Presentation by the Government of the District of Columbia: APPROACH TO AFFORDABLE AND MIXED-INCOME HOUSING April 30, 2014

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I.  What is "affordable housing“?

II.  Population Growth in DC III.  Housing Development Tools

Agenda 2

IV.  Innovative Programs and Resources V.  Housing Unit Production VI.  Challenges for DC Housing Programs VII.  Moving Forward

What is “Affordable Housing”?

U.S. Department of Housing and Urban Development Definition:

In general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities.

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Area Median Income (AMI) in DC Metropolitan Area is $107,000.

Affordable Housing  Workforce Housing /

Moderate-Income Housing  Extremely

Low Income  Very Low Income   Low Income      

Median Income      

Household Size   30% AMI   50% AMI   60% AMI   80% AMI   100% AMI   120% AMI  

1 person   22,470   37,450   44,940   59,920   74,900   89,880  2 person   25,680   42,800   51,360   68,480   85,600   102,720  3 person   28,890   48,150   57,780   77,040   96,300   115,560  4 person   32,100   53,500   64,200   85,600   107,000   128,400  

Affordable Housing versus Public Housing 4

Public Housing (“social housing”): The U.S. Department of Housing and Urban Development (HUD) administers Federal aid to local housing agencies that manage housing (also known as “subsidized housing”) for low-income residents at rents they can afford.

Sheridan Station Phase 1, Matthews Memorial Terrace and Sheridan Station Phase 3 in Southeast DC

Population Growth in DC 5

540,000

560,000

580,000

600,000

620,000

640,000

2000 2002 2004 2006 2008 2010 2012

12% growth since 2010 2% increase per year

Affordable Housing Financing Tools 6

Office of the Deputy Mayor for Planning and Economic Development (DMPED) •  Charged with executing the Mayor's economic development strategy which encourages

growth and investments across the District. •  Three (3) major priorities: Business Attraction and Retention, Neighborhood Revitalization,

and Job Creation and Government Coordination   Department of Housing and Community Development (DHCD) •  Administers the District’s affordable housing programs •  Coordinates with other District agencies to issues annual Notice of Funding Availability

(HPTF, federal funds, low-income housing, permanent supportive housing, special needs) •  Provides first-time homebuyer assistance   DC Housing Finance Agency (DCHFA) •  Manages the Multifamily Mortgage Revenue Bond Program (MMRB) and 4% Low Income

Housing Tax Credit Program (LIHTC) financing program •  Used to facilitate affordable multifamily rental housing projects •  Able to fully finance 100% affordable projects DC Housing Authority (DCHA) Managed HUD-subsidized housing (public housing)

District Government Housing Agencies

Affordable Housing Financing Tools 7

Local Funding - Housing Production Trust Fund (HPTF) •  Provides loans and grants for new construction and preservation of affordable

housing •  For housing that serves households at 0-80% of Area Median Income (AMI) •  Helps to keep residents from being displaced from DC’s changing neighborhoods. •  Funded primarily by a dedicated revenue stream of 15% of the DC Deed Transfer

and Recordation Tax

Production and Preservation

Federal Resources: •  Community Development Block Grants •  HOME Investment Partnership Program •  Low Income Housing Tax Credits (LIHTC)

Federal-Local Program: •  LIHTC paired with local tax-exempt bond financing

Developers able to apply for financing on an annual basis through DHCD’s consolidated Notice of Funding Availability

Affordable Housing Financing Tools (continued) 8

Assistance for Homebuyers Home Purchase Assistance Program (HPAP) •  Helps low- and moderate-income District residents purchase their first homes

through downpayment and closing cost assistance •  Can receive up to $44,000 to purchase a single-family house, condominium or

cooperative apartment •  For residents with incomes between 30%-80% AMI •  Must successfully complete housing counseling program provided by one of the

District’s non-profit partners

Employer Assisted Housing Program (EAHP) •  Assists DC government employees who are first-time homebuyers in the District •  Provides down payment funds up to $1,500 and a deferred loan of up to

$10,000 •  Annual tax credit of $2,000 against income tax liability for five years •  Real property tax credit for five years based on a sliding scale

Mixed-Income Housing Development Tools 9

Inclusionary Zoning •  Adopted in 2009 •  Requires 10% of the units in new

residential developments must be set aside at prices that are affordable to low and moderate income households

Planned Unit Developments Public-Private Partnerships •  Development Agreement may require or

encourage a % of affordable units as part of the project

•  Discounted land value •  Cross-subsidization (mix of market &

affordable) •  Tax abatement or Payment-in-lieu-of-

taxes (PILOT) •  Tax Increment Financing (TIF)

Tools to Encourage Mixed-Use and Compact Development

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Comprehensive Plan and Mixed-Use Zoning Density bonuses through Planned Unit Developments (PUD)

Transferable Development Rights: •  Ability to purchase additional floor

area ratio and to build higher density in “receiving zones”

•  Enables owners to achieve PUD densities without having to spend time and money on PUD approval

Live Near Your Work Pilot Program •  District matches up to $8,000

contribution made by employer for employee to purchase of a home close to transit or their place of employment

•  Open to households of all income levels

Innovative Programs and Resources 11

North of Massachusetts Avenue (NoMa) District Managing Growth and Change •  Fastest growing district in DC •  Transformed from a primarily industrial area into a thriving mixed-use community •  Development catalyzed by three primary factors:

1.  Favorable real estate market dynamics 2.  Prioritization by both the District and Federal governments 3.  Addition of an infill Metrorail station

•  Tax abatements for residential developments

Between 2010 and 2012: <1,250 housing units and 1.3 million square feet of office space were built

Innovative Programs and Resources (continued) 12

New Communities Initiative •  Comprehensive public private partnership designed to revitalize 4 neighborhoods

with physically deteriorating subsidized housing and transform them into vibrant mixed-income communities

•  Provide quality affordable housing options, employment opportunities and access to appropriate human services.

•  Market rate and workforce housing units included in each project to cross-subsidize the affordable units

Innovative Programs and Resources (continued) 13

Tenant Opportunity to Purchase Act (TOPA) •  Tenants in DC have the first right to buy their building when the owner decides to sell •  Low-income tenants are eligible to receive funds through the Housing Production Trust Fund

to make sure that they can afford to purchase and renovate their buildings •  Tool to preserve affordability and complete repairs through an agreement with a third

party developer District Opportunity to Purchase Act Housing search website Centralized searchable database of units (in development)

Housing Unit Production

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Affordable Units Market-Rate Units Total Units

2011-2013 2,751 1,223 3,974

2014-2016 5,103 6,539 11,642

Post 2016 1,756 5,805 7,561

9,610 13,567 23,177

55,000 additional units of housing needed by 2020 to reduce upward pressure on housing prices and rents, and to accommodate a growing population

Challenges for DC Housing Programs 15

Market Dynamics •  Slow start to delivery of IZ units due to the economy

•  In some neighborhoods, what would be considered “market rate” is 60% AMI

•  New Communities Initiative

o  Market conditions different in each of the 4 neighborhoods, so some are moving while others are not

o  Some do not have a natural market: lack metro access and anchor tenants, environmental contamination issues

o  Due to the economic downturn, banks were not financing mixed-income developments, so cross-subsidization from market units not possible

o  Projects have stalled due to lack of financial resources

o  Distrust of government by local residents

Challenges for DC Housing Programs (continued) 16

Program Administration Affordability Covenant Compliance

•  District funds disbursed at time of construction and Affordability Covenant gets executed

•  Lack of staff to monitor both Inclusionary Zoning and Affordability Covenants

•  Difficulty in ensuring that developers conduct proper marketing and sales process

Affordable Homeownership Program Deficiencies

•  Covenant is for the life of the building, so homeowners cannot build wealth

•  Inability to regulate condo fees has resulted in some units becoming unaffordable

•  If a home has a federally-insured loan and goes into foreclosure, HUD requires that the affordability covenant by the local municipality is terminated

Moving Forward 17

Additional Funding Commitment for Affordable Housing by Mayor Gray

•  Made $100 million commitment in 2012 with goal to produce 10,000 new affordable housing units by the year 2020

•  Additional $87 million commitment in 2013

•  Additional $100 million in 2014

2012 Comprehensive Housing Strategy  

•  Policy, administration and financial strategies to improve success in developing affordable housing

•  24 action items

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For more information: Reyna Alorro

Supervisory Project Manager DC Office of the Deputy Mayor for Planning and

Economic Development reyna.alorro@dc.gov http://dmped.dc.gov/