Derek K. Miller / Flickr

Expensive rents can be a byproduct of gentrification and rising property values. So isn’t rent control one way to keep housing affordable?

Turns out that it’s not always that simple.

This week’s Washington City Paper Housing Complex column explores how one developer’s approach to purchasing and renovating old apartment buildings in D.C. has become a double-edged sword for renters. When landlords wants to sell their buildings, a D.C. law requires that they offer tenants the first right to buy. Urban Investment Partners buys old buildings, but they get the tenants to waive their right to purchase by striking deals that include keeping rents relatively stable for original tenants. Those old buildings need major renovations, and the company pays for them by substantially increasing rents for newcomers to the building. The result: rent-controlled, low rates for those who remain, but the number of affordable apartments in the building — and the city– declines.

But what other options exist? The pot of money intended to preserve affordable housing in the District is dwindling. For-profit developers want to make money, and it’s difficult to massively renovate a building without charging people more to live there.

These issues disproportionately affect people of color in the District. About twice as many African Americans, Asians and Latinos rent rather than own homes in D.C. Meanwhile, nearly the same number of whites own homes as rent them in D.C. About 55 percent of people who live in D.C. rent.

Increasing home ownership among the renting population has been cited as a way to keep low- and moderate-income people in gentrifying neighborhoods. Home owners have more leverage and could either remain or benefit from gentrification by selling their homes at higher values. Renters, on the other hand, could get a payoff from a developer to move out, but it’s certainly not enough to buy a new home. It may not even be enough to continue renting in the same neighborhood.

Still, owning a home isn’t a surefire way to protect oneself from poverty. For instance, the black middle class suffered greatly during the recession and housing bubble burst because they disproportionately had more of their wealth tied up in home equity.

Obviously, rent control does help existing tenants. But given the declining number of rent-controlled apartments, it can’t be a longterm solution to the city’s affordable housing problem.

Abbey Henderickson / Flickr

The D.C.-metro area is an expensive place to live, but it isn’t the priciest of places. The Washington region ranks as the 10th most expensive place for renters in the U.S., according to National Low Income Housing Coalition’s (NLIHC) new 2012 rankings.

Members of household would have to earn $28.96 per hour, or $60,240 a year, in order to afford a fair market, two-bedroom apartment in D.C., which costs $1,506 a month. Housing is deemed “affordable” if the resident spends no more than 30 percent of his or her income on rent.

The Washington region moved up one spot from last year, when the housing wage was $28.06 an hour.

More than half of the District’s population rents, and the median income for renters is an estimated $40,000 a year. That’s well below the threshold NLIHC set for affordability.

Here are the top 10 most expensive metro areas for renters, and their respective housing wages:

1. San Francisco, Calif. ($36.63)
2. Stamford-Norwalk, Conn. ($34.02)
3. Honolulu, Hawaii ($33.98)
4. Nassau-Suffolk, N.Y. ($32.35)
5. Orange County, Calif. ($31.77)
6. San Jose-Sunnyvale-Santa Clara, Calif. ($31.21)
7. Westchester County, N.Y. ($30.38)
8. Bergen-Passaic, N.J. ($29.13)
9. Danbury, Conn. ($29.08)
10. Washington-Arlington-Alexandria, D.C.-Va.-Md. ($28.96)

Yeah, that’s all well and good but what usually happens is that the neighborhood improves to the point that poor families can no longer afford to live in it.  The increased tax base continues to attract so-called wealthy people to the neighborhood which decreases the number of poorer families with children.  The new so-called wealthy people benefit more from all of the new facilities, the playgrounds, improved schools, better services, etc… [SIC]

Harold Neal / Flickr

Gentrification is one of the main reasons behind why more poor District children now live in wealthier neighborhoods. Such neighborhood revitalization, which brings along amenities that children can benefit from, also increases property values. As a result, low- and moderate-income families renting at market rates may get priced out.

Those living in public housing, however, could be somewhat buffered by the negative impact of rapid gentrification, since rents remain steady. Take Columbia Heights, where public housing apartments are on the same block as million dollar homes. But good luck to anyone seeking public housing — the waiting for affordable housing vouchers in the District has swelled to more than 37,000-people long.

Josh / Flickr

When planning affordable housing, the major consideration is whether residents will be able to make rent. Housing is considered affordable when you’re spending 30 percent of your income on it. But paying rent is only one part of affordable living; you still have to spend money to eat and get around.

GOOD reports that, in the long run, factors such as transportation, grocery options and other costs can make some affordable housing developments more expensive than others. For instance, the difference in living costs between some of Chicago’s affordable housing developments was high as $3,000 a year per family, depending on location.

That’s relevant to D.C., where 55 percent of the population doesn’t make enough money to afford rent (the average household would have to earn $28.10 an hour to be able to afford housing). Transportation costs differ neighborhood to neighborhood — Tenleytown residents are paying $1,003 a year on transportation, while those in Columbia Heights are paying about $200 less. It may only be a couple of hundred of dollars, but the difference in transportation costs could big for families on limited budgets.

Elahe Izadi / DCentric

The Payton family tours its new home.

Tyisha and Antonio Payton were looking for a new home, something more spacious to accommodate their family than the two-bedroom, affordable housing apartment in Barry Farm they lived in.

Antonio Payton said he didn’t want to speak disparagingly of Barry Farm since “they housed us,” but said their former apartment was too small for his family. The appliances and apartment were outdated. And it didn’t feel like a safe environment where he could raise his three daughters.

On Tuesday, the family entered its new home at Matthews Memorial Terrace, a new $22 million, 99-unit affordable apartment complex built upon church land.

“This is a nice, secure building. It’s a whole different mindset,” Antonio Payton said. “I feel at peace here.”

It’s a unique project, built on land donated by Matthews Memorial Church at 2626 Martin Luther King Jr Ave, SE.

“This part of the city, and I live east of the river, has historically been ignored. It’s time for that to change, and it’s going to change because of developments like this,” Mayor Vincent Gray said at the Tuesday dedication of the building. “This development has been built with sensitivity to this community.”

The dedication ceremony was quite the celebration. It kicked off with a gospel choir, included some choked-back tears and plenty of praise and thanksgiving.

It’s been 28 years since the congregation first dreamed up the idea to use the land for housing. Bishop C. Matthew Hudson Jr., who took the helm of the church in 2006, said the project was a priority of his. The original intent was to provide seniors with homes near the church. He said “suburban flight” has taken many of his older congregants out of the community over the past few decades. “The church was preparing for that,” he said.

“We were a people of faith, land and a vision,” Hudson said during the ceremony. “We didn’t have any money, any experience in building.”

Elahe Izadi / DCentric

The Matthews Memorial Church Choir performs before the dedication of a new affordable housing complex.

A mix of public money and investment meant priorities had to be readjusted (that includes $6.8 million in federal stimulus funds). Now, one-third of the building is reserved for seniors, another third for Barry Farm residents and another third for those making up to 60 percent of the area’s median yearly income (which is $58,526 in D.C.). About 25 percent of the units are leased at the moment, according to Stephanie Anderson of nonprofit The Community Builders, Inc., the developer and property managers. Matthews Memorial Terrace became part of the the D.C. government’s New Communities Initiative, which seeks to improve affordable housing options while not displacing current residents.

Mayor Gray said the redevelopment of St. Elizabeth’s campus nearby will bring more than 3,000 new people into the area for work.

“A lot of people will want to live here, and we hope they do,” he said, adding that Matthews Memorial Terrace is an example of how to create opportunities for people to also remain in the neighborhood.

Ward 8 Councilman Marion Barry, who praised the project during the dedication ceremony, later said that increasing home ownership is the most sure-fire way to prevent displacement of residents since renters have little equity to tap into (he’s previously wanted to ban construction of apartments for this reason).

Elahe Izadi / DCentric

Bishop C. Matthew Hudson Jr. speaks in front of Matthews Memorial Terrace during a dedication ceremony Tuesday.

Tyisha Payton said she didn’t want to leave her neighborhood.

“With the children, to have to uproot? I don’t want to put them through that,” she said. “This way, they don’t have to change schools. And [my husband and I] don’t have to leave the friendships and bonds that we’ve made either.”

Life hasn’t been easy for the Paytons; in 2009, their baby son died, Tyisha said. The couple had spent most of their time in the hospital with him, while family members looked after the daughters. They couldn’t afford the home they were renting, and they eventually moved into subsidized housing Barry Farm.

“We were worried about being displaced to elsewhere in the city,” Antonio Payton said. “We’re actually moving into this place, and we’re still in this community.”

On Tuesday, the couple and their daughters — ages 2, 5 and 6 — stepped over the threshold to their new three-bedroom home. It had hardwood floors, new carpeting and energy efficient appliances. The girls timidly toured the rooms with their parents, until they discovered a large closet in one of them. “You get your own rooms,” Tyisha told them. The girls piled into the closet, opening and closing the door while giggling away.

Patrick Feller / Flickr

Is D.C. becoming culturally irrelevant because artists can’t afford to live here?

Slate’s Matthew Yglesias wrote last week that D.C. is “unhip” because it’s too expensive to live here; Washington City Paper‘s Ryan Little disagreed, writing that the District has abundant opportunities for artists.

Now, Atlantic Cities’ Richard Florida weighs in on the debate by providing the numbers on wages and housing for D.C.-metro artists. Arts, entertainment and design workers in our region have an average of $2,465 left over each month after paying for housing, which is far less than similar workers in New York and Los Angeles. Florida writes:

When all is said and done, D.C. seems like a not-so-great place for visual artists, a slightly better than average place for musicians and a pretty good place for writers and editors. New York and L.A. continue to dominate these fields, particularly arts, design and music, and actually provide a comparatively good living even with their high costs of housing.

A number of you responded on Facebook and Twitter to our questions: Is D.C. “unhip?” Is it because the city is too expensive for artists?

Poet Derrick Weston Brown wrote on Facebook:

I live in MT. Rainier MD and pay in monthly rent for a pretty decent apartment what I paid for a room in a house that I shared with three other people in DC. That’s not including utilities. I learned a long time ago DC is expensive. Unhip? No. Segregated and at times exclusive. Yep.

D.C.-based DJ and co-owner of U Street Music Hall Will Eastman tweeted that D.C. “is expensive, but culturally it’s holding its own.”

@jon_fischer @kristoncapps it's hard to live cheaply & make art ANYWHERE. I still have a "day job" & prob always will.

December 29, 2011 4:41 pm via EchofonReplyRetweetFavorite

@willeastman

Will Eastman

Bakari Kamau disagreed with the assumption that D.C. lacks cultural relevance, writing on Facebook:

I’m constantly running into talented artists and designers who live in DC. The problem lies with most artists (myself included) failing to form a community and really self promote in inventive, ahem, creative ways.

A number of you wrote that D.C. is “unhip,” but it’s not for a lack of artists:

@jadabradley @DCntrc D.C. is “unhip” due to the high volume of politicians, lobbyists & journalists.

December 30, 2011 11:56 am via webReplyRetweetFavorite

@newsmatt

Matt Small

Others responded that D.C. is indeed expensive, and it’s priced out more than just artists. The District’s housing prices continue to rise, making D.C. one of only two major cities that saw such increases in 2011.

There are some modest rents available in D.C., but they may not be in neighborhoods chock full of galleries and performance venues. The city provides a number of grants to working artists, and there are some nonprofits working to provide affordable housing to artists. But, as DCentric commenter Mike Licht pointed out, finding a cheap place isn’t the only issue:

It’s not about housing, it’s about artist work space. An artist without a studio is a former artist.

That may be a more difficult problem to tackle given the rising demand for space in the District. It’s becoming more and more difficult for artists, particularly musicians, to find spaces to create.

Dan Reed / Flickr

Kenyon Square in Columbia Heights is where affordable condo owners are facing escalating fees.

When big condo buildings and luxury developments are built up in gentrifying neighborhoods, a common fear arises: low and moderate-income residents won’t be able to afford to stick around. Reserving affordable housing in gentrified neighborhoods seems like an obvious solution to such displacement.

That was the thinking behind the District’s Affordable Dwelling Unit program, in which developers set aside some condo units at below-market rate for people with lower incomes. The program is intended to make it possible for people with moderate incomes to remain in gentrifying neighborhoods such as Columbia Heights.

An issue the program doesn’t address is condo fees. While the program has kept mortgages down, it doesn’t have any restrictions on condo fees. Some affordable unit owners have seen their condo fees double to $400 or $750 and fear foreclosure could be imminent.

“It identifies a real problem… despite our best efforts to do the right thing,” Councilman Jim Graham said. He represents Ward 1, which is where many of these buildings are located, such as Kenyon Square. Since 2008, condo fees there have doubled to more than $400.

Manna Inc.‘s housing advocacy team has taken up the unit owners’ cause. They’ve submitted a petition to D.C. Councilmembers last month, urging them to start thinking of solutions.

“For those owners where their condo fees are close to their mortgage, it’s questionable how long they can sustain” owning their units, Sarah Scruggs of Manna Inc. said. “It’s going to mean a round of foreclosures that not only affect them and damage their credit, but it also affects their building.”

Condo fees cover common building costs, such as maintenance and repairs. All unit owners have to pay them. A board made up of unit owners typically set fees. Affordable unit owners make up a small portion of these buildings; for instance, there are only five affordable units out of 107 total in the Chase Point condo building in Friendship Heights. The market-rate for units at Chase Point start at around $600,000.

One affordable unit owner unsuccessfully ran for the condo board of City Vista in Mt. Vernon. There is now talk at the building of installing a dog park on the roof, which would be an additional expense that could increase condo fees, Scruggs said.

Market rate owners may “have a lot of money, and the things they want to do in the building, they have the money for them,” Scruggs said. “But [those things] are very different from what the affordable unit owners want.”

Some of these improvements can increase the value of the property. But according to the program, affordable condo owners are restricted from selling their units for 20 years, unless it’s to someone else who’s in the same income category, which can be difficult when condo fees are too high. Owners also can’t tap into the equity of their condos for 20 years.

“We’re in a bit of a jam,” Graham acknowledged.

Scruggs said the city needs to provide permanent subsidies to help affordable unit owners pay for increasing rates. But that would require city dollars, a tricky proposition especially in these difficult economic times.

An alternative solution is setting a cap on how high condo rates can rise for affordable unit owners, but other condo owners who would be paying more for the same amenities could view that as unfair. Also, it’s unclear even to lawmakers how many people this issue affects. Graham said the city’s Department of Housing and Community Development should begin a review of the program.

“I don’t want to sound bureaucratic, but the fact of the matter is we need to understand how widespread [high condo fees are], what kind of impact this is having on people and how to come up with a good solution,” Councilman Graham said. “All of the solutions are not immediately obvious to me.”

David Gaines / Flickr

Building more housing is one solution to preventing displacement, D.C.

D.C. is a city with 700,000 jobs and about 600,000 residents. Yet, there is an imbalance; nearly two-third of District jobs are held by non-District residents, D.C.’s Director of Planning Harriet Tregoning said on Monday’s The Kojo Nnamdi Show.

In an effort to rectify that imbalance and also shorten workers’ commutes, the District launched the Live Near Your Work pilot program. District and non-District residents are eligible to receive grants to buy homes close to their places of work.

Encouraging people to move into the District could stoke fears over the displacement of low-income residents; as the demand to live in D.C. neighborhoods increases, so do housing prices. Tregoning told DCentric the way to prevent displacement is to create more housing.

“In general, the way we think about housing is ‘supply and demand.’ So the more housing that there is, the cheaper it’s going to be, all other things being equal,” she said. “Providing much more housing has got to be part of the solution to making sure we have affordability, not not building the housing so as to keep things exactly the way they are.”

Part of building more housing, she added, is ensuring there are reserved affordable units. The city has an inclusionary zoning law requiring new, large residential developments to set aside 8 percent or more units as affordable.

You can listen to the entire The Kojo Nnamdi Show segment here.

Hundreds people waited Tuesday night, through the rain and with some camping overnight, to sign up for newly-renovated Hubbard Place’s waiting list. And according to The Washington Post, competition for the apartments “was intense:”

Security guards and two D.C. police officers tried to keep the line orderly, but shouting matches broke out, and some of those who had waited accused others of cutting in line and not waiting their turn.

“There are a lot of people that need housing, a lot of homeless right now,” said Katherine Felder, a security guard who had been waiting in line since midnight. She lost her apartment this year and has been staying with relatives, along with two granddaughters, ages 3 and 2, who are in her care.

“I don’t have anywhere to stay,” she said from under a black umbrella, shifting her weight to keep warm. “I’m cold, wet and soaked to the bone, soaked from my head to my toes. Cold, cold, cold. Haven’t slept all night.”

As the Post points, out, there’s quite a high demand for affordable housing in the city: about 20,000 people are currently on the city’s waiting list. Although D.C. rents aren’t the highest in the nation, they are out-of-reach for many in the city. A little more than half of District residents don’t make enough money to afford a market rate, two bedroom apartment. Development has caused Columbia Heights in particular to become more expensive, which is one reason behind Latinos increasingly settling in more affordable neighborhoods in the city.

Cathy / Flickr

A slowdown of new home construction is sometimes cited as a reason behind high unemployment rates, but building a new house may not always be the best way to create jobs.

Emily Badger at The Atlantic Cities reports that redeveloping older homes actually produces more jobs than does building brand new houses:

This intuitively makes sense. Rehabilitating old buildings is more labor-intensive than new construction, since much of the cost of new construction goes literally to bricks and mortar. But we asked Heidi Garrett-Peltier, an economist with the Political Economy Research Institute at the University of Massachusetts Amherst, for some data to back this up. She ran some estimates based on national 2009 data, the most recent numbers available. And it turns out that repairing existing residential buildings produces about 50 percent more jobs than building new ones.

It would seem that D.C. is prime for such job creation; more than half of the District’s houses were built before 1950. Plus, the D.C. wards with the most blighted and vacant properties — Wards 5, 7 and 8 — also have the city’s highest unemployment rates:

Source: DCRA, DOES

But rehabilitating older houses won’t necessarily reduce high unemployment in hard-hit wards:

• First, these communities would have to attract the investment needed to revamp blighted houses. This is already happening in neighborhoods such as historic Anacostia where young professionals are rehabbing old homes, but it’s occurring on a small scale.

• Redevelopment may create jobs, but it doesn’t mean locals will be hired for them, as shown by some existing building projects. Take the $3.4 billion redevelopment of St. Elizabeths in Ward 8, where about 20 percent of construction workers are D.C. residents.
• Even if locals are hired for redevelopment jobs, construction work is temporary.

Pushing for rehabilitating older homes rather than building brand new ones could be one tactic in fighting D.C.’s unemployment, but it can’t be the only one.