The God Connection

AFFORDABLE HOUSING FINANCE • June 2008

BY BENDIX ANDERSON

WASHINGTON, D.C. Aplain brick building on the edge of this city’s impoverished Congress Heights neighborhood marks the beginning of a new wave of development here.

The 14 rehabilitated apartments at 4115 First St. are the first of many being planned in Washington, D.C., by nonprofit developers affiliated with religious groups. Such alliances are becoming more common because many small churches own or control land that is otherwise tough for developers to get their hands on. Developable sites are increasingly hard to find in this town, as even neighborhoods like Congress Heights begin to gentrify and attract land speculators and market-rate developers.

“Historically, churches have been big purchasers of real estate,” said the Rev. Donald Isaac, executive director of East of the River Clergy-Police- Community Partnership (ERCPCP), the developer of 4115 First St. “There are a lot of pastors that realize that it’s never a mistake to buy property.”

To help churches get started in development, ERCPCP has partnered with Johnson Memorial Baptist Church, Enterprise Community Partners’ D.C. office, and the land-use researchers at Georgetown University to create a faith-based development initiative. Together, the partners identify churches, synagogues, and other religious institutions that are holding land and, if the religious groups choose to develop, provide them with technical assistance and pre-development funding.

The result is a new group of churches that develop affordable housing. Already 25 churches have made plans to create or preserve 650 units of affordable housing through the initiative.

In the early days of the federal low-income housing tax credit (LIHTC) program, many affordable developers were affiliated with churches working to rescue their neighborhoods from rising crime and the blight of abandoned housing. In recent years, however, fewer faithbased organizations have entered the affordable housing business. “There’s been a lull,” said Isaac. “There were still churches that wanted to do it but lacked that capacity.” The programs and procedures were too complicated for many small churches to navigate without help, he said.

What they did have, though, was land. Some churches have held their parcels for decades, often while developers scoured the real estate listings for places to build. For example, for years, Young’s Memorial Church of Christ in the Garfield Heights area of southeast D.C. has owned a scattering of sites around its church totaling several acres.

And even with the foreclosure crisis, owning developable land in D.C. is like having money in the bank. New investment has caused the price of land and buildings to more than double over the last six years, according to local officials.

This year, ERCPCP lost a bidding war for a 20-unit property, also in southeast D.C. The building was appraised for $1.4 million, and ERCPCP planned to pay $1.6 million, or $80,000 per unit. The property is now under contract to another buyer for $1.7 million, well over its appraised value. Centex Homes recently completed and sold hundreds of new single-family homes at prices over $300,000 just a few blocks from 4115 First St.

ERCPCP is still hoping to purchase properties as the real estate market softens. In the meantime, the organization aims to leverage its development experience by partnering with churches that have land to develop.

One advantage of that strategy lies in the deep roots churches have in their communities.

Those connections can help them gain the approval of local officials such as the advisory neighborhood commissions that must approve any new development receiving funding from the city.

The faith-based development initiative can help churches find development partners and provide training on the ins and outs of the process. Herbert Chambers, the pastor of Young’s Memorial Church of Christ, has already attended six training seminars put on by the initiative, including a recent three-day training on project feasibility analysis.

Pastor Chambers plans to use the pro bono legal services provided by the D.C. Bar Association through the initiative. Architects and other consultants also offer services.

Financing is also available to help developers complete parcels of land. Just a few hundred feet away from 4115 First St., another faithbased community development corporation (CDC) had gathered two sites on a busy corner. To purchase a third property that it needed to redevelop the corner, SW-SE CDC used a $585,000 grant from Enterprise.

With the site assembled, SWSE CDC has partnered with MissionFirst Development, an experienced for-profit developer, to build a four-story mixed-use building. Trinity Plaza will create 42 mixed-income condominiums, more than 19,500 square feet of retail space, and 59 underground parking spaces. The partners plan to start on the $19 million project later this year.

The initiative also provides predevelopment financing. ERCPCP spent a total of $700,000 to redevelop 4115 First St., using $25,000 in predevelopment financing from Enterprise; $80,000 in equity granted by Johnson Memorial Baptist Church; $300,000 from the U.S. Department of Health and Human Services; and another $300,000 from a congressional appropriation to the project.

The redevelopment of 4115 First St. has allowed ERCPCP to expand its mission. Since 1999, the nonprofit has provided services such as job training and drug treatment to people coming back to the Congress Heights neighborhood after serving their time in prison. With the new building, ERCPCP can also provide permanent housing.

“Jobs and housing are key,” said Isaac. “Housing has to be on the agenda.”