Have You Heard About DC’s Pilot Program – Live Near Your Work?

Photo by PoPville flickr user Faucetini

Thanks to a reader for the news. The Office of Planning press release says:

On Friday, April 29, 2011, the DC Office of Planning (OP) released a Request for Applications (RFA) for up to $200,000 in matching homeownership grants, to be administered by qualified employer(s) based in the District of Columbia. In partnership with selected DC employers, the Live Near Your Work (LNYW) pilot program will provide grants for down-payment and closing cost assistance to individual employees. OP will match employer contributions (up to $6,000 per participating employee) to attract and retain DC residents, with the primary purpose of encouraging employees to live close to their place of employment and/or transit.

CityPaper’s Lydia DePillis asks:

“the grants are available to people at any income level—might this grant just throw free money at people who were planning to move somewhere else anyway?”

What do you guys think – is the good idea? A good use of money during a tight budget?

54 Comment

  • This just seems foolish to me. There are already big incentives to live near where one works. giving folks $12k to do so seems superfluous. Why not just drop $200k from a helicopter on the intersection of 14th and U Streets?

    • My partner and I just bought a house that’s walking distance to my place of employment and a short metro ride to hers. Our mortgage is quite affordable, but the downpayment and closing costs were steep as hell. We had $90k saved up but still had to borrow another $90k or so from her mother. The closing costs alone were $30k. I don’t know how someone without family money could come up with the downpayment now that lenders require a 20% minimum even with good credit.

  • Great idea if your plan is to reduce the spiraling gentrification in DC.

  • Seems like it’ll be great at spurring home sales at inflated prices in Bloomingdale, Shaw, Logan Circle, Eckington, LeDroit Park, Trinidad, H Street, Capitol Hill, Dupont, and similarly situated locations. Will probably make further out neighborhoods less appealing. $12,000 bucks is a lot of incentive. I think it will distort the real estate market and artificially increase peoples’ willingness to pay more to be closer to work. Currently, there is already a value associated with being close to work, having the government add value to that because they like it, accomplishes little, and will probably be a waste of money in the long run.

    • I think the effect will be more pronounced in less wealthy neighborhoods. $12k isn’t as much an incentive to someone buying a $700k home on H Street as it is to someone buying a $300k home in Anacostia.

      • I disagree, to a point. Look at the disruptive effect an 8k credit had on our whole housing market.

        12k goes a long way even on a 700k house. It would be nearly half of the buyers closing costs.

        • Which is a drop in the bucket considering the 140k you’d need to put up to actually secure a mortgage.

        • I dont think that nearly 10% is a drop in a bucket to anyone and I’ve seen a lot of houses go recently for 5% down that sold for 750k. Besides, its mostly psychological anyway.

  • This is a horrible idea.

    My tax dollars should not subsidize families looking to buy a home in the city. I’m already practically priced out of the market and now someone will get an extra 12K to buy in the same neighborhoods that I want to.

    What a huge slap in the face to DC taxpayers . . .

  • What is Harriet Tregoning thinking with this one? Government subsidies for wealthy condo developers I’d say. I guess that’s how the economy functions, government promoting wealth development for the wealthy and we residents get the benefits of more urban congestion from all the new residents clogging the streets.

    • Let’s just point out two things: credit is progressive. It assists non-wealthy people to a greater degree than wealthy people, given that less-affluent people are more affected by a $12k credit. Second, you’re against development because it causes traffic? If you want to live in a secluded enclave, it ain’t here in DC.

    • Baltimore implemented a similar program 3 or 4 years ago. In addition to lots of other benefits, they actually found that traffic and congestion actually DECREASED.

      The point of the program is for people to live near work, after all.


      • Of course traffic decreased. Anon 11:51, how in the world does an incentive to get people closer to their jobs and less reliant on cars increase traffic?

  • The question is whether this is in addition the $5k DC first time homebuyer’s credit, which I think it’d have to be for this credit to be more than marginally useful.

    I’d say this is a good idea, since the outlay of $6k would come back in the form of property taxes. Figure people who weren’t going to buy, buy and that resets the property taxes of the sold property to prevailing levels. It seems like over 5 years of ownership, even a $200k condo would recoup much of the $6k.

    We remember from the federal $8k credit, that big incentives like this drive home sales. Difference is, with a local credit, we’re not stealing sales from future quarters (making people buy sooner), but rather stealing sales from other locales, like VA and MD. Let’s be real: MD, VA, and DC are at war over attracting the most productive of our region’s citizenry. It’s zero sum — either you get the residents who pay taxes or you don’t. I do think DC should do whatever it takes to pull middle class people away from the burbs and into vested DC residency.

    Of course, then you subtract out the wealthy people who aren’t swayed by a $6k incentive. Given them a credit is just throwing money away. They should phase the benefit out after a certain level income. That gives the money we do spend on this incentive its greatest return.

    • Very good points about this being a zero sum game with MD and VA and the need to increase the tax base. The last thing any locale wants is to be saddled with a horde of dependents. It’s hard to provide good services, including social services for the needy, if the needy are all you’ve got to draw your resources from.

    • I think your points are pretty spot-on. But it is worth pointing out that employer-assisted housing works a bit differently than a tax credit. Eligible employees are (usually) given a forgiveable loan to help with making a down payment. In addition to having part of the loan forgiven for each year of employment with the company, homeowners usually have to undergo education and counseling related to purchasing a home.

      This is really the District prodding employers to create a benefit related to housing for their employees. Yes, it helps to build a permanent tax base and lure people from VA or MD, but not in the same way a tax credit would.

      Eventually, employers will see the benefit to employee retention and stability and realize it makes sense to do this on their own. Then, hopefully, we won’t have to use tax dollars to do so anymore. (And, yes, there are case studies out there that show it’s a win-win for employees and employers)

  • If a private business finds it in their best interests to pay $6,000.00 to have an employee live near work – there is nothing stopping them. Taking money out of my pocket to help someone else buy a more convenient house is outrageous.

  • I’d rather the money be spent to improve neighborhoods near transit to attact investment and development there.
    While they are at it – I’d rather money be put to expand transit in DC. With Metro being designed to bring people into the district, infrastructure is needed to augment the system so improve movement WITHIN the district.

    • +1.

      I’m also wondering what employers would have the money to participate in this. Law firms? Lobbying firms?

      • CVS actually has a pretty big employer-assisted housing program. And even some small non-profits.

      • The employer doesn’t have to do it as a grant; it can be a no-interest loan. My employer (a medium-sized nonprofit) is talking about doing it as a $3000 loan recouped $100 a month for 30 months from the employee’s paycheck. I’m excited about it–my org’s never considered it before.

        I agree that it’s a little strange not to have an income cap…although I’d probably qualify for it even if it did! But if the purpose is to cut down on traffic and increase the tax base, then attracting higher-income people might actually help achieve that.

  • I saw this work really well in Philadelphia. The Univ of Pennsylvania offered generous grants to employees buying houses in the neighborhoods near campus, areas which had lovely housing stock, but had really suffered when folks fled for the suburbs. In less than 15 years, University City has become a safe and vibrant place to raise a family.

    That said, the university is a private entity, using its own funds. I don’t think any city or state money was involved.

    Also, as others have said, $12k is nothing around here. Even 10x the offered grant wouldn’t put the neighborhood in which I work in my price range. So I’m not sure at whom this project is targeted…

    • but $12 would significantly ease the burden on outlay of cash for a down-payment, which is i think the intended purpose.

    • Speaking of, I’m surprised that Georgia Avenue, given its proximity to Howard, hasn’t gentrified — or at least moer quickly. Or should I not be surprised? It seems like the immediate streets just off of Howard would have benefited more from the University’s existance.

  • Absolutely ridiculous. The real estate market in DC is already supercharged with an influx of new residents. I don’t know why the local government needs to get involved and offer another incentive.

    There are tons of people already in DC who are trying to find a house to buy and failing due to financing issues and bidding wars. What does this do but exacerbate the problem?

    • Also: money would be better spent on transit and schools. Dealing with these two issues will cause a lot more people to choose the city over the suburbs than a cash incentive.

    • Are all the neighborhoods supercharged? Maybe they’re trying to pull people into places like Eckington? (No offense, Eckingtonianintes.)

      • Don’t you live like 2 blocks from eckington? You can’t honestly think there are major differences between your neighborhood and eckington.

    • This HELPS the problem by giving people grants to help with their down payment. That’s usually the greatest barrier to homeownership.

      Not to mention anyone could be eligible for these — it’s a grant to participating employers; the employer then sets up a program to help its employees, usually through a forgivable loan-type arrangement.

      There are often “strings” attached –ie, the loan is partially forgiven each year of employment; if you leave prior to full forgiveness you need to pay back the remaining amount.

      The city is just effectively creating an incentive for employers to put such a benefit in place. So talk to you HR department and have them create a program! Then YOU’LL be the one who is eligible!

    • This is a war against the 20/30 year old “gentrifiers”. It’s an attempt to increase the constituency of the existing power base –existing DC government workers, and I’m sure members of Metro.

  • Great Idea! There are good points above but mean nothing when you have no residents. We need people willing to live, buy, invest, and spend in our city.

    This is nothing new. Incentives to buy homes is a great idea as long as the come with condition of residence (3 to 5 years in your home or pay it back.)

    The $8k the Federal Gov gave me to buy sure worked.

  • Employer-assisted housing can be a really great thing! Hopefully they’ll target companies and communities where this assistance can be really effective — that is communities where homeownership rates are low, or that residents have difficulty amassing the necessary down-payment for a home.

    Ideally, this would help residents who already work in the District find housing nearby and become permanent residents. Baltimore had some big successes with a similar program.

    Lots of room for error (poor targeting, inflating home prices*), but I hope there are enough successful models out there that DC has taken note.

    *On that worry — it is real! But I don’t think that there will be enough of these grants out there to really impact home prices. Besides, they are already WAY expensive.

  • great idea IF there were income limits :-/

    • It’s tied to specific employers, so all of that — income, etc — are up to whichever companies win these grants from the city.

      As I mentioned above, the city is just creating an incentive for employers in the area to create a housing benefit. There are a lot of great models out there, so hopefully any company that applies to do this takes a good look at them and designs a well-functioning program.

    • There should be no income limits on this one.

      There are other programs that have those requirements.

      • Why even bother with income limits? So fewer people of means will move to somewhere like Petworth? If it costs 12 grand to increase the tax base, improve services and bring crime down, it’s a worthy investment.
        There are lots of programs with income limits. HPAP has a great program, but is definitely not designed for those with higher pay.

  • DC is too different. Many — not all, but many — of the housing neighborhoods in the District that are close to where most people work are already extremely desirable, and extremely expensive.

    Baltimore is not like that. Detroit is not like that. It might make sense in those cities, which are desperate for tax-paying residents. DC doesn’t have that problem. DC has a LACK of affordable housing in many parts of the city, because people already want to live there.

    • To put it more simply: this kind of credit is only useful where you want to ENCOURAGE people to move to a particular place. It isn’t useful when you want to HELP people move to a particular place, because if it is available to all income levels, it will simply increase the cost of housing across the board, more or less equally for everyone.

      DC doesn’t need more residents; but it does arguably need to help those who are being priced out of the district. (I’m not advocating one way or the other on that, I’m just saying this program doesn’t really do it.)

      • No, this HELPS individuals with a downpayment on a home in DC. It does help to encourage in specific locations, but really this is an affordability tool.

        It’s not available to just anyone. We’ll have to wait to see which employers participate and their plans to understand just who it will help, but it WILL help folks in DC make down payments on a home. And down payments are usually the biggest hurdle to homeownership.

        The volume of these grants in unlikely to increase demand much, so it should not affect home prices at all.

        • I agree that it won’t increase demand much. It’s not a big program.

          And it does help in the sense that if my parents gave me money for a down payment, it would help me meet the down payment. But the program doesn’t say that the point is to help people achieve the dream of home ownership; it says that the point is to encourage them to live in DC. And I just can’t see that, because based on housing prices in the district, DC is clearly already a desirable place to live.

          Yes, there are people who might choose to live in DC over suburban locations because of this program, so on an individual level it encourages a move to DC. But aren’t things pretty zero-sum with respect to housing in the district? There is not a lot of empty housing stock here. (Unlike Baltimore, Detroit, etc. — cities which are much more desperately in need of revitalization through newcomers to the city limits.)

          Bottom line: with a growing tax base and increasing property values, what will the district get out of it?

          • As to it not encouraging people to live here, think about this hypothetical: you’re a young 20-something at a non-profit. You have $10k in savings. Your options are buy in DC or — nowhere else. Does $10k allow you to close in Rosslyn? Bethesda? PG? Nope. DC’s credit/assistance has created a buyer where there was none before. Poof! New buyer. One less person who’d buy in NoVa as opposed to DC in a couple years when their financial situation was more shored up.

            $10k + a $5k first time buyer credit + $12k employee/DC assistance = $27k for closing costs and down payment in DC. That gets you a studio in Adam’s Morgan, a 2 bedroom in Eckington, etc.

            There is a lot of potential to further develop DC — add more housing stock, etc. DC isn’t Baltimore-blighted in terms of vacant blocks, but it is underdeveloped.

          • OK – so restrict this benefit to people who will buy in undeveloped/un-gentrified/below market/ancostia/east of the river – whatever you want to call it – areas and it’s all good.

  • I think there is a larger benefit overlooked here. DC is affraid of large employers leaving the District. Metro keeps increasing rates, which incentivizes large employers to relocate to the burbs. If their employees all live in the District, they are more likely to stay and pay corporate tax.

  • If is anything like the program I signed up for there is a catch. There is always a catch. Mine was I had to stay in my home for 10 years. Or else if I sold it, I’d have to figure out some funky math formula based on the number of years I resided in the home with the amount of equity. I hate math, so I stayed.
    I can’t remember if there was an income limit. I had just started my career so I wasn’t making much nor was I planning on staying mid-low income.
    This may attract people who were like me many moons ago, relatively young, just starting out and keep them till they get older, grayer, fatter with a nice set of investment vehicles.

  • What if someone is self-employed? That’s a sweet deal. Then they can give themselves the grant, live whereever they want in DC and pick up a check from DC.

  • This could be a good thing if the timing were right and we could be sure that it will be managed properly. That’s the kicker, DC has an extremely poor record of managing anything that involves money. Look at the solar program after only 3 years; and most of that money came from a fee paid by residents on the Pepco bill supposedly going into a dedicated fund. If you can take advantage early before it gets raided.

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