Real estate development is a gamble, but in DC lately, the odds certainly seem in your favor when you build on top of a Metrorail station. So it was a bit surprising to see legislation sent to the Council from the Gray administration recently to give the developers of Progression Place ‘ an almost-completed project that will feature office, retail and housing right on top of the Shaw-Howard University Metro’a $2.7 million loan from the Housing Production Trust Fund. The loan needs DC Council approval, and DCFPI urges council members to make sure the loan is necessary.
Progression Place includes affordable housing; one-fourth of the units will be priced for low- and moderate-income families. Early on in the project’s development, plans were put in place for Progression Place to use the trust fund, which provides financing for affordable housing. But the application for trust fund dollars was withdrawn in 2009.
The proposal to bring back the DC loan to Progression Place should be scrutinized carefully to make sure the project really needs it, and that this is the best use of the city’s limited affordable housing resources. The Housing Production Trust Fund is DC’s main tool for building or renovating low-cost housing. Funding has declined in recent years due to budget cuts and a steep drop in its source of dedicated revenue ‘ DC’s deed taxes, which are tied to the housing market. The trust fund received just $18 million this year, compared with $68 million in 2007. Administrative expenses and other funding commitments reduced new funds to around $13 million this year, which will support only about 100-200 new housing units.
The loan to Progression Place was first approved in fiscal year 2007, but a lot has happened since then. The District has become an increasingly popular city — with a growing population and demand for housing, especially in the heart of the city. In 2010, the District provided subsidies of nearly $5 million to encourage the United Negro College Fund to move to Progression Place, and the project’s construction was started. And the request for funding from the trust fund was withdrawn because other funding sources were identified, according to reports from the city.
The loan for Progression Place is now before the DC Council for approval, and the Council should ask some hard questions about why the subsidy to the developer is being revisited: Why is the loan necessary? How has the financial picture of the project changed? What happened to the other resources identified for the project? Can the developer get more private funding instead of relying on the city?
The housing trust fund needs more resources if it is going to make meaningful progress in stemming the loss of low-cost housing in the private market. But it also means that every penny of the fund should be spent as wisely as possible. That includes a careful look at the proposed loan for Progression Place.
