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Condo fees: A rising AMI lifts all household budgets

by Blake Warenik, National Housing Conference and Center for Housing Policy

DCentric, a program on Washington’s WAMU 88.5 “created to examine the ways race and class interact in Washington, D.C.,” has created some buzz in the local blogosphere with Elahe Izadi’s piece on how many low- and moderate-income residents in the District’s Affordable Dwelling Unit program (ADU) are being crushed by rising condo fees.

D.C.’s program ensures that some units are held back for occupants who fall within a certain income range and are generally rented or sold below market rate. However, in what would appear to be a glaring omission on the homeownership side, there is no provision made to also restrict condo fees for residents in affordable units. Residents in one such condo building that includes affordable units, Kenyon Square in D.C.’s gentrifying Columbia Heights neighborhood, have seen monthly fees double to more than $400 since 2008.

What does this mean for affordable-unit residents in areas with skyrocketing housing costs? I couldn’t put it better than did Sarah Scruggs of Manna, Inc., a local community development organization that creates and preserves affordable housing. She said that market-rate owners may “have a lot of money, and the things they want to do in the building, they have the money for them. But [those things] are very different from what the affordable unit owners want.”

It’s helpful to consider that condo fees sometimes cover more than just maintenance, repairs and utilities. Associations often decide to budget for things like fresh flowers in the lobby or a dog park on the roof—touches that may seem like extravagances to residents in affordable units. Scruggs added that the upward pull on condo fees could result in foreclosures, hurting not only owners of affordable units but their market-rate-paying neighbors as well.

The problem of unlimited condo fees in affordable housing is certainly neither new nor confined to D.C. (a writer in San Francisco plumbed the issue in 2007). Some jurisdictions, such as Chapel Hill, N.C., have taken steps to ensure that residents in projects governed by inclusionary zoning laws and other affordable housing statutes are not unduly burdened by the burgeoning condo fees that their higher-income neighbors can more easily afford.

A colleague at the Center for Housing Policy reminded me that, even without taking condo fees into account, housing in the D.C. region is very expensive. In the just-released Paycheck to Paycheck database, Washington was ranked 16 on the list of the nation’s most expensive housing markets, out of 209 surveyed. The income required to qualify for a mortgage on a median-priced home has risen more than 8% since the end of 2009 to a whopping $92,032 annually. And, for those of you keeping score, the market’s median home price of $319,000 upon which that salary figure is based does not include condo fees.

It doesn’t take much imagination to see how the District Department of Housing and Community Development could put similar rules in place here in Washington. Such a move might serve as a model for housing authorities in expensive markets around the country to make homeownership truly affordable for low- and moderate-income families.

One simple solution might be programs to help increase the awareness of the financial situations many families in the District face, particularly ones in affordable housing units. When condo association members understand the financial situations of their neighbors, they can more prudently budget for the entire community. After all, they all literally live under one roof.

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