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Hope for D.C. Housing

Developers Strike Deal to Renovate Scattered Units

On a well-kept stretch of Columbia Road NW just north of the McMillan Reservoir, Rudolph Jenkins has the distinct misfortune of having the D.C. Housing Authority for a next-door neighbor.

In Housing Authority parlance, the row house adjoining Jenkins's home is a "scattered-site unit," one of 310 city-owned houses in varying states of disrepair sprinkled throughout Washington. More than a third of these buildings are vacant, gutted shells. The one next to Jenkins is vacant, gutted and burned.

"They finally boarded it up, and it's been pretty cool since then," Jenkins said last week, grateful for the authority's final act of surrender.

But after years of playing slumlord, the Housing Authority now is hard at work on an effort to eradicate this kind of neighborhood blight.

Pending federal approval, D.C. public housing receiver David I. Gilmore has agreed to hand over 76 vacant scattered-site units in Columbia Heights and Shaw to a coalition of nine housing developers. It's the agency's first step toward getting out of the scattered-site business.

The nonprofit developers say it will cost $80,000 to $100,000 on average to rehabilitate the abandoned properties, which they then will sell to mostly low- and moderate-income families. Ultimately, Gilmore wants to sell off all 310 units, with current tenants and other public housing residents given first opportunity to buy.

"They've got some capable people putting this together for them," said Chris Hornig, a deputy assistant secretary at the U.S. Department of Housing and Urban Development. "I don't foresee obstacles."

For years, nonprofit developers in the District have been begging city housing officials for a shot at rehabilitating the decrepit scattered-site units. For years, they got nowhere.

Then, said Robert L. Moore, president of the Development Corp. of Columbia Heights, "we finally got to David Gilmore. And he says, `Okay, let's do it.' "

Gilmore, who became the Housing Authority's court-appointed receiver in May 1995, remembers when the deal was made at the Florida Avenue Grill, a soul food place at 11th Street and Florida Avenue NW. "Bob took me to lunch there once shortly after my arrival -- I told him I have this fondness for short ribs -- and we talked about how we might work together."

Many of the Housing Authority's directors before Gilmore -- there were 12 in 15 years -- liked the idea of turning scattered-site units over to developers, but they lacked the will, the competence or the creativity to put a plan in motion.

Moore brought nine community developers together to make his pitch to Gilmore, knowing it would take their combined capacity to renovate 76 houses in three years. Each brings a specialty or a special interest to the project, Moore said.

Manna Inc., which has produced 500 units of new or renovated housing in the last 15 years, focuses its efforts in Shaw. Mi Casa Inc., a two-man outfit that has renovated 16 houses in the last four years, specializes in single-family homes.

Hope Housing and Church of Christ have signed on together to renovate seven vacant properties in the 1300 block of Irving Street NW, where the church is located, and two others around the corner in the 3000 block of 13th Street NW.

Moore, whose agency will manage the coalition, brought one other essential ingredient to the table: financing. Fannie Mae agreed to provide technical support and mortgage money, and the D.C. Local Initiative Support Corp. offered technical help and construction financing.

"We've got a market that appears to be willing and able to make this deal work," said Larry Dwyer, a former Boston city official now working as Gilmore's development director. "We've got nine competent partners led by sound, proven community development corporations. And a finance community that says, `This makes sense to us.' "

The Housing Authority began acquiring scattered-site units in the 1970s as a way to lessen the density of public housing. A majority of the properties came from the city's Redevelopment Land Agency, which used federal urban renewal funds to acquire run-down houses as a first step toward alleviating blight.

But the houses weren't maintained by the city, and the blight got worse. "If you turn your back on this stuff for a minute, it starts to get away from you," Gilmore said. "You have to keep the properties up to code. This is a good example of what happens when you don't."

Many of the houses acquired with redevelopment funds were in Columbia Heights, a section of the city devastated by riots after the assassination of the Rev. Martin Luther King Jr. in 1968. Today, the neighborhood has almost a quarter of all the city's scattered-site units -- and more than half of all vacant ones.

"On some blocks, there are eight or 10 vacant houses," Moore said. "It makes the block look like a war zone."

The key to nearly all low-income housing development is some type of subsidy to bridge the gap between what it costs to fix up a property and what a working-class family with an income of $25,000 a year or less can afford in mortgage payments.

In this case, the so-called write down comes directly from the Housing Authority -- it essentially is giving its properties to the nonprofit developers for free. In the 500 block of Columbia Road NW, for example, there are three vacant houses. The two that are owned by the city will be turned over to Mi Casa for rehabilitation. The third is now for sale by a private owner, who's asking $54,000.

One of the units, at 511 Columbia Rd., looks to be in fairly good condition. If rehabilitation costs, say, $40,000, the house could easily be sold to a low-income family living in public housing for about that amount -- far less than the vacant house for sale two doors away.

But the row house next door to Rudolph Jenkins -- the one trashed and burned by crack addicts -- is so badly damaged that it might cost up to $90,000 to renovate, making it affordable only to a buyer with considerably more income.

"It's probably been vacant for seven or eight years," said David Wiley, Mi Casa's executive vice president. "And conceivably, it needs everything new."

But those costs can be recouped. Gilmore envisions a third of the 76 rehabilitated properties going to low-income families, a third going to moderate-income families, and a third being put up for sale to families of any income.

When a property is rehabilitated, it will be appraised. The difference between its appraised value and the rehabilitation costs is the property's "as-is" value -- what it was worth, presumably, as a vacant shell.

Thus, a renovated property assessed at $100,000 that cost $75,000 to rehabilitate would have an as-is value of $25,000. If a low-income family were to purchase that home, it would pay about $75,000. But if the property were sold to an upper-income family, the price would be the full $100,000 market value -- with $25,000 going into the program to subsidize other low-income buyers.

Gilmore said his main concern is whether enough of the properties can be rehabilitated and still be affordable to low-income families, the key to the program's success and its approval by HUD later this year.

"The properties have been allowed to deteriorate to such a state that it's going to require some carefully crafted financing to make this available to low-income families," he said. "I don't know how you get around the construction costs."

But Wiley remains optimistic that a good percentage of the properties can be fixed and marketed to low-income buyers. "These were public housing units," he said. "HUD's objective, the Housing Authority's objective and our primary objective is to use them to house people who are income-eligible for public housing."

DIGGING FOR GOLD

The conversion of about 300 units of publicly owned scattered-site housing in the District, 110 of which are vacant, into owner-occupied housing will increase neighborhood home values and the city's respective tax base. Columbia Heights, which has more of these units than any other neighborhood in the city, would benefit most from their restoration.

Percentage of publicly owned scattered-site housing by ward

WARD 1 42%

WARD 2 13%

WARD 4 5%

WARD 5 10%

WARD 6 16%

WARD 7 6%

WARD 8 5%

NOTE: There is no scattered-site housing in Ward 3.