Washington, D.C.: Affordable Housing at Rhode Island Row

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Washington, D.C.: Affordable Housing at Rhode Island Row

 

The Brentwood neighborhood of Washington, D.C. is home to a mixed-use, transit-oriented development that is providing location-efficient affordable housing for the District of Columbia’s workforce. Built on a former commuter parking lot adjacent to Metrorail’s Rhode Island Avenue–Brentwood station, Rhode Island Row features 274 apartments and 70,000 square feet of commercial space. The project received a 2012 Jack Kemp Workforce Housing Models of Excellence Award from the Urban Land Institute.

Background and Context

The District of Columbia’s population has risen 13 percent over the past decade, from approximately 572,000 residents in 2000 to more than 646,000 in 2013. This rapid growth has brought both benefits and challenges to the city. A 2012 analysis by the DC Fiscal Policy Institute shows that the median rent for a one-bedroom apartment in the District increased by 50 percent from 2000 to 2010. Over the same period, the percentage of very low-income households paying more than 50 percent of their monthly income for housing increased by 25 percentage points, from 6 to 31 percent. The District’s housing wage, what a household needs to earn to pay no more than 30 percent of its income for a two-bedroom apartment at fair market rent, is $27.15 per hour, which is the second highest housing wage for states in the nation.

The need for housing in the District and throughout metropolitan Washington has not gone unnoticed by the region’s policymakers and planners. A 2011 report prepared by the George Mason University Center for Regional Analysis identifies affordable workforce housing as critical to the region’s growth. The report highlights the need to provide housing near employment centers and transit stations. Because transportation is the second-largest line item in most families’ budgets, a household’s ability to access public transit and reduce its automobile use can significantly affect housing affordability. This is particularly relevant in metropolitan Washington, where access to the region’s rail and bus systems can save a household thousands of dollars in annual transportation costs. A recent study found that average household transportation costs across the region varied by more than $16,000 annually, with the cost of vehicle ownership and miles driven accounting for much of the difference.

Creative public-private partnerships are addressing the demand for housing served by transit and other amenities in the region. Through its Joint Development Program, the Washington Metropolitan Area Transit Authority (WMATA) has used many of its real estate assets to support transit-oriented development. In 2000, WMATA solicited development proposals for an 8.5-acre property adjacent to the Rhode Island Avenue–Brentwood station. Located just two miles northeast of downtown, the site offered an excellent opportunity to provide residential and retail space within the neighborhood while contributing to redevelopment efforts along the Rhode Island Avenue corridor.1

Design and Program

In the early 2000s, Urban Atlantic and A&R Development Corporation began an extensive planning process for the site that engaged many neighborhood and city stakeholders. Resident concerns about housing affordability and a desire for increased services influenced a development program that includes affordable and workforce housing combined with businesses serving neighborhood residents.

The developers sought to create a mixed-use development that would respect the scale of the neighborhood, catalyze future investments, and provide economic development and job opportunities in a distressed area. Rhode Island Row consists of two 4-story buildings defining a pedestrian-oriented main street and the property’s frontage along Rhode Island Avenue. The ground floors on the main street accommodate a branch office of the District of Columbia government, restaurants, and retail conveniences and help to activate the development’s primary street and strengthen its connection with the surrounding area. The developers have designated 10 percent of the project’s commercial space for local businesses.2

The project’s residential component includes one-, two-, and three-bedroom units that range in size from approximately 700 to 1,500 square feet, accommodating singles, couples, and families. The apartments feature open floorplans with granite countertops, stainless steel appliances, and washers and dryers. Community amenities include a fitness center, outdoor pool, bicycle storage, and a 7,000 square-foot green roof deck.3

Rhode Island Row reserves 55 of its units for very low-income households earning 50 percent of the area median income (AMI) and 219 targeted for workforce households earning between 80 and 120 percent of AMI; none of the 274 units has a dedicated housing subsidy. The developer provided the very low-income units as a community benefit during the entitlement process, with a 20-year affordability restriction achieved through a zoning covenant administered by the District’s Department of Housing and Community Development. The affordability commitment allows a very low-income household of 4 with an annual income of $53,750 (50% AMI) to rent a 2-bedroom apartment within steps of local and regional transit for approximately $1,350 a month. The workforce units, which are not subject to an affordability restriction, have monthly rents set at affordable levels ranging from $1,700 for a 1-bedroom apartment to approximately $3,000 for a 3-bedroom unit.4

Public-Private Partnerships

The project would not have been possible without close collaboration between the developer and its public partners. As part of the conditions for the 60-year ground lease with WMATA, the developers replaced all the existing parking spaces with a WMATA-owned parking structure. In addition, a shared parking agreement allows commuters to use some of the parking spaces in the development’s two garages. To finance the construction of the WMATA garage, the District of Columbia granted the developer abatements on $1 million in construction sales taxes and an additional $7.2 million from its Payments in Lieu of Taxes (PILOT) bond program. The District’s PILOT program provides bond financing for improvements made on formerly tax-exempt land (in this case, WMATA’s surface parking lot), with a portion of the newly generated tax revenue from the project covering the debt service on the bond.5

In addition to local financing for the garage, federal programs supported the $109.3 million project at the height of the recession after the original financing structure fell apart (see table 1). An $82.4 million mortgage guaranteed through the Federal Housing Administration’s Section 220 program was combined with $18.7 million in equity and new market tax credit allocations from the Low-Income Investment Fund and Urban Atlantic’s affiliate, Mid-City Community CDE.6 This financing strategy, which was one of the only options available to the developer, represents one of the first instances that the Section 220 program has been used in combination with new market tax credits.7

Lessons Learned

With a commitment to affordability that extends to addressing household transportation costs for very low-income and workforce households, Rhode Island Row is an exemplary model of transit-oriented development. Through its partnership with WMATA, the developers put an underutilized asset to highly productive use, yielding greater value for WMATA, increased tax revenue for the District of Columbia government, and an economically viable development that provides affordable housing for very low-income and workforce households with no dedicated subsidy. The project has received strong support from local neighborhood groups for its commitment to affordability and added neighborhood amenities.

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1. Internal project documents provided by the developer, Urban Atlantic.

2. Ibid.

3. Ibid.

4. Ibid.

5. Ibid.

6. Ibid.

7. Ibid; Jennifer Dockery. 2010. “First-of-Its-Kind Financing Brings Transit-Oriented Development to D.C.,” Journal of Tax Credits I:VI, 1–3.