Greater Greater Washington

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.

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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. 

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I suppose I'm ignorant on this issue, but what role do you expect the DC Housing Authority to play? Isn't it their job to provide housing to families at or below 50% AMI?

by Anonymous Poster on Nov 25, 2013 2:38 pm • linkreport

To support the authors suggestions, I would add one category of growth. Drastically taller residential towers on the north side of Metro stops (to prevent shadows on Metro Stations and surrounding street level services and business), preferably to the height of tallest accessible reservoir, especially Ft. Reno, would help house as many rail focused citizens in DC as possible, with the minimum of change to the city fabric and street level character.

Efficient commutes by rail to downtown offices is essential for Smart Growth in DC. Simply building up walking distance populations and walkability at these Metro stops would help improve community services, without fighting for parking spaces. These buildings would hardly be called "gentrification".

Focused taller residential towers, combined with a reasonable portion "Inclusionary Zoning" housing, would help serve many different demographics, both living in the building, living nearby, living in the city, and commuting through into the city each day, because of general attributes of smart growth (efficiency, multimodalism in place of monopoly car culture, maximized economic opportunity, and tax base).

The 3 best stops in North West DC for such as a strategy, in the buried portion of the Red Line Metro, providing the most reliable access to downtown DC, and similar buried stops, in all weather conditions, are "Woodley Park", "Cleveland Park", and "Van Ness" Red line Metro stops, on the north east side of Connecticut Ave, to minimize tower shadow impacts, and infill neighborhoods already occupied by short towers and new Post World II building and redevelopments, and perhaps buildings as early as World War I era in "Woodley Park". This contrasts with north of "Dupont Circle", most of which is significantly older in its construction, and more rich in its character and texture, south of Florida Ave (the old Boundary Street).

New (tallish by NYC standards) residential towers in the three Red Line stops I suggested, would not be easily embraced by the traditionally NIMBY neighborhoods, but would be the smartest growth in residential housing in the city. These buildings could be 200 feet tall from Connecticut Ave street level, and still be below the Ft. Reno Reservoir. This means as much as 20 stories tall.

A bizarrely short new building in Van Ness, reported again on GGW only a few days, because of construction closing the sidewalk for 2 year, is only 6 stories on the Connecticut Ave facade, a huge mistake, with massive opportunity costs long term, for DC, and its housing stock, (and in terms of economic opportunity and tax base). The building is missing minimum 6 stories (or simply should be a maximum current legal height of typically a 12 story building), and potentially missing as many as 14 stories, (or simply should be a maximum a 20 story building), if the logical limit of the water supply altitude is the next logical constraint, is a massive blow to smart growth housing solutions in DC. The smart growth solutions here, achieves the maximum useful density with the lowest construction costs.
http://greatergreaterwashington.org/post/17839/park-van-ness-will-fill-in-connecticut-avenue-streetscape/

Thoughtful IZ could gently smudge the fierce racial and class partitions increasingly assured from President Wilson's administration (A southerner who racially segregated all Federal offices circa World War I) to frankly this decade. It minimizes struggles in many neighborhoods, over what precisely "gentrification" is, and if such investment is somehow a bad thing, helping encourage the current DC populations ascend the educational and economic ladders, living in place, and make gentrification less wrenching and less polarizing.

After the Red line, I would look at smart growth residential towers at Green line Metro stops, of "Mt. Vernon Sq", "Shaw-HowardU", "U St-Cardoza", "Columbia Heights", on the north side of the station exits to minimize shadows, to help anchor neighborhood services, Metro rail commuting populations, and similar smart growth priorities. Using reservoir height limits, the southern most station could permit towers as tall as 300 feet or 30 stories tall, and northern (Green line) most station towers 200 feet or 20 stories tall.

by Nathaniel Pendleton on Nov 25, 2013 6:45 pm • linkreport

Anyone concerned notice that only one IZ unit has sold; a studio for over $200,000. The rest sit vacant. Two I know for certain have sat vacant for over two years without a word of concern or explanation from the rocket scientists that continue to scheme for more.

by Art linde on Nov 25, 2013 6:59 pm • linkreport

@Art linde, do you have a data source for your interesting reports of IZ program failure? If your data is correct across the city (and not just one building), do you have a theory on why IZ might be failing as you suggest? Failure of program and apartment advertizing? Inability to secure loans by possible buyers? Would it make more sense if IZ apartments are not selling, to sell them instead at commercial rates, and use the surplus funds for even more subsidized housing investment, such as funding an IZ bank to lend money to future qualified IZ apartment purchasers in other DC buildings?

by Nathaniel Pendleton on Nov 25, 2013 7:25 pm • linkreport

@Anonymous Poster: The federally supported DC Housing Authority has been the main source of housing for people at 30% AMI and below. IZ cannot possibly reach this level, but it can deliver housing at 60% and 50% AMI by using a bonus density to compensate developers. For lower income housing, we'll need to rely on diminishing federal aid and innovative resources such as DC's now very valuable public land. Note that the federal govt's greatest subsidy is to moderate and higher income homeowners through the mortgage income tax deduction.

@Art Linde - only 6 for-sale units are on the market, 1 is sold, 3 under contract and the last ones are the 2 in your project. More than a dozen have been leased. I very much regret that a combination of problems delayed the timely sale of the first 2 units you offered when they first came on to the market. The FHA problem has been resolved, and DHCD had improved its process to connect eligible buyers with IZ units. It is also in the process of revising the implementing regulations to further ease the process. So IZ units are now moving through the market.

by Cheryl Cort on Nov 25, 2013 7:32 pm • linkreport

With regard to actually selling the AD and IZ units, I am a real estate broker with a team that is specifically setting up systems to help qualified individuals purchase these units. We represent developers. What we've found so far is that the process requires a lot of structure up front to reach qualified folks, to provide education about the opportunities, to track the process of applications through our database (who has been pre-qualified for financing, who has the right size household for which unit), etc. We also had to screen lenders to identify a hand full who both know the supplementary grant programs that make it possible for buyers with limited funds to purchase, and who are willing to work with the restrictive covenants. It's a daunting process, but we're trying to make it work for both the developers and consumers.

by Suzanne DesMarais on Nov 26, 2013 12:09 pm • linkreport

@Suzanne - thanks for your explanation & efforts. In other jurisdictions more of this work is done by the govt. or a non-profit. We'd certainly like to see less of a burden on the seller, and more streamlined management of eligible buyers by DHCD. They say they are working on it, but DHCD should either do more of this itself or find the right non profit to smooth out the process.

by Cheryl Cort on Nov 26, 2013 12:22 pm • linkreport

Funny, I thought the whole point of affordable housing policies was to ensure that there's a healthy mix of housing at various income levels. So we avoid the historic urban problem of income bifurcation--where every single resident is either quite wealthy, or impoverished. We're told that it's important for teachers, police officers, firemen, &tc... to have housing within reach.

Now suddenly we set the bar for IZ at families who "truly need affordable housing". So a two-income family of three with both parents working at $40k a year don't need affordable housing? A mixed-income neighborhood isn't one in which half of the residents have HHIs above $200k and the other half live in dire poverty.

Sounds like a reversion to the classic DC policy of expensive housing subsidies to ensure that DC can corner the market on regional poverty for another generation.

by oboe on Nov 27, 2013 9:12 am • linkreport

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.

Actually, the biggest need for affordable housing is among people who make no income whatsoever. Presumably everyone between 0% of AMI and 100% of AMI can move to Hagerstown.

"Anyone who wants to live in DC will be provided with a District-subsidized housing unit" is not a realistic--nor a desirable--housing policy. But that seems to be the direction here.

If the District is going to take the role of social engineer, the first thing we should do is figure out what DC's optimal income mix should look like, then implement affordable housing policies that will get us there.

by oboe on Nov 27, 2013 9:20 am • linkreport

I'm not sure you can specify an optimal income mix.

First of course in the optimal world, there are no more poor people in the US, because some combination of economic growth (of whatever kind is best for relieving poverty), enhanced virtue by the poor, and federal programs, eliminates poverty.

But lets take as given the national income distribution - what THEN is the optimal number of poor people in DC. Again it depends. If the inner suburbs fail to redevelop their older properties (at either current or urbanist densities) , its possible that the regions poor could be accommodated there. In which case thats probably fine, even if it deprives DC of some diversity. If not, however, its probably important for DC to have some of the regions poor.

Similarly, if DC proves attractive to 800k or more middle class and affluent people, the social cost of keeping larger numbers of poor in DC is higher than if, say, only the current number of middle income and affluent people want to live in DC. And if all the affluent people who want to live in DC all want to live within walking distance of the White House, and/or can convince the majority to relax height limits enough to accommodate them in a few tall buildings WOTR, than again, the opportunity cost of keeping half of EOTR for poor people is significantly less.

So you can't really determine the "optimal income distribution" independent of a range of uncertain market conditions and policies by a range of jurisdictions.

by AWalkerInTheCity on Nov 27, 2013 9:34 am • linkreport

@Oboe: "a two-income family of three with both parents working at $40k a year don't need affordable housing?" They certainly do, but it's a challenge b/c the market doesnt produce housing for this low an income group. IZ can help, though it's lower income range is about $50k for a family of 3. As for "social engineering" the big wage gap between what we pay lawyers and the workers who clean their offices and serve them their food is the market failure that housing policies (and minimum wage) policies attempt to address. The market on its own does not address all the necessary components of a successful economy - like where lower wage workers live. I suppose they could all live in Hagerstown and we could run a lot of buses and trains to DC. But seems like an economically integrated community is a better option. Either way, the public will be involved in correcting for market failures.

by Cheryl Cort on Nov 27, 2013 9:48 am • linkreport

They certainly do, but it's a challenge b/c the market doesnt produce housing for this low an income group.

It could, if we allowed it to do so.

There's affordable housing that is subsidized, and then there's the market-rate affordable housing that is not. We could use a lot more of the market-rate stuff, and that would thus make the subsidies for the other housing that much more effective.

The market on its own does not address all the necessary components of a successful economy - like where lower wage workers live.

No, it does not. But let's also not pretend that the status quo is some magical manifestation of the free market - the current distribution of housing is incredibly constrained by zoning. The thing that IZ does not address is that instead of freeing up the market to at least let market-rate housing solve some of the problem, IZ instead doubles down on planning via constraints.

I suppose they could all live in Hagerstown and we could run a lot of buses and trains to DC. But seems like an economically integrated community is a better option.

Hagerstown is a bit far, but let's not pretend that this won't be part of the solution, or that it's mutually exclusive with building economically integrated communities. We're facing growth pressures, and DC cannot absorb all of it by itself.

So, yes - additional high-quality transit links must be part of the solution.

Either way, the public will be involved in correcting for market failures.

Yes, it will - but the public also needs to be involved in correcting for planning failures.

by Alex B. on Nov 27, 2013 10:11 am • linkreport

The places where you could provide housing a reasonable transit commute to DC, are finite.

The addition of even modest amounts of affordable housing via market approaches to those place elicits a certain amount of pushback
http://annandaleva.blogspot.com/2013/11/fairfax-county-measure-would-bar-rsus.html

As does the addition of improved transit
http://www.arlnow.com/2013/11/26/streetcar-uncertainty-slowing-development-on-the-pike/

and even something as simple as striping a bike lane - http://www.thewashcycle.com/2013/11/king-street-bike-lanes-delayed-2-months.html

Positing a world in which all zoning disappears and in which suburban transport is transformed to support affordable and accessible housing, in the amounts required, is, I think, as polyannish as expecting IZ to be implemented perfectly.

Given the state of the world (which includes NIMBYIST opposition to rezoning that would support market AH), financial and other limits on transport changes, etc, it seems to me like IZ is good to have, along with market oriented zoning reform, transport improvements, direct subsidies for AH, and improvements to incomes, to address the problem. Ideally they can be mutually supportive. Certainly that seems to be the case in Alexandria, where IZ in the Beuregard Small Area Plan has been key, IIUC, to winning political support for a very significant upzoning. It seems to function reasonably well in the RB corridor in Arlington, though the political configuration there is different from slightly more liberal Alexandria. AFAIK there is no serious opposition to the form based code on Col Pike due in part to IZ (though opponents of redevelopment are using the backdoor of opposing the street car, forming an odd alliance with those who say redevelopment will occur anyway).

I hope it can similarly be used as one part of a complimentary set of tools in DC.

by AWalkerInTheCity on Nov 27, 2013 10:30 am • linkreport

Positing a world in which all zoning disappears and in which suburban transport is transformed to support affordable and accessible housing, in the amounts required, is, I think, as polyannish as expecting IZ to be implemented perfectly.

I agree - good thing I wasn't suggesting that.

What I did say is that our reforms in zoning should trend towards liberalizing the rules. That is a far cry from calling to get rid of all zoning.

We're making progress. Eliminating parking minimums is a good step. Allowing ADUs is another. Allowing more uses by-right is yet another.

IZ isn't in that same vein. It is not a liberalization of development rules. The problem I have with IZ isn't that IZ can't work, it's that we're asking IZ to do waaaay too much when it comes to housing supply - and we're not allowing (yet alone asking) the market to do enough.

On the policy side, upzoning matters. And you're right, NIMBY pressures are hard to overcome. What's needed is a broader legal mandate against exclusionairy zoning - akin to NJ's Mount Laurel doctrine. There will still be opposition to local projects, but the burden of proof shifts.

The point about transit is this: we cannot realistically expect to solve all affordability problems within a single neighborhood. The universe is larger and more interdependent than that. People moving outward for greater affordability and bang for their buck need not be a huge negative IF we take actions to improve the built environment in those outer areas (make them walkable, link them to the rest of the region with high quality transit, etc).

This is how regions grow, and we can't lose sight of that when talking about smaller policies like IZ that are interdependent with bigger, regional issues.

by Alex B. on Nov 27, 2013 11:46 am • linkreport

"IZ isn't in that same vein. It is not a liberalization of development rules. The problem I have with IZ isn't that IZ can't work, it's that we're asking IZ to do waaaay too much when it comes to housing supply - and we're not allowing (yet alone asking) the market to do enough."

No, its not liberalization of development. Not EVERY policy to address AH is going to be liberalization. In some instances IZ is a sweetener to the consituents who either are harmed, or perceive themselves as being harmed by a particular liberalization (and those who sympathize with them.

I invoke, again, Beauregard SNAP in Alexandria. You and I can talk till the cows come home about how the affordable market rate housing there is going to filter up. Lots of people, on various bases don't believe it. meanwhile by putting in a 10% (I think) IZ requirement, city of alex has gotten the SNAP approved. Thats political reality on the ground. Dreaming of a virginia court passing Mt Laurel is not (and Im not sure there arent AH problems still in NJ, but thats another question).

Is IZ over relied on? I dont think thats the case in Arlington or Alexandria, which have been trying a number of things.

Fairfax meanwhile is only really beginning to use IZ, and is also trying other things like RSUs.

I note in NYC De Blasio is proposing IZ AND ADU's.

In DC, there is an IZ program, direct subsidy programs of various types, the OP proposal for ADU's, the OP proposal to relax parking minimums, etc.

I note that Ms tregoning tied higher IZ requirements to HIGHER bonus density.

Also, note, I mispoke myself in saying "ending all zoning" I realize no one is calling for ending zoning limits on heavy industrial uses, for example. I do get the impression that there are some folks who think that substantial upzoning, if not in fact relaxing all limits on form and FAR in residential and commercial zones, is the correct answer to all AH issues. Without addressing the merits of that approach I think its specifically that approach that is far from politically feasible. In the trenches, it was hard to get upzoning for the Beauregard corridor - which is relatively close in, is in between the Shirlington bus station and the Van Dorn metro, and which when complted will have a BRT line with a seperate ROW (and may eventually have that converted to rail). It was a battle to get Tysons upzoned as far as it was, despite 4 heavy rail stations. Fairfax county currently has low density, SFH zoning to "preserve existing character" along Gallows Rd within walking distance of the Dunn Loring metro station.

Will all that change, someday? Maybe. Meanwhile there are folks facing housing affordabilty problems. While I think there are limits as to what can be done with IZ, I don't think it should be dismissed as a useful tool.

by AWalkerInTheCity on Nov 27, 2013 12:34 pm • linkreport

pardon = SAP,not SNAP. Small Area Plan

by AWalkerInTheCity on Nov 27, 2013 12:34 pm • linkreport

While I think there are limits as to what can be done with IZ, I don't think it should be dismissed as a useful tool.

Nor do I, which is why I'm curious why you keep setting up these strawmen (such as ending all zoning).

It was a battle to get Tysons upzoned as far as it was, despite 4 heavy rail stations. Fairfax county currently has low density, SFH zoning to "preserve existing character" along Gallows Rd within walking distance of the Dunn Loring metro station.

Indeed - and this is exactly what I mean by a 'planning failure' rather than a market failure.

by Alex B. on Nov 27, 2013 12:46 pm • linkreport

i guess I dont understand the point of your response to Cheryl then. IE this exchange

"They certainly do, but it's a challenge b/c the market doesnt produce housing for this low an income group."

"It could, if we allowed it to do so.

There's affordable housing that is subsidized, and then there's the market-rate affordable housing that is not. We could use a lot more of the market-rate stuff, and that would thus make the subsidies for the other housing that much more effective."

The assertion that the market could produce enough AH, in a large metro area, is I think very unlikely to be the case GIVEN real world political feasibility constraints. Ergo, what Cheryl said is true (it MAY be true even with a radical and unfeasible change to zoning, but thats academic).

And Cheryl is PD for CSG - AFAICT her commitment to creating more market rate housing in order to address AH issues is considerable.

I assumed you had more issue with her comment than the details of her wording.

by AWalkerInTheCity on Nov 27, 2013 1:01 pm • linkreport

The assertion that the market could produce enough AH, in a large metro area, is I think very unlikely to be the case GIVEN real world political feasibility constraints.

I'm not asserting that at all (that the market alone will produce enough AH); I am pointing out that the current complaint is that IZ units benefit middle classes, not those that need deeply affordable units. And if we let the market add more supply, we can remove the need for those middle classes to use IZ to find reasonably priced housing because it can be available at market rates.

Read Oboe's hypothetical again: "a two-income family of three with both parents working at $40k a year." In other words, a family of three with a HH income of $80k. There is no reason that such housing cannot be supplied by the market. And if it were, then the units that IZ creates could be used for people with greater financial needs.

And no, I don't think you need 'radical' changes to zoning to get there, but we do need changes. If you would like to dismiss those zoning changes as unfeasible, then I'll stipulate that - and turn again to my critique that this is a planning failure, not a market failure.

And Cheryl is PD for CSG - AFAICT her commitment to creating more market rate housing in order to address AH issues is considerable.

I know Cheryl, and Cheryl knows me!

I assumed you had more issue with her comment than the details of her wording.

I do have more of an issue than just arguing semantics, but I don't think you've re-stated it here. Nonetheless, my disagreement with Cheryl's comment is rather mild - it's a disagreement on tactics, but not necessarily one of strategy. We're on the same team here.

by Alex B. on Nov 27, 2013 1:17 pm • linkreport

"a two-income family of three with both parents working at $40k a year don't need affordable housing?" They certainly do, but it's a challenge b/c the market doesnt produce housing for this low an income group."

I read oboe as referring to a 2 income family with a total family income of 40k. Perhaps because I was reading in the context of Cheryls comment, and I assume she is quite aware that there is a fair amount of housing in the inner suburbs, and even parts of DC, that is affordable to families with an income of 80k. How far we can get to making to making housing in well designed, close in, WUPs affordable to those families is an open question (which gets to the details of the costs of retrofitting WUPs among other things) But its a very differnt issue from affordability to families with incomes half that.

by AWalkerInTheCity on Nov 27, 2013 1:29 pm • linkreport

DCHA can only provide what vouchers HUD issues money for. Please talk to congress about that one.

by K.C. on Jan 9, 2014 4:20 pm • linkreport

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