Several steps closer to proving an innovative model for preserving housing affordability
Back in early 2018, the Washington Housing Conservancy was still just an idea. Today, in less than two years, it is preparing to close on its first properties in the first quarter of 2021—and prove that its transformative model using private dollars to preserve affordable housing in high-opportunity neighborhoods really works. It also intends to prove that starting right out of the bat with inclusive, racial- and equity-focused social impact goals really works, too.
Recently the Housing Conservancy hosted a meeting to showcase what it has been up to and where it is headed. Some of the key participants included Kimberly Driggins, Executive Director of WHC, David Roodberg, Chair of WHC and CEO & President of Horning Brothers, Joshua Bernstein, WHC Board member and CEO of Bernstein Management, and Mark Joseph, Professor at Case Western Reserve University, Founding Director of the National Initiative on Mixed-Income Communities, and WHC social impact lead consultant.
First, a quick description of how this effort is organized. The Washington Housing Conservancy (WHC) is the nonprofit owner of the larger Washington Housing Initiative (WHI), which also includes the Impact Pool and a Stakeholder Council, to be established in early 2021. The Impact Pool, managed by JBG Smith, is the investment vehicle providing loans to preserve affordable workforce housing. The Stakeholder Council will be created next year with a broad cross-section of regional civic leaders to provide strategic direction, advocate for local housing policy and support collaborative partnerships. Federal City Council Trustees have played central design, strategy, funding and leadership roles since the inception of the WHI.
The Initiative’s model is innovative because it seeks to demonstrate that, in addition to promoting housing stability, inclusionary housing efforts can achieve much broader social impact goals. Its core aims are to preserve affordable housing and avoid displacement in high opportunity neighborhoods, as well as promote economic mobility, particularly for low- and moderate-income African Americans and other residents of color.
As owner/operator, the WHC will make sure residents feel welcome, respected and engaged. So much of this country’s housing policy is wrapped up in institutional racism that trapped residents in poverty, unsafe conditions and far from jobs or a chance to get a leg up. Many property management companies try to create welcoming and inclusive environments, but few have these principles as a foundational and guiding North Star. To hold itself accountable to its vision, the WHC is generating an extensive set of social impact metrics—on everything from wealth and income gains to resident retention and surveyed feelings toward management, to community attachment and residents’ sense of stewardship of the property.
The Initiative is different in focusing on workforce housing affordability. This is the segment locked out of market-rate DC housing and is usually ineligible for public assistance. The WHC’s mixed-income buildings will have a sizeable number of units devoted to people making 50 percent to 80 percent AMI (Area Median Income). This includes people like teachers, policeman, firefighters, nurses and retail workers.
The Initiative is also innovative in its market disruption and financing model. Most affordable housing is created in neighborhoods where property is less expensive and where there are often fewer amenities and less access. The WHI is going into high-opportunity neighborhoods (with improving schools, access to transit and fresh and healthy food) that are just on the edge of becoming unaffordable, and purchasing buildings to preserve affordability in perpetuity. It is directly competing with private market-rate developers, and the biggest drivers behind the Initiative are some of DC’s leading private developers.
This is only possible because the Initiative is so well capitalized upfront from private and philanthropic donors. Investors in the Impact Pool can expect a capped return of 7 percent. Important fundraising milestones are being hit. The Impact Pool has raised $110 million with a $150 million goal and the Conservancy has raised $16.5 million with a $30 million goal.
The WHC is about to experience a growth spurt. Its goal is to acquire 3,000 units within 3 to 5 years. By early next year, it will nearly be halfway to that target, with acquisitions that should total 1,200 units.
This will begin the proof-of-concept test to see if any parts of the financial model or social impact theory will need tweaking and refinement. It will also be a time to think through how small businesses close by can be integrated into procurement, services to residents and part of the community fabric that enables everyone to feel like they belong.
In time, the Initiative can build a track record of success and buzz of interest in the region and beyond. Other real estate developers, seeing this success, could join in or start their own similar initiatives. Preservation, in addition to new construction, could become a lynchpin for future housing affordability policies. The idea could catch on, finally delivering a dent in a growing systemic problem in high-growth regions across the country.