Threats to Federal Programs Strain DC Housing Resources

528
St. Elizabeth's mental health hospital is in development to become the new practice facility for the Washington Wizards, as well as host games for the Washington Mystics and the Capital City Go-Go.

A resident of Ward 8 for nearly 10 years, Ms. J feels her neighborhood is changing. She says visitors need only drive around, right past the Congress Heights Metro stop and around Martin Luther King Avenue, to notice it. “Drive over this way sometime,” she suggested to me over the phone. “Go down 13th Street, and then you’ll see what I was talking about.”

On 13th Street, a residential area, brick houses and apartment complexes line each side of the street. It was a warm spring afternoon, and residents were outside on their porches while children rode bikes up and down side streets. Sure enough, I drove up to a site only a few blocks from the Metro, fenced off along its perimeter with a couple of portable toilets, indicating construction work had begun.

According to Ms. J, who requested that I call her by this name, development projects like the one I visited are popping up all over the neighborhood, and new residents may soon follow.

Congress Heights “is having an explosion of building,” she said. “They’re building right across the street from me. All of the signs say ‘Sold.’”

“There’s a building boom going on,” she added.

The uptick in development comes with efforts in the District to revitalize southeast DC. Most strikingly, the city is on track to open a $65 million practice facility for the Washington Wizards on the east campus of the former St. Elizabeths mental health hospital. The facility is expected to draw thousands of visitors to a part of town many of the city’s lower-income families call home.

DC Housing Finance Agency Executive Director and CEO Todd A. Lee supports the new developments. “Ward 8 is what I would consider a high opportunity area for the city,” he said. “Partially because of the public investment … partially because as the city’s population continues to grow, people are having to cross the river in order to find somewhere to live. And the development community is going to follow that demand.”

Ms. J worries that might drive up housing prices and threaten cheaper homes. “I welcome new neighbors who like flowers as much as I do,” she said, “but my concern is the pushing out of those who are on the other end of the economic spectrum.”

Lee also acknowledged the importance of maintaining a careful balance. “As higher-income residents choose Ward 8, we need to make sure that we’re doing all that we can to protect those who earn moderate to sub-moderate incomes so they can stay there, or, if they choose to live in that neighborhood, they have options,” he added.

According to a 2015 report by the DC Fiscal Policy Institute (DCFPI), the District has been losing nearly half of its low-cost units since 2002, as private investors opt for higher-rent units. A combination of steady disinvestment from federal housing programs and a strong housing market incentivizing the redevelopment of low-cost units has sustained the city’s ongoing housing crisis. Residents are displaced when stagnant wages can no longer keep up with rising rental costs. While spending cuts to housing programs on the federal level are nothing new, the District faces potential strains on its resources from intentions by the Trump administration to axe subsidies and tax incentives for low-cost projects.

Last year’s passing of a sweeping federal tax overhaul saw key affordable housing tools at risk in early legislation drafts. Private activity bonds and low-income housing tax credits (LIHTC), both of which attract private investors to fund public projects, were nearly cut until bipartisan negotiations restored them to final revisions. The tools make up two of a larger mix of federal and local resources to address the city’s affordable housing needs.

“Our local tools are designed in a way where they’re intended to work with other financing tools,” said Claire Zippel, a DCFPI policy analyst. “Both the low-income housing tax credit and housing subsidies that are funded through [the US Department of Housing and Urban Development] are equally crucial parts of the affordable housing spectrum.”

However, early intentions to reduce the corporate tax rate deflated LIHTC’s value to investors even before the bill was on the President’s desk. According to Kelly Hunt, a legislative analyst with At-large Councilmember Elissa Silverman’s office, the tax incentive has decreased between 12 and 17 cents on the dollar for every credit, which she calls a “huge gap.” According to Hunt, the DC Department of Housing and Community Development had to increase funding for six developments after prices started to fall. Developers “will do another application cycle, and the gaps are going to be bigger and bigger every time.”

“It appears,” said Zippel, “that for now the market for low-income housing tax credits has stabilized somewhat, but certainly any shock to resources that originate at the federal level, whether those are tax credit resources or subsidy resources, is going to impact how much money the District itself needs to put in to create or preserve the same number of units.”

City officials admit they’re still determining how LIHTC might affect real estate transactions. In an email, District of Columbia Housing Authority Executive Director Tyrone Garrett said the agency completed financing for Ward 8’s Parkway Overlook Apartments with pre-existing rates, and it’s a waiting game for future contracts to realize the impact.

“At this time, it is difficult to find an exact link,” said Emmanuel Brantley, communications director of the Office of At-large Councilmember Anita Bonds, chair of the DC Council’s Committee on Housing and Neighborhood Revitalization.

Brantley predicts the burden may fall on residents to shell out more for existing units. “What we can say is that as it currently stands, District residents may see greater tax liabilities and have less money to spend on housing.” He added, “This obviously affects the committee, as we would need to work more creatively to bring about more affordability and perhaps at a faster rate.”

According to Zippel, DC produces and preserves upwards of a thousand low-cost units a year. While she says the city has made monumental progress toward providing affordable housing and boasts one of the strongest inclusionary zoning programs in the nation, lowest-income residents still require an additional 26,000 units to meet their housing needs. Councilmember Silverman says constituents tell her that middle-income families also struggle to meet standard rent requirements in market-priced units.

“I think a lot of people outside of the District would be surprised at what income levels people say, ‘I can’t afford to live here. I can’t buy a house,’” the councilmember added.

Community activists like Dominic Moulden, a resource organizer for Organizing Neighborhood Equity (ONE DC), says more robust private development puts another strain on the city’s limited affordable housing stock. “If the city sells its public resources, like the old public housing, and puts it on the private market, you can’t solve the housing crisis,” Moulden explained. “You’re creating a housing crisis by growing the private market … even affordable housing in most instances is not affordable for people living paycheck to paycheck.”

Ms. J’s neighborhood in Ward 8 contains some of the highest concentrations of housing vouchers in the District. She calls the area the final frontier. “It is the last place that is set to be gentrified in Washington, DC,” she said.

While Ms. J is looking forward to seeing more investment in her community, she is not sure how the changes will affect the neighborhood’s current residents. “Maybe things are going to stay as they are,” she mused, “but change is probably going to come in one form or another for the entire Ward 8 community.”