In the continuing drama in the District over the high cost of housing, the public routinely assigns the role of villain to greedy developers.
Don’t tell it to real estate entrepreneur Art Linde. He has instead played victim to the city bureaucracy in a three-year-old farce.
Since 2011, flawed rules and official ineptitude have blocked Linde from selling a pair of two-bedroom condos in a building he owns on Georgia Avenue NW near Howard University.
There’s no problem with the asking price or location. Rather, the District required him to sell the units as affordable housing to winners of a lottery for low-income residents – yet the city has repeatedly failed to meet its obligation to provide a qualified, interested buyer.
Linde estimates he’s out more than $1 million because he can’t unload the properties. Although he’s unhappy about it and has sued the city, he says the main casualties are needy District citizens unable to get a break on their mortgage payments.
“I’m a rich guy,” Linde said. “This thing will get sorted out one way or the other, and I’ll go on to live a happy, healthy life. The real losers are the affordable-housing lottery winners.”
He said the District has given him more than 1,000 names of potential buyers, but none worked out. Some couldn’t get mortgages or provide the necessary paperwork. Others were never interested in the property in the first place.
“There’s supposed to be tens of thousands of people who need affordable housing,” Linde said. “I haven’t had a warm body with a preapproval letter [for financing] in 31 / 2 years.”
Linde’s experience illustrates the problems burdening one of the city’s principal efforts to help less-affluent residents to buy their own homes despite soaring prices.
The undertaking, part of the Inclusionary Zoning program, is well-intentioned. Developers seeking maximum density in new buildings are obliged to sell a fraction of the units at below-market prices to applicants who meet certain income requirements.
For instance, Linde said an eligible buyer could have purchased one of his units in 2011 for $124,900, compared with an actual sales price for an identical unit in the same building of $299,900.
Sounds like a great deal, right? At mayoral and D.C. Council debates during the current campaign, candidates routinely urge extracting more concessions from developers as a way to curb housing costs.
But the Department of Housing and Community Development did a poor job of administering the project from the start. The effort also was out of sync with market trends and has yielded scant results.
Since the program began in 2009, the number of people who have used it to buy homes is only four, with three more deals under contract.
One reason is that only a sliver of people have incomes that are simultaneously low enough to qualify for affordable housing — and high enough to get a mortgage.
In addition, the program strictly limits the price for which a participant can eventually sell the unit.
That’s designed to keep the unit affordable for future buyers. But it also means people have less incentive to buy in the first place, because they won’t benefit from price appreciation.
The program “has no connection to the reality of trying to connect appropriate housing to households and families,” said Frank Demarais, vice president of Manna, a nonprofit affordable housing corporation. “Practically, it’s just ridiculous.”
The Department of Housing and Community Development said it couldn’t discuss Linde’s case in detail because of the lawsuit. But it emphasized that the agency believes that reforms planned for next year “will significantly enhance programmatic operations.”
“DHCD is making changes in the registry [lottery] and selection process to ensure that candidates are qualified, ready, willing and able to take advantage of any purchase opportunities that are available,” said Marcus Williams, director of communications.
The program has had more success placing needy residents in rental properties. That’s partly because there’s more supply, as the vast majority of new buildings coming on the market now offer units to rent rather than buy.
In addition, the city has added staff to manage the program.
That’s little consolation for Linde, who’s still paying taxes and condo fees on the units the city won’t let him sell.
“At some point, you feel like you’re in a Kabuki theater,” Linde said. “You’re playing for laughs.”
For previous columns, go to washingtonpost.com/mccartney.