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Back when Carol Erting and Joseph Kinner moved to Rockville, more than a decade ago, living in the District of Columbia wasn’t an option: There was too much crime, too few services, and no sense that the city had anything better on the horizon.
Over the years, however, the couple grew weary of their hourlong commute into the city, as well as the lack of cultural opportunities near their home. As the District learned to collect the trash and clean the streets, the pair, both professors at Gallaudet University, became less and less enchanted with Rockville’s quiet cul-de-sacs. Erting started putting on a noise machine to sleep. And Kinner searched the District housing market for something he considered livable.
According to the brochures, the Lofts at Adams Morgan would have everything the couple wanted, including top-of-the-line amenities, excellent security, interesting neighbors, and a good location, near the bars and restaurants of the area’s commercial strip. Erting and Kinner put their money down on a penthouse condominium in 2001, before the place was even built. Then they waited as the site was transformed from a trash-strewn parking lot into a sprawling faux-industrial building with underground parking and a glass-encased walkway separating its two wings.
Erting and Kinner represent an element routinely vilified at municipal gatherings—suburbanites who sit out the city’s rough times, then parachute in when it recovers. But though the pair are unlikely to join the PTA, not even the most narrow-minded of critics can ignore their impact on the city’s pocketbook. Erting and Kinner have already paid more than $10,000 in taxes on their nearly half-million-dollar purchase, and the District will take another $5,000 in property taxes and $3,000 from the couple’s store and restaurant purchases this year. That’s a windfall of more than $18,000 over the course of 12 months, with more on the way. And that figure doesn’t even factor in the couple’s income-tax contributions, parking fines, and other forms of tribute exacted by the city government.
You can extrapolate from there: There are 59 units in the building, and, by fairly conservative estimates, each one will send the District about $25,000 in its first year, once income, property, and other taxes are figured in. The building will thus generate about $1.5 million in revenue for the city in just 12 months. To provide some perspective, consider this: The former parking lot where the Lofts now stands, which was owned and operated by the city, might bring in a few hundred dollars on a good night.
Most of the people moving into the new luxury digs are much like Erting and Kinner: highly paid white professionals without kids but with disposable income to burn. In the popular imagination, they are gentrifiers bent on building comfy nests for themselves and securing safe parking spots for their cars. With each new arrival, the notion goes, the District inches toward one big condo association and drifts farther from its traditional role as provider of generous social services to the downtrodden.
It’s a tidy rap, if completely mistaken. Far from spelling the end of the city’s ideals, the occupants of the District’s most outrageously priced real estate may be their best hope. Despite the influx of wealthy people into the city, the District still bears a disproportionate share of the region’s poor—its poverty rate is 18.2 percent, compared with 8.0 percent and 7.2 percent in Virginia and Maryland, respectively. Serving the indigent helped earn the city a projected budget deficit last fall—a crisis that prompted painful cuts in services and tax hikes.
The tax windfall from one of the city’s hottest real-estate sectors—high-end condos—is a key force in preventing the District from regressing to its mid-’90s financial condition, when huge deficits and a federally imposed financial control board ruled. That’s not to say the city doesn’t pay a price for the condo boomlet: luxury-condo dwellers wall themselves off from their neighbors and destabilize neighborhoods by driving up the cost of living. But a city dogged by an ages-old revenue problem can use as many exposed-concrete, spiral-staircased urban barns as it can get.
Mayor Anthony A. Williams last week announced a goal of luring 100,000 new residents to the District. Would that all the newcomers do what Erting and Kinner have done—namely, buy an expensive piece of real estate and not move in.
The story of D.C.’s most underutilized luxury condo begins with the 18th Street nightclub Heaven and Hell, which has been blasting catchy dance music to its young clientele for the better part of 19 years. The patrons, sweating and grinding, like the beat to be deafening, and noise has never been too much of an issue—Heaven and Hell’s block is made up primarily of clubs and restaurants, many of which are equally loud. The Lofts, Erting and Kinner’s new building, was built to be close to the action, and close it is: The bedrooms of many of the units, including the couple’s, are just 20 feet from Heaven and Hell’s back patio. This setup allows residents unfettered aural access to the whims of the club’s DJs—an amenity most could live without.
“The noise assaults you,” says Erting. “Calling it noise doesn’t even do it justice—it’s like this pounding bass. You feel as though you’re sitting in the middle of the club. People [in the building] are suffering hearing loss—they’re losing weight. They all have bags under their eyes. We were expecting noise when we got here, but we just couldn’t have conceived of this.”
Erting and Kinner say that the sonic emissions of the club keep residents awake well into the night, despite their best efforts to sleep through the cacophony. It’s so bad, they say, that the two of them have decided not to move in. Instead, they’ve come up with an alternate arrangement: They spend their evenings at their new digs in Adams Morgan, but they retreat to Rockville to get some sleep, at the home they had hoped to abandon.
Heaven and Hell’s owner, Mehari Woldemariam, says he feels for the couple. But he worries that their desire to get a good night’s sleep spells bad news for his ability to pull in customers.
“I’m just trying to run a business, like anybody else,” Woldemariam says. “When you buy a condo in this area, you should know it’s going to be loud.”
Even though the conflict will strain relations along the neighborhood’s commercial strip, it won’t strain the District’s coffers. In pursuing any complaint, the residents may lobby their local advisory neighborhood commission, as well as other city instrumentalities. But that’s about it. No matter how long they live in D.C., they are unlikely to ask the city for much more than intervention in quality-of-life issues.
Condo dwellers such as those in the Lofts live in multi-unit buildings, so they don’t take advantage of municipal trash collection. They tend to make good salaries, so they generally don’t need welfare, unemployment benefits, or other social services. They pour dollars into the District treasury and take very little back out.
“The people in our condos are not overtaxing the service structure—very few children, for example, are moving in,” says developer Monty Hoffman of the PN Hoffman firm. “It’s good for the tax base of the city, and it’s good for businesses that thrive on local living.”
According to Hoffman, there are three types of people moving into luxury condos: baby boomers who are selling their houses and downsizing, professional midlifers who have high incomes and no kids, and the 20- and 30-something crowd drawn by the lifestyle city living affords. The condo residents typically work hard and like to spend their money. The lawyers and lobbyists who used to eat their dinners in Northern Virginia are now frequenting the District’s ethnic restaurants and dropping $250 a pop at Fresh Fields; they’re venturing over to 14th Street for BYOB blues shows; and they’re checking out U Street boutiques in search of overpriced bar stools and other items for their spacious accommodations.
“It’s about minimalism,” says Mark Myers, who works for the furniture store B&B Italia and lives at the Lofts at Adams Morgan, in describing how he has designed his home. “You try to simplify and tone down, and let people be accessories in the space. It elevates human perception, and it’s what lofts are all about.”
A few decades ago, not many D.C. condo inhabitants were examining the feng shui of their surroundings. Back in the ’70s, a condo wasn’t a particularly glamorous alternative: It tended to be the no-frills choice for those who needed to live in the city and couldn’t afford a better option.
That perception has changed in the District, however, even as it hasn’t in other cities.
“If you go to Buffalo and Cleveland,” says real-estate agent Mary Jane Molik, “condos are still a frowned-upon form of ownership, because land is much more accessible. In D.C., with everyone wanting to move back into the city, it’s a completely different story.”
Hoffman describes condo living as the ultimate in luxury. “Condo dwelling is not a utilitarian lifestyle,” he says. “It’s a lifestyle choice.” He once characterized life in a high-end condo as follows: “You pull up in your Jag, go up to your rooftop condo in your private elevator from your secured parking spot.”
The marketing of high-end housing has long trafficked in hyperbole, but lately a new term has made its way onto District real-estate listings: “New York-style.” One Kalorama apartment is described as “an inviting spacious light filled New York style apartment with picturesque European streetscape views.” A new loft building from Linde Development is marketed to people who “love the Nation’s Capital, but…dream about New York style loft living.” It turns out that “Dreams do come true!”
Lofts are common in cities with an excess of unused industrial space, but they are rare in D.C. The Lofts at Adams Morgan was made to look as though it had been converted from another use, but, of course, it hadn’t—the designers just thought it would be cool to build huge windows and throw in some low-lying trusses. It’s a style that owes little to traditional D.C. apartment-building architecture.
But architectural diversity isn’t such a bad thing, and the developers are pulling residents into the city—and pumping up the tax base—by giving the people what they want, even if it is a sad approximation of other cities’ trendiest accommodations.
“Had I not been offered something that was of substantial value for what you pay in Washington, I would not have moved here,” says Myers.
Last fall, the D.C. Council faced a projected $323 million deficit for the current fiscal year. The crisis produced the usual moaning about how the D.C. budget was already cut to the bone and complaints that city residents and businesses were already overtaxed. Once all the speechifying ended, though, the council upped the recordation tax on real-estate sales from 1.1 percent to 1.5 percent, among other gap-closing measures.
Docking homebuyers makes sense for a city with D.C.’s unique revenue structure, because assessors have precious few alternative revenue sources. A whopping 42 percent of all property in the District is tax-exempt, controlled by a mix of federal tenants, international entities, universities, churches, and tax-exempt organizations such as Fannie Mae. All the free-riders cost the city $550 million dollars in forgone revenue a year, according to Alice Rivlin, the former head of the D.C. control board, who is now a senior fellow at the Brookings Institute.
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In addition, D.C. lacks the authority to tax out-of-state residents for income earned inside its boundaries. If someone lives in New Jersey but works in New York City, that person still pays income tax to the state of New York. (The tax is subsequently offset in New Jersey.) D.C., however, collects income taxes from only those workers who live here. Commuters may spend their days in D.C., but as long as they sleep in Rosslyn or Chevy Chase, the city cannot take a penny of their income. That distinction costs the city about $1.4 billion annually.
“The District has a serious long-run problem,” says Rivlin. “Congress restricts the District’s ability to tax income in a normal way, and many of the activities that the government attracts aren’t taxable.”
Other major cities receive aid from their states, which draw revenues from larger, relatively diverse tax bases. Baltimore, for example, looks to its affluent suburbs—and the affluent suburbs of D.C.—to help fund its social programs. In 2001, Baltimore public schools garnered 59 percent of their budget from state funds. D.C. has no comparable source of revenue.
It once did. Until 1997, the federal government provided a payment to the city designed to address some of this shortfall. But that year, Congress instituted a two-year plan to phase out the federal payment and instead take over certain public services. Rivlin, among others, wants the aid reinstated, and D.C. Congressional Delegate Eleanor Homes Norton has introduced legislation to redirect part of the federal income tax paid by the District’s nonresident workers to the city. If no such measures are implemented, however, D.C. will eventually return to its days of ever-increasing budget deficits as a crippled tax base fails to keep pace with municipal spending, as detailed in a report by McKinsey & Co. to the Federal City Council.
The federal government and the luxury-condo dwellers have one important attribute in common: Neither has much of a stake in helping the District support its social services. But while the feds, buoyed by D.C. residents’ lack of voting rights, can just take their funding elsewhere, condo owners end up supporting the city in spite of themselves. They may not much care about services they have little use for, but in the District’s current financial vacuum, they still pay for them.
And they’re paying plenty. A recent search of the Washington Post housing classifieds turned up more than 150 condos on the District market priced at more than $250,000, including a two-bedroom downtown for $1,200,000 and a one-bedroom in the West End listed at just short of $700,000. At the Lofts, potential buyers can pick up a two-bedroom, three-bath unit for around $800,000. And the high prices are not just confined to Northwest Washington: There are one-bedrooms in Southwest going for $250,000 or more, and on Capitol Hill two-bedrooms are listed at prices ranging from $200,000 to $500,000.
At last count, there were 26,000 luxury apartments in the District, with more than 3,000 more currently under construction. In 1998, just 228 such units were built. The number of luxury condos increased almost fourfold between 2001 and 2002, and last year the District took in more than $5 million in real-property taxes from the roughly 1,150 condos valued at more than $400,000.
Though condos are being built all over the city, the movement has its nerve centers. One is Logan Circle, where, buoyed by the yuppie-friendly Fresh Fields, development group PN Hoffman just erected two huge buildings. PN Hoffman has sold units in the buildings for upward of $500,000, despite the fact that the neighborhood was not considered particularly livable by high-end buyers until recently. In Capitol Hill, builders seem to be breaking new ground on condos every week—one new Abdo Development lofts project, a conversion of the Bryan School, on the 1300 block of Independence Avenue SE, promises potential residents “Elegance with an Edge”—though it is unclear whether the “Edge” in the trademarked slogan refers to the building or the neighborhood. Adams Morgan, Foggy Bottom, and the U Street corridor are also flush with new projects. And downtown, where developers are putting gyms and party areas in their buildings, the young and overworked are paying previously unheard-of prices for small, lavishly appointed digs close to their offices. With the mayor’s efforts to repopulate downtown greasing the wheels for developers, residential buildings are starting to compete with their established commercial neighbors for control of the city skyline.
Ann Marie Jackson and her husband moved into the Lexington, a “postmodern” high-rise located in the Penn Quarter, because they “wanted to be right in the heart of things.” Jackson, who had relocated from Boston, loves both the neighborhood and the building, which, she says, has “a great gym” and is only a short walk to her office at the State Department. But as much as she enjoys her current living situation, Jackson admits that she is unlikely to remain in the District in the long run.
“Once we have children, we’ll probably move out to the suburbs,” she says. “The city has so much to offer, but if you have a family, being here doesn’t make a lot of sense.”
And the District is doing little to convince her otherwise. If Jackson could find an affordable, safe neighborhood with parks, row houses, improving schools, and a sense of community, she says, she might consider staying in the city. But few families are going to pay $400,000 for a couple of rooms in a concrete building with little available green space, even if the countertops are granite. Both Jackson and Erting say there are no children in their buildings, and developer Jim Abdo admits that they are rare in his residences. The condo dwellers are willing to pay high taxes to support public schools, but they sure as hell aren’t going to stay to send their kids to them.
In the meantime, however, developers are scrambling to keep up with demand by seeking land for new buildings, in a process that some activists are worried will lead to the displacement of poorer residents. Thus far, most of the luxury developments have risen on properties that were either vacant or used for nonresidential purposes, such as parking. But even if few residents are kicked out of their homes directly by development, rents in the surrounding area generally increase when a new luxury condo is built—a dynamic that can cause animosity among longtime residents whose families have rented in the neighborhood for generations.
“There are tensions, and I can see them mounting,” says Darnell Bradford El, an activist with Jubilee Housing, an organization that provides more than 200 affordable housing units in Reed-Cooke, the Adams Morgan area where the Lofts is located. “The property values have shot up so high that poor people feel like they’ve just got to go, and they don’t like it. The youngsters feel like their community is being taken over.”
The full extent of displacement in gentrifying neighborhoods is hard to document. But the mere suspicion that luxury-condo dwellers have arrived to mold the neighborhood to suit themselves is enough to spawn conflict. Frustrated residents are raising their voices, occasionally hurling racial invective and homophobic slurs at their new neighbors.
“I’ve seen a lot of friction between the low-income African-American families and some of the people in the building, especially the gay couples,” says one community leader. “I don’t know if it’s religiously based or because they’ve been there for multiple generations, but some people seem to have a problem with the [Lofts] residents.”
When PN Hoffman first put forth a proposal for the Lofts, the largely working-class Reed-Cooke residents supported the idea, as Ward 1 Councilmember Jim Graham discovered when he attended a meeting of the neighborhood association.
“People forget that the real-estate market has only been hot for the last two years,” Graham says. “This was three years ago. Nobody knew at the time what would happen. They didn’t know how much these condos would sell for.”
While neighbors squabbled over parking and zoning questions, no one ultimately stood in opposition to the arrival of the building. Bradford El says that was a mistake.
“That building is a monster,” he says. “If I could make my decision to support it again, I would choose differently, and so would a lot of other people.”
But there are plenty who wouldn’t. The building replaced a fairly unattractive stretch of land, and, according to Advisory Neighborhood Commissioner Josh Gibson, many residents were relieved to be rid of what they considered “blighted, nasty, rat-trap [parking] lots that stood vacant most of the time.” As he points out, “they were happy to replace something that wasn’t valuable with something positive.” The little opposition that surfaced at the time came from those who wanted a smaller building with more affordable units. The more recent complaints frustrate developers, who argue that they are doing a service by bringing higher-quality housing into depressed areas.
“You go into an area nobody wanted to touch and put up a building, and people get upset despite the fact that the housing they own was once worth a quarter of what it is today,” says Abdo. “They weren’t happy when there were crack dealers and prostitutes and trash on the street, and now they’re not happy that they’re paying higher taxes.”
The backlash cited by Abdo adheres to much of what city officials, especially Mayor Williams, have cited as progress in recent years: the leveling-out of the city’s population drain, the emergence of high-end retailers, and, yes, the proliferation of luxury condos. Such gentrification, say D.C. old-timers, has toppled “Chocolate City” in favor of a bland, white metropolis.
The District is indeed getting whiter—U.S. Census data peg the percentage of white District residents in 2000 at 30.8 percent, up more than a percentage point from 1990. Gentrification has begun pushing into many traditionally black enclaves, such as the former “Black Broadway” area of U Street NW, where the newcomers mingle uneasily with the neighborhood’s longtime residents.
Condo dwellers, after all, are not merely moving into the house next door: They’re settling down in expensive buildings, complete with doormen charged with keeping the neighbors out. They don’t appear at the front stoop each morning to grab the paper. Landscaping services mow their grass and tend to their tree boxes.
Rivlin and Carol O’Cleireacain, in a paper for the Brookings Institute, argue that the problem of contentious neighborhood relations could be controlled “if the existing community played an important role in the planning process.” But in D.C., the existing community is no match for savvy developers sitting on vacant parcels—not to mention a city government salivating over potential tax revenues.
But the government, nonetheless, is trying to generate regular neighbors in transitional communities. Williams’ Home Again initiative is designed to fund the renovation of 4,000 “blighted properties” citywide. It rejuvenates individual homes, as opposed to colossal condo developments.
For a model of how to further class integration, D.C. leaders need only look next door, to the Moderately Priced Dwelling Unit (MPDU) program in Maryland’s Montgomery County. If a developer puts up a luxury condo building with more than 50 units in the county, at least 12.5 percent of those units must be affordable housing, ranging in price from $85,000 for a two-bedroom condo to approximately $135,000 for a three-bedroom detached house with a basement and garage. PN Hoffman recently erected a building in downtown Bethesda, for example, that comprises 50 high-end units and 12 moderately priced units.
The new luxury buildings in the District have no affordable units, in large part because the city doesn’t require them. But an MPDU-like program might address the low- and moderate-income-housing shortage, as well as help break down the barriers between condo dwellers and their neighbors. Hoffman, for his part, says that “if the city were to institute something like [the MPDU program], I’d be all for it.”
The first thing you notice when you walk into the lobby of the Lofts is the high ceiling. The pipes have been left exposed, but not completely: There is a grid of shiny silver suspended just below them, creating a feeling of order beneath the carefully designed chaos. The couches are made of brown leather, and the tile floors are a tasteful brown and beige. Behind the doorman’s desk is a row of black-and-white screens that monitor different parts of the building, and on the wall sits a framed poster that says “DU VIN BLANC—EXTRAORDINAIRE.” Everything is sterile and clean, from the brushed-aluminum rows of mailboxes to the quiet, spacious elevators.
Erting and Kinner’s place upstairs has a similar feel. The list of amenities is long: oversize cherry kitchen cabinets, bamboo floors, dramatic contemporary lighting. The large, wooden sliding doors don’t fully close; upstairs, by the wet bar, the trusses come down so low that you feel as if you might hit your head. But the most striking feature is the apartment’s openness; the huge pipes and metal staircase are secondary to the 25-foot stark white walls, to the space they create. From the patio outside, you can see quite a bit of the city.
Erting and Kinner, though, would gladly trade a bit of their view for quiet evenings, free of the beat from across the alley. Heaven and Hell owner Woldemariam has already made a few concessions, including closing the club’s back patio, but he fears he will be forced to do more.
Erting and Kinner knew that their new home would abut bars, but they figured that at a price of a half-million dollars, the place would be livable. Frustrated with the noise, they and other residents have called in the big guns: Monty Hoffman, Graham, and Mayor Williams’ office are all working for a compromise, and they’ve had some success—the Tom Tom Club down the block, another generator of late-night noise, has already built a brick wall to keep the music inside.
But the proprietors of 18th Street businesses worry that more significant demands are on the way. At an early-December meeting on the issue, Constantine Stavropoulos, the head of the Adams Morgan Business and Professional Association and the owner of Tryst and the Diner, expressed concern that the residents were on a crusade to shut down the entire block. He asked that they focus their anger on one location at a time, so that the whole strip isn’t affected.
“We assured him that we had no desire to close down all the businesses on 18th Street,” Erting says. 18th Street and places like it, after all, are what attracted Erting and Kinner to the city in the first place.
“It’s distressing to know,” she says, “that people like us may be participating in a process that destroys the very thing we value.” CP
Art accompanying story in the printed newspaper is not available in this archive: Photographs by Darrow Montgomery.