Greater Greater Washington

Posts by Cheryl Cort

Cheryl Cort is Policy Director for the Coalition for Smarter Growth. She works with community activists, non-profit groups and government agencies to promote transit-oriented development, housing choices, economic development and pedestrian safety, especially in less affluent communities. 

Why the right is wrong about affordable housing

On Wednesday, we discussed what's wrong with the notion that supply and demand don't apply to housing. But on the other end of the spectrum, a free-market approach isn't the whole answer to housing affordability, either.

Free market image from Shutterstock.

Some people (on the left) oppose new market-rate housing development. They claim that new development only provides high-end housing, which doesn't do anything to help the supply of more affordable options.

Others with a more libertarian view (a more right-leaning view in our region) claim that if we get rid of all zoning regulations, the free market will take care of it and build housing for everyone.

Both arguments are wrong.

Yes, adding more housing must absolutely be a part of the strategy to make housing more affordable. And zoning changes to allow people to build taller and more usable space near transit, rent out carriage houses, and avoid expensive and often-unnecessary parking are all steps in the right direction. But some proponents go on to say relaxing zoning will solve the problem all on its own. It won't.

The free market will only build housing for higher incomes

Even if cities roll back many land use regulations, squeeze down construction costs, and leverage new financing tools, the cost of building new housing won't fall below a certain point.

Graph from McKinsey.

This report from McKinsey found that even if you take all of these steps together, it will only cut the gap between what housing costs and what people can afford to pay in half (assuming people spend 30% of their income on housing—a generally-recommended level).

A developer finances a new development by offering investors a return. If the return is higher than investing in something else, investors will finance the project. If the return is not high enough, especially given the risk, investors will put their money elsewhere and the housing simply doesn't get built. Regulations add to development costs. The development review process also adds costs when projects get delayed or shrunk down, and it increases the risk.

The city's baseline costs for But even without these costs a newly-constructed one-bedroom apartment in DC are over $2,000 a month to meet the level of return the market demands.

A person's income has to be about $38 per hour, or $80,000, for this kind of rent to only take up 30%. If someone earns $15 an hour, or $32,000 a year, he or she can only afford an $800 apartment—or less than half of this level.

More density does not change the basic math

Even if land is free (which it's not) and regulations offer unlimited density, buildings still cost money to build. And taller buildings cost more money per unit than short ones.

In the DC Office of Planning's study on DC building heights, Anita Morrison, a principal with Partners for Economic Solutions, found that while regulations might reduce potential development, unlimited height and density is not the simple solution to affordability.

"Unlimited FAR [density measure Floor Area Ratio] is not the magic cure, because the cost of building with concrete and steel is much more per square foot than low-rise stick-built [wood frame] construction up to five or six stories," Morrison explained.

To prove this point, Morrison offered an analysis of varying scenarios for a new apartment building. Assume a new building on a half-acre lot where the land price is set at zero (such as a deal to build on public land). Rent would be $1,127 for a one bedroom apartment, which is affordable to households making 60% of AMI ($51,600 per year). Is this building economical to build?

To find out, Morrison tested different heights ranging from 65 feet (six stories) to 250 feet (23 stories). The rent didn't cover the cost of construction or meet the minimum return on investment in any of these cases.

The 65-foot building costs $168,000 per unit, while the costs for high-rise steel and concrete buildings of 130 to 250 feet are higher. The 200-foot building costs $241,000 per unit. Even if the building's parking is above-ground (cheaper) rather than below-ground, the return only improves to 4.6 percent, "still nowhere close" the 7 percent required return on investment, according to Morrison.

Of course, most development projects include paying for land. The higher the zoning, the more valuable the land, so some of the gain also turns into higher land costs rather than lower housing costs.

What about "filtering"?

In response, free market advocates claim that "filtering" helps supply housing at rents below new construction. Instead of living in new buildings, poorer people can live in unrenovated older ones.

Like the argument about new market-rate housing, this is true, but only to a degree. It is true that increasing supply eases upward pressure on all prices. But the reservoir of naturally cheaper, older buildings runs out after a while.

When many people moved out of urban areas, a lot of buildings started decaying and so prices went down. Now that urban areas are popular again, in growing cities like DC, older buildings are a dwindling resource. New buildings won't get old fast enough, and they won't offer cheap-but-only-adequate places to live, to actually offer housing for the lower end of the income spectrum.

Old buildings need renovation. Even if they're low-income housing, they still need repairs and rehabilitation—they may not need granite countertops, but the plumbing has to work well. Once a market-rate building in a growing neighborhood needs renovation, there's enormous incentive just to go further and make the building higher-end to capture the higher rents or sell it as more expensive condos.

Take the 1400 block of W Street NW, just north of the booming epicenter of 14th & U Streets. Six nearly-identical apartment buildings line the southern side of the street. In 2000, all started out as unsubsidized market-rate, affordable rental apartment buildings, except 1424 W Street. The one exception was converted to a limited equity mixed-income cooperative in the early 1990s by the tenants. Today, two of the buildings are high-end market rate, while four are part of two affordable cooperatives.

Image from Bing.

During the early 2000s, all of these buildings changed hands and filtered up to a higher rent market. The three westernmost buildings, totaling 100 units, formed an affordable cooperative with financial help from the District government through the Tenant Opportunity to Purchase Act (TOPA), which lets a tenant group match a buyer's offer. The buildings were renovated for $11 million, and many of the existing tenants were able to become owners.

Without direct intervention via TOPA the program and funding from the city, all of these old apartment buildings would be high-priced market rate housing today—despite the hundreds of new units being constructed on vacant lots adjacent to this block.

While there were some regulatory limits on construction, there was a lot of vacant land nearby at the time. Supply was not constrained by zoning, but rather by financing and property owners' readiness to build. It's hard to speculate that any amount of nearby new construction would have prevented these buildings from being renovated into high-end housing.

On a larger scale, the increased supply of housing in the area helps absorb demand for more housing, but it's not enough to stem the demand for such a sought-after location. Between 2005 and 2011, the rental housing market's growth added more than 12,500 units. But at the same time, $800/month apartments fell by half, while $1000/month rentals nearly doubled. Strong market demand will shrink the availability of low-priced units. That's what has happened over the last decade as DC transformed from a declining city into a rapidly growing one.

Supply matters, but it's not the whole story

Building more housing is important. But simply relaxing constraints on density and height isn't enough to build and sustain a housing stock that's affordable to the working class, which makes up a large share of our overall population and workforce.

We should roll back some of the regulatory delay and restrictions that do a lot more harm than good. We can reduce parking requirements, allow accessory apartments, increase height limits in a few parts of town, and fight for projects that will add housing, especially near existing transit.

At the same time, the District needs to find ways to create new affordable housing for people of making under 50-80% of AMI (a household of two earning up to $70,000) and preserve the affordable housing that already exists. The market will not meet those needs on its own.

Why the left is wrong about affordable housing

Whenever we discuss housing affordability, we usually hear two major opposing beliefs. Both are well-honed, clear arguments. And both are wrong—or at least, not completely right.

Photo by Loupiote on Flickr.

Some say that new development only provides high-end housing which doesn't do anything to help those who really need it. Therefore, they oppose new market-rate development.

Others say the problem is we don't have enough development. Regulations constrict supply and drive up costs. Get rid of regulations and the free market will build housing for everyone.

While residents of DC (and most US cities) are mostly Democrats, we can say that proponents of the first view are generally farther to the left on the political spectrum, while proponents of the second are, if not conservative, farther to the right. This post will address what's wrong with the left's notion that supply and demand don't apply. A follow-up post will critique the right's free-market solution.

In a nutshell, the first proposition essentially denies that supply and demand matter. But it's not to hard to demonstrate that if there's not enough housing on the market to meet demand, higher-income people will bid up prices and out-compete lower-income people.

DC is growing rapidly and this strong demand to live in the city encourages people to build new housing. But it's not enough. There's so much competition for a limited supply of homes that even people who could normally afford to rent or buy a home can't find one easily within their budget.

There's clear evidence that this is happening in a recent study by the Urban Institute about affordable housing in the region. It shows that nearly half of the units that could be affordable to lower-income people are instead occupied by higher-income people:

Graph based on data for DC from the Urban Institute.

Basically, the people who make up the green bars in the above chart could afford to be in a higher-priced unit. If there were more new construction units, many of them would live there. That would leave more lower-priced housing left for those who don't earn as much.

Encouraging more new housing to be built and making it easier to build can help increase competition among builders and reduce competition among renters. This helps keep prices down both in among new, higher priced units and also in older buildings.

Recent reports suggest this is happening. The rapid increase in housing supply that has been pushing down rents in high end, newer units is also now shaving down prices across the market, even for older apartments.

While this decrease in prices might be difficult to discern, continuing to encourage more supply will help further push down costs and make it easier for a larger segment of households to find the right place to live.

Supply matters. The more the market can serve those who can to pay for more expensive housing, the better chance for moderate- and lower-income people to find lower-priced housing available.

Buildings are expensive to build, and absent a government subsidy or a program like Inclusionary Zoning, new units won't be affordable to everyone. But it can be for many. Ignoring the importance of supply to keep up with demand means that we are only that much farther behind trying to address our housing needs for people at the bottom and middle of the housing market.

Encouraging supply to meet demand is a necessary condition for addressing housing affordability. However, it's not a sufficient condition entirely on its own. Tomorrow, we'll talk about why "let the market work" isn't the whole answer either.

Read part 2: Why the right is wrong about affordable housing.

Car-free housing could come to historic Blagden Alley

One hundred twenty-three new units of housing could come to Shaw's historic Blagden Alley. Many residents think that's a great idea, but some aren't happy that the project would contain no parking spaces. That idea deserves support, not opposition.

Rendering of the proposed development.

The misconception that everybody drives and needs a place to park has long shaped cities' zoning codes. But developers are starting to look beyond that assumption and consider buildings that cater to people who want to travel in other ways.

The two small buildings, by developer SB-Urban, would run along Blagden Alley between M and N Streets NW in Shaw, adjacent to the Convention Center and Mount Vernon Square Metro station and close to downtown. Blagden Alley is a unique historic alley for DC, featuring both residences and small businesses including La Colombe Coffee. This alley, and its northern neighbor Naylor Court, are small alley networks that allow for vehicles and pedestrians to share space in a way that is common in European cities.

The new buildings will have no parking

SB-Urban would build two apartment buildings with 123 small, short-term, fully-furnished rental studios averaging 380 square feet. It replaces two vacant lots used for surface parking and restores a historic garage on the interior of the alley. And it would contain no off-street parking. It's similar to projects in Dupont Circle and Georgetown which have already gotten through the approval process.

Units without parking won't be for everyone, but would appeal to the many people who don't need cars to work, shop, or socialize. It's near downtown and near ample transit.

SB-Urban has described the complex as a good fit for an individual who arrives by taxi or Metro with little more than a suitcase. This person prefers to live in a vibrant urban neighborhood and navigate the city by foot, bike, bus and train. An ideal tenant, for example, might be a consultant in town to work for nine months.

Any new housing development in Shaw is likely to succeed. But to make sure the residents can live without parking spaces, SB-Urban will invest $70,000 in a new 27-dock Capital Bikeshare station (and 14 new bikes) and each resident will get a membership. The building will provide car share memberships, real-time transit screens, and a bike maintenance room. There will also be someone on site to advise residents on how to get around without a car.

Rendering of the proposed development.

No parking draws opposition

Despite support from Advisory Neighborhood Commission 2F, DC's Board of Zoning Adjustment has yet to approve SB-Urban's proposal. Board members worried that despite all efforts to ensure apartment residents will be comfortable without a car, the project will still lead to more cars on the street and a raised demand for parking in a neighborhood where drivers already complain of tight parking.

At a December 2, 2014 hearing, several nearby residents objected to the project's lack of parking. Board of Zoning Adjustment Chairman Lloyd Jordan repeatedly expressed skepticism that building zero of the 62 spaces otherwise required by zoning would not have a negative impact on the neighborhood, despite repeated affirmation by both DC Office of Planning and DC Department of Transportation officials.

"What do we do two years from now when the buildings are up and running and we have a problem?" Jordan asked. He did not specify what he meant by a parking problem. And his and other residents' concerns are misplaced.

This project is smart because there's demand for it

Parking is often far more expensive than most people realize. Fewer people all over the region and country are owning cars. More than a third of households in DC are car-free, and that number is 41% among renters in the Census tract containing the project.

This neighborhood has an astonishingly high walk to work rate: 37%, versus DC's overall 11%, which is already the second highest in the country. This makes sense because of the proximity to downtown.

The Blagden Alley project is not appealing to just a small niche, but rather to a large and growing share of DC's households: young professionals who are much less likely to own a car and more likely to want to walk and bike to daily activities.

The rapid growth of DC, with more than 42,000 people arriving between 2010 and 2013, is led by young adults who are willing to trade larger living spaces and car ownership for living in more walkable, mixed use neighborhoods.

Without the ability to get an RPP sticker, if any residents later decide they do want cars, they will have to rent an existing off-street parking space nearby. Even so, opponents of the development argue that new residents would find a way to get a sticker or at least a temporary permit from the police. SB-Urban representatives stated that the leases in the building would prohibit this.

Blagden Alley apartments will add affordable housing and pedestrians

Shaw is a neighborhood that's in high demand in a rapidly growing city. In addition to adding much-needed housing, the Blagden Alley project is setting aside 11 units for moderate and low-income residents as part of the city's Inclusionary Zoning affordable housing program.

By bringing in new residents who walk to stores, work, and transit, the project will also push its historic neighborhood toward being more pedestrian-oriented. More people walking on the streets help lower crime, support local businesses, and strengthen the case for better transit.

Construction of these buildings with alley addresses and no parking also reinforces the pedestrian orientation of the alleys, which do not have sidewalks. Forcing more cars into the alley would degrade the character of this shared-use space.

SB-Urban also makes the case that this kind of housing minimizes vehicle trips, lessens traffic, and shrinks the carbon footprint of residents. "Buildings with parking attract people with cars; buildings without parking attract people without cars," said project manager Brook Katzen in a statement about the project.

Today, the BZA will continue to discuss the case. These Blagden Alley apartments represent an excellent chance to welcome new residents to the city with minimal carbon footprints.

Finally, DC's zoning update steps forward

After a debate that has stretched for seven years, reforms for lower parking requirements near transit, basement apartments, and corner grocery stores are actually close to becoming reality in DC.

Photo by Lachlan Hardy on Flickr.

The DC Zoning Commission has been deliberating on the zoning update this week. The commissioners embraced most of the DC Office of Planning's proposals while even rejecting at least one of OP's recent steps backward.

Buildings near transit (including priority bus corridors) will be able to have half the parking that's otherwise required if they are willing to forego residential parking permits. Homeowners will be able to put accessory apartments inside their houses without a special hearing, but will have to go through one to use a carriage house. And corner grocery stores will be able to open in residential row house areas if they sell fresh food.

This is a major milestone in the grueling zoning regulations revision process that began in 2007 just after the DC Council adopted the 2006 Comprehensive Plan. Opponents of the update repeatedly asked the commission and the Office of Planning and for more outreach, more meetings, and more delay. In response, officials stretched out the process and added dozens of meetings, fact sheets, and hearings throughout the city. But the process now has an end in sight.

If you're interested in the wonky details, below are many of the specifics about what is changing in DC's zoning.

What happened with accessory apartments

Tuesday night, the commission debated whether to allow accessory apartments in owner-occupied homes in low-density areas. Currently, higher-density residential zones allow two or more units in a single building (like a rowhouse), but low density zones (including some row house areas like Georgetown) allow only one unit except for an antiquated domestic worker provision.

While Chairman Anthony Hood tried to only permit accessory apartments if the owner goes through a special exception hearing, the rest of the commissioners voted to allow homeowners to have one accessory unit inside their home as a matter of right.

However, when it came to garages or carriage houses, the commission didn't question the recent OP revision to only allow accessory units there after a special exception hearing. They adopted that rule with no discussion.

The commissioners did ease restrictions on the lot size and home size required to qualify for an accessory unit. They removed a minimum lot size rule altogether and shrank the required house size from a large 2,000 square feet to a more modest 1,200 square feet in R-2 and R-3 zones. They also removed a combined six-person cap on the total number of people in the primary residence and accessory apartment; instead, they will simply limit the number of people in the accessory apartment to three.

What happened with corner stores

The Zoning Commission approved a proposal to make some corner stores legal in medium-density residential zones for the first time since the city adopted its 1958 zoning code. Commissioner Marcie Cohen argued that corner stores were an important way to help seniors have easy access to daily needs.

However, through the years, the list of rules for what stores are allowable got longer and longer. What the Zoning Commission finally approved was only allowing small grocery stores as a matter of right if they devote a certain area devoted to perishable foods like dairy, fresh produce, fresh meats, and food that must be prepared at home. Beer and wine sales can't exceed 15% of the floor area and requires a special exception hearing.

While these stringent rules will mean that few new corner grocery stores will sprout up, it is likely to inspire a few small entrepreneurs to open up small groceries. Beyond the small grocery stores that would qualify as matter of right, the rule would also allow other types of stores if they go through a special exception process with the Board of Zoning Adjustment.

What's happening with parking

The commission agreed to reduce required parking by 50% for developments near transit (½ mile from Metro or ¼ mile from streetcar or bus priority corridor). In doing so, the Zoning Commission rebuffed the Office of Planning's recent proposal to exclude bus priority corridors from the list of transit services that would qualify.

The commission also inserted one significant change that hadn't been part of the earlier proposals: Developments that take advantage of the 50% reduction would also be ineligible for residential parking permits (RPP).

Current housing developments tend to contain one space for each two or three units voluntarily. The new rule will require just under three for developments away from transti (technically, one per three units after the first four). Cutting that in half means a minimum of one per six units near transit, clearly below market demand.

In effect, therefore, most developments will still park above the minimum, and allows the market to decide what is appropriate rather than forcing most buildings to build more. At easily $50,000 per parking space, this is an important way to make housing less expensive to build.

The commission did adopt OP's suggestion to exclude the West End neighborhood from the Downtown zone that requires no parking, but seemed to support for removing requirements from downtown. However, Chairman Anthony Hood expressed skepticism toward any proposal that removed parking mandates entirely. The commission will consider the downtown zones tonight.

Commissioners also agreed to require one space for each single family home but waive that if no alley access is available. This is a fair compromise that will protect continuous sidewalks and not force curb cuts and driveways on a rowhouse block.

If a property owner feels it's impractical to provide the required parking, it will also be easier to get an exception. The owner will now only need a "special exception" rather than the much more stringent "variance" standard that applies today. Either way, however, asking for a reduction requires a trip to the Board of Zoning Adjustment, which costs time and money.

The new special exception rule will allow the board to reduce parking requirements by considering the lack of demand, proximity to transit, or, in a provision added by Commissioner Marcie Cohen, the affordability of the housing. Any special exception would also require a Transportation Demand Management Plan, or traffic and parking demand reduction plan, which DDOT would need to approve.

Buildings can also share parking or put parking off-site to meet the parking requirements. If a project proposes building more than twice the minimum required for a building where the minimum is 20 spaces or more, the developer will have to add amenities like more bike parking, trees, car sharing spaces, electric car charging stations, or green roofs.

The commission will deliberate on the last few items tonight. After that, officials will create a new draft of the zoning code for one more round of public comment.

DC sells valuable land, but loses interest in using it to create affordable housing

Since 2000, the District has generally required that when it sells publicly-owned land, part of the deal include new affordable housing for lower-income residents. But more recently, that commitment has waned. A bill in the DC Council could rejuvenate it by requiring affordable housing in city land development deals.

Design for the winning 5th and I building. Image from the developers.

The trend of weakening the city's commitment to affordable housing reached a new level last May, when the Deputy Mayor for Planning and Economic Development (DMPED) picked a proposal to develop a city-owned half acre at 5th & I Streets NW.

While the bidders who proposed housing offered some affordable housing in the new building, the winning proposal by Peebles Corp. and the Walker Group put a hotel, condos, and a dog spa in the Mount Vernon Triangle while offering to build affordable housing somewhere else—perhaps at a site it owns in Anacostia, about 3 miles away.

DC needs affordable housing, and there are good reasons to build it inside developments on public land instead of far away. Mixed-income communities are valuable to a city that wants to be diverse and inclusive. Mixed-income neighborhoods give people of different backgrounds better access to jobs, transit, schools, and other amenities. These communities build opportunity for less affluent people.

Mixed-income neighborhoods also ensure that as central city neighborhoods get more valuable, not just the wealthiest people benefit. They encourage people to interact with neighbors with varying income levels, and help transportation like bicycling or streetcars, which run shorter distances, to not be only services for higher-income people.

While most traditional tools for creating affordable housing add new units in higher-poverty areas, DC's land dispositions and inclusionary zoning policies are creating affordable housing in stronger real estate markets such as Columbia Heights, and even Chevy Chase.

When the DC government sells surplus parcels of public land for private development, it traditionally asks that at least some of the new housing built be affordable. Mayors Anthony Williams and Adrian Fenty sought and built substantial amounts of affordable housing in city-owned parcels like City Vista at 5th & K Streets NW or the new housing around the Columbia Heights Metro station. Unfortunately, the Gray administration has generally asked for far less affordability in public land deals.

The Peebles/Walker proposal represented yet another step away from the goal of mixed-income communities.

There's still time to revisit this poor decision, and fix the longer-term problem of the city's faltering commitment to affordable housing in public land deals. The DC Council will need to approve the 5th and I deal. Economic Development committee chair Muriel Bowser and her colleagues on the council should reconsider this deal.

And if it approves the pending bill, the council will set a clear policy that future land dispositions need a substantial amount of affordable housing on site. That bill, introduced by Ward 5 Councilmember Kenyan McDuffie, will require that any deal include 20-30% of its housing at an affordable level for low-income households.

For rental units, that means households earning between 30% and 50% of Area Median Income, or just under $30,000-$50,000 per year for a family of three. Units could be sold to owners earning between 50% and 80% AMI, or just under $50,000-$78,000 per year for a family of three.

The bill, and an action by the council to reject the 5th and I proposal, would restore DC's commitment to affordable housing and not waste the rare opportunities to get a project that promotes mixed-income communities when DC sells off land.

Prince George's is trying to be serious about transit-oriented development

Prince George's County officials want everyone to know that the county is serious about transit-oriented development and making the most of its Metro stations. A promise to plan needed streets, sidewalks and parks around a short list of stations could be an important change to county spending that's been focused on big-ticket road projects.

Photo by the author.

The county has been lobbying hard to get the FBI headquarters at the Greenbelt Metro station. Next week, officials break ground on a new Maryland Department of Housing and Community Development headquarters at the New Carrollton station. And the county has committed to locate a $650 million hospital at Largo Town Center station.

All are examples of the county's strategy targeting five Prince George's Metro stations: Largo, New Carrollton, Prince George's Plaza, Branch Avenue, and Suitland. The county will speed up the approval process around these sites and offer financial incentives for transit-oriented development.

The county has also committed to plan infrastructure such as streets, sidewalks, and parks around each station. For the last few years, the county's requests to the state government for transportation projects listed infrastructure at Metro stations, but did not make a detailed request. County officials now are committing to assessing specific station area needs, to make sure that infrastructure at Metro stations are in the line for funding from the county, state, or other sources. The current draft of the county's 20-year land use plan also calls to revise the county's capital project lists to align with its transit-oriented development priorities.

But apart from the Purple Line, which isn't entirely in the county, the lion's share of local and state funds continue to flow to expensive road widening, interchanges and other facilities that chase sprawl.

The county has won a state commitment to spend $150 million on an interchange at Suitland Parkway and MD-4, and a new interchange for MD-210 (Indian Head Road) at Kerby Hill Road for $100 million. The Suitland and MD-4 (Pennsylvania Avenue) interchange feeds develop­ment at the 6,000-acre greenfield Westphalia project, which is a bad deal for the county.

The county's top request from the state this year is to fund another interchange for MD-210, which could cost close to $100 million. The complete plan for 7 interchanges along MD 210 prices at more than $600 million. Those numbers dwarf the $26 million the state committed last year for pedestrian and bicycle improvements.

Rushern Baker's administration's pledges to help spur development at priority Metro stations are very welcome. Residents are hoping to see them follow through.

Takoma Metro development proposal is a real compromise

For more than 10 years, we've discussed what kind of development at the Takoma Metro station would make this station a lively, safer place. A new plan for a residential building does just that, while offering a compromise to neighbors concerned about open space and parking.

Photo by tracktwentynine on Flickr.

Since 2000, WMATA has attempted to develop the area around the Takoma station. Last year, developer EYA proposed building about 200 apartments on a surface parking lot. The building would have 3 stories on Eastern Avenue and step up to 4 toward the train tracks. It would replace most of the parking, only about half of which is used at one time.

The plan keeps the existing 2.5 acre green space open, and offers some enhancements to make it more usable. The proposed building and residents overlooking the site will help foster a safer, more pedestrian-friendly environment by orienting the building to the bus drive, with entrances and windows facing the lane. Previous plans for live-work units or retail space have been dropped because of the weak market for retail at the site.

A 2006 plan that later stalled out offered about 90 townhouses and a one acre village green, but no replacement for the Metro parking, which is only for short term use. While the attractive townhouse and inviting village green were worth pursuing, I always thought this site would be better for an apartment building.

Image from EYA.

Then and now, some neighbors in both Takoma and the adjacent city of Takoma Park, which sits across Eastern Avenue, have opposed the project. In 2006, both supporters and opponents gave the developer grief about building homes with 2-car garages at a Metro station. But many critics also said that WMATA should replace all of the existing parking, in addition to preserving the whole 2.5 acre open space in front of the station and adding more bus bays.

The new plan responds to nearly all of the major criticisms, while at the same time more than doubling the amount of housing originally proposed. Now, opponents mostly object to the potential building's height, even though it is on a block with other 3-story apartment buildings, all of which face single-family houses.

The proposal's modest scale is in sync with the downtown district's eclectic variety of buildings. EYA has already agreed to make the building shorter and reduce the number of units from 266.

At a March 13 WMATA committee meeting about the project, the board members incorporated amendments that the city of Takoma Park requested into its resolution to move the project forward. This Thursday, the WMATA Board will vote on an agreement with EYA to pursue the project, and to hold an official public hearing.

If WMATA approves the project, it will go to the DC Zoning Commission, which will have an opportunity to refine the design in its review process. Neighbors will have ample opportunity to raise their concerns about any aspect of the proposal then.

Like with any proposal, there is room for more improvement. The proposal offers much less parking for residents than before, which makes sense for a site next to a Metro station. But it could be lower still, since this is the transit agency's land and the point is to build housing for more transit customers.

The new proposal offers residential parking at about 0.7 spaces per unit, down from 1.5 to 2 spaces per unit in the townhouse proposal. It would be sensible for WMATA to require that developers on their property to build less parking and offer their residents incentives to ride transit and use carsharing. That makes it easier to market the building to transit-oriented households who rely much less on personal cars.

The other important way the WMATA Board could improve this project is to honor the DC Council's 2002 request that 20% of any housing at this site be set aside for households making 30%, 60%, and 80% of the area median income. This is still the right commitment for a property that the public transit agency and District of Columbia control, and our need for more affordable housing has only grown in the intervening years.

It's been a long time coming, but this proposal for the Takoma Metro station will make downtown Takoma a better place for everyone. It will help a greater number of people use transit, have daily access to local shopping, and live with a lower carbon footprint. This is exactly where our region should be growing, and where we can accommodate more people who seek a transit-oriented lifestyle.

If you agree, ask the WMATA Board to move ahead with this project. Click here to let them know.

DC mulls new affordable housing rules in public land deals

When the District government bids out city-owned property for development, it asks for affordable housing to be part of the deal, but how much is enough? Councilmember Kenyan McDuffie is proposing that 20-30% of the housing in any such deal be affordable for low-income households.

Photo by Daniel Lobo on Flickr.

On properties that DC has offered for development, like Parcel 42 in Shaw or the Hine School on Capitol Hill, the city has a great opportunity to not only create and enrich walkable neighborhoods, but receive additional benefits for residents as part of the deal between the city and the developer.

One of the greatest needs we have right now is to increase the supply of affordable housing. But how do we best maximize affordable housing in public land deals and do so in a way that's the best deal for the city and residents?

One in five DC households spends more than half of their income on housing, a severe housing burden, according to the DC Fiscal Policy Institute. Nearly all renters with this severe housing cost burden earn less than half of the area median income (AMI), or less than $48,300 a year for a family of three.

The purpose of McDuffie's bill is to ensure that DC fully leverages the deals involving city-owned land to address the continuing challenge of housing affordability for low- and moderate-income households. Under the bill, when DC sells or leases public land for private multifamily residential development, at least 30% of the units would be affordable if the project is close to a Metro station or major transit line. Developments elsewhere in the city must include 20% affordable units.

Affordable rental units would be available to households earning between 30% and 50% of AMI, or just under $30,000 and $50,000 per year for a family of 3. Owner-occupied affordable units would be priced for households earning between 50% and 80% AMI, or just under $50,000 and $78,000 per year for a family of 3.

McDuffie's bill would allow the city to subsidize the cost of the affordable units by selling or leasing the land at a discount, allowing the developer to pass on the savings to buyers or renters. If the land value is not sufficient to subsidize the required units, the bill provides for the District's Chief Financial Officer to certify that the alternative proposal nonetheless maximizes affordability, taking into account all available subsidies.

The Coalition for Smarter Growth highlighted the unpredictability of the city's commitment to affordable housing in public land deals last year in a report called Public Land for Public Good: Making the Most of City Land to Meet Affordable Housing Needs. It's encouraging that DC leaders are using another tool to create affordable housing, ensuring that households of all means can have a place in the city as it grows.

DC considers making Inclusionary Zoning more affordable

DC's Inclusionary Zoning (IZ) policy requires developers to set aside units in new construction for low- and moderate-income households. But zoning commissioners say the units may be priced too high for those families who truly need affordable housing.

Photo by Mr. T in DC on Flickr.

During a discussion Wednesday night on the zoning code rewrite, DC Zoning Commissioners said that they are ready to revisit the income requirements for IZ units, which are priced for households making 50% or 80% of the Area Median Income (AMI). For a family of 3, that equals about $50,000 and $78,000, respectively.

If $78,000 for a family of 3 sounds high to you, that's because it is. The DC Fiscal Policy Institute has often pointed out that the biggest need for affordable housing is at the 50% AMI level and below. And commissioners agree that an 80% AMI target is too high to address the needs of most families who find themselves priced out of DC's rising market.

IZ units begin to enter the market

After adopting the policy in 2006, the Fenty administration delayed its implementation until 2009, following the housing market crash. By then, many already-approved projects had stalled. As the housing market recovered, these grandfathered projects, which didn't have inclusionary zoning units, moved through the construction pipeline.

One of those projects is The Louis at 14th and U streets NW, where a new Trader Joe's is slated to open soon. The original design for the project included IZ units, but they were eliminated due to the delay in implementation. Meanwhile, across the street is another sizable residential project that will also be completed soon, but since it was approved later, it has IZ units.

Only now are significant numbers of IZ units entering the market. According to the DC Office of Planning, as of July there were 265 IZ units on the market or about to be. That's about 11% of a total 2,404 units subject to the IZ law. Over the next several years, the pipeline is likely to contain about 1,000 IZ units.

Of the 265 IZ units the DC Office of Planning (OP) is tracking, 85% will be affordable for households making 80% of the Area Median Income (AMI), while the remaining 15% will be affordable for households making 50% AMI.

Housing market has changed since IZ began

At Wednesday's hearing, Zoning Commissioner Michael Turnbull asked OP if it would be feasible to require a larger set aside than the current 8-10%. Planning Director Harriet Tregoning indicated that they could look at it, and that the policy might be able to offer additional bonus density. And Office of Planning Deputy Director Jennifer Steingasser said that her agency is planning to introduce a separate discussion on revisions to IZ regulations in January to address concerns about income targeting and other issues.

DC's real estate values are higher than they were before the housing bust, when the Zoning Commission adopted the IZ policy. This means there's more value in the bonus density that IZ gives a development as compensation for the cost of units rented or sold below market rate.

Not only does the current policy require builders to set aside IZ units based on income level, but it also distinguishes between high-rise and low-rise development. For high-rise buildings, which are more costly to construct and are generally 6 stories or higher, developers only have to set aside 8% of their units, and price them for households at the 80% AMI level.

But for low-rise construction with typically 5 or fewer stories, the set aside requirement is 10%, and the income targets are split between 50% and 80% AMI. Commissioner Peter May asked OP if this distinction gives developers an incentive to seek high-rise designation for projects that could also qualify as low-rise construction, and Steingasser said it does.

Housing prices in DC continue to rise. Despite a number of administrative problems that the city is still working to manage, IZ can offer an important source of new affordable homes and help preserve mixed-income neighborhoods.

Inclusionary Zoning making slow progress

After a rocky start, DC's new affordable housing program, Inclusionary Zoning (IZ), is getting on track. It's one of many policies needed to address DC's growing affordability gap. In many affluent parts of town, it may be the only new affordable housing available.

Photo by dan reed! on Flickr.

IZ requires developers to set aside 8 to 10% of new housing in projects with more than 10 units for households making between 50 and 80% of the area median income (AMI), or incomes of $42,778 and $69,530 for a household of two. One-bedroom apartments in the program rent for between $1,006 and $1,610 a month, while similar condos sell for between $116,600 and $220,100. It's similar to Montgomery County's Moderately Priced Dwelling Unit program, which began in 1974.

Of 28 available units, one for-sale unit had been sold and 14 rentals had leased by July. According to the Office of Planning, another 262 IZ units are in the pipeline as part of 24 different projects, and more than 1,000 IZ units may enter the market in coming years.

How it works

Inclusionary Zoning, a national best practice, uses a zoning bonus to pay for additional affordable units in new residential developments. The subsidy for the affordable units is created through a density bonus, allowing more units than could otherwise be built there. This compensates the developer while saving the city money.

IZ also integrates below-market-rate homes into a larger, market-rate development as a matter of course. Mixed-income housing has long been recognized as having many advantages over exclusively affordable developments. Mixed-income housing in high-demand areas offer lower-income residents access to a higher level of services and amenities than is usually available in areas where affordable housing is concentrated.

It offers an important tool for creating and sustaining economically integrated neighborhoods. It helps ensure some level of diversity of housing choices in areas where demand is strong and growing, such as close to Metro stations, major bus or streetcar corridors, areas with good public schools, or close to downtown DC. The policy is designed to create below-market rate units wherever new housing is being built and keeps them affordable for the life of the building.

Unlike many other affordable housing programs, where low income housing tends to cluster in high poverty areas, IZ units around the country are predominately located in low-poverty neighborhoods. In DC's Ward 8, home to many low-income residents, as much as 90% of the housing in some census tracts is subsidized. But a 2012 study of Montgomery County demonstrates that IZ enables children from low-income families to live in more affluent neighborhoods and have access to high-performing schools.

Barriers to implementation

For all its benefits, DC has struggled to implement IZ since units began coming onto the market two years ago. The program's rigid implementation regulations made it cumbersome for the Department of Housing and Community Development (DHCD) to administer, and the program was severely understaffed as well. In addition, more restrictive Federal Housing Administration (FHA) lending standards made it next to impossible for buyers to obtain mortgages for affordable housing. The first two units to come on the market didn't sell after sitting on the market, and the developer responded by suing the city.

But today, the city is making progress. DC has changed the standard covenant in mortgages for IZ units that release any price constraints in the event of a foreclosure, as required by the FHA. DHCD is considering measures to recoup the public subsidy in the unit that would be consistent with FHA rules.

The city is also making the process for marketing and awarding IZ units to buyers and renters more flexible. Today, DHCD awards units through a lottery, which the agency has struggled to implement, finding it to be a time-consuming process, and has failed to build a sufficient list of eligible and interested applicants. Under the new regulations, developers can use the lottery or create their own DHCD-approved marketing plan to find and select applicants for IZ units.

Finally, the city is moving to address the program's staffing issues by getting additional assistance from nonprofits. DHCD plans to add capacity from experienced nonprofits to give low-income home buyers more help during the buying or renting process as well as long-term stewardship of the units. DHCD hopes to have new nonprofit assistance in place by October 1.

The construction pipeline is swelling with residential projects subject to IZ requirements, and IZ units are starting to enter the market in large numbers. We have proof that private residential projects with IZ units can get financed, and that IZ units can be leased and sold. While the program still faces many challenges, we can learn how to make it perform better and deliver more mixed-income housing opportunities throughout the city.

Looking ahead

Like other IZ programs across the country, DC's faces many challenges. Montgomery County's nearly 40 years of experience shows that programs need adjusting and refining over time. One of the key concerns for future action in DC is getting more deeply affordable housing.

In the current pipeline, just 15% of IZ units will be set aside for households making less than 50% of AMI, far short of the 50% housing advocates had originally hoped for. Once the program is running smoothly, the Zoning Commission should consider ways to create more "very affordable" units.

Some of the program's challenges don't have easy fixes, but DC can find reasonable solutions. Addressing these challenges will take the hard work and good will of activists, developers, and public officials. Given the benefits of mixed income housing in walkable, bikeable neighborhoods close to transit, and the growing need for more affordable housing choices, making IZ in DC work is worth the effort.

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