There's a deceptive-sounding piece of legislation called the "Housing Production Trust Fund Act" now being considered by the D.C. Council. Its goal, providing capital for the development of moderate- and low-income housing in the District, is admirable. The public housing situation in the District -- more than 10,000 people on the waiting list, waiting time extending to 11 years -- alone warrants attention to the affordable housing crisis in this city.
But if the bill passes, about the only thing the taxpayers will be able to admire will be the speed with which real estate developers, such as Oliver Carr and Mortimer Zuckerman, are able to simultaneously raid the city treasury and abuse the District's zoning laws.
The "linked development policy" contained in the bill is something other cities are trying with some success. It works this way: when developers want to build office space (San Francisco) or want special zoning exceptions (Boston), they make a sizable contribution to a city-controlled trust fund, the capital in the trust fund is used to spur development of affordable inner-city housing; the developers get their office buildings where they want them, the working poor finally get a decent place to live.
There are several big differences, however, between what is being proposed for the District and what is working well in Boston and San Francisco. Shrinking federal housing funds and increasing need in the face of budget limits have spurred many cities, including Chicago, Seattle and Miami, to consider similar programs. None, however, are contemplating the giveaway of development benefits as cheaply as Washington.
In the first place, the D.C. bill calls for "voluntary" rather than mandatory participation by the developers. In San Francisco or Boston, if you want to play, you pay; in Washington, you could play, pay whatever you want, or pay nothing at all.
The proposed "Housing Production Trust Fund Act" then becomes a simple ratification of the D.C. Zoning Commission's recent practice of trading zoning favors for low- and moderate-income housing aid -- a practice wide open to abuse.
A second great flaw in the D.C. bill is that it contains no real guidelines -- actual procedures for implementing voluntary linkage aren't adequately delineated; only minimal standards are set for the amount of a housing contribution; there are no regulations about where housing should be located. Instead, the bill relies on case-by-case decision-making by the Zoning Commission, and that is poor policy in such a vital area.
An example of the potential for abuse under the bill is provided by the recent generous offer of the Oliver Carr company to establish a foundation to contribute to inner-city causes if the city agrees to sell $54 million worth of urban renewal land at Gallery Place for $17 million.
The Carr Company, which also wants relief from the zoning requirement for housing at the site, would donate a portion of the profits from the Gallery Place project to the foundation -- payments that are estimated at $40 million over a 20-year period. A good deal? You bet! Carr can take the $40 million gain from the value-sale difference, invest it, pay the $40 million over 20 years and still have $20 million left over!
A recent proposal by Mortimer Zuckerman and Boston Properties for a large development at 25th and N streets provides another look at how developers present an underestimated picture of benefits from downtown development. In order to get relief from a covenant as well as from zoning regulations requiring that only residences be built at the site, Zuckerman and Boston Properties proposed making a $2.2 million linkage contribution. But the calculation used to justify the deal was based solely on a comparison of office and residential development costs, without taking into consideration the anticipated profits from the office buildings. The Zoning Commission, to its credit, refused the deal.
The proposed "Housing Production Trust Fund Act" should be defeated. The council committee responsible for the bill is trying to slip this by without adequate public comment. It did not properly alert community groups to the fact that it was holding hearings, and therefore the draft of the bill does not reflect community concern. While the purpose of the bill is noble, its foundation is flawed. It relies entirely on the good will and generosity of the city's real estate moguls, and our experience in trying to deal with these people is that their good will extends about to the lip of their wallets, their generosity to the edge of their next downtown development site.
-- John J. Sweeney is president of the Service Employees International Union. HGHis