Testimony on Recommendations for Increasing the Production of Affordable Housing in the District

Office of Planning Roundtable on Affordable Housing

11-01-2022

I am Meg Maguire, testifying on behalf of the NW Opportunity Partners Community Development Corporation.  Thank you for holding this roundtable to solicit recommendations for increasing the production of affordable housing in the District.

People who work in Ward 3 cannot afford to live here.  A year ago, we incorporated the CDC to help achieve Mayor Bowser’s admirable goal of 1990 new units of affordable housing in Rock Creek West.  However, it is increasingly clear that the mayor’s goal cannot be met through existing or other District incentives.  Obstacles include: 

• weak requirements for inclusionary zoning
• little District-owned land 
• very expensive private land, making the economics of producing affordable housing virtually impossible 
• lack of a financial tool to acquire private non-residential land
• hurdles in existing programs that impede rapid acquisition financing to respond to a fast-moving competitive market
• insufficient goals and tools to address racial inequity in formerly segregated areas of the city.

To address these issues, we have worked with a variety of affordable housing experts to propose the Affordable Housing Property Acquisition Fund.  (See attached proposal.) The Fund will enable qualified mission-driven affordable housing developers to move quickly to acquire non-residential public-purposed property to add significant amounts of new permanently affordable housing in four areas defined in the 2019 Housing Equity Report that are high in opportunity and high in need of affordable housing: Rock Creek West, Rock Creek East, Capitol Hill and Upper Northeast.

The Fund is designed to:

1. Break new ground with innovative forms of housing: family-sized and deeply affordable rental units, and affordable homeownership opportunities including Limited Equity Cooperatives (LEC), social housing owned by either the District or another entity, rent-to-own, etc. 
2. Permit qualified public-purpose development teams to compete with private market-rate purchasers to act without delay both to buy non-residential properties suitable for affordable housing when the properties come on the market or are otherwise determined to be available for sale; and to cover pre-development costs.
3. Attract private and other public investment similar to the Housing Preservation Fund through community development financial institutions (CDFIs) that would also act as Fund administrators.

To avoid competition between the Fund and existing housing programs we propose two alternative sources for consideration:

• Alternative I: Create an extremely low-interest loan fund seeded with $30 million general revenue funds plus funds raised by CDFI managers in a 3 to 1 match for $120 million.  OR
• Alternative II: Dedicate $91 million of the $101 million sale of the ground lease of the Marriott Marquis + $9 million general revenues = $100 million. It is more important to provide housing for the workers who make possible the events and venues that the organization sponsors than it is to pay off Events DC’s debt. 

Additional Fund provisions include:

• Interest rates for borrowing from the Fund would be set at 0%-1% with provision for loan forgiveness up to 30% where exceptional levels of affordability are achieved. Fund borrowers could accrue interest of up to three years with the possibility of a one-year extension if a zoning variance or map amendment is required or if the project is a planned unit development (PUD).  Repayment would be delayed until the project is occupied to avoid the project incurring extra carrying costs
• Require properties acquired through the Fund to adopt an affordability covenant or restriction of 99 years to run with the land.

• If permitted under Federal and District law, grant preference for occupancy of both rental and ownership units to those who have lived in the District for 10+ years or whose families have been historically displaced throughrestrictive covenants, racial segregation, urban renewal, escalating property taxes, and relocation through land redevelopment. Portland, OR, Austin TX and San Francisco, CA all have preference programs for affordable housing.

Other District powers and programs can also help accomplish Fund goals. 

• Of particular relevance to OP’s work and the subject of this roundtable is our recommendation that the Zoning Commission adopt a text amendment to prioritize any necessary zoning changes for Fund projects including up-zoning that is compatible with the 2021 Comprehensive Plan amendments to the Future Land Use Map (FLUM), thus providing some assurance in advance that the property could be developed for affordable housing along with a mix of other uses. 

In closing, we urge that the Cash 2 Covenants program apply only to market rate housing, not to rent controlled units.  This program threatens to take one type of affordable housing off the market to create another type of affordable housing.  Cash 2 Covenants creates nothing new and is not a sound strategy to meet Mayor Bowser’ goals in Rock Creek West.

The Affordable Housing Property Acquisition Fund offers an approach that directly addresses the affordable housing deficits that are so detrimental to the future of our city.

Thank you.