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The idea behind the New Communities Initiative was simple: Replace distressed low-income housing with mixed-income communities, using the revenue from market-rate units to subsidize the construction of replacement apartments for all the public housing lost. The reality has been much more complicated. First came the recession, stalling what little progress existed on the 2004 initiative. Then came a series of hurdles: a failed development effort and contract termination at one of the initiative’s four sites, the discovery of a restrictive housing covenant at another, a near-violent confrontation at the third, and an inability to make the numbers work at the fourth.
So the District commissioned a report on how to jumpstart the failing program. Last September, the D.C.-based Quadel Consulting and Training LLC delivered its recommendations. The report was full of assessments of what had gone wrong with New Communities, but the central message was clear: The city had to rethink its core principles for the program—-namely that the developers build new housing before demolishing the old units, and that the new communities contain a mix of incomes from the start.
Of the four struggling New Communities project, Lincoln Heights has fared perhaps the worst. The redevelopment, near Deanwood, was supposed to be completed this year. Instead, as of the beginning of last year, just 32 of the 440 Lincoln Heights families had been moved into new housing. The reason shouldn’t come as a surprise. While the other three New Communities sites are near Metro stations and other development projects, Lincoln Heights is located in a poor part of the city, far from cranes and a mile from the Metro. The project’s developers can’t easily attract market rents high enough to justify the cost of the construction.
And so, as last year’s report suggested, the mixed-income principle is absent from the project’s next phase.
The developers behind the project, Pennrose Properties of Philadelphia and the D.C.-based Warrenton Group, applied yesterday for zoning approval to construct 150 apartments in a complex they’re calling Deanwood Hills, as part of the New Communities project. (Construction of this phase was initially supposed to begin in 2011; the site on Hayes Street NE remains a vacant lot.) Under the proposal, 50 of those units would replace public-housing units; the other 100 would be restricted to households making under 60 percent of area median income, funded with Low-Income Housing Tax Credits.
For developers in poor parts of town, there’s a strong financial incentive to build income-restricted units like these: The developer gets tax credits to offset the project cost, and since the maximum rents under the tax-credit program aren’t much lower than market rents in the depressed neighborhood, there’s not much profit lost.
But replacing low-income housing with more low-income housing doesn’t do much for New Communities’ mixed-income principle. The city needs affordable housing, of course. But residents of poor areas have urged the city to stop concentrating it in their neighborhoods. If New Communities can’t produce a mix of incomes in depressed areas, it’s not serving the goal of economically diversifying neighborhoods.
Representatives of Pennrose and of the Office of the Deputy Mayor for Planning and Economic Development, which oversees New Communities, didn’t immediately return calls for comment. Deputy Mayor Brian Kenner submitted a letter yesterday to the Zoning Commission confirming the development application, although the letter does not explicitly endorse the project.
Renderings from the zoning application