Housing Complex

Buyer’s Remorse: A D.C. law helped tenants become owners. But it didn’t fix the sink.

Robert Adejayan and William Martinez at the building they bought but can't renovate. (Darrow Montgomery)

Robert Adejayan and William Martinez at the building they bought but can't renovate. (Darrow Montgomery)

From the outside, the humble brick three story at 1333 Peabody Street NW looks like most other aging apartment buildings in Brightwood. A number of the ancient single-pane windows are cracked. Inside, carpets are musty, paint is bubbling, and fixtures are coming loose.

“The kitchen areas, the bathroom areas, are urgent,” says resident Robert Adejayan, ticking off the needed fixes. “The windows, the pipes—it’s a whole bunch of little things.”

The renovations were supposed to have been done by now, he says. But residents can’t blame the landlord for neglect. That’s because they bought him out.

When the previous owner tried to sell the building to a condo developer in 2007, the residents exercised their rights under D.C.’s Tenant Opportunity to Purchase Act (TOPA) and bought it for $847,000. The money came from a 40-year, two-percent-interest loan from the city’s Housing Production Trust Fund, a pot administered by the Department of Housing and Community Development (DHCD).

Usually, when DHCD helps out tenants with a purchase, there’s an understanding that they’ll then provide similar financing for renovations. In fact, the agency kicked in enough to cover a new roof at Peabody Street soon after the purchase, Adejayan says. But before another repair could be made, the trust fund suddenly started shrinking, and dollars were spread thinner and thinner. The residents’ plan for a sweeping overhaul was quickly reduced to cosmetic touch-ups.

The residents now pay “rent” in the form of a shared mortgage, plus a little extra for improvements around the building, like a new fence and landscaping. But central air-conditioning? Forget it. They’re trying to get a conventional bank loan, with the help of affordable housing developer Mi Casa Inc., but lenders are leery. Meanwhile, they look ruefully at the building next door, which is getting retrofitted with all new windows.

Adejayan, the member of the coop board who speaks the best English in a mostly Spanish-speaking building, throws up his hands. At this point, three years after buying the building, it’s almost enough to make him miss having a landlord. Almost.

“There are benefits. Nobody is telling you what to do,” he says. “But for the rent to go up now, [residents] are going to raise hell!”

The building on Peabody Street isn’t alone. The Latino Economic Development Corporation (LEDC) says it’s working with nine buildings in the same situation, having bought their buildings when the trust fund was flush, only to find that the money had run out before much needed renovations could begin.

“That’s one of the big reasons tenant groups purchase—having the affordability to renovate,” says Farah Fosse, director of affordable housing preservation at LEDC. “It’s just a really crazy situation because they’ve kind of become their own slumlords.”

At least those groups made their purchases in time. Many others are stuck waiting for the financing just to purchase their buildings. They will have to cobble it together from federal and private sources instead. Housing advocates say they stopped being able to facilitate tenant purchases about a year ago—and it’s because the Housing Production Trust Fund has essentially been allowed to go broke.

Over the last decade, the fund has been a huge force in the creation of affordable housing. It has existed since 1989, but was only fully capitalized when D.C. Council earmarked 15 percent of deed recordation and transfer tax revenues for the fund in 2002.

Between 2001 and 2008, the $204 million spent from the fund leveraged $773 million in housing development, amounting to 8,900 units either completed or in the pipeline. It also goes hand in hand with D.C.’s TOPA law, since most low-income tenant associations couldn’t actually take advantage of that buying opportunity without the long-term, low-interest loans financed by the trust fund.

Three years ago, though, the fund’s primary source of revenue—real estate transactions—started slowing down, before falling off a cliff in 2008. To remedy this, at the end of 2008, the Council unanimously passed legislation that would have supplied the trust fund with $80 million every year.

It was a hollow victory. The funding was made subject to appropriation, and lawmakers never followed up. Now, according to DHCD’s own projections, there will be only $3.6 million in the fund by the end of 2010—down from $99.9 million at the end of 2007. The department used to announce at least two funding rounds a year, but hasn’t done any since 2007. The next round of funding isn’t scheduled until 2012. With an estimated 28,000 households on the District’s waiting list for public housing, development of those homes has slowed to a crawl.

“Some of the housing that we would like to put on the market will be delayed by two to three years,” said Nechama Masliansky, of the interfaith nonprofit So Others Might Eat. “We’re ready, willing and able, but there’s a funding gap.”

In a budget cycle as bad as any, housing non-profits are barnstorming the Wilson Building with requests for several pots of money, including the Home Purchase Assistance Program and Local Rent Supplement Program, both of which have remained flat. But the trust fund is the biggest gaping hole. Advocates are lobbying for $10 million more for the trust fund to keep a few projects going—a big request at a time when budgets are getting slashed all around the city, even if it’s only a fraction of what was promised just two years ago.

“We’ve got to stand up respectfully to those who say that there is no money and say, ‘These are small numbers,’” says Jim Knight, president of Jubilee Housing.

Last Friday, Knight and roughly 30 other housing advocates wearing bright yellow t-shirts fanned out across the Wilson Building to lobby lawmakers on the issue.

Among them was Louise Thomas, leader of a tenants’ association in a 48-unit building at 1111 Columbia Road NW, which was denied trust fund financing for an attempted TOPA purchase last year.

“This is not what the tenants wanted. We wanted to buy our own building,” says Thomas, a dynamic woman with a frizz of black hair, clenching her fists. “We don’t want to be the scum of our neighbors, which our building was.”

Councilmember Michael Brown, who chairs the council’s Housing and Workforce Development Committee, has had harsh words for Mayor Adrian Fenty’s failure to find money for the trust fund. He says it’s a matter of priorities.

“Some of our city leaders have become enamored with a certain type of resident,” he told the advocates last Friday. Tax incentives for amenities like new grocery stores are all very well and good, he says, but are really aimed at a different type of Washingtonian. “Hopefully, they’re for you, but in a lot of cases they’re to bring new people to the neighborhood, and that means that people get gentrified out.”

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