By Cody Mello-Klein | [email protected]
City Council unanimously approved an update to the city’s affordable housing contribution policy at the Dec. 12 public hearing. Additional affordable housing units will now be required from developers who wish to pursue added density.
The most significant policy change aims to address the city’s growing need for affordable housing through new developments. Development companies that seek waivers from the city’s density rules will now be required to set aside space in that additional density for affordable housing units.
Specifically, developers opting to pursue residential density over what they are allowed in a given small area plan must devote 10% of the increased density to affordable units in what are deemed “core markets,” including Old Town, Del Ray and Potomac Yard. Developers building in “emerging markets,” including Arlandria, Rosemont and the West End, are only required to set aside 8% of additional density to affordable units. Market designations are based on rent prices in various areas of the city, according to staff.
Developers of continuum of care projects and age-restricted, independent living multifamily projects would be required to dedicate 3% of additional density to affordable housing.
The update also includes several voluntary policies that would allow developers to include additional affordable housing within the limits of their SAP-allotted density. A proposed amendment to city code that would make these voluntary contributions mandatory is included in the city’s legislative package for the 2021 General Assembly session in January.
Council’s approval came with some caveats. Although council approved staff’s recommended update to the policy, council directed staff to come back in January with revisions that reflect changes proposed by several members of council.
The update, which the Planning Commission unanimously approved on Dec. 1, is the culmination of an 18-month process involving conversations between city staff, developers and housing consultants.
Council had an initial conversation about the policy update during its Dec. 8 legislative meeting, during which most members of council supported the majority of staff’s proposed update.
Councilor John Chapman said he supported the mandatory element of the policy update, arguing that it protects communities that are increasingly getting pushed out of the city and ensures developers do not undervalue the community they are coming into.
“It’s about actually improving the opportunity for people to stay in this community because that’s what we’re fighting against,” Chapman said at the meeting. “Gentrification is alive and well in our community and there’s very few tools that we have to fight against it. This is a tool that we’re trying to use, trying to use the opportunities that developers are giving us … to be able to allow people to stay in this community.”
Chapman and Councilor Mo Seifeldein did push back on some of staff’s proposed changes on Dec. 8. They claimed that although the overall vision for the policy update was something they supported, the specific language provided too much flexibility for developers.
The initial policy update allowed for developers to dedicate as low as 5% of their added density to affordable housing under certain circumstances, such as market or economic factors that lie outside the developer’s control. Seifeldein pushed back on this and requested staff specify that the circumstances in question are limited and rare.
Seifeldein and Chapman met with city staff and City Attorney Joanna Anderson in the intervening days to work out an amendment to the proposed changes that would work for both staff and council.
On Saturday, Seifeldein proposed an amendment that, like staff’s recommendation, would make the 10% and 8% contributions mandatory if developers opt to go above the density they are allowed under a SAP. However, Seifeldein further defined that the circumstances that would allow developers to go below those contribution mandates would not include “ordinary or industry-standard economic factors.”
Under Seifeldein’s amendment, an applicant pursuing decreased contribution due to a project’s lack of feasibility under the mandates could submit a pro forma evaluation, opening their financial books to the city. The developer would have to pay the city to hire a third-party consultant to review the evaluation and council would consider the pro forma but it would not be a requirement for council’s final decision.
Cathy Puskar, an attorney at Walsh, Colucci, Lubeley & Walsh who represents various developers in the region, expressed concern upon hearing some of Seifeldein’s proposed changes at the hearing for the first time.
Puskar, along with many other developers’ representatives, has been working with the city since 2019 to find a solution to the city’s affordable housing woes that works for both developers and the city.
“I would ask council to consider the fact that the reason we have had the success that we have had in the past with developers agreeing to abide by [these policies] is because we were all part of that process and we all agreed on the outcome,” Puskar said. “It just feels a little bit disappointing that you guys are now changing what was discussed and negotiated with that group at the 11th hour.”
Puskar urged council to defer their decision on the proposed amendment to January.
Seifeldein pushed back on Puskar’s comments, claiming his amendment does not fundamentally change the policy update but further clarifies the rules around exceptions to the contribution mandate.
“It does not change the substance of what has been agreed to, and certainly council has the authority to make that change, make things clear for all parties,” Seifeldein said.
Puskar said she remained concerned about how, under Seifeldein’s amendment, developers would not only be opening their books to the city but would have to pay for a third-party analysis that might not even be used by the city in its final determination.
Mayor Justin Wilson expressed discomfort around the idea that council should bind itself or future councils to specific actions, such as requiring a pro forma to be part of its consideration in a process designed around case-by-case analysis.
Councilor Canek Aguirre questioned the need for market designations between core and emerging markets, especially as “emerging markets” in the city are developing so quickly. Seifeldein seconded Aguirre’s comments, proposing that the 10% contribution requirement be made universal across the city.
Chapman supported the councilors’ position, encouraging council to find places where policy can lead development and not the other way around.
Sarah Woodworth, a consultant for Office of Housing who assisted in the research that led to the proposed update, cautioned that developers would be less likely to pursue projects in emerging markets with a 10% contribution policy.
“I do not think that in the markets with the lower rents that do not get the prime rents that our core markets or mature markets get, that a project will be feasible at the 10% level, which means no investment will happen,” Woodworth said.
Wilson pointed to the city’s handling of development policy in Beauregard, where developers have opted to pursue by-right renovation instead of adding density due to an ambitious contribution policy.
“We don’t want to go too far or we’re not going to have anything happen,” Wilson said.
To address council’s concerns regarding market designation, Helen McIlvaine, director of the Office of Housing, agreed to perform annual reviews of market designations, as opposed to performing reviews every five years.
After a lengthy back and forth, Chapman made a motion, seconded by Councilor Del Pepper, to approve staff’s recommended policy update. Instead of deferring the decision, as part of the approval, council directed staff to return to council at its Jan. 12 legislative meeting with a revised policy that reflects Seifeldein’s proposed amendment and adjustments made to the frequency of reviews to market designation. Council approved the motion 7-0.
