- The Washington Times - Wednesday, March 8, 2006

Affordable housing is a buzzword in most cities, where low- to moderate-income families often cannot find a home to rent or buy in a safe neighborhood. When development does occur, long-term residents who have suffered through crime and poor conditions are sometimes displaced by wealthier people who can afford the pricier homes in the newly improved neighborhood.

Affordable housing is hard to separate from all of the issues that plague low-income communities in the District or other cities. Nonprofit groups and local governments have been working for decades to eliminate crime from poor neighborhoods and to provide services to families and their children.

Often missing from the equation are private developers and financial institutions known for working on a grander scale.

However, in Southeast Washington, a group of community activists has teamed with a for-profit developer and lenders to revitalize a neighborhood. The effort is based, in large part, on encouraging residents to become homeowners.

“As homeownership increases, drug dealing and associated crimes decrease,” says Chuck Martin, vice president of the Community Reinvestment Group of M&T; Bank. “Increasing the safety of a neighborhood is part of the whole process, so while we work on increasing homeownership, we increase the services that can decrease crime, such as supporting Boys and Girls Clubs, and a community center with after-school programs and weekend programs that keep the kids occupied.

“This increases the capacity of the police to focus on the big drug dealers and the addicts rather than chasing down the kids,” Mr. Martin says.

Steve Shaff, founder of Community-Vision Consultants Inc., has established his business as a for-profit developer committed to improving low- and moderate-income neighborhoods in the District.

“My goal is not only to create housing and to make money as a developer, but to work on the community surrounding the homes I build,” Mr. Shaff says. “Twenty to 50 percent of the proceeds from our company goes right back into the community to support supplemental programs that help the buyers financially and with their quality of life.”

“Having a decent place to live is an integral part of changing a neighborhood,” says Tim Tilghman, one of the staff organizers of the Washington Interfaith Industrial Network.

“Washington Interfaith has been organizing leaders from a variety of groups and businesses to work together with entire communities to get residents engaged in changing their neighborhoods,” he says. “Community-Vision is providing affordable homes and at the same time investing in the community to create places for youth and families in the neighborhood to gather, which is part of the process of developing a community.”

Before focusing his attention on Southeast Washington, Mr. Shaff lived and worked in the Shaw neighborhood when it was one of the District’s most crime-ridden areas. He turned to Southeast several years ago, where he was able to purchase apartment buildings at low rates and envision a positive future for the community.

His most recent project is the Magnolia Gardens condominium.

“In Southeast on Brandywine Street, you could see that taking over some abandoned buildings and turning them into housing made sense from a financial point of view,” Mr. Shaff says, “but the block was congested with drug dealers, so it was hard to imagine that people would want to live there.”

He started by organizing stakeholders in the community, including building owners, churches, nonprofit groups working in the neighborhood, as well as homeowners and tenants, putting pressure on everyone to get involved with changing the neighborhood.

Mr. Shaff and others met with police officials in an effort to get involved in cleaning up the neighborhood, not just to complain about the level of crime.

“While we began the process of organizing community activism on Brandywine Street, we also got started on building the condominiums,” Mr. Shaff says.

“I knocked on every door in the community to talk with people and find out who the community leaders were, especially the elderly people who had been living there for years,” he says. “We wanted to help the tenants prepare to become homeowners and wanted to make sure that everyone who wanted to stay could stay.”

Community-Vision invited everyone in the community to a lunch where Mr. Shaff gave everyone the phone number for Manna Inc., a nonprofit group that develops affordable housing and provides home-buying education and assistance.

Mr. Shaff told the tenants that the goal was to get everyone to become a homeowner, but that they had to take the first step and call Manna for financial preparation.

“Our goal was not to displace people, but to educate them about the possibility of buying a home,” says Mr. Shaff. “We talked to them about their income and their credit, but some of the responsibility for getting ready to buy a home is on their side, too.”

Area lenders were brought into the community as financial advisers for potential buyers and as investors in the development.

“There are lots of factors involved in changing a community; it’s not simple,” says Jamie Foroughi, vice president and regional manager for Citibank Community Lending Group.

“We started working with nonprofit developers, but even though some affordable housing was being produced, there weren’t enough homes being created quickly enough,” he says. “We shifted to work with for-profit developers such as Community-Vision in addition to the nonprofits. There’s really just a small core of five or six developers working in Southeast on several projects, and we’re seeing the quality of the work they do improve with each development.”

M&T; Bank’s Mr. Martin says M&T; has worked with Community-Vision for two or three years.

“We’ve worked on this issue in several ways, including evaluating buyers and helping them obtain mortgages,” Mr. Martin says. “We’re working with Community-Vision to figure out which local organizations working on housing, health care, safety and education issues in the area M&T; should contribute to.”

Mr. Foroughi’s office works with buyers to provide mortgages to as many tenants as can qualify.

Another group within Citibank provides funding for development projects.

“The Community Lending Group focuses on affordable lending in neglected areas,” Mr. Foroughi says. “We work with first-time buyers to get them ready so that once the project is under way, things can be turned around quickly.”

Mr. Foroughi says key elements to the success of affordable housing developments include pricing the homes to attract people already in the community and to bring in buyers from other areas, a sales and marketing team to promote the development, and a pool of qualified buyers to purchase the first homes.

In addition to housing counseling, low- and moderate-income buyers may also need down payment assistance and other support.

“M&T; has a relationship with the Greater Washington Urban League, which helps people in the community with down payment assistance and after-school support for the kids so that the parents, who are often single mothers, can earn the income to make the mortgage payments,” says Mr. Martin.

Mr. Shaff says he expects the first phase of Magnolia Gardens to be sold out by the end of March. Prices for the homes are currently in $120,000s to the $140,000s, with the next phase expected to be priced about $5,000 more per unit. Most of the buyers have income levels between $30,000 and $45,000 per year.

Yvette Mitchell was the first buyer in Magnolia Gardens.

“I was born and raised in D.C. and wanted to stay here, but I didn’t think I could find anything I could afford,” she says. “I was renting a basement apartment, and now I am in a two-bedroom condo on the third floor which is full of sunlight. I had looked at a condo with only 540 square feet near my mother’s home at 3rd and R streets Northeast, which was priced at $328,000. At Magnolia Gardens, I paid $136,500 for two bedrooms with all new appliances, new bathrooms and new wall-to-wall carpeting.”

Miss Mitchell had been saving money for a down payment, but she also worked with Home Purchase Assistance Program (HPAP) to obtain financing assistance with the closing costs. She had 3 percent of the home price saved and HPAP provided additional funds.

The District government has partnered with the Washington Interfaith Network and other groups to build a $4,000,000 community center in the neighborhood. Community-Vision will contribute $50,000 to $100,000 to the community center along with pro bono services.

“The community center plan was terrific, but it was originally designed to have programs mostly for the chronically unemployed,” says Mr. Shaff. “I pushed them to provide things on a much higher level, such as computer training and arts programs. I encouraged them to add the arts component because it’s a great way to engage kids at a young age in the fine arts and performing arts.”

“We’re bringing in technical experts to work on computer skills with local residents, which can close the technology gap between low-income and high-income people,” Mr. Shaff says. “We’re also encouraging them to include gathering places such as a little cafe inside so neighbors have a place to get together and don’t have to hang out on the corner.”

In addition to fostering a healthy social life for the neighborhood, Mr. Shaff hopes the community will have a stronger political presence when the development stage is complete.

“We want the community to be taken more seriously and to have more of a political voice,” Mr. Shaff says. “Pulling the city government in and groups like the Washington Interfaith Network can help that process. As the quality of the home buyers in the neighborhood improves, there will be more commitment to the community and the desire for a voice.”

Homeownership in Ward 8 was about 17 percent five years ago and now it is approaching 50 percent, Mr. Foroughi says. It is a significant change to the character of the area.

“Folks buying into neighborhoods which are improving but are still in transition need to make a leap of faith that they will continue to improve,” Mr. Foroughi says. “Both nonprofit and for-profit developers are always two, three or four years ahead of the curve in terms of neighborhoods. Citibank can provide incentives to encourage people to buy in these areas and make the homes even more affordable with a variety of loan programs.”

Mr. Shaff says Southeast Washington has a lot of potential because of its location away from traffic congestion yet with easy access to downtown and to Metro stations.

“What will drive the health of the neighborhood in the long-term will be the development of more single-family homes and moderate-income housing,” Mr. Shaff says. “Then, eventually, retail will come into the community.”

Mr. Shaff says Community-Vision has several additional conversion projects planned in Southeast.

“We consider our success from both a financial perspective and from a community perspective,” he says. “We hope to influence other developers to do the same.”

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