D.C. is allocating $6 million in tax credits to a community hospital. The only problem is, that hospital is located in a different community, more than 2,600 miles away, in south central Los Angeles.
The D.C. Housing Authority Board of Commissioners voted in an emergency meeting last Friday to send $6 million in new market tax credits across the country. The funds must be allocated by the end of the calendar year, or else the District risks losing out on tax credits from the federal program in the future. D.C. Housing Enterprises, a nonprofit subsidiary of the housing authority, administers the tax credits and has given out $122 million worth since 2009. The housing authority board voted to approve sending the credits to L.A., rather than using them on a local project.
The $6 million was originally slated to help redevelop the Strand Theater, which opened in 1928 and was the first movie theater built east of the Anacostia River for Black patrons. Officials have talked about redeveloping the historical landmark since Mayor Adrian Fenty was in office. The project, which is part of the New Communities Initiative, also includes an adjacent affordable housing development with 86 units, 28 of which are reserved for people who are relocated from the Lincoln Heights and Richardson Dwellings public housing communities. The theater itself is slated to become a new restaurant.
But whose shenanigans led to the $6 million loss in investment in local projects, and yet another delay in a New Communities project? It depends who you ask.
Deputy Mayor for Planning and Economic Development John Falcicchio blamed D.C. Housing Enterprises. DCHE should be held accountable for its failure to keep the credits in the local economy, Falcicchio said Friday afternoon.
“They’re asking the board to do something extraordinary, which is place our tax credits into a deal in Los Angeles,” Falcicchio said during the DCHA meeting Friday. “It’s really hard for me to stomach that knowing there’s a need in the District of Columbia.”
He also said he spoke with a development team last week who could have used the tax credits, but declined to name names when LL asked in a follow up conversation. Falcicchio is technically right. It is DCHE’s responsibility to make sure all of the new market tax credits are spent by the deadline. But LL finds Falcicchio’s finger pointing a bit harsh. It’s his office that’s responsible for helping to plug holes in the financing scheme for the theater project.
DCHE’s president, Merrick Malone, was more polite in pointing that out.
“I do believe you are familiar with the development team,” Malone told Falcicchio during the meeting last week. “The development team has to work out the financing and funding before they can use our tax credits. We can’t do their financing for them. … We’ve held this open longer than we fiscally should have done, probably.”
Warren Williams, the project’s developer, tells LL it’s disingenuous to lay blame on his team.
“You can either kick my ass or take my money, but you can’t do both,” he says, regarding the government’s failure to help assemble the funding. “And they’ve been kicking my ass and the community’s ass for a long time.”
When it looked as if the development would not meet the deadline to use the tax credits, Malone went searching for another local project to fund. In his search, Malone said he returned to Williams’ team as recently as November to check whether they could rush the deal to closure by the Dec. 31 deadline.
Neither the Strand developers, nor any other local projects that Malone said he considered could meet the deadline. So D.C.’s loss is L.A.’s gain.
William Jordan, a housing advocate who testified during the hearing on Friday, said the situation is another example of how the New Communities Initiative has failed D.C. residents.
New Communities is a project within DMPED that seeks to redevelop public housing complexes into mixed income communities. In addition to Lincoln Heights and Richardson Dwellings, New Communities includes Barry Farm, Park Morton, and Northwest One. The primary goal of the initiative is to prevent public housing residents from being displaced while the government redevelops existing units and the surrounding communities.
“I was extremely disappointed at Falcicchio,” Jordan told LL in an interview this week. “He and his agency are responsible for this very kind of situation, and they dropped the ball. And rather than him take his share of the responsibility, he just pointed fingers.”