Category: District of Columbia

A few steps can fix Inclusionary Zoning

Posted on by Ted Van Houten

DC’s Inclusionary Zoning (IZ) affordable housing program has suffered from serious administrative problems in its start-up phase. As a policy, however, it is still sound, and is the right policy for DC’s future.


Photo from 2910 Georgia Ave.A handful of IZ units are on the market, along with over 900 units in the pipeline. There are also 1,000 units that came through the Zoning Commission’s Planned Unit Development (PUDs) process since 2000, using the same policy standards as IZ.

Unfortunately, 2 early IZ units sat on the market for more than a year, and the developer has sued the city to get out of the IZ requirement. This doesn’t reflect a fundamental flaw in IZ; rather, it arises from understaffing at the DC government and rigid local and federal regulations. There’s not much time to fix the sputtering implementation of this important affordable housing policy tool.

IZ brings many benefits

IZ sets aside 8-10% of new housing construction for households earning 50-80% of Area Median Income (a 50% AMI household of 3 earns $49,250 per year, a 80% AMI household earns $78,221 per year). IZ is worth fixing because we have plenty of evidence that this kind of program can produce results beyond what other housing programs can. IZ provides affordable housing in mixed-income and wealthier neighborhoods throughout a jurisdiction rather than concentrating it in a few neighborhoods.

This benefit of economic integration has been documented. Low-income children in programs like IZ perform better in school than their peers, because they live in low-poverty neighborhoods and attend local low-poverty schools. Another other advantage of IZ is that it does not require a direct subsidy from the government to construct the affordable unit, but rather lets the developer to build extra market-rate units, and uses that value to pay for the below-market ones.

Other than a nominal administrative cost, IZ is a very cost-effective way to sustain the city’s production of new moderately-priced homes. There are many successful similar programs throughout the country, including Montgomery County’s long-running IZ program, Moderately-Priced Dwelling Units (MPDUs).

DC IZ also has a sister program which creates affordable dwelling units through PUDs and public land deals. (Confusingly, these are often called ADUs, which is the same acronym, but not the same thing, as Accessory Dwelling Units, market-rate basement or garage units inside someone’s house). This program does not appear to have problems filling units at the same income levels. That success shows that IZ can also overcome its challenges with some concerted attention.

Three problems have stalled IZ

Three debilitating problems with the program’s administration can be fairly easily corrected and get it back on track: severe understaffing, rigid regulations, and rigid FHA lending rules.

Severe understaffing: Only 1-2 people administer the program inside DC’s Department of Housing and Community Development (DHCD). Without a few more staff people, IZ and the sister affordable dwelling units (ADUs) cannot be administered effectively. The Mayor and DC Council need to provide a few more staff positions to manage these programs.

An alternative to administering the program entirely inside the DC government would be to give responsibility for the for-sale units to a nonprofit experienced in managing permanently affordable homeownership programs. CityFirst Homes is already doing a similar job with the District’s first major housing land trust. Evidence suggests that more hands-on assistance from a non-profit like CityFirst Homes can drastically cut foreclosure rates and yield more successful homeowners.

The other component that requires sustained support is the housing counseling agencies who educate applicants and help them through the process. Ensuring the city’s budget provides for this is another key ingredient to success. In all, these administrative costs amount to a modest budget item and are a fraction of what it costs to subsidize new affordable housing construction.

Rigid IZ regulations: DHCD manages a process for connecting a person who qualifies for affordable housing to available units. This involves a centralized application and lotteries. Details of that process have proven too rigid to accommodate the realities of matching housing seekers and available units.

The city is in the process of revising the regulations to give the program necessary flexibility. This revision should be in effect in a few months.

An alternative to the current lottery system would be to let the developers market the units to qualified households, and simply have the District housing agency certify the applicants as qualified and provide general oversight. This is already the process for the PUD and public land “ADUs.”

With sufficient support from housing counseling agencies, residents in search of an affordable home should be able to get enough help to conduct that search, especially with the city’s useful website, dchousingsearch.org.

Rigid FHA lending rules: The Federal Housing Administration has emerged as the predominant mortgage backer in the post-2008 affordable homeownership world. Nationwide, most local housing programs have encountered a critical conflict with FHA rules where local programs (like IZ and ADUs) often require that the affordability provisions survive foreclosure. FHA does not allow for this.

The only way to deal with FHA mortgage lending standards that conflict with local program requirements is to change the program to conform to FHA’s standards, and get FHA to sign off on the changes. DC is acting to change its standards to comply with FHA. The timeline for receiving FHA’s approval is uncertain but the city hopes it will happen shortly, we hope in the next month or so.

If a unit goes into foreclosure and then sells on the market, the city would lose its investment in an affordable home. There are other safeguards the city could put in place that do not conflict with FHA. They would at least allow the city to recover the value of the affordability of the unit, should a foreclosure occur and the unit sell on the market.

With these three administrative fixes in place, DC should be ready to smoothly operate a program to place the right applicant in the right unit as 900 more IZ units come online.

Mend it, don’t end it

IZ’s growing pains have led to some calls to more fundamentally modify or scrap the IZ program. We should consider and debate these suggestions only once DC fixes the immediate problems and the program administration is running smoothly.

Some opponents continue to question the policy itself, but experience across the country points to IZ as a valuable and effective tool to create moderately-priced housing in strong markets with virtually no direct cost other than a small budget for staffing the program.

Photo courtesy of 2910 Georgia Ave.

Read the original article on Greater Greater Washington. >>

Strategies Detailed to Remedy DC’s Affordable-Housing Crisis

Posted on by Joe Wisniewski

Lack of affordable housing is an unintended consequence of a region’s success, and can certainly be seen in the Washington D.C. metro area.

As the public demand for walkable neighborhoods has increased, low- to moderate-income residents are being priced out of those neighborhoods. And unfortunately, the public policy regarding housing affordability in the United States remains “drive until you qualify.”

Thus began Chris Leinberger of the Brookings Institution at a recent seminar entitled “Walkable Neighborhoods: How to Make Them for Everyone,” sponsored by the Coalition for Smarter Growth.

The seminar also featured Ed Lazere of the DC Fiscal Policy Institute and David Bowers of Enterprise Community Partners, who brought their own unique spins on the affordable-housing problem in D.C.

Lazere illuminated some startling statistics regarding housing affordability (D.C. lost half of its low-cost apartment rental units from 2000 to 2010). Bowers added the human element with stories of how housing affordability has affected some actual D.C. residents (illustrating his concept that “data without stories are just numbers”).

Leinberger pointed out that Hollywood does more market research than any other U.S. industry, crediting the popularity of television shows such as Seinfeld and Sex and the City supplanting that of, say, Leave it to Beaver, as reflecting the national consumer demand for walkable neighborhoods away from suburban forms of development which remained in demand until the mid-1990s.

The result of this increased demand has naturally been an increase in land values in walkable communities, specifically in D.C.’s 139 designated activity centers. This, coupled with the lesser issue of increased construction costs associated with the development of walkable neighborhoods, according to Leinberger, has led to gentrification.

Bowers pointed to D.C.’s U Street and H Street corridors as the city’s two most recent neighborhoods to undergo gentrification which, Leinberger stated, was either good or bad, depending on where you sit.

The side effect of gentrification, of course, is pricing out D.C.’s low- and moderate-income residents from these neighborhoods, often displacing long-time residents in the process. And where are they to go? Bowers pointed out that 20 percent of D.C. residents spend half of every take-home dollar on housing already. “They are drowning,” Bowers said.

The main solution to housing affordability in walkable urban places, Leinberger stated, is simply to create more walkable urban places. This is a recognition that housing affordability in in-demand neighborhoods is, by definition, a supply/demand problem.

Leinberger enumerated additional remedies, of which the following is a subset:

  1. Offering standard tax credit and vouchers from the local government in lieu of increased tax revenues from other parts of the walkable urban district;
  2. Participating in federal government programs associated with the U.S. Department of Housing and Urban Development’s Choice Neighborhoods, the next generation of the department’s Hope VI programs;
  3. Instituting inclusionary zoning to require affordable units within a district with higher walkable urban infrastructure investment;
  4. Implementing fee capture upon resale of any market-rate unit within a district with such infrastructure investments;
  5. Allowing ancillary units in for-sale housing (i.e., “granny flats”) to expand the housing supply; and
  6. Encouraging employers to locate in transit-oriented developments in order to increase tax revenues in those districts.

These remedies are not just theoretical, but have been implemented in jurisdictions nationwide. Likewise, they are made possible based on increased profitability that does indeed occur in walkable neighborhoods.

Chris Leinberger dropped a staggering statistic regarding how much D.C. land values have increased in the past decade. On one particular site in Capitol Riverfront, he noted that the land value was probably at around $5 per square foot a decade ago. That same land was recently sold to Toll Brothers at a cost of $825 per square foot. “That increase is stunning,” he added.

In addition, in Arlington County, Virginia, the eight significant walkable neighborhoods occupying 10 percent of the county’s land today generates 55 percent of the county’s revenue, up from 20 percent just a few short decades ago. The county now captures part of this value growth by requiring that developers apportion a percentage of their residential units as affordable housing, or make a contribution to the county’s affordable housing fund.

While there is no one silver-bullet remedy, jurisdictions can, with perseverance, creativity, and hopefully a sense of urgency, address the “unintended consequence of success” that housing affordability poses as they create the walkable communities preferred by consumers of all socioeconomic backgrounds.

Click here to read the original article from Mobility Lab. 

Photo courtesy of  Paul Goddin.

 

Testimony before the D.C. Zoning Commission: Support Case No. 04-33F Text Amendments: PUDs and Inclusionary Zoning – Termination of Affordability Controls upon Foreclosure

Posted on by Ted Van Houten

Please accept our testimony on behalf of the Coalition for Smarter Growth. My organization works to ensure that transportation and development decisions in the Washington D.C. region accommodate growth while revitalizing communities, providing more housing and travel choices, and conserving our natural and historic areas. I also note that we have been working to create and implement a successful Inclusionary Zoning program since its inception in 2003.

We are here to express our strong support for these amendments. We concur that the proposed text amendments are needed to ensure that IZ and ADU covenants conform to FHA guidelines. We appreciate that the city can take other steps through regulations to protect the public’s interest in its investment in below market rate homes without conflicting with FHA requirements. We look forward to the District developing these regulations to complement this action.

These amendments are critical to removing a major barrier affecting the IZ program. Administration of IZ has experienced a number of substantial challenges as units have come on line in the last year. While these challenges remain a major disappointment, they can be overcome. The first challenge is the severe understaffing of both the IZ program and the management of ADUs – affordable dwelling units generated through PUDs and public land dispositions. It appears that no more than one or at most two DHCD staff members manage every aspect of the ADU and IZ programs. Elected officials have touted the benefits of these affordable housing units, but they have not provided the modest funding needed to adequately support these assets. A few more staff members and continued support for adequate housing counseling services are needed to ensure that these programs have the resources they need to work with applicants and developers.

While ADUs are largely managed by individual developments with oversight from DHCD, IZ was designed to more closely manage the recruitment of applicants and the placement process. The intention was to provide greater assistance to residents in search of a home they could afford and allow them to come to one place to find assistance, rather than chase project after project. ADUs have not experienced the problems in leasing or sales of units at 80 percent AMI that IZ has. Considering these differences, and other factors, DHCD is in the midst of revising the IZ regulations. We hope this process will take no more than a couple of months. Apparently, the regulations were too rigid to respond to obvious needs in practice, such as ensuring that an applicant who enters a lottery for a for-sale unit is qualified to get a mortgage for that unit. There appear to be a variety of glitches in the IZ regulations that are inhibiting the smooth process of connecting the right applicant with the right unit. We are hopeful that this regulations revision will resolve these problems within the next several months.

You are here today to resolve one of the other barriers that we have recently encountered – the rise of FHA as the leading backer of affordable residential mortgages, and FHA standards that conflict with affordable housing covenants common among local government programs. These amendments will allow prospective buyers to secure FHA financing and purchase affordable units subject to the Inclusionary Zoning program and ADU requirements. We welcome these appropriate and necessary text amendments to the current PUD and Inclusionary Zoning regulations to improve the effectiveness of these programs and increase the availability of affordable housing in the District of Columbia.

Thank you for the opportunity to testify.

Cheryl Cort

Policy Director

D.C. zoning revamp stokes residents’ fears about changing city

Posted on by acustis

District planning officials are rewriting the city’s zoning rules for the first time in 54 years, a process that has hastened anxieties about growth and at times has erupted into a pitched debate about the future of the city. The proposed changes are small — allowing a corner store here, fewer parking spaces there — but the debate has grown in recent months, pitting some longtime residents and civic activists against city officials and advocates of denser transit- and pedestrian-oriented development.

Testimony to D.C. Comprehensive Housing Strategy Task Force

Posted on by acustis

Please accept these comments in addition to my oral testimony at the Oct. 22 hearing on behalf of the Coalition for Smarter Growth. We are a regional organization based in the District of Columbia focused on ensuring transportation and development decisions are made with genuine community involvement and accommodate growth while revitalizing communities, providing more housing and travel choices, and conserving our natural and historic areas.

Public Land for Public Good

Public Land for Public Good

Posted on by acustis

The report chronicles how the District of Columbia has used the redevelopment of public land to provide affordable housing and other benefits.

Highlighting the significant accomplishments the District has made in creating affordable housing and integrating it into larger mixed-use development, the report also details areas needing improvement. Most importantly, the assessment points to recent reduced expectations in the level of affordability in future projects. The report calls for the District to recommit to making the most of affordable housing opportunities in public land redevelopment deals, as the District seeks to build a more inclusive city as housing prices rise and more affluent residents move in.

Testimony in Support of the future redevelopment of the McMillan Sand Filtration Site

Posted on by ian

We wish to express our support for the proposed Master Plan for the McMillan Sand Filtration Plant. This plan is a carefully designed redevelopment and preservation plan that will highlight the unique historic resources while putting this significant parcel back to productive use. This 25-acre site, adjacent to the 68-acre McMillan Reservoir site helps reconnect the Washington Hospital Center complex and adjacent neighborhoods back to the rest of the city while also addressing the growing need for more housing, especially more affordable housing, local retail, medical offices, and celebration of the historic features of the site.