Strategies Detailed to Remedy DC’s Affordable-Housing Crisis

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[By Paul Goddin for Mobility Lab, published on January 30, 2013]

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Lack of affordable housing is an unintended consequence of a region’s success, and can certainly be seen in the Washington D.C. metro area.

As the public demand for walkable neighborhoods has increased, low- to moderate-income residents are being priced out of those neighborhoods. And unfortunately, the public policy regarding housing affordability in the United States remains “drive until you qualify.”

Thus began Chris Leinberger of the Brookings Institution at a recent seminar entitled “Walkable Neighborhoods: How to Make Them for Everyone,” sponsored by the Coalition for Smarter Growth.

The seminar also featured Ed Lazere of the DC Fiscal Policy Institute and David Bowers of Enterprise Community Partners, who brought their own unique spins on the affordable-housing problem in D.C.

Lazere illuminated some startling statistics regarding housing affordability (D.C. lost half of its low-cost apartment rental units from 2000 to 2010). Bowers added the human element with stories of how housing affordability has affected some actual D.C. residents (illustrating his concept that “data without stories are just numbers”).

Leinberger pointed out that Hollywood does more market research than any other U.S. industry, crediting the popularity of television shows such as Seinfeld and Sex and the City supplanting that of, say, Leave it to Beaver, as reflecting the national consumer demand for walkable neighborhoods away from suburban forms of development which remained in demand until the mid-1990s.

The result of this increased demand has naturally been an increase in land values in walkable communities, specifically in D.C.’s 139 designated activity centers. This, coupled with the lesser issue of increased construction costs associated with the development of walkable neighborhoods, according to Leinberger, has led to gentrification.

Bowers pointed to D.C.’s U Street and H Street corridors as the city’s two most recent neighborhoods to undergo gentrification which, Leinberger stated, was either good or bad, depending on where you sit.

The side effect of gentrification, of course, is pricing out D.C.’s low- and moderate-income residents from these neighborhoods, often displacing long-time residents in the process. And where are they to go? Bowers pointed out that 20 percent of D.C. residents spend half of every take-home dollar on housing already. “They are drowning,” Bowers said.

The main solution to housing affordability in walkable urban places, Leinberger stated, is simply to create more walkable urban places. This is a recognition that housing affordability in in-demand neighborhoods is, by definition, a supply/demand problem.

Leinberger enumerated additional remedies, of which the following is a subset:

  1. Offering standard tax credit and vouchers from the local government in lieu of increased tax revenues from other parts of the walkable urban district;
  2. Participating in federal government programs associated with the U.S. Department of Housing and Urban Development’s Choice Neighborhoods, the next generation of the department’s Hope VI programs;
  3. Instituting inclusionary zoning to require affordable units within a district with higher walkable urban infrastructure investment;
  4. Implementing fee capture upon resale of any market-rate unit within a district with such infrastructure investments;
  5. Allowing ancillary units in for-sale housing (i.e., “granny flats”) to expand the housing supply; and
  6. Encouraging employers to locate in transit-oriented developments in order to increase tax revenues in those districts.

These remedies are not just theoretical, but have been implemented in jurisdictions nationwide. Likewise, they are made possible based on increased profitability that does indeed occur in walkable neighborhoods.

Chris Leinberger dropped a staggering statistic regarding how much D.C. land values have increased in the past decade. On one particular site in Capitol Riverfront, he noted that the land value was probably at around $5 per square foot a decade ago. That same land was recently sold to Toll Brothers at a cost of $825 per square foot. “That increase is stunning,” he added.

In addition, in Arlington County, Virginia, the eight significant walkable neighborhoods occupying 10 percent of the county’s land today generates 55 percent of the county’s revenue, up from 20 percent just a few short decades ago. The county now captures part of this value growth by requiring that developers apportion a percentage of their residential units as affordable housing, or make a contribution to the county’s affordable housing fund.

While there is no one silver-bullet remedy, jurisdictions can, with perseverance, creativity, and hopefully a sense of urgency, address the “unintended consequence of success” that housing affordability poses as they create the walkable communities preferred by consumers of all socioeconomic backgrounds.

Photo by Paul Goddin.

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