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2017 was the year that a(n orange) real estate magnate took over the White House. It’s fitting, then, that developers who were already operating in the District continue to rake in the dough.
The local residential market may be cooling off a bit, but it’s still hot. Rents remain high despite new housing supply, and tenants—especially those who have lived here for years—are feeling the financial pressure. While D.C. home prices haven’t jumped as in past years, homes get sold quickly.
At the same time, many downtown office spaces remain vacant as organizations’ needs change. In light of this and scarce housing overall, some developers are weighing office-to-residential conversions.
Against that backdrop, the District government keeps touting its recent investments in affordable housing. But this year, it also limited access to emergency family homeless shelters and granted subsidies collectively worth tens of millions of taxpayer dollars to for-profit development firms.
In addition, officials slated various pieces of public land for private redevelopment, sans much fuss from the public or the D.C. Council. Affordable housing, of course, is one of the community benefits that these projects are required to provide. But experts say the current level of funding for it is not nearly enough to serve D.C.’s lowest-income residents, who make less than $33,000 a year for a family of four. About 43,000 families in the city fall into this income group, per a 2016 study. The shiny new apartments and condos being built on the District’s waterfront and elsewhere don’t benefit them.
Looking back on this past year, it is difficult to see how D.C. will suddenly become more of an inclusive city in 2018. Nonetheless, 2017 shows that D.C. is a vibrant city that will keep evolving.
Thirstiest D.C. Government Action
D.C. and scores of other jurisdictions across North America are competing against one another for tech giant Amazon to open a new headquarters within their borders. This fall, District leaders pitched four sites to accommodate such a facility, which Amazon says would eventually span up to 8 million square feet and create 50,000 jobs. But like officials in several other jurisdictions, D.C. leaders haven’t been totally transparent with residents about what incentives they’ve offered the company. They even failed to tell Hill East residents that they were about to propose a site in their neighborhood when residents asked directly about the site’s future at a public meeting. Thankfully, the public has the Freedom of Information Act: The results of a recent FOIA request revealed that the District spent $140,000 to design and market its bid, including a video where Mayor Muriel Bowser dialogues with an Amazon Echo device about the company’s competition. Amazon says it will choose a winner in 2018.
Most Anticipated Ribbon-Cutting
In October, after years of planning and construction, The Wharf in Southwest débuted to great fanfare. Forged by joint venture Hoffman-Madison Waterfront, the development has connected D.C. residents and visitors to a long-forgotten stretch of the Washington Channel and given them a new venue for living, eating, and concert-going. (Also: playing “Battleship” on a life-sized board.) The project required an act of Congress to transfer previously federal land to the District, which in turn leased it to the developers. The design of the development has received both praise and criticism. With a second phase planned, there’s more to come—though some neighbors around the site and labor unions are concerned about the Wharf’s impacts and work practices. It figures: When a project costs $2.5 billion, people are bound to have questions.
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Over the past year, City Paper has chronicled the stories and sufferings of tenants—most of whom are low-income people of color—living under Bethesda-based landlord Sanford Capital. A February investigation found that Sanford systematically allowed its myriad properties to fall into serious disrepair, failed to address tenants’ maintenance requests, and, in many cases, evicted tenants and left the units vacant. In Congress Heights, the company had plans to redevelop a Metro accessible site across from the St. Elizabeths East Campus into a mixed-use project that the tenants feared they couldn’t return to. At another Southeast property called Terrace Manor, the tenants similarly worried that Sanford wanted them gone, and was letting rats, broken doors and appliances, and vagrants go unchecked.
All the while, Sanford was earning millions of dollars annually via rental vouchers that some of its tenants, including families who were recently homeless, received from the government—and from charging market-rate rents and adding various fees. In 2016, D.C. Attorney General Karl Racine sued the company over Congress Heights and Terrace Manor. The latter property was sold through a related bankruptcy case to well-known real estate company WC Smith, which promises major renovations, and the former is now in the middle of purchase negotiations between the tenants and Sanford. But despite these turns of events, hundreds of Sanford tenants continue to endure unsafe living conditions as the company tries to sell off its portfolio for millions.
Shadiest Leasing Practice
Troublesome rent discounts at D.C. rent-controlled buildings are finally having their day in court. In December, the District filed a lawsuit against Equity Residential, a national firm that owns and manages a building in Ward 3 where leasing agents offer so-called “rent concessions” to attract potential tenants. But when tenants’ leases come up for renewal, the landlord attempts to raise their rents based on higher values that the company says are the true values of the rents rather than the rents the tenants have actually been paying. This often means hundreds of dollars more per month in rent. The District and the tenants argue that this practice subverts D.C.’s rent-control laws, which restrict annual rent increases to just a few percentage points in most circumstances. Additionally, over the summer a former prospective tenant of another Ward 3 building sued its owner and management companies for similar actions, contending that he was misled about what his future rent would be. Both civil cases are pending in D.C. Superior Court.
Weirdest Planned Use of Public Property
The site of one former D.C. school building —the aged and underutilized Grimke School near U Street NW—will be converted into architectural offices, space for the arts, housing, and a refurbished museum. But another, the downtown Franklin School, is to become the District’s first-ever “interactive language arts museum,” called Planet Word. Several years ago, the former school building served as a homeless shelter, and after the shelter closed, Occupy activists took it over briefly in 2011. Now D.C. officials and philanthropist Ann Friedman want to host linguistic exhibits, classes, and arts and music events there. While the long-vacant building will be put to productive use again, some can’t help but wonder why affordable housing wasn’t the crux of the plan. Coming in a close second for this category: a “senior co-housing” project in Hill East.
Most Millennial Housing Policy Debate
Airbnb and other short-term rental companies face a reckoning under a bill that the D.C. Council is considering. That legislation would require short-term rental hosts to register their listings with the District, and would set limits on the number and length of bookings per home. Proponents of the legislation—including Ward 5 Councilmember Kenyan McDuffie, who authored it—say it is meant to curb illegal hotel operations and short-term rentals in rent-controlled buildings. But the bill’s critics (above all short-term rental companies and hosts) say it would harm private property rights and make it harder for hosts to make extra income in an increasingly expensive D.C. The legislation is still pending, but some observers note that D.C. already fails to enforce such laws.
Most Mixed-Bag Development Suite
D.C.’s longstanding New Communities Initiative to redevelop distressed public housing across four sites into mixed-income projects has started and stopped since its inception more than a decade ago. This year, the initiative saw watershed moments. In Ward 1, the redevelopment of the Park Morton complex, which involves the current Bruce Monroe Park a few blocks away from it, faces a zoning challenge from neighbors who desire to preserve the park. Yet in all other respects the project is moving forward smoothly.
The same can’t be said of the Barry Farm redevelopment in Ward 8, where much of the housing stock is unlivable. Tenants there are particularly concerned about being displaced, and have sued the D.C. Housing Authority and the developers over their plans.
Greatest Changes for Homeless Families
In December, the D.C. Council passed a law proposed by Mayor Bowser that could make it even more difficult for families to access emergency shelter. That’s because the law requires families to prove District residency through a stringent list of documents, and gives the administration expanded power to redetermine families’ eligibility for services. Many homeless advocates lambasted the legislation as it made its way through the Council process, and were astounded when lawmakers approved $82 million in tax subsidies for Union Market developers on the same days as the votes on the homeless services reforms.
The law’s backers say it will ensure that D.C.’s shelters serve as a crisis response system and that, since D.C. has a right-to-shelter law during extreme weather, it will benefit District residents. As part of these changes, the Council narrowly declined to modify D.C.’s rapid rehousing program, which advocates have also criticized for setting homeless families up to fail when their rental vouchers expire. In signs of progress, however, overall homelessness fell 10.5 percent between 2016 and 2017 and Ward 1 finally has viable plans for a new family homeless shelter.
Most Bemoaned District Agency
DCRA. Need we say more? The Department of Consumer and Regulatory Affairs—which has many responsibilities, from issuing business licenses to inspecting rental housing—has undergone scrutiny this year from the D.C. Council, the D.C. Inspector General, and the D.C. Auditor in a series of public hearings and independent reports on the agency’s performance. The auditor found, for example, that the District may be losing millions of dollars a year in tax revenue from DCRA’s shortcomings in overseeing vacant properties. The inspector general found remarkably similar deficiencies in DCRA’s enforcement against illegal construction. Such issues have a few officials pondering leadership and cultural changes at the agency. Maybe they’ll happen in 2018.