The District of Columbia's Housing Preservation Strategy Benefits Low and Moderate Income Households
In recent years, the District of Columbia’s population and economy has grown, causing an increased demand for affordable housing for low and moderate income households. In addition, the current affordable housing stock has been at risk due to:
- the city losing at least 1,000 units of subsidized housing between 2006 and 2014;
- another 6,000 units that are at risk of being lost, according to the DC Preservation Network;
- and an additional 13,700 units have subsidies that will expire by 2020 and are possibly at risk of loss.
To remedy this problem, Mayor Muriel Bowser created the DC Housing Preservation Strike Force and charged it with developing an action plan. The 18-member team was chaired by the Department of Housing and Community Development (DHCD) Director Polly Donaldson, and comprised of District housing experts and selected stakeholders.
For several months, the Strike Force assessed the current tools available to the District for the preservation of its affordable housing stock. The Strike Force presented six initial recommendations to Mayor Bowser in June 2016 during the DC Housing Expo and Home Show: (1) establishing a preservation unit; (2) creating a public-private preservation fund; (3) expanding resources to preserve small properties; (4) adopting regulations for the District Opportunity to Purchase Act (DOPA); (5) advancing preservation through the Tenant Opportunity to Purchase Act (TOPA); and (6) enhancing programs to allow low income seniors to age in place.
The mayor released the final 28-page report in November 2016. The report detailed a proactive, multi-pronged strategy for the District to use in preserving its existing supply of affordable housing by 2020, and many have already been implemented:
Establish a Preservation Unit
The Preservation Unit was funded for the first time in Mayor Muriel Bowser’s FY 2017 budget and will focus on preserving affordable units that currently exist with and without government subsidies and on collecting and maintaining data on all affordable housing opportunities in the city. The unit is located within DHCD. Its specific duties include:
- Reach out to property owners, investors, and others associated with real estate and housing advocacy in the District to establish relationships and gather intelligence.
- Discuss concrete options with owners and other interested parties to seek agreement on a preservation outcome even when the threat to affordability is not imminent.
- Provide financial and technical assistance rapidly to make preservation the most efficient and effective method for the District to provide affordable housing.
In 2017, the Mayor announced the appointment of Ana Lopez Van Balen as the Preservation Officer charged with leading the unit.
Create a Public-Private Preservation Fund
Mayor Muriel Bowser invested $10 million in local funds for the Housing Preservation Fund in DHCD’s FY17 and FY18 Budget. Along with other private and philanthropic investments, the $10 million will be used to grow the fund to approximately $30 million—or a combined total of $40 million. These monies will quickly provide short-term bridge acquisition and pre-development financing to eligible borrowers. Properties targeted for fund investments are occupied multi-family housing of over five units, in which at least 50 percent of units are currently affordable to households earning up to 80 percent of the median family income (MFI).
The fund has two managers: (1) Capital Impact Partners, a Certified Community Development Financial Institution (CDFI) based in Arlington, Virginia; and (2) LISC-DC, which over its 30-year history, has preserved over 3,700 units of affordable housing in the District. The companies were selected from responses to a DHCD solicitation in late 2017 seeking the following qualifications: (1) a substantial record of affordable housing and community development lending nationally and/or in the District during the last five years; (2) a strong record of success in its lending activities; (3) access to its own private funds to invest in the Fund or the solid commitment of monies to create the Fund; (4) ready to immediately proceed with implementing the Fund; and (5) a substantial record of providing technical assistance and pre-development loans to developers.
More than 800 units have been preserved as affordable housing since FY 18.
DHCD’s Small Buildings Grant Program will provide funds for limited systems replacement and other key repairs to eligible property owners of multi-family rental housing of five to 20 units. Repairs are expected to improve substandard housing conditions, including safety and environmental hazards in the District as required by other regulatory agencies
DHCD has $200,000 to allocate through this program to award grants on a first come basis starting October 1, 2018. The guidelines and application can be found at: Small Buildings Grant Program.
Implement the District Opportunity to Purchase Act (DOPA)
The District Opportunity to Purchase Act (DOPA) promotes affordable rental housing by maintaining the affordable status of existing affordable rental units as well as increasing the total number of affordable rental units within the District. To this end, DOPA requires rental property owners to provide the District of Columbia with the opportunity to purchase housing accommodations consisting of five or more rental units, as long as 25 percent or more of those rental units are deemed as “affordable.”
In the statute, the District’s right to purchase is subordinate to a tenant’s right to purchase under the Tenant Opportunity to Purchase Act (TOPA) Further, according to the statute, DOPA can be used to:
- Preserve affordable housing: At least 25 percent of the units must remain affordable below 50 percent of the area’s median family income (MFI); but higher numbers of affordable units—and units affordable at higher and lower incomes—are encouraged.
- Address at-risk properties: The Mayor can purchase at risk or problem affordable housing properties that an owner is offering for sale to other potential buyers but only after the tenants have been unable or have chosen not to exercise their Tenant Opportunity to Purchase Act (TOPA) rights within the prescribed timelines.
Final regulations and selection criteria were finalized in FY 18. In FY 19, 40 developers were prequalified and the first Request for Proposals (RFP) for a DOPA property was released.
Advance preservation under the Tenant Opportunity to Purchase Act (TOPA)
District law states that tenants in buildings up for sale must be offered the first opportunity to buy the building (DC Law 3-86, the “Rental Housing Conversion and Sale Act of 1980,”under which falls the Tenant Opportunity to Purchase Act (TOPA))/ The District encourages tenants to exercise this right—it stabilizes city neighborhoods, combats urban displacement and helps tenants become homeowners. With DHCD’s assistance, the tenant groups are able to purchase the building and convert the units into cooperatives or condominiums. DHCD provides the following services:
- financial assistance such as seed money, earnest money deposits, and acquisition funding;
- technical assistance; and
- specialized organizational and development services, to include structuring the tenant association, preparing legal documents, and helping with loan applications
More than 1,000 units have been preserved as affordable housing since FY 2002.
Allow low income senior renters to age in place. (Single Family Residential Rehabilitation (SFRRP))
One of a few programs that meets this goal is the Single Family Residential Rehabilitation (SFRRP) that administers loans and/or grants for home repairs to alleviate DC building code violations and assists homeowners in repairing physical threats to health and safety, and modify and/or eliminate barriers to accessibility for persons with mobility or other physical impairments. SFRRP helps households finance minor home repairs that will; address building code violations, repair roofs, remove threats to health and safety, and modify and/or eliminate barriers to accessibility for persons with mobility or other physical impairments.