Should DC Support More Affordable Housing … or Less?

The DC Council has two bills pending that force decisions on how — and to what extent — local taxpayer dollars should be used to create and preserve affordable housing in our increasingly unaffordable market.

One bill quite clearly would increase the stock of housing affordable to low and moderate-income residents. The other would, over time, have the opposite effect, though it’s doubtful that’s what the sponsors intend.

Leveraging Public Land

A bill introduced by Councilmember Kenyan McDuffie would require private-sector developers that buy or lease District-owned land for multi-family housing to make a specific portion of units affordable for specific categories of low-income residents.

The requirements would apply to both rental housing and condos, but in both cases, only those with 10 or more units.

For housing near a Metro station, major bus route or streetcar line, at least 30% of the units would have to be affordable. A 20% minimum would apply to housing less convenient to public transit.

Those who know how dicey affordable housing requirements can be will be pleased to know that the bill sets quotas. These are all based on the customary 30% of household income and, as is also customary, the Washington-area median income, adjusted for family size.

The affordable unit requirements differ according to the type of housing, as well as where it’s located.

For rental housing, 25% of the set-aside units would have to be affordable for what the bill defines as very low-income households — those whose incomes are no greater than 30% of the AMI. (Those familiar with U.S. Department of Housing standards know them as extremely low-income households.)

The rest of the units would have to be affordable for households in the next tier — 31-50% of the AMI. For a four-person household, this would currently mean a maximum monthly cost of about $1,338 a month.

Half the set-aside for ownership units would have to be affordable for households in this tier. The remainder would have to be affordable for households with incomes between 51% and 80% of the AMI.

These restrictions would remain in place “for the life of the building,” which I assume means for as long as it’s used for housing. (Keep reading to see why this is so important.)

The District would subsidize the affordable units by selling or leasing the land at less than its appraised value. Developers could request waivers from the affordable unit requirements if that, plus other subsidies wasn’t enough.

Cutting Back of Affordability Requirements

A bill introduced by Councilmember Anita Bonds would change rules designed to ensure that condos and single-family dwellings developed with Housing Production Trust Fund subsidies remain affordable for a goodly number of years.

As things stand now, owners of subsidized units generally must sell them at a price that’s affordable to other people in the same income bracket until 15 years have passed — or longer if their purchase agreement says so.

Once the time limit expires, they can sell to anyone at any price. But they must reimburse the Trust Fund for the subsidy that made the home affordable for them. The time limit drops to 10 years if the home is in a high-poverty neighborhood. The repayment requirement remains the same.

The Bonds bill would cap the affordability limit at 15 years, making some types of homeowner affordability programs ineligible.

More importantly, it would reduce the affordability requirement to five years for homes in “distressed neighborhoods.” Owners could then sell at whatever price they could get.

They’d still have to repay the Trust Fund. So it might seem that the subsidy were merely being recycled — repaid by one owner, available for the next.

But in a housing market like the District’s, the second subsidy would often have to be larger. And the cost of subsidizing the creation of a new affordable unit would generally have to be larger yet.

So the repayment wouldn’t fund a replacement in either case — or at least not in the same neighborhood as the unit that got sold at market rate. At best, the Trust Fund would be re-creating affordable homeownership units, rather than expanding the shrunken stock.

Which brings us to the second big problem with the Bonds bill — the definition of “distressed neighborhoods.” It would reduce the definition used for the current 10-year time limit from a 30% to a 20 % poverty rate.

For technical reasons, the rate wouldn’t reflect the current poverty rate, as the DC Fiscal Policy Institute’s Jenny Reed has explained. So we’d have many “distressed neighborhoods” that haven’t been distressed for some time, e.g., Columbia Heights, Logan Circle, parts of Penn Quarter.

The five-year limit would also apply to neighborhoods that will soon be wholly redeveloped — and pricey. I see condos sprouting up near the Navy Yard every time I walk down that way.

The end result would be affordable housing losses in nearly 40% of the District’s Census tracts — the technical definition of “neighborhoods.”

And as housing advocate Angie Rodgers points out, it’s not only prospective homeowners who’d be affected. Any new Trust Fund money invested on their behalf would mean less to subsidize affordable rental housing, which we’re already so short on.

Preserving the current affordability requirements wouldn’t deny homeowners the opportunity to build wealth, as homeownership is said to do. It would merely ensure that future homeowners can benefit from subsidies we’ve paid for to preserve some modicum of diversity and opportunity in our community.

The current law probably isn’t the best way to do this, as Urban Institute housing and community policy expert Brett Theodos (and others) have explained.

But it’s a whole lot better than shrinking the time limits — and over-defining neighborhoods that prospective homeowners might shy away from if they couldn’t turn a maximum profit for 15 years.

One Response to Should DC Support More Affordable Housing … or Less?

  1. […] new chair of the Housing and Community Development sponsored a bill that would have accelerated the loss of affordable housing. But we’ll have to wait and see how she addresses her part of the […]

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