Can DC Housing Policy Preserve its Affordable Communities?

by Jacob Wallace

One of the largest housing programs in Washington, D.C., the Home Purchase Assistance Program (HPAP), has become so popular it may run out of funding before the end of the fiscal year. Although the District of Columbia government dedicated approximately $40 million in its most recent budget to the program, demand for all housing programs has begun to put a strain on the ability of the District government to respond to need.

“We might be running out of funds as early as June 2018,” said Jonathan Nisly, a housing advocate for MANNA Inc., which constructs Affordable Dwelling Units (ADUs) in the city and provides education programs and counseling for low-income residents who need help navigating the complex process needed to secure housing. “That means ADUs whose construction begins in March can’t be purchased in July because there’s no HPAP funding.”

As housing prices continue to increase in Washington, a patchwork of policies and non-profits have sprung up to ensure low-income residents can continue to afford housing within the District of Columbia. During a time of municipal budget surplus, more and more money and policy is being directed towards these residents, but the funds provided may not be enough to prevent the gentrification of an entire city.

Nisly expects HPAP to be fully funded again following the beginning of the 2018 fiscal year, but is worried about that gap. The current budget represents an increase of approximately $5 million from the previous year, and while this increase is welcome news to those in need of assistance, advocates are worried it won’t be enough. Nisly is encouraging residents to reach out to councilmembers and encourage them to create a special funding plan to keep HPAP coffers stocked until the end of the current fiscal year, a process which would begin in late March.

MANNA Inc. runs monthly Home-Buyer’s Club meetings for those residents who are just becoming educated on their options. At their most recent meeting on Saturday, Erica Armstrong, a property manager for Winn Residential and DC resident, was optimistic about her chances to own a home.

“I think with all the programs that DC has, if you know the right people you can get what you need,” said Armstrong. “I’m not telling myself anything other than I’m ready to buy a home.”

The Washington Metro area grew .9 percent overall from 2015-2016, which is a lower migration rate than in recent previous years. The District of Columbia, however, grew at a significantly higher rate than the overall area, at 1.6 percent. This means that more individuals moving to the area are moving to the city itself than to surrounding suburbs, which can cause a significant uptick in housing demand.

Another District of Columbia housing program, Inclusionary Zoning, has seen demand sharply rise in the past few years. The program mandates that private residential developments over a certain number of housing units must provide 8 to 10 percent of the units at a discounted rate. These units represent an important stepping stone for residents on the way to owning housing of their own.

“We have definitely seen an increase in the number of individuals interested [in Inclusionary Zoning units],” said Gene Bulmash, manager of the Inclusionary Zoning Program. “I think people are doing it as an opportunity to gain quality, safe affordable housing, but it’s not going to provide generational wealth.”

That lack of generational wealth stems from the Inclusionary Zoning program’s resale limits, which prevent residents who have purchased homes through the program from reselling it at market rate. That policy was designed to ensure that units remain in the hands of low-income IZ residents in perpetuity.

“Inclusionary Zoning is great for a very narrow purpose,” said Nisly. “It only piggybacks on units developers already want to build.”

Developers do indeed want to build. According to data published by DC’s Office of Revenue Analysis, in the past 12 years the District of Columbia has experienced a 22 percent population growth, and construction of new apartment units has more than kept pace with the demand this growth brings. During that same period, the apartment vacancy rate has increased from 4.7 to 5.1 percent.

graph-1
Data Courtesy of District, Measured

The Department of Housing and Community Development currently maintains a Housing Production Trust Fund at $100 milliion, which is designed to provide funds to companies interested in constructing new properties as a means to ensure the continued creation of Inclusionary Zoning units. This fund has essentially guaranteed a certain number of Affordable Dwelling Units exist in the city by subsidizing the construction of housing in the first place

Interview with DHCD Secretary Polly Donaldson TK

The inability of funding to meet demand is discouraging to District of Columbia residents, but policymakers and advocates alike agree that the city is a model for the nation in terms of the various ways it attempts to preserve affordable housing.

“I think DC is a model city, which in some ways is depressing to say. Other cities’ advocates are jealous of the tools we have,” said Nisly. “The city has certainly done good work under DHCD Secretary Polly Donaldson.”

 

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