Almost completely occupied. (www.kenyonsquare.com)

As of ten minutes ago, there was one more condo left at the 153-unit Kenyon Square development in Columbia Heights: A two-bedroom, two-bathroom spot priced at $549,000. In an effort to get the last few units off the books, the property's management had been discounting by as much as $50,000. And so ends a two-year selling span, during which the immediate area underwent a major design renaissance and even won an award for it.

Is that the sound of a rope snapping?

MANNA Up: Jim Dickerson and Frank Demarais say the city’s stiffing affordable condo owners.

Tanya Davis spends most of her hours on the couch, watching cable television shows depicting graphic surgeries and other invasive medical procedures.

It’s not that she’s lost her job or depressed. She’s bed-ridden, waiting for her baby—“Ella” is the chosen name—to be born, and the due date is in December.

Pregnant for the first time at 40, Davis’ delivery anxiety is driving her TV habits: She wants to familiarize herself as much as possible with health care jargon and hospital-speak. Fortunately, that particular worry will fade; the real stress point is what happens after the baby comes.

If Davis feels imprisoned in her apartment now, she suspects the sense of entrapment will only grow. These two bedrooms, this living room nook, and this open linoleum kitchen in her condo are sufficient—for the moment. But three years down the road, her toddler will be running around bumping into things, and Davis and her husband might want another child. Then what? Move?

That may not be option. Davis lives in a designated “affordable” condo in Kenyon Square in Columbia Heights. According to the rules and regulations she signed on to, she’d need to stay in it for 11 years to walk away with at least half its appreciated value.

Sell now, and she’ll leave with barely anything—no nest egg to purchase another house. Worse, she’ll have used up any first-time homebuyer programs available to her, meaning she’ll actually be at a disadvantage heading back into the real estate market.

“You’re not getting anything from it, and the person in the unit is financing it. Here you are trapping them,” says Jim Dickerson of the housing nonprofit MANNA, Inc.

Kenyon Square is one of several relatively new condo buildings with designated affordable units, priced below market rate and geared toward buyers making below the area median income level. Others include the Solea and Union Row near 14th and U Streets, and City Vista in Mount Vernon Square.

MANNA helped qualify buyers for City Vista. “We’re not for anyone making a windfall profit,” Dickerson says. “But we are for someone making equity on their investment.”

From a practical standpoint, the units are often better-suited to people who don’t plan on changing their lifestyles for decades. For the first 20 years after its purchase, the unit must be first marketed to someone “in the same income class as the Affordable Dwelling Unit Owner,” according to Kenyon Square’s condo rulebook. So it’s not as if Davis—who earns 40 percent of the area median income—could turn the keys over to a lawyer pulling in six figures and walk away with a sweet profit soon.

But finding an eligible buyer is a challenge, says MANNA’s Frank Demarais. He and his co-workers heard from thousands of people interested in affordable condos at City Vista. But after running credit checks and the like, sales reps there “still didn’t find enough buyers to fill 89 units.”

If Davis can’t find a buyer in her income bracket, she can sell to a market-rate buyer. But she can’t recoup any of her condo’s appreciated value within the first three years. Over time, she’ll receive more: 20 percent after six years; 40 percent after nine; 80 percent after 18.What’s left over goes into a city fund supporting future affordable housing.

MANNA reps think that buyers should be entitled to the normal market-rate appreciation, according to Shiv Newaldass, director of advocacy at the nonprofit. So if the market rate value of Davis’ condo increases by $50,000 over three years, she should recoup exactly that amount, along with the original cost of her condo.

“If there’s been a drop in the real market value, we don’t think you should be entitled to anything,” says Newaldass. “It’s part of being a homeowner.If your house has lost value, it’s not wise to sell. So don’t sell.”

Davis says that, even before she bought the condo, she “knew the time would come” to leave it. But when she heard Ward 1 Councilmember Jim Graham announce during a community meeting that affordable units would be coming onto the market, she jumped in and signed a contract.

That was 2005, when Davis lived only with her dog. She had called Columbia Heights home since the late 1990s and felt connected to the neighborhood. And she’d already looked into other nonprofit, moderate-income housing opportunities, to no avail.

Four years have passed, and Davis isn’t so single anymore. She lives with her husband and an elderly woman with dementia whom she met at church years ago, then invited into her home. Add the baby—and the dog—and that makes five. “A small townhouse in the city would be nice,” says Davis.

The city says it expects owners like Davis to continue living in their homes, not rent them out.

But some people—reasonable people, even—say they plan to cheat the system, because it’s the only sensible way to own an affordable unit and still go on living your life without suffering major consequences. One City Vista resident told Washington City Paper that he intended to sublet his condo to a family member whenever he outgrows it. (Naturally, he asked that his name not be published.)

The city’s new inclusionary zoning rules, which went into effect in August, now force developers to set aside a number of units deemed affordable. Prior to that, most of the rules binding people like Davis were negotiated individually by the city.

The new rules should ease sellers’ burden, said Sean Madigan, spokesperson for the deputy mayor for planning and economic development. People like Davis can search for qualified condo buyers on the new website DChousingsearch.org. The city also plans to “establish a list of qualified buyers,” as people sign up for future affordable condo lotteries.

The new rules also created a different policy for re-sale restrictions involving a complicated equation that factors in the 10-year compound annual growth of the area median income.

“It does make sense to stay longer,” Madigan says of affordable condos. But, these days, few short-term owners are reaping big benefits on their properties anyway. “Back in the go-go days of the real estate market, you’d flip a property and get a 40 percent return, and that’s just not going to happen anymore.”

MANNA’s Newaldass talked his own sister out of getting a City Vista unit, convincing her she would regret the decision because she might want to sell before it made financial sense to do so.

“I see it as the lesser of two evils. People can either leave the District, or move into these units with heinous restrictions. Still, it means more for these people to be in their community, to stay in D.C.,” he says.

Dickerson, who is also a pastor, compares the whole process to marriage. “I don’t really counsel people before the marriage; I counsel them a year later, when the stars in their eyes are gone,” he says. “It’s the same with home ownership. It’s hard to hear some of the tough facts. But then they’re very susceptible and vulnerable.”

This story will appear in this week's issue of the Washington City Paper. Image by Darrow Montgomery.

This piece will appear in this week's print edition of the Washington City Paper.

In mid-June, Angela Peltzer moved into her brand-new condo at 14th Street and Florida Avenue NW with views of the Capitol, the Washington Monument, and possibly the Anacostia River.

“I think I can see the new stadium,” she says.

The purchase is a coup for someone who never thought she could afford a condo, wasn’t looking for one, and ended up paying below market price.

“I thought I was so far away from it,” she says. “My career had been in nonprofits and traveling around, and I never had any money.”

But last year, after attending a women’s seminar—“something along the terms of financial management, creating wealth”—she heard a lucky tip from a fellow attendee: A new building called the Solea was holding a lottery for designated affordable condos.

Solea is a yellow and gray six-story property with an unorthodox South-Beach-meets-Soho look. Remaining two-bedroom units are currently listed at $549,900; one-bedrooms are going for $379,900.

Peltzer paid $234,000 for her one-bedroom unit. Currently an employee at the Department of Labor, she met the requirement of making between 50 and 80 percent of the area median income, $99,000.

Peltzer’s now informing all of her friends about the affordable-condo process—which is key because the average D.C. real-estate agent doesn’t know or isn’t talking about the deals. Nor is the average developer, it seems, or the average city housing official.

“None of our agents that I know of have sold one,” says Don Denton, head of the Capitol Hill Coldwell Banker office. “It’s not on our radar.”

“Generally, I would agree that they’re not well-marketed,” says Lindsay Reishman, who specializes in luxury condos. “If I were a consumer, I’m not sure I would know if they existed.”

Valda Crowder, however, is one D.C. agent who makes it her business to find out about these elusive units. She doesn’t have access to some secret database. She’s not treating developers to lunch on the company plastic. She basically sniffs them out—as early as possible.

“Usually when I see a development going up, I’ll call or look it up in the records,” she says. “Anything that’s put up near a Metro stop” is likely affordable, she says, because it may have been built on land previously owned by the city and provided to the developer with strings attached.

But even with cold-calling on new buildings, there’s potential trickery. Crowder, who served as Peltzer’s agent, suspects the sales staff may keep the receptionists purposely ignorant about the affordable units. Then desk-workers can honestly say, “I don’t know what you’re talking about,” Crowder says.

“I believe that one of the reasons they keep this quiet is they don’t want to sell them at affordable rates,” says Doug Carter, a real-estate agent who handled Solea’s initial sales and has also represented buyers.

Quietly, a lucky few figured out how to get in at the right time. Besides Solea, affordable units have sold at City Vista in Mount Vernon Square. Crowder and Carter both heard rumors of similarly priced units at Kenyon Square in Columbia Heights and Union Row near 14th and U—but the news leaked after all the cheap condos had been sold, they say.

More recently, Capitol Quarter, a 200-plus town-house community near Nationals Park, held its first lottery for workforce housing units (several more will occur as properties are completed in the coming years). During the first lottery, 58 qualified buyers vied for 18 homes.

But Capitol Quarter was a special circumstance, says AJ Jackson, a representative with developer EYA.

Unlike the typical developer, his group partnered directly with the D.C. Housing Authority, which provided a list of pre-approved buyers interested in town houses. The majority of people who qualified for the first lottery were former public-housing residents with incomes that no longer qualified them for public housing, according to Dena Michaelson with the Housing Authority. The agency walks them through pre-approval for a mortgage so they’re good to go if an opportunity comes up.

Absent of handholding from the Housing Authority, the city acknowledges the search can be perplexing.

“There was no uniform process in place to let prospective homebuyers know the location or
availability of affordable units,” writes Sean Madigan, a spokesperson with the office of the Deputy Mayor for Planning and Economic Development, in an e-mail. Lotteries weren’t required and marketing “has really been at the discretion of the developer who created the units.”

In mid-May, the mayor’s office issued new zoning regulations that could make finding these units easier.

Under the new rules—which are supposed go into effect by early fall—the Department of Housing and Community Development (DHCD) will review all buyers who register with the agency to see if they meet “certain income and household-size eligibility requirements.”

Then DHCD will notify registered people when lotteries occur. In addition, developers will be required to list their affordable units on a city Web site, dchousingsearch.org. The city will also “contract with a community-based organization to assist with outreach, housing counseling/education,” Madigan writes.

Agents, however, are not required to engage in “counseling/education.” On many projects, the developers aren’t forced to provide a commission to buyers’ agents on the affordable units, as they might be with a normal sale, so the incentive can be lacking.

Developers also have another trick: Strict viewing schedules, says Crowder.

“One building would only show their affordable units from 10 a.m. to 3 p.m. on Monday to Friday,” she says—not exactly the best time for your medium-income paper-pusher.

Despite the hurdles, Crowder says she’s had four or five clients enter into contracts for affordable condos. Two went to closing. She’s informed plenty of others about various lotteries.
Peltzer says several of the friends she’s talked to about how it works are now on the hunt.

“It’s really something you need to educate yourself about—or find someone who knows about it,” she says.

Image by Darrow Montgomery