Tuesday, August 11, 2009

Inclusionary Zoning: DC's Mandatory Subsidized Housing Rules Kick In

Washington DC commercial real estate
The District's controversial new "inclusionary zoning" rules come into effect this week; rules that come with a raft of new regulations, a hefty price tag, an outsourcing of social services from the government to a private industry, and a potential to drag down land values that are already plummeting. That, anyway, is the fear many land developers feel about the District's new inclusionary zoning rules. Beginning August 14th, Washington DC's lengthy new rules begin applying to housing providers, requiring subsidized housing in new projects of 10 or more units, and laying out a regime for building, tracking, verifying, and regulating housing going forward. While the legislation - the Mandatory Inclusionary Zoning, or "IZ", to some - has some exemptions by neighborhoods, zoning code, and building type, it is expected that most new apartments and condos will be required to offer moderate and low income housing going forward. DCMud provides the following summary for how the new rules will apply: 

Property Type: The new rules require that new buildings (or groups of homes) with 10 or more units, or existing buildings of 10 or more units that are increased in size by 50%, provide 8 to 10% of new units as affordable (or up to 75% of the bonus density, whichever is greater), depending on construction type and zoning district. Exemptions exist for student housing, hotels, and embassy housing. 

Beneficiaries: Inclusionary units will be set aside in all buildings that fall under the mandate of the new regs, for "moderate-income households" - applicants making up to 80% of the Area Median Income (AMI). In some zoning districts, 50% of those inclusionary units will be reserved for "low-income households," or applicants making less than 50% of AMI. Current income levels, based on HUD's figures, mean that a family of 1 would have to make $35,950 or less to qualify for the 50% AMI rule, and $57,500 for the 80% qualification. A family of 4 would have to make no more than $51,350 and $82,150, respectively.

Where: The MIZ rules were intended to apply in most of the District, with exemptions for low-density neighborhoods for which additional density would be out of character, according to the District's zoning map, i.e. zone R-2 through R-5-D, C-1, through C-3-C, CR, SP, and W-1 through W-3. Because developers receive a 20% density bonus for complying with the regulations, historic sections where added density would be inappropriate are excluded, including portions of downtown, Dupont, Georgetown, Anacostia, Southeast Federal Center, and Eigth Street (SE) Overlay. 

What: Builders must provide units of comparable size, unit mix, "exterior design," "finish," "materials," and "interior amenities," while still allowing for "less expensive materials" in affordable units. Inclusionary units must be in the same building, unless a special exemption for off-site construction is given. 

How to find them: Owners of subsidized units will be required to notify the Department of Housing and Community Development (DHCD), which will keep a database and, for each new housing unit, make a determination of the appropriate sale or rent price, and conduct lotteries in the event of over-enrollment for new housing. Purchasers of subsidized condominiums will be required to continually verify their resident status, but will not have to re-qualify for income. Washington DC residents will have some priority over non-DC residents, but the latter will qualify. The DC government has issued a preliminary website for guidance, and will help potential occupants search online for available units. The regulation of the new regime will be administered by the Department of Consumer and Regulatory Affairs and the DHCD. And while the regs may trigger fears of additional bureaucracy within the DC government, according to Sean Madigan, spokesman for ODMPED, the new system is intended to use existing facilities to govern the process without adding a new layer of staff. Madigan says the rules will have a "phased introduction" that will be put into place over the next few months as plans gel into administerial mechanisms. The new rules have been a long time coming, having been debated for years when finally adopted by the Zoning Commission on May 18, 2006. The DC City Council codified the rules in the same year in legislation that required the Mayor's office to issue new rules on the subject. But amidst drooping development prospects, those rules were not issued until May 14, 2009, to the consternation of affordable housing advocates and the relief of housing providers. Under the codifying legislation, those rules would take effect 90 days after publication.

Washington DC commercial real estate news


Anonymous said...

Do any of the surrounding jurisdictions have this type of zoning? If not, how will this affect DC's ability to compete for development in the area?

Anonymous said...

(1) So what happens when the low-income condo owner wants to sell - are the individual units permanently classified as "affordable?" And, if the units do convert to market rate would the owners of the low-income unit benefit from what some might argue is a "windfall"?

(2) As I am opposed to price controls on principle, whether through forced "affordability" units or rent controls, I think the new rules stink.

Ken on Aug 11, 2009, 12:32:00 PM said...

The new rules include a regime for pricing. If you purchase the unit as "affordable" you can only sell it subject to the same rules. How many owners of subsidized units will ask real estate agents to sell their home, and not mention that it is subsidized?

uncle jessie said...

Phew! Good thing Georgetown is exempt on that historic doo-hickey clause. Can you imagine if an 'inappropriate density'(any) of poor people were added there? Land-sakes.

I don't suppose there is anything in there about 'affordable housing density limitations?' I wouldn't suspect so, as that might interfere with dumping more affordable housing on parts of town where it's easy and political capital from doing so can be easily gained.

Anonymous said...

Yes, Montgomery County has had this in place since the mid-seventies. Fairfax also has a program.

Anonymous said...

Montgomery co and Fairfax have a program for workforce housing. The targets for inclusionary zoning are people much farther down the income ladder, the working poor. Another example of the city shooting themselves in the foot and shutting down neighborhood revitalition, while keeping dc a city of poor, unskilled, and undereducated residents supported by the few of us who actually produce. Obamacare anyone?

realWashingtonian said...

The posting about Montgomery County's affordability levels being higher than the District's is incorrect. The County is looking to implement a workforce housing program (for those with income levels of 60-120% of the median income) IN ADDITION to their long-standing affordable dwelling unit program, which has generated over12,000 low and moderate income units in the more than 10 years it has been in operation.

Re: the claim about "dumping" affordable housing in just a few areas, that is what inclusionary zoning is specifically adopted to counteract. A small percentage of affordable units (8 - 10 %) are scattered in new developments all over the city, instead of concentrating low-income housing in the same neighborhoods that are already full of low-income housing, with bad schools and limited parks and public amenities.

Many cities across the country have very similar programs, without the negative impacts that various alarmists have predicted.

[And, lastly, what the heck does "Obamacare" have to do with this? People who are opposed to sensible health care reform should be forced to provide some intelligent solutions for the current health care mess, rather than irresponsibly invoking mindless slogans and disrupting public meetings.]

Anonymous said...

Obamacare has a lot to do with the narrow mindedness of MaMa government doing everything.

When you have a problem with about 10% of the population not having healthcare (& that includes people who decide NOT to pay for health insurance & have enough $$$ to self-finance their own medical costs) and you decide to smack the other 90% (that have insurance they like) with a government plan they don't want, it all sounds like government intrusion on a system that works!

How much more inefficient can you get? .... upset 90% of the working system to cover a 10% problem!@#$!

Why don't we just give a Trillion Dollars to those 10% for healthcare and not increase the government expenditures by $1.6 Trillion while screwing with the 90% that works?

The same might apply to affordable housing that could be done on a more market based approach rather than by government fiat with arbitrary percentages.

Anonymous said...

This lack of your so called "mamacare/Obamacare" is the reason the economy is in the toilet now. Further, when the economy was doing well did the private market address any of these issues addressed? NOT

You really need to check your facts about the impact of prohibitive healthcare costs and policies on self-employed persons and small businesses, which make it difficult for these "working" entities to get and keep insurance. I am guessing that you have entitlement issues.

Ace said...

This program is certainly better than having huge 'Section 8' housing projects that just breed crime and disparity.

By spreading out the affordable housing across the landscape, hopefully you can give lower income people a better living environment (i.e. not trapped in a building with gangs and drug dealers).

The 90% of well educated and well off yuppies (like myself) will help raise the standard of living for less fortunate 10% living in their building (and not the reverse of the 10% dragging down the upper 90%).

All in all, this is better than dangerous and crappy densely populated ghettos.

Anonymous said...

While I agree that providing quality affordable housing to low and moderate income residents is important, I think that there should be a limit on the length of time an IZ unit must be kept out of the general housing market. The legislation and regulations, as well as the agency's website, refer to the people who buy these units as "owners" but owners can sell their property to whomever they want, can rent out their apartments, and have incentives to improve their property. The IZ unit owners have almost none of the benefits that tend to run with ownership.

Ally said...

It tickles my funny bone, and provides a source of entertainment during rush hour, when people make really ill-informed comments such as "Obamacare anyone" or "unskilled workers moving in".

Has anyone considered that you do not have to be poor to qualify for AMI? As someone recent to the workforce (bachelor degree holding with a masters on the way), and a lover of non-profits, I HAPPEN to make under 50K. Imagine that? I am educated, with highly developed soft skills, and I STILL qualify for ADU!

I would like to propose a moment for self-reflection here. How many of you are a couple of paychecks away from poverty yourself? How many of you have way too much debt to credit ratio? Car loans? Student Loans? Maybe you should judge your own situation and if you really care enough to comment on a blog...to do some research on what these programs truly entail.

Duly noted.

You are too busy "making money" to do research and receive concrete facts before posting them on a blog.

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