Original post, November 18:

D.C. Mayor Muriel Bowser’s administration has teed up a multimillion-dollar contract for the development team behind a long-planned mixed-use project in Hill East to build permanent supportive housing for homeless residents exiting city shelters or getting off the streets. But the contract, which District lawmakers are scheduled to vote on Tuesday under an expedited timeframe, has blindsided Hill East neighbors who say they learned of the new plans for the site—abutting the Stadium-Armory Metro stop—only at the tail end of the approvals process.

That the city could have better informed residents about the changes is undisputed. “I know it’s always hard when it comes to siting it, but I didn’t understand that it would feel like a bait-and-switch to the community in the way that it clearly did,” said Laura Zeilinger, the head of D.C.’s Department of Human Services (DHS), in an interview last week. “And so that was just a misstep that we are working hard to create and rebuild trust with the community, so that in the long run it’s something that they can really be involved in, embrace, and feel proud of and a part of.” Francis Campbell, a former advisory neighborhood commissioner who has lived in Hill East for more than 40 years, said he could not remember city officials telling neighbors about any plans for supportive housing on the site previous to November.

“You have not given anyone in the community who’s going to be affected any knowledge or forewarning or thought to say ‘look, this is what we’re now proposing to do,’” said Campbell, who added that he does not object to supportive housing but wished for more transparency. Had the city done so, he said, “there would have been far more acceptance” for the changes.

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The contract was sent to the D.C. Council in late October, just days before it was slated to be approved as an item on the “consent agenda” at the legislature’s November 5 meeting. But at that meeting, Anita Bonds, an at-large councilmember and the chair of the Council’s housing committee, requested that the measure be postponed, saying she wanted to ensure Bowser’s administration had “time to talk with the neighbors” of the site. The site, a roughly 61,000-square-foot parcel on a 67-acre area officially called Reservation 13, is near rowhouses, the former D.C. General family homeless shelter, the Congressional Cemetery, and the D.C. Jail. It is located in the District’s Ward 7 but is immediately across the dividing line with Ward 6.

If authorized by the Council Tuesday, the contract would provide annual rental subsidies of $3.1 million to an affiliate of a joint venture between D.C. area-based Donatelli Development and Blue Skye Development, for a period of 15 years. This would fund the rents for 100 units of supportive housing: about $2,650 per unit per month, or a total $47 million, derived from federal standards set by the Department of Housing and Urban Development. Construction on the project will be funded separately, under the popular Low Income Housing Tax Credit program, according to Chris Donatelli, who is president and CEO of Donatelli Development.

The contract is being moved as emergency legislation, meaning that it would go into effect as soon as the mayor signs it rather than having to first go through the standard congressional review process typically required for District bills. Zeilinger said there is an “immediate and ongoing need” for additional permanent supportive housing in D.C., pointing to the success of affordable projects like La Casa in Columbia Heights and the Conway Residence in NoMa.

“The urgency around bringing more site-based [permanent supportive housing], particularly as it relates to the needs of women who have been in our shelters for a long time, has been a consistent and more and more urgent need,” she said. This type of housing comes with wrap-around services, such as employment and mental health supports, for the formerly homeless, and is shown to improve outcomes for people as compared to short-term housing or shelter. DHS will manage the supportive services at the Hill East site with a to-be-selected provider.

On October 9, the board of the semi-independent D.C. Housing Authority (DCHA) green-lighted the conversion of tenant-based rental vouchers into project-based rental vouchers that will finance the 100 units, public documents show. DCHA administers the Local Rent Supplement Program through which the funds are flowing. The contract requires Council approval because it is worth over $1 million; lawmakers are expected to debate it Tuesday.

Previously, 91 residential units—both market and affordable—and more than 13,000 square feet of retail were planned for the parcel. A 2017 zoning order permits a four-story building there with a minimum 75 affordable units, 25 of which “shall be two-bedroom units” and all of which “shall be reserved” at specified affordability levels “for 50 years.” The current plans maintain the building’s size and envelope as well as the retail, but call for 100 one-bedrooms instead. (Zeilinger said a legal analysis was conducted to make sure the new plans complied with the site’s existing zoning; though asked, officials did not provide a copy by press time.)

Through their joint venture DB Residential Hill East LLC, Donatelli and Blue Skye struck a land deal with the city that was negotiated beginning in 2013 and signed in 2015. That deal granted the joint venture the rights to develop the parcel in question in addition to a nearly 88,000-square-foot parcel immediately to the south. The overall development is set to see more than 350 units, retail, and parking. Construction on the south parcel started last year.

The two companies and their principals are big players in D.C. real estate and have donated significant contributions to local political campaigns. They have regularly worked on public-private partnerships with the city, including for multifamily developments like the one in Hill East. In recent months, tenants at their predominately affordable Park 7 Apartments, located on Minnesota Avenue NE, have raised concerns about poor conditions. But Donatelli said his company directly took over the management of that building earlier this year, has “overcome some challenges,” and is “proud of the condition of it.” “This building,” he said, referring to the Hill East project, “we are literally building it and the city will be running it through their providers. We do not operate permanent supportive housing properties. That’s a specialized discipline, and there’s just a handful of people that do that in a city, like Catholic Charities.”

Asked whether she has full confidence in the development team to be a responsible partner on the Hill East project, Zeilinger replied with “an unequivocal yes.” She added that DHS’s experience at Park 7, where some of its clients live, is that Donatelli is responsive to issues. And at site-based supportive housing programs, “there’s no time-lag between the awareness that there’s an issue and our ability to work with the property manager or property owner to get it fixed,” Zeilinger remarked. “We have the mechanisms to not pay if it’s not meeting the required standards, so we have all the protections and leverage we need to ensure quality.”

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Donatelli and District officials confirm that both parties collaborated over the summer to determine that 100 units of supportive housing would be viable at the site and to prepare paperwork for DCHA’s review. “I think it was a function of the fact that we had a parcel, a building and planning, one that was going to be largely affordable,” said Donatelli. “They were looking for a building in Hill East, so really I was the only one who had one, a self-contained building. It’s not that kind of situation where the city was looking over various locations and selected me for some other reason, other than we met the immediate need, there was no other place to really put that.” He said the building frame will be made with concrete instead of wood, with groundbreaking expected next year and completion in 2022.

But some Hill East residents like advisory neighborhood commissioner Denise Krepp worry that the city is rushing the contract through, even though the project seeks to deliver much-needed affordable housing. After not receiving what she felt were satisfactory answers to her queries, Krepp asked the D.C. Inspector General’s office to look into the contract process and award. DHS only began community outreach about the new plans in mid-October, following the DCHA board’s allocation of project-based rental vouchers for the site earlier that month.

While the 100 units of supportive housing will be open to both men and women, according to District officials, many of the future tenants are anticipated to come from the nearby Harriet Tubman emergency women’s shelter, which is also situated on Reservation 13. The city has plans to replace the shelter in the long term, but a location still must be identified, Zeilinger said. In a statement, Sarosh Olpadwala, the director of real estate development in the office of the Deputy Mayor for Planning and Economic Development (DMPED), said the Bowser administration is “proud that Hill East will now provide more deeply affordable housing with the addition of permanent supportive housing.” DMPED negotiated the 2015 land deal and also worked with the Donatelli-Blue Skye development team on the changes to the site plans.

Update, November 19:

The D.C. Council unanimously approved the $47 million subsidy contract for permanent supportive housing on the Reservation 13 site Tuesday. Ward 6 Councilmember Charles Allen, who represents Hill East, said he supports the project but that “the mayor’s team messed this up in terms of its outreach to the community” and to the Council, which only found out about the changes to the development plans a few weeks ago, after it received the bill authorizing the subsidies. Now, the bill heads to Mayor Muriel Bowser for her signature.

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Although the contract moved forward without much debate, it did draw some discussion. Brianne Nadeau, the Ward 1 councilmember and chair of the legislature’s human services committee, said she hoped “we can build one of these [projects] in every ward, that we can find the funding to continue doing this across the city” to lower chronic homelessness. But At-Large Councilmember Elissa Silverman said the key issue was not whether permanent supportive housing is a worthy pursuit, which she said she supports and voted in favor of.

“It’s not about worthiness, it’s about how we’re spending our taxpayer dollars,” Silverman noted. “We shouldn’t allow developers to use [permanent supportive housing] as a way of getting more money for other stuff or for their market-rate units.” She added that it proved difficult to get answers about the project from Bowser’s administration and housing officials.