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Manna report offers lessons on inclusionary zoning and affordable housing

The District's Inclusionary Zoning program hasn't had the smoothest history. Enacted in 2007, the program requires that developers set aside 8 to 10 percent of new housing as affordable to buyers who make up to 80 percent of the area median income.

But until earlier this summer, no IZ units had actually been sold. Last year, the developer of D.C.'s first for-sale IZ units sued the city.

Now Manna Inc., a nonprofit housing developer, has released a report that looks at IZ programs across the country and draws lessons for the District.

Lesson one: stop looking at Montgomery County. "Such comparisons are inappropriate," the report says, because D.C.'s economy, population, available land and housing market are different. Instead, Manna looked at IZ programs in San Jose, San Francisco, and Boston.

One issue D.C. faces with the predecessor to its IZ program, which Manna says may affect the IZ program as well, is that when owners of below-market homes wish to sell, the amount they can sell their home for is capped. In San Jose, that issue is sidestepped through a subsidy recapture program. If a buyer purchases a unit for $230,000 that is worth $430,000, then sells for $530,000, that original buyer must pay the $200,000 subsidy back to the city. 

In San Francisco, if a buyer of an affordable unit wishes to sell but can't find a buyer in their income category (because, for examlpe, condo fees have increased so far as to make the payments untenable for another in the same income block), San Francisco's Office of Housing allows sellers to obtain waivers to exceed their AMI category by 20 percent, but never above 120 percent. "To date, the Office of Housing has not seen a housing-to-income ratio that necessitated resale to someone above 120% AMI," the report says.

And in Boston, the city allows developers to create its affordable housing at a completely different location, or pay a fee to the city in lieu of building affordable units in the same building. While this initially seems like a step back for affordable housing, Manna's report explains it like this:

"With onsite construction, unit sizes are determined by the make-up of market-rate units in a given development, and are typically studios, one-bedrooms and a fewer number of two-bedroom units. If the District wants to provide longer term ownership opportunities for families or individuals/couples planning to have children, then it should consider available avenues to build larger units." 

Read more here.
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