Sunday, April 29, 2012

Riverside at Poplar Point Place

Pobrecito de Jeff Epperson.

Dude bought some land on Poplar Point, intending to develop a half-billion dollar mixed-use project. He tried to get Walmart, then he tried to lure a Homeland Security contractor. But eight years later he hasn't drawn a tenant or acquired the lots that separate the parcels he does own. Now his land is going to auction.


Presumably some new speculator will purchase these 10 properties for the same reason Epperson bought them in the first place: The city and federal governments have visionary plans for just about every square inch of land in all directions around the site.


(1) Poplar Point; (2) Frederick Douglass Memorial Bridge; (3) Barry Farm; (4) St. Elizabeths West; (5) St. Elizabeths East; (Not Shown) Anacostia Streetcar Extension.

But this can't all happen at once, and you hear much less buzz these days about Poplar Point than you do about the District-owned portion of Saint Elizabeths, or nearby Skyland, due in no small part to the selected Poplar Point developer withdrawing its winning proposal three years ago. And the District Department of Transportation (DDOT) won't even begin to think about breaking ground on the South Capitol Street project until the three new spans of the 11th Street Bridge, located just upstream, are complete. The new Sheridan Station is a nice reminder (though not without problems of its own) that the Barry Farm plan is underway, but at last week's budget oversight hearing, the Deputy Mayor for Planning and Economic Development (DMPED) stated that the redevelopment plan from 2006 needs to be updated and his office will soon solicit a new master planner for the site.

One dark horse player to keep an eye on at Tuesday's auction is Bob Nixon. The Hollywood producer-turned-activist and founder of the local non-profit Earth Conservation Corps (ECC) believes that developing the wooded Poplar Point would be an act of environmental injustice, and he put up this sign on the the two lots his organization owns to prove it:


Earth Conservation Corps will be an important ally to the District Department of the Environment (DDOE) in achieving a number of the objectives outlined in its new Vision for a Sustainable DC, such as cleaning up the Anacostia River. But Nixon's zeal to keep Poplar Point au naturale conflicts with Mayor Gray's sustainability goal of adding 250,000 net new residents to the city's population, many of whom will presumably live in new neighborhoods and housing units created on previously undeveloped sites like Poplar Point.

No matter what, the federal government will require that the Poplar Point developers retain at least 70 acres of parkland, but if Nixon wants to block development completely, he could start by taking his checkbook up to the office of Alex Cooper Auctioneers.

On Tuesday, Epperson and company will say adios to the bulk of their Poplar Point holdings, owned officially by Poplar Point North LLC, Poplar Point South LLC, and Poplar Point One LLC. Interestingly though, they will not be letting go of three small properties owned by Poplar Point East LLC (to the author's knowledge, there is no Poplar Point West LLC), suggesting that the persistent developer may not be quite ready to give up on Poplar Point completely.

Sunday, April 22, 2012

The Prince George's Pinkskins


This Thursday the Washington Redskins will draft RGIII, probably the most exciting thing to happen to the team since Sean Taylor inverted an opposing punter. In urban planning circles, a much more pressing issue is that the Mayor and some Councilmembers want to spend public money to entice the team to build a practice facility on Reservation 13, a master-planned new neighborhood near RFK, in hopes that the team might someday relocate back to the District from Landover. For the politically correct, it's hard to have any conversation about the 'Skins without noting the obvious: the team name is kinda racist.

Of the 32 teams in the NFL, 14 (44%) are named after animals (5 birds, 4 cats, and 2 horses, plus the Rams, Bears, and Dolphins) and one is named after an inanimate object (Jets). The remaining 17 are named after some form of Homosapien:


The Redskins are unique in that they are the only team named after a non-mythical race of people. In some enlightened, hypothetical future universe our city's team would succumb to a grassroots movement and choose a superior moniker, but for now, public disapproval is quenched by a chuckle-inducing opportunity to brainstorm alternate team names

While RGIII will have to show me some results before I consider transferring my allegiance to his new team, I will without hesitation jump on this renaming bandwagon and toss out my own geographically-appropriate proposal: Hail to the Prince George's Pinkskins!

Friday, April 20, 2012

2323 Martin Luther King Jr. Ave SE

If you have ever traveled down Martin Luther King Jr. Ave SE in Anacostia, you may be familiar with Morgan's Family Fish Fry. One order of flounder at Morgan's contained about 17 fried fillets, over-stuffed into a standard Styrofoam tray. Now Morgan's is no more. I first noticed the absence of activity at 2323 MLK a couple of months ago, and the For Sale sign confirms it.

This is one of the larger properties on the business strip to hit the market recently, and it offers the advantageous combination of being located close to the Metro and outside of the historic district (meaning there are fewer restrictions on redevelopment). If the eventual purchaser follows in the footsteps of most commercial property owners in the neighborhood, he/she will hold it vacant indefinitely, speculating that at some point in the future the redeveloped property will command the high rents that it would need to justify the development costs and still turn a profit.


Before this week, I had heard the term Crowdsourcing, but then all of a sudden it got tons of hype, specifically as it relates to having neighborhood residents identify a preferred retailer for a site. Elahe Izadi thinks it's classist; Richard Layman thinks it's stupid; I just think it's fun.

So, based on absolutely zero reality, here are four hypothetical options for this site. They range from optimistic to pessimistic, and each has impacts associated with it that should be taken into consideration. 

A) Redeveloped with Busboys and Poets restaurant on the ground floor and three stories of subsidized rental apartments above. Creates jobs and slightly increases property values (and taxes) for homeowners in the surrounding neighborhood, but also raises commercial and residential rents. Increases traffic and night-time noise, and makes it more difficult to find street parking within a few blocks of the site.

B) Redeveloped as a Five Guys restaurant and a bank on the ground floor, with three stories of commercial office space above. Creates a number of retail jobs for neighborhood residents, but most office jobs will already be filled by people from across the region. Increases traffic on Martin Luther King Jr. Ave and Howard Road during the morning, lunch-time, and afternoon rush hours.

C) Existing building reused as a Wendy's restaurant with drive-through window. Increases traffic slightly throughout the day and creates some entry-level jobs. No impact on property values, and does not increase rental rates in nearby homes or lease rates for neighboring businesses. What good is a fancy restaurant if I can't afford to eat there anyways?

D) Site remains vacant and parking lot is used informally by patrons of nearby businesses. No impact on traffic on Martin Luther King Jr. Ave, and lack of development prevents rents from increasing for residents of the surrounding neighborhoods. I like the neighborhood exactly how it is, and I don't want any changes that will attract new residents or increase my cost of living!

Which option would you prefer?

Monday, April 9, 2012

US Housing Subsidies: The Home Mortgage Interest Deduction + Some Scraps for the Poor

When you think of subsidized housing, you probably picture a scene from the PJs or The Wire. Don't. Funding for low-income housing accounts for only a small portion of government housing subsidies in the US.

The US Department of Housing and Urban Development (HUD) hasn't funded the construction of a new public housing unit since 1994. However, that hasn’t entirely halted Housing Authorities’ groundbreakings and ribbon cuttings: Between 1993 and 2010, HUD competitively awarded $6.7 billion in HOPE VI funds to demolish or redevelop the most distressed public housing projects across the country, creating housing developments with a mix of public housing and market rate units. While the initiative certainly improved the physical quality of the projects it reached, it also reduced the nation's public housing stock by 39,400 net units. Public housing refers to a specific type of low-income housing – properties developed, owned, and operated by a HUD-funded Housing Authority – and it is a dying breed. Instead, HUD now supports housing for low income families primarily through two mechanisms: (1) vouchers awarded to low-income households to supplement what they can afford to pay towards rent or a mortgage payment, and (2) privately-owned housing, the construction of which is partially or completely financed with public funds (grants or low/no-interest loans), that is reserved for low-income tenants or purchasers at a rate deemed affordable. When combined with local programs and regulations, the full list of subsidies (a term that I am using loosely to mean any intervention that makes a housing unit available at a price below the market rate) that specifically target low- or moderate-income households here in the District of Columbia looks something like this:

Supply-Side Subsidies - public money (or land) spent, granted or loaned (at a favorable rate) to develop or rehabilitate housing units that, in return, will only be rented or sold to low- or moderate-income households at a price they can afford:
Demand-Side Subsidies - tax dollars allocated, granted or loaned (at a favorable rate) to individuals and families to supplement their ability to pay for housing costs, including rent and mortgage payments, down-payments, and property taxes:
Zoning Regulations - rules or one-time determinations that require the construction of affordable housing units (rental or for sale) as part of a larger development, in exchange for government relaxation of applicable zoning restrictions.
  • Inclusionary Zoning (IZ)
  • Planned Unit Development (PUD) approval

Government deserves a cookie for the sheer number of low-income housing policies and programs it has implemented, but when you look at all housing subsidies dished out (not just those that target the poor), the above list only represent a drop in the bucket.

The Home Mortgage Interest Deduction

By far, the biggest government subsidy the government offers to help individuals and families pay for housing is the Home Mortgage Interest Deduction (MID), which was claimed on about 26% of all DC individual tax returns. The Mortgage Interest Deduction allows homeowners to reduce their Adjusted Gross Income (what you pay taxes on) by the amount they paid towards interest on their first $1 million of home mortgage debt. Oh and BTW? You can also deduct the interest on your vacation home (just in case the debt on your primary residence doesn't get you to the million dollar cap). It’s easy to get caught up in semantics on this issue: Unlike a voucher, which is a direct government expenditure and therefore a more tangible subsidy, the MID is instead foregone government revenue, which is more politically palatable than a direct outlay, but serves the same purpose. Consider two scenarios: (A) getting $10 taken out of your paycheck before you ever see it; and (B) receiving full pay but then having to give $10 right back. If there is a difference between the two, then it is only psychological.

The cost of Home Mortgage Interest Deduction to the federal government amounts to a cool $100 billion dollars annually. Compare that to the annual budget of the biggest low income housing programs:


One natural reaction to these statistics is to suppose that, as an entitlement program available to all homeowners (about 2/3 of the country), the Mortgage Interest Deduction is likely a shallower subsidy disbursed to a much broader pool of recipients than something like Housing Choice Vouchers, which target a specific income range. That’s true to an extent, but it turns out that the biggest individual beneficiaries of the MID actually receive a greater (and more reliable) subsidy than recipients of housing vouchers.

Comparison of Vouchers and the Mortgage Interest Deduction Subsidy in DC

Based on approximate figures provided by the DC Housing Authority (DCHA), the average housing voucher in 2009 was worth $967 monthly. Most (at least 75%) vouchers are reserved for households earning no more than 30% of the Area Median Income, which today translates to a maximum of $32,250 (75 hours per week at minimum wage) for a family of four. Using the industry-standard assumption that households can afford to pay 30% of their income on housing, a family at the upper limit of this spectrum can afford to pay $806 per month for housing. Since most of the families eligible for vouchers earn less than the upper limit, it sounds about right that it would take $967 per month per household to get them into decent housing (Fair Market Rent for a 2BR home in DC is $1,506). This is a steep subsidy, and the overall federal low income housing budget is not astronomical only because, unlike food stamps or Medicaid, housing vouchers and public housing are not entitlement programs, meaning that even if you qualify, you may not receive the benefit. DCHA spends $130 million per year to provide vouchers to 11,200 households, but there are an additional 25,000 to 37,635 on the waiting list. 

In comparison, the average subsidy to a DC resident who claims the Mortgage Interest Deduction is $331. But unlike a voucher which increases with need, the MID subsidy rises in proportion to the cost of your home and your marginal tax rate. Take a look at who claims the deduction, and how much it costs the government, on average, for each income range:

Data Source: http://www.irs.gov/taxstats/article/0,,id=171535,00.html


Lower income households are less likely to claim the Mortgage Interest Deduction because (A) they are less likely to own their home, and (B) the sum of their itemized deductions (including mortgage interest payments) is less likely to exceed the standard deduction. The percentage of tax returns claiming the MID for each income range reflects this, with only 9% of households earning under $50k taking the deduction and 80% of households earning over $200k deducting their interest payments.

While the subsidy does increase with income, remember that there is a cap to the amount of interest that can be deducted (only that which is paid on mortgage debt up to $1 million). Here’s a hypothetical scenario to illustrate how one might achieve the maximum benefit from the MID: You take out a $1 million loan from the bank at 5% interest to buy a big-a$$ house. Over the first 5 years you would pay  $240,461 in interest on that loan (an average of  $48,092 per year). If you make earn enough money to buy a million dollar house (not extremely uncommon in DC), then your marginal tax rate is probably 35%. Because you can deduct your interest payments from your income, you reduce your tax burden by 0.35 x ~$48k: about $1,402 per month, or 1.5 times what the average voucher holder receives. What’s even more kush about this subsidy is that there is no waiting list, and the benefit never expires!

While affordable housing advocates and local politicians nobly debate over whether local tax money should be used to finance the construction of low-income units or for vouchers, the federal government continues its backwards system of giving homeowners (renters, of course, get nathan) a guaranteed subsidy that is disproportionately doled out to the rich. There are a number of ways we could reform the Mortgage Interest Deduction, for example by lowering the cap or by eliminating it completing, but no matter what, an understanding of the subsidy must inform our perception of welfare programs in this country and should be central to any discussion about housing policy.

Sunday, April 8, 2012

Lunching in Ward 8


Ward 8 Councilman Marion Barry said some stuff last week that angered anyone in his or her right mind. If there's an upside, it's that the statement triggered thoughtful responses on topics including race relations and economic justice. A much more mundane issue that I wish to explore here is that many people who live or spend time in Ward 8 think that the available food options suck.


There are lots of places that serve food in Ward 8. The problem is that many of them are school cafeterias, gas stations, corner stores, or warehouses that sell products to stock vending machines. Of the remainder, most are "delicatessens" - the Department of Health's fancy way of referring to what everyone else calls a carryout. There are 8 delicatessens/carryouts/mumbo-sauce-dispensaries owned by Asians within walking distance of Barry's office in Anacostia. If that bothers you, then you are a racist. However, if the fact that there are only 2 black-owned restaurants (a number that recently decreased from 4) in Downtown Ward 8 doesn't concern you, then you probably shouldn't expect to be elected to public office in the 94% African-American jurisdiction.

Anacostia is sparsely populated and its average resident is relatively low-income. This combination does not generate a competitive, varied retail market. Those who are dependent on the few restaurants that do exist get the shaft, because they pay the same price as they would in a market with a broader consumer base but for an inferior quality meal. Hopefully Barry and others whose gears this situation grinds will pursue more reasonable solutions than the one he proposed on Wednesday.

Thursday, April 5, 2012

How the Other Half Lives

Of all the baloney terms that get thrown around in planning meetings, "neighborhood character" might be my least favorite. Part of DC's "character" (I refuse to say it without quotation marks) is that it is racially and economically segregated, and is increasingly unaffordable to the average mortal. Any policy or tradition that reinforces this disgraceful reality should be revisited.


DC is a place where people want to live. There are jobs, universities, and plenty of cultural and recreational attractions. It is the type of diverse and stimulating environment that fosters innovation and tolerance, and we as a city should embrace anyone who wants to call the District home. And yet many of our policies impede the supply of housing from responding to the high demand in a way that might make housing more affordable.

Why can't you and 5 families buy a piece of land in Spring Valley and split it into 6 smaller, less expensive pieces and build 6 separate houses? Because that is incompatible with the "neighborhood character." Why can't a non-profit organization buy a property there and build subsidized apartments for low income families? Because apartments would negatively alter the "urban fabric." Apparently there is something inherently wrong with putting anything other than a mansion next to a mansion, because almost all zoning codes prohibit the mixing of uses and building typologies on the majority of the land under their jurisdiction.

Sources:
American Community Survey 2005-2009 5-year estimates
DC GIS shapefiles (dcgis.dc.gov)