Human Rights & Democracy

March 21, 2023: DC’s Choice: Build Housing to Address Residents’ Needs or Continue to Commodify Housing for Developers’ Profits

Posted on March 21, 2023 at 12:00 AM

By Renée Bowser, Esq., Ward 4 Committeewoman, DC Democratic State Committee, Guest Contributor

District residents are awash in DC government rhetoric of “affordable housing production.” The administration touts the benefits of its affordable housing programs—the Housing Production Trust Fund (HPTF), DC Housing Authority’s (DCHA) transformation of public housing developments, and the inclusionary zoning (IZ) program. A closer look reveals that these and other housing programs produce a majority of market rate and luxury units, sometimes overwhelmingly so, while producing few housing units for the DC residents most in need of housing and housing assistance. The result is an escalating housing crisis accompanied by massive displacement of poor working-class Black and Brown residents from the city.

The affordable housing program most touted by DC government is the Housing Production Trust Fund (HPTF), administered by the Department of Housing and Community Development (DHCD). HPTF’s purpose is to assist deeply affordable housing production and preservation for renters and homeowners1; 50% of the funding is mandated to go toward housing for extremely low-income households (ELI) who earn between 0% and 30% of the median family income (MFI) or up to $42,690 for a family of four.2 Yet, in 2021, the DC Inspector General found that DHCD violated the law by failing to spend nearly $82 million on the lowest income residents, instead producing housing for residents with less need.3 The agency also chose to fund developers who produced lower quality housing and fewer units4 and funded developers who had insufficient cash flow necessary to repay their loans to the HPTF.5

Public housing, administered by DCHA, is another of the District’s largest housing programs. DCHA owns and operates 8084 housing units, in more than 60 developments across the city, of which 1628 are vacant due to the agency’s long-term failure to maintain the housing units in a safe, sanity, and secure condition.6 Since 2019, DCHA has been implementing a policy of “repositioning” public housing developments, which means redeveloping public housing through demolition, gutting, and rehabilitation, or non-gutting and rehabilitation.7 In practice, DCHA has redeveloped public housing properties by building more market-rate housing and reducing the number of deeply affordable units8 that existed before the buildings were redeveloped, eliminating safety-net housing on which thousands depend.9

The District’s inclusionary zoning (IZ) program is another over-hyped affordable housing program. IZ, enacted in 2009 to provide developers greater density for their projects in return for setting aside 8–10% of the units as “affordable,” has produced only 1583 housing units as of the end of FY 2021.10 Since June 2017, most IZ produced rental housing for 60% MFI households and most IZ produced for sale housing for 80% MFI households.11

The following examples demonstrate the District’s affordable housing policy of incentivizing profit for developers rather than producing housing for income groups who need the most assistance. The typical result is displacement of DC households needing housing assistance. For example, in 2001, DCHA demolished the 707-unit Arthur Capper/Carrollsburg public housing project as part of the federal Hope VI program. DCHA and then-Mayor Anthony Williams promised one-for-one replacement of the 707 public housing units. Yet 20 years later, after providing millions of dollars in subsidies to private developers to build boutique apartment buildings such as the Bixby and Harlow as part of the Navy Yard redevelopment, DCHA still has not rebuilt 234 units for ELI households.12 At the same time, DCHA, according to a September 2022 HUD report, has massively failed to properly administer its public housing portfolio by failing to provide decent, safe, and sanitary housing for residents in violation of program requirements.13

Brookland Manor is another glaring example of DC’s policy of incentivizing profit for developers at the expense of low-income Black residents and reducing the amount of affordable housing previously available to them. In this regard, in 2019, Deputy Mayor for Planning and Economic Development (DMPED) secured Council approval to grant developer Mid City a $47 million subsidy to redevelop Brookland Manor that housed large low-income families. Brookland Manor was a 535-unit private housing development with 373 deeply subsidized project-based Section 8 units and 162 units affordable to moderate income households. Brookland Manor had 209 (3-, 4-, and 5-bedroom) units to accommodate large families. Under the Mid City deal, the developer will build 1646 rental units of which 373 will continue to be subsidized.14 But the deal eliminates most family-sized units, leaving only 64 units with 3 bedrooms. The deal also prohibits seniors from living with non-seniors in the 100 subsidized senior units (e.g., grandchildren cannot live with grandparents). The result is displacement of large low-income families from their homes.

A final example of DC’s policy of prioritizing developer profit over building affordable housing for those most in need is DMPED’s advocacy for passage of Bill 24-0466, the St. Elizabeth’s East Parcel 13 Surplus Declaration and Disposition Approval Act of 2022. This bill gave away 3 acres of valuable public land to Neighborhood Development Company CEO Adrian Washington, providing his company a 99-year lease for $1 per year totaling $99 for 99 years. The developer’s profit for this deal is estimated to be $19.5 million. Despite the Comprehensive Plan’s instruction to prioritize housing for ELI and very low income (VLI) households,15 out of the 421 apartments to be built, 295 are market rate with only 32 units for 30% median family income (MFI) and 94 units at 50% MFI; none of the apartments is larger than 2 bedrooms.16

In the face of DC government’s prioritizing profit for developers, there is great income disparity among DC residents. Income statistics for 2022 show that the annual median income for White households was $160,914, for Hispanic households $93,846, for Black households $53,629, and for Native American households $50,850.17 DC statistics for 2022 also show that DC had 165,659 renter households, making the majority of DC residents (57%) renters: 30% or 49,639 of the 165,659 renter households are ELI renters, which means that the annual household income of a family of four is $42,690 or less.18 At the top of their income scale, extremely low-income households can afford to pay only $1067 for monthly rent.19

Yet in 2022, the fair market rent (FMR)20 for a 1-bedroom apartment was $1567 per month and rent for a 2-bedroom apartment was $1785 per month.21 In order to afford a 2-bedroom apartment at FMR, based on HUD’s standard that housing expenses should cost no more 30% of the household budget, a household in DC must earn $5950 monthly or $71,400 annually.22 In short, the cost of monthly rents in DC far exceeds the ability of many households, especially ELI and VLI households, to pay.

Given the wide disparities in income and high housing costs, characterizing housing and development programs as “affordable” is no salve when housing policies center developers’ profit goal rather than residents’ need for housing. Nor does using buzzwords like “racial equity” or “racially equitable development,” while incentivizing and subsidizing developers to build mostly market rate and luxury housing, reduce the disparities. In fact, the huge, subsidized outlay to developers for few affordable units that never match the great need of our residents actually hastens housing cost increases, causing gentrification and displacement.

The District’s policy of driving developer profit fosters the commodification of housing. Commodification means the general process by which the economic value of a thing comes to dominate its other uses.23 Products are commodities because they have a dual nature as objects of utility and bearers of value. Housing is commodified when a structure’s function as real estate takes precedence over its usefulness as a place to live.24 When housing’s function is principally for real estate purposes, housing’s role as an investment outweighs all other claims upon it and housing costs skyrocket out of proportion to its usefulness as shelter.25 DC government’s housing policies spur the commodification of housing, resulting in disproportionate increases in housing prices.

The District must change the ballooning cost of housing in the city by endorsing policies of racially equitable development and housing decommodification. The DC Comprehensive Plan (Comp Plan) requires housing development to be viewed through a racial equity lens to determine what projects will advance racial equity in housing and development and redress decades of displacing marginalized groups.26 The Comp Plan also states that more deeply affordable housing production and preservation is needed to advance racial equity.27 Specifically, DC is required to prioritize public investment toward housing production and preservation that serves ELI and VLI households.28

The District cannot continue to use public land and public funds to build housing that serves those with the greatest ability to pay and boosts developers’ profit goal. Rather the District must focus and implement policies to counter housing commodification. It cannot continue to see its role as only providing funds for development controlled by private developers. As an example, the sheer numbers show the IZ program to be a failure because it has produced fewer than 1600 so-called affordable units in 14 years of operation and fails to serve households who most need housing assistance. In addition, by facilitating developers’ production of market rate units when and where it’s profitable for developers to do so, IZ facilitates rising housing costs and gentrification.

The District must begin to decommodify the housing market by producing housing to provide shelter for households who need it most, but are financially unable to attain it. The majority of housing construction the District subsidizes has little, if any, connection between the housing constructed and the actual residential needs of working-class households. But the District can take steps to ensure that the housing construction it subsidizes is not used as a vehicle for profit or mechanism for investment. Building and preserving public housing, social housing, community land trusts, and limited equity cooperatives are concrete alternatives to subsidizing private housing development. For example, the District must end the policy of conveying public land to private developers whereby the government deducts from the value of the land the cost of the affordable housing to be built and, after development, reimburses developers to make up for the rent paid by voucher-holders who reside in the units. DC Council must amend the authority of DCHA to prohibit that agency from conveying valuable public housing to private developers. Currently, DCHA’s repositioning policies do not guarantee one-for-one replacement of public housing units of the same size and do not guarantee affordability into perpetuity.

Limited equity cooperatives (LECs) are another form of housing decommodification that deserves greater support from the District government. An LEC is a homeownership model whereby residents purchase shares in a development and agree to resell their share at a price determined by the cooperative in order to maintain affordability at purchase and in the long term, including in perpetuity. Community land trusts (CLTs) are yet another form of decommodified housing. CLTs are affordable home-ownership models that contain the cost of housing purchases because the land is owned by a government or nonprofit entity and only the housing on the land is sold. CLTs are usually managed by nonprofits whose boards include purchasers, government or nonprofit stakeholders, and community members.

Finally, social housing is a decommodifying form of housing development with a long and successful history. The government produces and owns mixed income housing developments that are affordable to ELI and VLI residents together with moderate- and above moderate-income households. Producing housing developments with a mix of household incomes will result in cross subsidization of the developments with residents who can more easily afford housing, with residents who are less able to pay. The cross-subsidization will produce a balance in revenue to meet operational needs and reimburse debts from development costs. Public ownership of quality mixed income, self-sustaining housing with accompanying services needed for flourishing communities will serve as competition to private housing and help contain the costs and speculation in the private market.

Though DC’s housing programs are failing in relation to housing needs, DC can address the housing crisis by creating a housing system based on its constituents’ needs rather than the current system based on bolstering the profits of developers.

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