DHCD Defies Council Law

It will award six blighted Historic Anacostia houses to nonprofits despite new law

1220 Maple View Place SE. Photo by John Muller.

Six historic but blighted houses in Ward 8’s Anacostia will go to two nonprofit developers, defying legislation passed by DC early in 2017. The DC Department of Housing and Community Development (DHCD) awarded the District-owned lots to developers Mi Casa and Development Corporation of Columbia Heights (DCCH) on April 11.

The homes have for several years remained vacant and deteriorating, which has frustrated neighbors and local representatives who asked DHCD to fix or sell them. Despite a plan to transfer four of those properties free of cost to a separate nonprofit put forth by DC Council Chair Phil Mendelson that passed into law in 2017 – the Historic Preservation of Derelict District Properties Act of 2016 – DHCD awarded the houses to the two other nonprofits.

And at a cost upwards of $1.6 million to DC’s taxpayers, not free.

DHCD views the move as part of the ongoing effort to relieve the District of these burdensome properties and turn them into affordable housing for residents. But Mendelson has denounced the move as insufficient in affordability and against the best interests of the residents of the District.

The houses identified in the legislation are 1326 Valley Place SE, 1518 W St. SE, 1648 U St. SE, and 1220 Maple View Place SE. The additional two sold in DHCD’s deal are 1528 W St. SE and 1926 15th St. SE.

Disconnect Between DHCD and DC Council

Back in September, Council Chair Mendelson introduced Bill 21-837 to transfer four properties to the L’Enfant Trust, a nonprofit dedicated to preserving and revitalizing DC’s historic neighborhoods. The L’Enfant Trust had built experience revitalizing historic homes in DC through two other projects, and proved its interest in taking on the costly ventures at a loss in order to give back to the local community.

After several years – and for some of the homes, decades – the offer to take the four properties seemed like a windfall for the District. The Council passed the bill unanimously soon after, and in early 2017 the bill became law.

The L’Enfant Trust would get the homes at no cost to DC.

But while the Council considered and then passed the law, DHCD had started soliciting plans from other developers. And in April, the agency went against the law and awarded the four properties to nonprofit DCCH and two additional properties to nonprofit Mi Casa.

“The law requires no payment from the Trust for the four houses,” Mendelson said in a statement after DHCD’s announcement. “Instead, the City will pay as much as $1.6 million to the inexperienced nonprofit. We're paying for something we could have gotten free.”

That potential $1.6 million would come from the Housing Production Trust Fund (HPTF), which DHCD said its Development Finance Division will review in order to decide the funding-gap needs of the projects and what DHCD will offer from the fund to the two developers. “The final gap financing determinations will be made during the further underwriting process, which is expected to occur in the coming months,” said Gwen Cofield, DHCD communications director.

Meeting the Affordability Needs of Ward 8

DHCD’s average median income (AMI) requirements for Mi Casa and DCCH’s revitalized properties came to between 50 percent ($54,300) and 80 percent ($86,880) for resale value.

Mi Casa’s two homes at 1528 W St. SE and 1926 15th St. SE will be two- and three-bedroom units with one and a half baths at 50 percent AMI – affordable for a four-person household making $54,300.

DCCH’s plans for its four units are:

  • a four-bedroom, two-bath home at 80 percent AMI for 1326 Valley Place SE
  • a two-bedroom, two-bath home at 50 percent AMI for 1518 W St. SE
  • a three-bedroom, two-bath home at 50 percent AMI for 1648 U St. SE  
  • a split, three-bedroom, two-bath at 80 percent, and a two-bedroom, two-bath at 50 percent AMI for 1220 Maple View Place SE

But Mendelson’s new law requires that at least the four DCCH houses be resold as “workforce housing” – affordable housing for people who work in the area to either buy or rent. “Instead, the solicitation of the properties specified that the homes be sold for $145,000-$250,000 (or 50 percent Area Median Income),” Mendelson said.

The difference: workforce focuses on residents working in DC, but doesn’t necessarily limit the income requirement to 50 percent AMI. It can range anywhere from 60 to 120 percent AMI. The AMI restrictions don’t allow for those making an income above that 50 or 80 percent mark to buy these homes. “Placing more income-restricted housing East of the River does not produce a net gain for a neighborhood that is demanding income diversity,” he said.

Who Has the Experience?

Mendelson also slammed DHCD for picking two nonprofits that he said have no experience rehabilitating historic properties. “The course this administration is now taking – to ignore the legal transfer of title, to unnecessarily spend precious dollars, to disregard the Anacostia community, and to award the houses to an inexperienced developer – is not governing in the best interest of the District,” Mendelson said.

DHCD argued that the agency vetted the two developers’ applications for the projects and determined their experience worth the award. It pointed to DCCH’s work on the historic Tivoli Theater (3333 14th St. NW) and Mi Casa’s work on historic housing in DC and Baltimore as examples of their qualifications.

DHCD also described the sole-sourcing redevelopment plan to hand over the properties to L’Enfant Trust as against the District’s competitive bidding process. “Sole sourcing negatively impacts our goal to preserve affordability, eliminates DC's first source and [Certified Business Enterprise] priorities and discourages the District from getting the best deal for its assets by giving them away without a competitive process,” Cofield said.

Moving Forward

After DHCD announced the awards, Mendelson and community members met with DCCH. He said the community remains in favor of L’Enfant Trust, and he was skeptical of DCCH’s plans to cover all the renovation costs. “[The] numbers said to me that economically there's no way they can do this,” Mendelson said. “They are capped on the selling price, and they underestimate the rehabilitation costs. So, for the moment the only thing that's clear is that the houses will continue to suffer.”

Morgann Reeves owns a home near these blighted properties in Ward 8. She agreed with Mendelson’s frustrations and also called DHCD’s move not in the best interest of the community. She said neighbors want L’Enfant Trust to rehabilitate the properties because it has built a relationship with the community, has a history of success working with historic properties, and wants to finish in a timely manner.

“The Trust will do the entire project at no cost to the District and taxpayers,” Reeves said. “For those reasons, the community continues to stand behind the Council passing this law and L'Enfant Trust obtaining these properties.”

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