Can DC Housing Policy Preserve its Affordable Communities?

By Jacob Wallace

WASHINGTON – Since Vaughn Perry moved to Congress Heights in 2000, the median home price around him has more than doubled. It’s the sort of ballooning one might have expected to deflate somewhat post-recession, but in DC, housing continues to boom.

“Just two weeks ago, a house next to me sold for three times what I paid for my house,” said Perry. “You’re definitely seeing the house prices rise quickly.”

Perry, the equitable development manager for the 11th Street Bridge Park connecting Anacostia to nearby Capitol Hill/Navy Yard, understands better than most what rising development across the city means for communities, and the difficulties of balancing the needs of long-term residents with the inevitable changes that come to every Ward of the District of Columbia.

“Ultimately, neighborhoods change, and I don’t look at that as a good or bad thing. I think change is inevitable, but I think it’s how you deal with that change that matters,” said Perry. “When those changes are taking place, how does that have an impact on the culture? How does that have an impact on longstanding traditions? How does that have an impact on the people that will be there?”

The 11th Street Bridge Park will connect communities whose demographics could not be more diverse: Capitol Hill, on the West side of the river, has an unemployment rate of 6.6 percent and a median value of homeowner-occupied homes of almost $650,000. Anacostia, on the East side of the river, has an unemployment rate of 20 percent and a median value of about $250,000. With the 11th Street Bridge Park, Washington might soon have one of the most stark answers yet to the question: What can a city do to remain affordable in the face of gentrification?

 

Growing Pains

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. 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.

One of the largest housing programs in the District, the Home Purchase Assistance Program (HPAP), has become so popular it may run out of funding before the end of the fiscal year. The program allows low-income Washingtonians to purchase affordable homes using a loan from the District of Columbia of up to $80,000. 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. “That means [Affordable Dwelling Units] whose construction begins in March can’t be purchased in July because there’s no HPAP funding.”

MANNA predates many of the housing policies Washington residents rely on to find affordable housing. The organization provides a wide range of services related to housing, which includes constructing Affordable Dwelling Units (ADUs) in the city, providing housing-related counseling, and running regular classes for low-income residents who need help navigating the complex process needed to secure housing. When the organization was founded in 1982, HPAP did not exist. Instead, many of the Washingtonians who bought affordable housing created by MANNA were coming from transitional or Section 8 housing.

Today, much of MANNA’s services related to housing are directly intertwined with new District of Columbia housing policy created since 2000. Case in point: advocates from the Greater Washington Urban League came to MANNA’s Home Buyer’s Club on Saturday and talked to Washingtonians learning how to purchase their own home how they could secure a loan through the HPAP program.

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 council members 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.

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.”

 

Stepping Stones

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 itself, 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.”

The 11th Street Bridge Park runs into similar problems with its own Community Land Trust. The Trust buys up housing immediately surrounding the park and regulates the price at which it can be sold in order to keep it affordable. Much like Inclusionary Zoning housing, the amount that owners of housing within the Trust can resell for is limited, and the resident selling can earn 25% of the equity.

“I think [resale limits] is one of the drawbacks of CLTs, but it’s also only one tool that we use,” said Perry.

Indeed, the nonprofit in charge of the park also sponsors MANNA’s Home Buyer’s Club meetings within Ward 8, as well as workshops on tenant’s rights and other initiatives to try and spur business development by Ward 8 residents for Ward 8 residents.

All of these programs can interlock in confusing, but helpful, ways. For instance, MANNA could create a building that must have Inclusionary Zoning units. Those IZ units, in turn, could be purchased by someone who qualifies for an HPAP loan. Together, this patchwork of policies help Washingtonians find, secure, and continue to afford a home.

Charlie Gussom, whose mother has worked for MANNA for 19 years, understands better than most how all these policies can come together.

“They meet you where you stand in the homebuying process and they’ll work with you at the point that you’re in,” said Gussom. “You can have good credit, moderate credit, or you can have not great credit and they really help you through the process of improving it from the point that you’re at.”

Gussom is also going through the Home Buyer’s Club process as he begins to look for a house of his own. In part because of the deep connection he has with MANNA, he’s confident he can use the resources available to him to successfully navigating the homebuying process.

“It’s not intimidating at all,” said Gussom, “it’s just a matter of using the resources available that I have in my life that provided me with things that I need.”

 

Build Baby Build

Developers are doing a lot of building in Washington. 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 slightly, from 4.7 to 5.1 percent.

graph-1

Data Courtesy of District, Measured

 

All this growth isn’t necessarily a bad thing. As Gussom points out, neighborhoods formerly blighted or underdeveloped now have an infusion of interest.

“I like that the buildings you see bring in new things, new people, new businesses because at one point of time there wasn’t anything,” said Gussom. Still, he remains concerned that the people who benefit most from all this newness are not the people who were born and raised in Washington. “On the flipside, I’m concerned about the individuals who don’t have the education and the mindset who don’t understand that path.“

The inability of funding to meet demand for the programs that slow the negative effects of development can be discouraging to Washingtonians, 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,” said Nisly. “Other cities’ advocates are jealous of the tools we have.”

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