D.C. sold properties for affordable housing. Half are still vacant.
About two dozen properties that D.C. auctioned off years ago to developers who promised to build housing for middle-income families remain vacant, a Washington Post investigation found, amid an affordable housing crunch and a rise in homelessness.
The city sold the properties — some potentially worth more than $1 million in desirable areas such as Shaw and Petworth — as part of a program called “Vacant to Vibrant,” which Mayor Muriel E. Bowser’s (D) administration announced in 2017. The program aimed to “produce and preserve affordable housing and create homeownership opportunities,” according to promotional materials.
In 2018 and 2019, the city auctioned off 56 sites, including townhouses, apartment buildings and vacant lots, “to produce approximately 50 workforce housing units,” according to the D.C. Department of Housing and Community Development (DHCD). Workforce housing is aimed at families earning between 60 and 120 percent of the area median income — about $50,000 to $90,000 for an individual and $70,000 to $140,000 for a family of four.
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Half of the 56 properties are inhabited and no longer owned by the city. The rest remain undeveloped, uninhabited or badly in need of repair. More than half of those vacant properties have returned to District ownership. In some cases, those who won auctions never took possession.
In an email, DHCD spokesman Tim Wilson said winning bidders had to comply with affordability requirements unless the property was being used for green space. The requirements limit the property’s resale value and obligate the buyer to lease to people of certain income levels. The terms also require most developers to build properties within a year and a half, although city officials acknowledged that time frame was probably too short.
“There’s a process. You can’t just develop. You need permits. You need to get financing,” said DHCD Director Colleen Green. “We can’t expedite once the District gives a private owner property.”
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Typically, developers need about three years to complete a project, and the coronavirus pandemic caused delays, Green said. “The pandemic slowed a lot of things down. The supply chain was slowed down. Banks stopped, construction stopped for a few months. There were financing problems.”
She still gives Vacant to Vibrant high marks. “Generally, the program has done well,” she said. The remaining undeveloped properties “may be vacant, but they may be in a plan with an owner.”
The financial incentives for developing vacant properties can be significant. The average assessment for undeveloped properties containing housing in the Vacant to Vibrant program was $557,812, according to a Post analysis, while the average assessment for vacant lots was $166,607. The properties were auctioned for an average of just $269,681.
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Asked about the construction delays, owners cited typical obstacles to building in the District, such as the city’s bureaucratic permitting system and the costs of construction. Joseph Schilling, who studies housing policy at the Urban Institute, said the program’s checks and balances are “consistent with how other cities have tried to tackle vacant properties,” but the 1½-year deadline given to most of the developers was probably too short.
When developers do not fulfill their agreements with the District, the city can pursue legal and financial punishments, according to property covenants. But the city did not penalize them for not finishing development by their scheduled deadlines.
Among the undeveloped Vacant to Vibrant properties that The Post visited were vacant lots near the Maryland line in Northeast and Southeast Washington, and uninhabited apartment buildings off South Capitol Street in Ward 8. Others were in neighborhoods where rents and home prices are mostly out of reach for middle-income families.
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One vacant three-story townhouse owned by the city is at 905 R St. NW in Shaw, on a tree-lined road and close to amenities such as a beer garden, upscale restaurants and a Metro stop. The real estate website Zillow estimates its value at more than $1.2 million. Records show a developer won the property at auction through Vacant to Vibrant, but the District now owns it again.
On a recent visit, the property’s English basement was boarded up, and the front door was tagged with a green “Vacant” sticker. A DHCD sign at the property cautioned against trespassing or dumping. The city’s vacant property database indicates it has been empty for at least a decade.
Jon Kirn said he has lived next to the vacant home for 13 years. When he first moved to the block, 905 was a shell. Though different developers have renovated parts of it, Kirn said, no one has ever moved in.
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The abandoned house is an ongoing problem, Kirn said. Over the years, neighbors have worked together on coordinated 311 requests, ensuring that the grass is cut, rat infestations are abated and trespassers are kept out.
Though such issues are manageable, Kirn said he cannot understand why the city doesn’t do something with the property in its quest to build more affordable housing.
“There are hindrances to this program that have left this property vacant,” he said. “This thing just does not work.”
About three blocks from Kirn’s property, Beth and Larry Ketchum live in a condominium on 10th Street NW with their goldendoodle Dakota. The condo, redeveloped through Vacant to Vibrant and valued at more than $550,000 on Zillow, is across an alley from a park.
Beth Ketchum said the couple previously lived in the Navy Yard section of Southeast Washington. Their income was under the program limit for the condo on 10th Street. Without the program, she said, she doubts they could have afforded a home in their current neighborhood.
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Marc Laurent, the developer of the Ketchums’ home, said he and his company have worked on more than two dozen projects in the District. He took possession of the property in late 2018. He said completing the project in accordance with the program requirements was not more difficult than a traditional development project. He put the redeveloped property on the market in December 2019, with two workforce units and two market-rate units. The final sale was in April 2020.
Laurent said when he completed the project, it was “one of the best feelings I’ve had professionally because of the outcome for the two families who were able to participate in the program and purchase the workforce units.”
He said he heard that some Vacant to Vibrant projects didn’t work out because the winning bidders were inexperienced in construction and did not know the program requirements. Some overbid for the properties and ran out of money for development.
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Green, the director of the DHCD, said bidders had to show they had the finances to buy the properties, but she was not aware of any other specific requirements. Alex Cooper Auctioneers, which ran the auctions, did not respond to questions about the process.
“There should be a way for the D.C. government to develop a program like this, but they need to look at what went well and what went poorly to make this successful,” Laurent said.
For more than a decade, Senghor Bey, 46, has lived next door to 4326 Halley Terrace SE, a lot with unkept grass off South Capitol Street near the Maryland line. D.C. auctioned the lot in 2019 and awarded it to a bidder who never took possession, according to city records. The city still owns it.
Bey called the lot “an eyesore” — a magnet for rats, roaches, stray cats, opossums, raccoons and trash. He thinks the blight has driven down the value of his one-bedroom unit. Tired of seeing the vacant lot, Bey approached the city to purchase it earlier this year but was told it was not available.
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DHCD officials said title issues complicated a sale. “It probably should not have been included in the auction at the time with the title issues,” Green said.
“For the city to sit on [the lot] is a disservice to the neighborhood and the residents of D.C.,” Bey said.
Another property, 523 Kennedy St. NW, sits on a corridor that the city targeted for revitalization more than a decade ago. Public records show Equilibrium Realty Investments paid $670,000 for it in 2018.
Today, a rickety wooden fence with a “Vacant” sticker surrounds the property, which is still owned by Equilibrium. Although the city’s vacant property database says the home has been vacant for more than nine years, Zillow values it at $736,600.
Shanu Okwesa, Equilibrium’s regional manager, said in a phone interview that the company planned to build condos at the site. The property’s development has been delayed because of permitting issues, he said.
“It takes a long time to get permits in D.C. these days,” he said. “The Department of Buildings is very difficult to deal with.”
Other developers whom The Post spoke with said permitting and resistance from neighbors were part of the reason projects were delayed.
Not far from Interstate 295 and the Anacostia Metro Station is 2413 Shannon Place SE, a lot that sits amid attractive, modest single-family homes. A chain-link fence surrounds a three-story structure going up at the site, across from Thurgood Marshall Academy Public Charter High School.
The owner of the property, who declined to speak on the record, bought it at auction through the Vacant to Vibrant program in 2018, property records show.
Regina Middleton, who lives next door to 2413 Shannon Pl. and has lived on the block for more than six decades, has a name for the uncompleted construction project: “Godzilla.”
For years, Middleton said, the lot where the uncompleted three-story building stands was vacant. She said she tried to buy the land at a tax sale years before the Vacant to Vibrant program but did not win the auction.
Now, she said, a developer has decided to build a structure that’s too big for the space — and has not even finished it. Moreover, according to Middleton, the construction blocks access to the side of her home, where vines and weeds are sprouting up.
“I wish they would just gut it and plant flowers,” Middleton said. “What about the people that have been here long-term? What about the true Washingtonians? I think we should have a say because this affects us.”
In 2010, then-Baltimore Housing Commissioner Michael Braverman oversaw a program similar to Vacant to Vibrant in Baltimore called “Vacants to Value.” The city transformed more than 800 vacant properties to usable lots, according to an analysis by the Center for Community Progress, a nonprofit organization that studies vacancy transformation programs.
Braverman said Baltimore was successful because it identified developers who had a history of building affordable housing and partnered them with affordable housing nonprofits and community members. The program also helped developers secure financing and relaxed zoning requirements. And the city enforced a punitive system of fining developers or reclaiming properties if they failed to redevelop on time.
Baltimore and other cities, including Cleveland and Philadelphia, focus more on converting vacant lots to green space, which can help stabilize vacancies and abandonment, rather than housing, Schilling of the Urban Institute said.
D.C. was able to successfully rehabilitate four once-vacant lots that the city designated for tree canopy conservation through Vacant to Vibrant, The Post found.
“My impression is the city’s heart was in the right place and they wanted to get something off the ground quickly in order to take advantage of it, but didn’t really take the time to think it through,” Schilling said.
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