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The Washington, DC Workforce Housing Land Trust

The Washington, DC Workforce Housing Land Trust. A New Tool Leveraging Funds for Permanent Affordability. The Challenge. Mayor’s Comprehensive Housing Strategy Task Force: “…a growing middle class is the key to the city’s future vitality…

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The Washington, DC Workforce Housing Land Trust

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  1. The Washington, DC Workforce Housing Land Trust A New Tool Leveraging Funds for Permanent Affordability

  2. The Challenge Mayor’s Comprehensive Housing Strategy Task Force: • “…a growing middle class is the key to the city’s future vitality… • “[The city must] make a major effort to enable middle income working people to find and retain housing they can afford.”

  3. The Challenge • Shallow Subsidy • Permanent Affordability

  4. An Answer: Leveraging Funds for Permanent Affordability • Highly leverage city funds by using NMTC-enabled private investment • In exchange for subsidy enabling them to buy a home, buyers agree to share the appreciation • Use a private, non-profit community land trust with a public mission to oversee and implement permanent affordability

  5. The Mayor’s Plan: Overview • $10MM in City funds leverages: • $65MM in private socially responsive investment • Creating a $75MM financial pool to develop 1,000 units of permanently affordable workforce housing in the District

  6. Leveraging City Funds

  7. Open Architecture • Pool operated by Land Trust which provides $75,000 per unit in low-interest, non-amortizing subordinate debt • Funds made available to non-profit and profit developers • Portable: homebuyers may use as a credit towards home purchase

  8. Objectives • Efficiently support developers of affordable housing • 1,000 permanently affordable units • Achieve 80% AMI or lower portfolio average • Disperse housing units across City • Support New Communities, Great Streets, AWC, NCRC • Prove success and do it again

  9. Sample Home Purchase • Land Trust unit with market value of $300,000 • Buys home with: • $9,000 down payment • $75,000 interest-only, low-rate loan (repaid at resale) • $216,000 mortgage (72% LTV) • Unit affordable at 76% AMI

  10. Sample Resale, Year 8 • Upon Resale, Seller Receives: • 100% down pymnt, equity in home, improvements • 25% of appreciation • Seller walks with $66K +$19K income tax savings • Resale price = • Seller equity + all debt + CLT fees & closing costs • $443 market value sells for $361K • Affordable to family at 77% AMI

  11. Subsidy Grows Over Time

  12. The Land Trust is: • Highly Leveraged – bringing in $29 of private funds for every $1 of public support • Highly Efficient – averaging only $10,000 local public subsidy per unit • Highly Flexible – offering simple terms to any developer preserving or creating affordable housing, as well as individual homebuyers • Easily Layered – works well with HPAP, EAHP and others

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