Washington, D.C., has experienced an economic resurgence that has resulted in the population growing from 571,776 in 2000 to 702,445 in 2018. The District’s growth has attracted a large number of higher income households and recent studies have named the city the fastest gentrifying in the country.
Unfortunately, the reality of high housing costs is that the District is at the point where middle income households are under excessive pressure and are unable to qualify for traditional affordable housing due to their income. Members of middle income households in Washington, D.C. are being forced into long commutes from other municipalities.
The DC Housing Finance Agency (DCHFA) created the Housing Investment Platform (HIP) as its laboratory for addressing housing challenges outside of DCHFA’s traditional bonds and tax credits business lines. HIP launched in May 2017 and its first activity was a pilot investment building five workforce homes in Ward 8, Elvans Road Townhomes. HIP co-invested in Elvans Road Townhomes in partnership with a local minority-owned developer H2 Development and City First Bank to produce five new three bedroom townhomes restricted to households earning up to 120 percent of MFI. These homebuyers earn enough income to purchase a house but struggle to find high quality homes in their price range. The new owners at Elvans Road Townhomes include a D.C. public school teacher, a retired U.S. Army veteran, and an employee of the local sports and entertainment authority.
Following the success of the pilot program, DCHFA formalized its for-sale workforce housing investment activities by creating the Single Family Investment Fund (SFIF). SFIF was created as the first innovation launched under HIP to take a new approach to how housing finance agencies can solve housing challenges. DCHFA’s model is to enter into joint ventures with local developers on projects and to provide equity capital at required return rates lower than traditional private equity capital. This innovative approach incentivizes developers to build and sell workforce housing by allowing them to invest significantly less capital while receiving returns comparable to market returns.
The District and Mayor Muriel Bowser have placed an emphasis on housing affordability and production of housing for all income levels. DCHFA has partnered again with H2 Development and City First Bank to construct Cynthia Townhomes in Ward 8’s Marshall Heights community. The first phase, five townhomes, will be completed this year followed by two additional phases with five homes all priced affordable for middle income homebuyers.