Why D.C. Government Favors Luxury Condos Over Affordable Housing in Congress Heights

A major falsehood is being perpetrated by public and private sector supporters of the redevelopment project at Congress Heights: that the reason the District government refuses to use its powers to help a non-profit developer build 200 units of affordable housing there has nothing to do with the direct ties District government leaders have to a development group that wants to build luxury condos and offices in the same space. This lie is pushed despite the clear, deep political, financial, and personal relationships that facilitate exactly this sort of cozy relationship between public and private actors.

The actions of the District reflect that though since the beginning of the development process, the government has claimed it has little to no power to act, it has in fact helped facilitate the private business deal. A combination of continuing old practices and specific contemporary action have directly led to the current impasse, in which a massive affordable housing development is being held up by luxury condo investors.

The District’s actions to facilitate displacement and gentrification at the site start at the very beginning. The Office of Planning (often referred to as “OP”) has to certify that a project meets certain requirements to be presented to the Zoning Commission (often referred to as the “ZC”) for approval. Justice First has argued for years that the process by which the OP proceeds is highly problematic. Frequently, including in this case, it is very clear from the start that developers actually do not meet the requirements. In fact, most applications presented to the ZC take the approach of seeing what requirements they can get away with ignoring without getting caught. Often, the requirements that ‘fall through the cracks,’ as we’d be led to believe, have to do with providing affordable housing options.

In this particular case, often repeated around the District, it was very clear the development team’s proposal did not meet the statutory requirements for affordable housing – something the commission acknowledged right away when Justice First pointed it out at a ZC hearing. This reveals a larger issue: Why does OP not use its authority more broadly? The OP seems to take the position that if a proposal comes within the ballpark of these rules, the ZC can figure out the rest. This means, among other things, that many projects move forward with far less affordable housing than they are supposed to facilitate. The zoning experts on the OP and ZC know what the regulations are, but leave it to community members to point out shortfalls.

So just the process of getting to the ZC is weighted heavily toward developers and facilitates their attempts to do end runs around the actual zoning rules. This is a longtime process at OP and one that makes  the Bowser administration, by allowing it to continue, complicit in this structural aspect of gentrification.

Next is the Zoning Commission itself. After a 2014 court case in which the D.C. Court of Appeals took the ZC to task, Washington Business Journal noted “The Zoning Commission has never rejected a PUD application before, and it does have a tendency to adopt applicants’ draft orders nearly word-for-word.” The court's own words in that case directly pertain to a central issue in the Congress Heights dispute:  “Although we have not independently verified the precise calculation, we have no reason to doubt the … claim, which the developer does not dispute, that the commission’s order is an approximately 99.9% verbatim adoption of the developer’s proposed order...The commission even adopted almost all of the grammatical and typographical errors in the developer’s proposed order.”

The mayor, of course, appoints the majority of ZC members. If the ZC is pliable and amenable to the needs of developers to the extent that it is actually ridiculed for it in court, it seems fairly clear that the mayors who appoint ZC members must share a great deal of the blame. This is another example of legacy practices making the D.C. government complicit in displacement and gentrification.

More germane to this project has been the saga of 3200 13th St. SE. The building, which sits empty, sits on the same footprint as the other properties even though it is independently owned by the District. The first ask of tenants was that the District government, which has significant legal leverage due to unpaid loans, take control of the property and use their public ownership to help the tenants leverage non-profit developers to create significant affordable housing.

The District, despite admitting its ability to do so in a D.C. Council hearing, refused to do so. Then, after Congress Heights tenants were able to find a non-profit developer and set the stage for a large affordable housing development, tenants and their allies resurrected this demand.

Not only was the District unresponsive; it then secretly took control of the building. Once that move was brought into the open it seemed like the way was clear for tenants to not only exercise their rights to purchase their own buildings, but, with a little help from the District, for the way to be paved for 200 units of affordable housing.

In a public meeting with tenant leaders and Ward 8 Councilmember Trayon White, the director of the District of Columbia Housing and Community Development Agency (DHCD) made it clear that while they have the power to work to promote the broader affordable housing proposal, that they prefered to place the property on the open market for anyone (read: Geoff Griffis & friends) to buy.

The District has the opportunity in this building to create a rare 100 percent affordable housing development - but through inertia; a government structured to facilitate displacement, slums and gentrification; and outright unwillingness to work with anyone other than a luxury condo development group, the District is instead blocking the way.

The real question is whether a web of business people and politicians so intimately connected and dependent upon each other can credibly be seen as not trading on those relationships to obtain the outcome they desire, at the expense of all other possibilities.

The Gentrification Nexus

The best way to understand the web of  interests that surrounds the Congress Heights redevelopment is to see it as forming an axis centered on two people: Geoff Griffis and Ben Soto – frequent business partners, prolific campaign donors and deeply enmeshed in major government and business networks in Washington.

Griffis, an architect and developer with an extensive record across the city, was, for a number of years, chair of the Board of Zoning Adjustment. He currently serves on the federal National Capital Planning Commission, appointed there by Mayor Muriel Bowser.

Soto embodies the nexus between the development community and elected officials. He served as the treasurer for both former Mayor Adrian Fenty and Bowser during their past mayoral campaigns. Soto was recently demoted by Bowser for presiding over a number of scandals and pay-to-play allegations. Through his company, Paramount Development, he is a developer in his own right. He is also owner/president of Premium Title & Escrow LLC, making him a player in the local title insurance market, a critical part of securing deals. In addition, Soto is a director at Eagle Bancorp, Inc. and has also served as vice-chair of the Board of Real Property Assessment and Appeals and board member of the old D.C. Sports and Entertainment Commission during the development of Nationals Stadium.

The business relationship between Griffis and Soto is noticeably close. Three of the five projects Soto’s Paramount Development is a party to are partnerships with Griffis. One notable example is the Hyatt Hotel and an adjacent property on E St. SW. The development group set up by Griffis and Soto was selected over two other groups by Fenty in 2009.

Both men and their associated entities had given thousands to Fenty in the 2010 election, and just a few months before the property selection, Griffis gave a maximum donation to Fenty’s re-election effort. The E St. development team received the properties, which were District-owned, at a $25.3 million discount from their actual value. Ward 3 Councilmember Mary Cheh was one of the council members who voted to dispose of the public property this way, despite the fact Griffis’ wife, Claire Bloch, headed up Cheh’s election campaign and was also a partner in the deal.

An indication of the level on which these developers are operating and why people like Griffis are important partners for people like Sanford Capital is the $50 million investment cash from China the E St. project raised, part of a broader rush of foreign money into D.C. real estate around that time.

Griffis and Soto were also partners on the massive multi-billion dollar development on the Southwest Waterfront known as The Wharf. The politically connected duo and their partners received $95 million worth of land from the District government for $1.

Clearly, development deals involving Griffis and Soto follow very closely behind political favors.

Sanford Capital, the initial owner of the Congress Heights properties, was essentially a bottom-feeder making its money through buying, operating and selling slum buildings. Soto and Sanford are undoubtedly aquainted, as Eagle Bancorp, Inc. has lent Sanford more than $46 million dollars across at least a dozen projects.

Sanford and Griffis formed a partnership for the redevelopment. They then retained Goulston & Storrs as legal counsel in land use matters as related to the overall project and in front of the Zoning Commission. They were represented in particular by Paul Tummonds. Goulston & Storrs often shows up in major projects tagged as drivers of gentrification. Members of the firm turn up in all sorts of influential places. Allison Prince, director at Goulston & Storrs and a highly regarded zoning lawyer, served on the Economic Development & Jobs Committee of Bowser’s Transition Team. Soto also happens to serve on the Board of the DC Chamber of Commerce with another Goulston & Storrs director, Mark Jackson. Maureen Dwyer, yet another Goulston & Stoff director, is the general counsel for powerful regional business organization the Greater Washington Board of Trade.

Each player also has their own independent connection to and leverage with Bowser, the District government, and the Council of the District of Columbia. The development partners are also enmeshed in a broader network at their own firms and through other relationships that amplify that leverage.

We examined both the personal and business-related donations of a number of these key players. Our conservative analysis of  eight people and corporations found that this small group that stands to directly benefit from the Congress Heights redevelopment has donated $142,018 to political candidates in the District of Columbia since 2006.

Nearly a third of that, $58,587, was donated directly to the mayor or her closest allies on the DC Council.

Beyond simply the issue of donations, the parties involved have had various forms of leverage over the positions of political power in the District. Sanford, for instance, was one of the District’s go-to developers when the city's current affordable housing crisis left it scrambling for housing for low-income and houseless residents.

The Washington Post summarized that relationship thus:

Over the past eight years, District officials have issued more than 200 warnings for housing code violations at apartment complexes owned by Sanford Capital, charging the company more than $150,000 in fines – about a third of which have gone unpaid. Yet the city has continued to boost Sanford’s bottom line, funneling millions in tax dollars to the company annually to subsidize rent for the poor and formerly homeless residents living in its 19 apartment buildings, concentrated around Wards 7 and 8. City officials say they have no choice because the supply of affordable housing is so limited. [Emphasis added]

In the context of the District’s well documented affordable housing crisis, this made Sanford a powerful player, the triage nurse, so to speak, that the mayor was relying on with her approach to housing low-income residents, which amounts to something akin to using the ER as a primary care facility. Without a happy, compliant Sanford, the District could very easily have its vastly inadequate housing programs exposed rapidly and embarrassingly, which is essentially what took place when our efforts led to significant investigations by local media.

Soto and Griffis, along with law firms like Goulston & Storrs, also have the benefit, and leverage resulting from it, of occupying key positions in the economic structure of the District of Columbia. The primary economic drivers in D.C. are the federal government and tourism. The developer-investor-lawyer network creates the infrastructure for the homes, businesses, and social activities that underpin the multi-trillion dollar government apparatus and its sustaining consultant-legal complex, as well as lodgings for tourists.

We see this leverage play out frequently: note how the overall development community is able to extract massive tax breaks, often unneeded, at the threat of stopping all progress and thus “jobs and growth.”

The final important aspect of this is to understand the context of the development as it concerns the surrounding neighborhood.

The willingness of all the development players to pursue the project over the course of four years speaks to the value of the property, situated directly overtop a Metro station and across the street from the new Mystics basketball stadium development, which includes tens of thousands of square feet of retail and office space as well as townhomes and multi-family apartments.

It is also located alongside the Malcolm X Opportunity Center, a large former school that is widely rumored to be slated for redevelopment. The properties are also adjacent, or near adjacent, to numerous other potentially valuable development sites. The multi-stage zoning process allows for enough flexibility to make a number of lucrative array of possible development options available.

Clearly, then, the redevelopment project is one with very high stakes, running into the tens of millions of dollars, for high level players. This is important context when considering the possibility of potential influence being wielded or abused.

Influence being abused is the obvious final conclusion of all we have observed above. All parties in the public and private sphere who support the redevelopment claim there is no relationship between their clear influence with political officials and the District government’s unwillingness to pursue a tenant-led affordable housing project on the Congress Heights site.

How likely does it seem that a group of people with deep and demonstrably profitable ties to the mayor would choose not to use their influence to capture a tremendously profitable development, in an area where more profitable investment may follow for established players?

Appendix: Donor History and Business Connections of Key Players


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