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With its signature statutory mechanism for creating affordable housing failing to provide a meaningful number of low-income units, the city is taking steps to shore up the regulations surrounding the inclusionary zoning program with the goal of streamlining the process and boosting production.
Inclusionary zoning requires developers of new residential projects to set aside between 8 and 12 percent of the units for low-income residents. But the program has been very slow to get off the ground. The IZ legislation passed in 2007 and took effect in 2009, just as the recession brought new construction to a halt. Now, even with the real-estate market booming again, IZ is producing only a trickle of affordable units.
Just nine affordable rental units and six for-sale units were produced through IZ last year, according to the annual IZ report released yesterday by the Department of Housing and Community Development. That brings the totals to 21 and nine, respectively, through the end of 2013, four years after the law went into effect. In a city that’s lost more than 35,000 affordable housing units since 2000, these numbers are so small as to be almost meaningless.
IZ is meant to apply to all residential developments of at least 10 units, but developers have gotten out of the requirements in a number of ways. One is simply a matter of timing: If the projects were approved prior to 2009, they’re exempt from IZ. Others get out of IZ by adding affordable units through other programs or because they’re located in parts of the city where IZ doesn’t apply because bonus density can’t be added (like downtown) or would interfere with a neighborhood’s historic character (like Barracks Row and Historic Anacostia). Other developers, the report notes, have sidestepped IZ by building nine large units.
DHCD announced new regulations yesterday aimed at streamlining the IZ process, which developers have sometimes criticized as cumbersome. Among other changes, the regulations now require IZ homebuyers to complete pre-purchase training and have a pre-qualification letter from a lender, in order to insure that households selected for units are able to move in quickly. Landlords will be able to market their units more flexibly to renters, through a citywide lottery or directly.
The changes are small, but city officials are hoping that, combined with higher overall production of projects approved after 2009, they’ll allow IZ to begin to take off.
“These programmatic changes to the Inclusionary Zoning Program are vital to ensuring quality affordable housing is available for the residents of the District of Columbia,” said Mayor Vince Gray. “My administration heard the concerns and made adjustments as needed.”
But even among the housing that’s being produced, there’s the question of just how affordable the IZ units are. Of the 15 IZ units produced in 2013, 14 were for moderate-income households, defined as those making between 50 and 80 percent of area median income. The last one was for a low-income housing, making under 50 percent of AMI. The IZ law doesn’t require any units to be reserved for extremely low-income households making under 30 percent of AMI.
Of the 30 total IZ units that were produced through the end of 2013, 28 were for moderate-income households, and two were for low-income households. The median income of households renting IZ units as of the end of last year is $60,000. The average rents for IZ units last year ranged from $1,505 a month for studios to $1,935 a month for two-bedrooms.
These prices and salary ranges likely appeal to blue-collar workers, but they’re beyond the means of many unemployed families, or people making minimum wage. As the city confronts another homelessness crisis this winter, it’s not clear that housing of the type produced through IZ will help keep truly poor families out of homelessness.
Still, the city sees IZ production picking up. According to its annual report, 19 projects with 95 IZ units began above-grade construction in 2013, and there are another 99 IZ-applicable projects in the pre-development pipeline that should eventually provide 1,124 IZ units.
Map from the DHCD report