Housing Complex

Will Tenant Purchases Continue?

William Martinez and Roberto Adejayan, who bought their building but couldn't renovate it. (Darrow Montgomery)

It's that time of year again: When various interest groups cycle through the Wilson Building to justify their spending priorities, especially if they're being cut in this year's budget. Most of them actually got off okay, given that Mayor Vince Gray decided to raise some taxes (or "revenue enhancements") rather than taking the entire $322 million shortfall out of programs and services; the budget overall grew by 1.7 percent.

One of the bigger exceptions, however, is housing and homelessness programs. For the last couple of years, the Housing Production Trust Fund—which is used for loans to help tenants purchase and renovate their buildings when they come up for sale—sank to almost nothing after the tanked real estate market cut off the deed transfer taxes that supply the Fund. Since sales are on the rise again, advocates hoped that the fund might be substantially restored. Again, they've been disappointed, and voiced their dissatisfaction to Councilmember Michael Brown at a roundtable on tenant purchases yesterday.

Here are the numbers: On the budget, it looks like the Fund has $65 million in it, which isn't too shabby. But according to the Coalition for Nonprofit Housing and Economic Development, $29 million of that is a fund balance left from 2011 that will be used to cover projects that have already been approved, another $4 million is loan repayments and interest for 2012, and $5.4 million is for the Department of Housing and Community Development's administration of the fund.

On top of that, $18 million is being transferred to the D.C. Housing Authority to cover the cost of existing Local Rent Supplement Program vouchers (a kind of local Section 8 program that helps low-income tenants pay rent). That leaves a grand total of $8.9 million for housing preservation and tenant purchases in 2012–which doesn't go very far in this business.

Why is leaving the Trust Fund mostly empty a problem? Part of the reason: Timing is important. There's only so much affordable housing in the city, and once it goes up for sale, tenants have between 30 and 45 days to indicate interest in exercising their right of first refusal under the Tenant Opportunity to Purchase Act (TOPA). According to the Latino Economic Development Corporation, 72 apartment buildings with 2566 units have received offers of sale since September 2010. Many of them are still affordably priced, given that the real estate market is still coming out of recession—but they won't be for long. So literally every day that money isn't available in the Trust Fund, D.C. loses a chance to help long-term residents stay in the city. Banks and non-profit lenders are willing to make bridge loans, but only if they know that Trust Fund money will be available to pay them back.

The current situation will likely change somewhat in the budget the council sends back to the mayor. In the mean time, at yesterday's legislative meeting, Brown attempted to circumvent the process and move $24.16 million in increased deed transfer taxes as an emergency to help fund four projects—including Shaw's already-underway Progression Place, Trinity Plaza in Ward 8, and new rental housing on the already-demolished Parkside Additions—plus $9.2 million for the Deputy Mayor for Planning and Economic Development to do as he sees fit. But other councilmembers on the dais threw a fit that they hadn't heard about the appropriation (though Councilmembers Jim Graham and Muriel Bowser asked if part of DMPED's money could go to projects in their wards) and Brown withdrew it for further discussion.

So anyway, we'll see how all this shakes out.

UPDATE, 12:50 p.m. - Councilmember Brown had this to add:

As you are aware, by your mention of the demolished Parkside Addition, these projects have already been approved. Their approval came during the Fenty administration and went through the standard Housing Production Trust Fund pipeline RFP. Yesterday’s emergency bill was done at the request of the Mayor and the funding came from unexpected additional deed and recordation taxes collected. I gladly submitted the bill because I do not want pre-approved projects to be delayed by governmental red tape.

  • Skipper

    $5M to DHCD for "administration of the fund"??? WTF?

  • meanteeth

    When we fought to revitalize the Trust Fund, we all realized there would be dips in the market that would mean that years when the market *wasn't* going gangbusters would be harder than the years when it was. The problem from the start with the Trust Fund has been that once the Council and the Mayor understood the need, the fund was tapped again and again. A chunk was securitized to pay for New Communities, and everyone of them seemed to think that the booming market would never tank. Now we have a market slump, the same affordability needs and then some, and considerably less money available in the Trust Fund than we'd anticipated. FURTHER, we have considerably less commitment to tenant purchase, both because of the funding considerations and the overall political appetite for such deals.

    Washington, DC used to be a place with many tools for the creation of affordable housing, and we're watching all of that versatility go out the window. The Housing Production Trust Fund is key to maintaining affordability in neighborhoods, and the Tenant Opportunity to Purchase Act is also a great way to both provide affordability and stability to the people on whom we rely to keep this city running.

  • Hillman

    "Washington, DC used to be a place with many tools for the creation of affordable housing, and we're watching all of that versatility go out the window. The Housing Production Trust Fund is key to maintaining affordability in neighborhoods, and the Tenant Opportunity to Purchase Act is also a great way to both provide affordability and stability to the people on whom we rely to keep this city running."

    Two major policy issue problems with this statement.

    First, you are ignoring the fact that there is plenty of affordable housing in the suburbs.

    Why do we have to artificially keep people in the city, at great artificial cost, when there is perfectly good housing, with MUCH better schools, in the suburbs?

    Second, the reality is that much of the subsidized and affordable housing in DC is not actually for the "people on whom we rely to keep this city running."

    Much of it is actually housing the second or third generation of families that don't actually work, raise their kids to be drug dealers and prey on other city residents, and have no desire to be contributing citizens, much less 'keep this city running.'

    If you started looking seriously at weeding those folks out of housing programs, you'd have plenty of affordable housing for people that would actually work and be a part of the fabric of the city.

    But you won't. So your constant pleas for yet more money are starting to fall on deaf ears. 40 years of failed housing policy, and at some point the people that pay the taxes start to notice.

  • Autoexec.bat

    Nailed it. +1,000,000

  • DC

    Agree with Hillman,

    I'd even go a bit futher by saying that DC has lots of affordable housing. The catch? It isn't in expensive, developed/redeveloped neighborhoods in the center of town on a metro station.

    The city has spent nearly 750 million dollars in the past decade (2 of those years being severe recession years) on tenant purchase / renovation programs. I can point to two buildings specifically in Adams Morgan where the units were bought and renovated with city money, and then sold at subsidized prices to hispanic folks who were then, and I imagine still are, illegal immigrants. Not to devolve this into an immigration thing, but for gods sakes if you are going to spend the money, atleast do it on actual District Residents and US Citizens.

    The District goes through enormous pains to artificially manipulate a housing market where no manipulation is needed.

  • Hillman

    Thanks for the supportive comments, fellow posters.

    I should point out that I'm not against programs that encourage workforce housing. Not at all.

    I'm just saying that we aren't doing that. Instead we are spending a good percentage our resources on housing for people that won't work, as a political statement.

    DC (the poster) raises a very valid point.

    What we are really talking about here quite often is artificially allowing very poor people to live in very expensive areas, for the sake of making a political statement. The areas are very expensive largely because they are hip and trendy.

    So we squander our resources on a trendy address.

    There are plenty of far less expensive areas with equally good public transit options, but have way better public schools, way less access to drug and crime culture, way more involved neighbors, etc.

    We call those 'suburbs'.

  • Lovelace

    With the exception of some areas of PG, our suburbs are just as or more expensive than DC; unless you want to move people out to outer suburbs that have no access the public transit.

    It's just silly for 101 reasons to suggest that people who need affordable housing can just go somewhere else.

  • Hillman


    That's simply not universally true.

    I guarantee you I can find far cheaper neighborhoods with decent metro (particularly metro bus) access in the burbs.

    Springfield, for example. Sure, it's far out, but it does have metro bus and Metro.

    Entire neighborhoods in NOVA have become havens for lower income Latino immigrants. How is it that they can afford these areas, yet low income DC residents can't?

    Plus, you throw in a few variables like developing mixed income developments in suburban areas, and the market rate parts of the developments more than subsidize the workforce housing units.

    We could of course do that in DC as well, if we had the political will to do so.

  • Really?

    Thank you for bringing this to our attention, HUD will take your suggestion under advisement.

    @meanteeth thanks and great comment. From my understanding the issue with the housing production trust fund has been that there were no rules are guidelines on how and when and what the money could be used on, thus creating a situation that we are in now where the fund has been raped.

    @Hillman said "First, you are ignoring the fact that there is plenty of affordable housing in the suburbs."

    So the city isn't for ya'll folks just us.

    Clap Clap Clap. That's real elitist

    Then Hillman went on to say "people on whom we rely to keep this city running."

    Ok so now we have an economical paper bag test. What’s the threshold to determine the dollar value that “people” need to meet in order to fit your criteria of “keep the city running”?

    Now according to the DC tax code its $40k because everyone who makes $40k in over pays the same taxes.

    I want to also like to challenge your thought that poor people need not live in expensive areas. The fact that Montgomery County, our brethren whom many local governments look up to as one of the golden idols don’t do this. In fact there has been a study that has shown that children who live in affordable housing located in expensive areas did much better in schools then their cohorts who lived in affordable housing located in poorer area. It called Housing Policy Is School Policy.

    What we need is more mix-use housing. The housing that hillman is referring is almost extinct in this town. Also the tent purchase program isn’t a program dedicated to housing illegals. Maybe it’s the location that keeps your blinders on.

    What the tent purchase program does is allow those apartments to be brought by the tents WHO PAY RENT. It’s expected that they wouldn’t have the cash flow nor the networks to have a bank provide them with the financial support to purchase the building. This program keeps developers from dumping them out on the street or running down an apartment so they can turn tricks for more money. The folks were good enough to use in the beginning but a bigger ho has a come a calling and the poorer folks must go. This was the situation with the building in Mt Pleasant. I’m not sure if they ever proved it, but there was strong sense sentiment that the owner set the place on fire.

    Lastly $750 million is peanuts compared to the tax subsidies that we give away to developers and businesses. Many who don’t live here and most of their money is taken back across the Maryland and Virginia boarders. We also must keep in mind that those of us who own our homes are receiving welfare too. It’s called homestead.

    It’s easy to beat up on those who have less.

  • Lovelace

    Uhm, thank you for making my point for me by suggesting that people should move to Springfield. That is an excellent solution!

    And because I happen to know something about this and am not just talking out of turn, I can tell you that every last bastion for affordability that is currently home to low- and moderate-income minorities and is even remotely close-in to DC is going through major revitalization, has lost thousands of affordable units just like DC has in the past 5 to 10 years, and the jurisdictions are trying to use trust funds, bonds, tax abatements and every tool they can get their hands on to preserve what's left.

    So while you are suggesting that we shift our low- and moderate-income renters onto them, are you also suggesting that they shift their renters to Springfield?

    Oh, I know! Why don't we just move all our poor people to Baltimore and Southern VA!

    (And don't get me started on the problem of overcrowding in areas like Columbia Pike in NoVA. Those "immigrants" can afford what's left of the affordable housing in NoVA by living 2 and 3 families to a household. It's a big, serious problem.)

  • Hillman


    What exactly is wrong with Springfield, other than it's not trendy or hip?

    They have good housing stock, much better schools than DC, very good infrastructure, good metro and highway access.

    How is that not an adequate place to live? Other than the fact that it defeat the political purpose of keeping the poor visible in downtown or trendy areas of DC?

    There are also other affordable areas, like around Huntington, and many others.

  • Hillman


    The 'elitist' charge is easy to make. I often make it myself.

    But there's nothing 'elitist' about wanting my tax dollars spent efficiently.

    The 'test' you mention has nothing to do with income. It has to do with with the person is willing to work, isn't fostering a culture that encourages violence, etc.

    Your good schools argument actually makes my point.

    Even in very expensive areas of DC the schools by and large suck, with very few exceptions.

    It's now heinously expensive to live in Dupont, Logan, U Street, Capitol Hill, etc., as compared to some of the burbs. Yet the public schools that kids living in these now-trendy DC neighborhoods go to are by and large terrible.

    The schools in, say, Springfield, are FAR better. Even an average school district in NOVA beats pretty much most DC schools.

    So if your concern really is the welfare of the children, you'd be doing all you can to get them to the burbs as quickly as possible.

  • Hillman

    "It’s easy to beat up on those who have less."

    Agreed. You are seeing that done on that national level pretty indiscriminately, particularly by the political right wing.

    But that's not what I'm doing.

    I'm saying we have limited funds for social welfare programs, and that the programs should be redesigned to better serve actual working people or those that are unable to work.

    And the funds we do use are poorly used, and are often used counterproductively or for cheap political purposes like keeping the poor 'visible' in very expensive neighborhoods.

    I'm not advocating doing away with programs. Far from it. I'm advocating redesigning and strengthening them.

  • Hillman

    Also, as a practical matter, I'd suggest to all those actively employed in the housing advocacy programs.....

    You need to get your act together.

    DC demographics are changing. More and more people that believe like I do are moving to DC, and those that have always believed like I do, after seeing 40 years of failed public housing policy, are far more willing to speak up and call you out on your policies.

    The days of writing a blank check and accepting huge public housing projects that foster an environment where the very people our tax dollars are housing are out mugging us and breaking into our cars (and also terrorizing the decent public housing recipients)...... those days are coming to an end.

    Accountability is coming to the public housing advocacy field in DC. You can either get on board and participate, or you will have a backlash and see fairly draconian changes made with our without you.

  • meanteeth

    Just checking back in-- @Hillman, I'm specifically talking about the District, its needs and those of the residents. Obviously there is affordability in the suburbs. Isn't this article about the Trust Fund and DC, which is the only municipality that has TOPA?

    I think it's important for the city of Washington to clear policies about creating and sustaining affordability in neighborhoods. It's important to me to have economic diversity in our city, and I do recognize that we sit in a region (where the inner ring suburbs are actually pissed at us, btw, because our lack of affordability pushes lower income people out to their municipalities, but that's a different article) where there are other options if people would like them. That said, I think the option should exist for people across the income spectrum to live and work in Washington.

    This is not an issue of very poor versus very rich. It's an issue of working people the income swath covered by 30% to 80% of AMI being priced out of neighborhoods that are not "very rich" they are just adjusting up to about 80-120% of AMI. This is about preserving the rights of people who stabilized the neighborhood through their rental investment to begin with.

    If the solution to our problems is to tell people to move to the suburbs rather than create clear policy solutions to the problem of basic affordability for working people, then we're really in a hell of a lot of trouble.

    Finally, TOPA IS for people who have been long time renters in communities, and has worked quite well since its inception in the late 70's. There are a number of skilled professionals who have figured out a lot of different ways to get these kinds of projects done, with a diversity of funding tools. Its not a matter of moving to another municipality. It's making core-level neighborhood investments for the people who live there.

  • Hillman


    I appreciate your reasoned response.

    But I view this as a regional problem, as that's what it is.

    And I would disagree with the idea that DC's 'unaffordability' has pushed the poor out to the burbs. Quite the contrary. Our nearly limitless welfare programs in DC have invited the burbs to dump their poor on DC for decades now.

    And I never said all public housing recipients should move to the burbs.

    I think we could easily and successfully build mixed income housing developments in DC itself.

    And I FULLY support programs for providing affordable workforce housing.

    It's the nonworkforce that is currently taking so much of our affordable housing budget, and that's what I think should change.

  • Really?

    @hillman it seems your issue is with public housing. And anyone who has lived here over the last let's say 5 to 10 years have seen public housing dwindle. Especially within the Wards you listed. It hasn't been replaced either. So the folks that you keep referring to as not willing to work are being pushed out. In droves.

    hillman said "The 'test' you mention has nothing to do with income. It has to do with the person is willing to work, isn't fostering a culture that encourages violence, etc."

    Income is exactly the issue $40k isn't enough to live here and pay market rate housing. That's the whole point of the Tent Purchase Program.

    Lastly, hilman housing public policy such as inclusionary zoning has received push back and very little support in the last administration. Again Mo County has had inclusionary zoning work well since the 70's. The housing community has realized and supported building housing that housed solely sec eight. Thus the purpose of inclusionary law.
    But, again it’s ok for businesses to receive these deep subsidies and tax abatements.

    Please name me one housing project that has gone up in the last 5 to 10 years in DC.

    No what is happening is we have new individuals who don't want anyone who isn't in their income bracket have the right to reside next to them

  • Really?

    hillman is it the programs that the poor utilize that takes up most of the budget?

    It you are talking about housing (for those not willing to work) most of that money comes from the federal government.

  • DC

    Jeeez...you folks really have a penchant for getting way off into the weeds.

    It comes down to this. My parents would have loved to live in the center of town where I grew up. We didn't. Why? Because we couldn't afford it. They weren't well off at all.

    I wanted to live in Manhattan after college. Couldn't afford it so I lived a 30 minute train ride away.

    I'd love to live in one of those swanky 5 million dollar Ritz Carlton condos down on the Georgtwon waterfront. Why isn't the city subsidizing one of them for me?

    I don't know when the US went so far off the deep end that people honestly believe that tax dollars should be used to pay for luxury accomodations. There used to be a time that people lived where they could afford to live, and if they wanted to "move-up" they saved their money for it.

    I understand that we as a civilized society provide a safety net for the less fortunate among us, but that safety net only entitles someone to a clean and secure roof over your head. It doesn't entitle you to a super subsized high rent address with swimming pools and free cable tv that is financially out of reach for 80% of the nation.

  • meanteeth

    Hillman-- I'm not talking about public housing residents, at all. Housing Production Trust Fund money can be used for brand new mixed income development, but consideration has to be made for existing affordability in neighborhoods, and one way to do that is through TOPA. We can and are investing TOPA funds in creating mixed income communities-- that's the point of the New Communities Initiative, which is funded in part by the securitization of HPTF. This doesn't preclude the use of funds to do TOPA projects in neighborhoods.

    None of these things are exclusive of the region, but I know what MY tax dollars can do in MY city, and I want them spent on creating and preserving economic diversity in the city's neighborhoods.

    The Trust Fund doesn't go to create public housing, and the income targeting for it isn't designed to create housing for people who aren't part of the workforce.

    It seems like we're all working with different definitions of workforce and public housing. Further, to address "DC's" comments-- who is talking about providing luxury accommodations? The focus is on affordability and creating and maintaining it. I don't know when public funds have gone to creating luxury housing for poor people? Are there projects out there with swimming pool and free cable?

    There's no need to exaggerate about the reality of the housing landscape in Washington-- people with jobs making decent salaries are shut out of the opportunity of homeownership. They are increasingly shut out of the opportunity for affordable rents. There are places where public funding can help create these opportunities or preserve them, and it's not unreasonable to expect for our money to be spent on that.

  • meanteeth

    Oops, meant to say "we can and are using HPTF funds to make mixed income communities..."

  • DC


    Don't be naive. Luxury accomodations is related to the location as well. It is a luxury location for those of us footing our own housing bills to be able to afford living in places like Adams Morgan. And yes, these projects have included pools, gym facilities and free (or heavily subsidized) cable.

    Your point that these set asides are apparently going to people with decent salaries, doesn't mesh at all with the realization that there is a ton of affordable housing in DC as it is. It just isn't in the uber desirable and "expensive" locations that everyone wants to live.

    I say again. Unaffordability for someone to live in super expensive and desirable neighborhoods is no more my problem, than my inability to buy a 5 million dollar Gergetown Condo is your problem.

    Lastly, I would have thought our recent and lingering experience with "homeownership for everyone" mentaility where we as a nation thought cramming ill equiped people into financial situations they have no business being in, would have taught us something, but apparently not.

  • meanteeth

    I'm not naive. Please tell me the names of projects where city tax dollars built housing for people to live in luxury accommodations. I can't think of any, at all.

    If you're talking about people with portable Section 8 subsidy then we're talking about a different pot of money, and we're talking about people who get up and go to work every day and pay to live in those places, along with their (federal) subsidies.

    Lots of people want to live in different places all over the city. Neighborhoods like Adams Morgan, Columbia Heights and Mt Pleasant all included significantly affordable housing (including homeownership) in all of those places. I'm not talking about moving people INTO "luxury" housing in wealthy neighborhoods. I'm talking about preserving affordability where it exists, and creating it when we have the opportunity-- through initiatives like mixed income housing. Trust Fund money is designed to help do both of these things.

    I'm also not talking about home ownership for everyone-- please refer back to my original post. As I said, we were a city with a lot of different tools for creating and preserving affordability-- whether it was homeownership or rental housing. I would like for us to remain so, and that requires giving thought and weight to how and where our money is spent, as well as valuing mixed income neighborhoods.

    I'm talking about affordability for everyone, not homeownership for everyone. People who can afford to buy, should be able to-- and we're able to create a wide variety of ownership pricing in all different neighborhoods in the city. You're right, there are many neighborhoods that are plenty affordable, but require a different kind of investment in order to create the opportunity.

    People who can't afford to buy should have options as well. HPTF is one tool that makes affordability accessible to people in rental buildings, too (RentSup & LIHTC).

    I'm not talking about people being able to live in a $5M Georgetown Condo (I didn't realize it was naive to think that this is absurd). I'm talking about helping people stay in neighborhoods throughout the city, in buildings where they currently live, pay rent and contribute to the stabilization of the neighborhood. And, for the record, the people who have used the TOPA tool have a great track record of keeping and managing their properties, regardless of income and education, because the process is designed to prepare them for the rigors of such. They are not crammed into financial situations they are ill equipped to handle. That's a totally different swath of buyers.

    Your point about people seeking to buy "unaffordable" housing on the backs of taxpayers doesn't make any sense to me. Who are these people financing $5M condos in Georgetown with HPTF money? Your core point about people choosing neighborhoods they can afford is on point; the realization that most people who live in stable, market-rate housing fail to make is that they too are seeking affordability.

  • JackDC

    HUGE POINT we're missing here:

    If renters don't buy their buiding, it isn't like they are all forced out. In fact, City law forbids new building owners from putting renters out. That's why we see developers forced to offer big $$$ to renters to agree to leave if the new owner wants to convert to condos!

    In light of this, there should be no concern from people if the City doesn't spend equally huge amounts of money facilitating a "sham" purchase of the building by renters who could never afford it or the upkeep.

    Couldn't all that money help the truely needy in the City? I have a single professional friend with a Master's degree who just bought one of these "subsidized" condo units because she made $43k in her first job out of school. So our affordable housing policy isn't even helping those we think it should!

  • Hillman

    "None of these things are exclusive of the region, but I know what MY tax dollars can do in MY city, and I want them spent on creating and preserving economic diversity in the city's neighborhoods. "

    Sounds like 'economic diversity in the city's neighborhoods' is more of a goal than actually providing affordable housing for the most people possible.

    And I never meant to imply that your particular program is predominately helping those that won't work.

    But a huge amount of money and programs locally are. And just saying that's not relevant because many of the programs are federally funded misses the point entirely.

  • Hillman

    It's also worth noting that in DC 'luxury' is location. Even 'luxury' accommodations in DC proper rarely have spacious grounds, pools, etc.

    What they do have is location in a trendy neighborhood, with easy access to trendy clubs, restaurants, with charming historically protected architecture, etc.

    And people pay a ton of money for that location luxury.

    That's why artificially 'preserving economic diversity in the city's neighborhoods' is such a massive waste of money, particularly if it's done poorly, which it so often is.

    If our goal is to make sure the very poor or working poor can easily walk to Buddha Bar or Matchbox, then we are doing quite well.

    If we are truly concerned about providing affordable housing for the most working people, then we are squandering our resources.

  • Hillman

    "I'm talking about helping people stay in neighborhoods throughout the city, in buildings where they currently live, pay rent and contribute to the stabilization of the neighborhood."

    First, many in taxpayer funded housing don't contribute to the stabilization of the neighborhood. Far from it. They often contribute to the muggings, the car breakins, the rapes, etc.

    That's not to say there aren't many decent, hardworking people getting taxpayer funded housing.

    But many aren't so decent.

    And housing advocates pretending that's not the case is one of the things that us footing the bills are getting tired of.

    And neighborhoods change. What was once a good bang for your housing buck in Logan or Capitol Hill is now no longer a good deal.

    Those of use not getting taxpayer funds have to live with this reality, and that often means moving to a cheaper neighborhood, downsizing to a smaller place, etc.

    Why? Because we value actual housing needs more than a newly trendy address.

    Why is it that when it's taxpayer funds being used that basic common sense rule doesn't apply?

    But no. Instead we spend twice as much taxpayer money on the trendy address as we do in actually addressing housing needs.