Monday, March 22, 2021

Gentrification in Capitol East

On April 3, 1975, Gilda Warnick, Rosetta Byrd, and Marianne Josem of the Capitol East Housing Coalition testified in front of the DC Council about how housing speculation was affecting them and the Capitol East area (here pp. 584-598). They and others had formed the Capitol East Housing Coalition a year earlier to stop the displacement of long-time low and moderate income residents. This displacement was caused by real estate speculation. In Capitol East, tenants were having their homes bought from under them and received eviction notices. Here are some excerpts I found most eye-opening:

Ms. Warnick:...We have found that the number of persons speculating in Capitol East is alarming. Last year, we found that over 60 investment groups, individuals, partnerships, and corporations operate in Capitol East, and since then, the list has grown dramatically

...speculators also benefit from more concealed and hidden real estate practices, such as flipping. Flipping is a process of buying and selling contracts before the property goes to settlement, and in this way, properties are artificially inflated before they enter the real estate market. Several real estate operators have told us about this practice, but it is extremely difficult to document, because the transaction does not appear in official records. 

Another practice is use of straw parties and dummy corporations, which gives speculators anonymity, while assembling real estate and ways of evading taxes. It also makes it difficult to get at the root of the speculation problem, which is the financing...

Those residents I am talking about are people who have literally already bought their homes. They have lived in there 12 or 15 years paying rent. They never had enough money to save up for a down payment or settlement costs. Then when the house is sold, they are given a month's notice to move, having had no time at all to try to purchase a home...

Linden Place NE

Ms. Byrd: My name is Rosetta Byrd, and I am the block captain of Linden Place, Northeast [between 12th and 13th St, south of H St NE]. I came here to tell you today about a housing problem myself and my friends are having because of real estate speculation on our block....Most of us have lived here for many years. We are regarded as low and moderate incomes, and many of us rent. All of a sudden last year, Linden Place became a speculator's market. Sixteen homes were bought up by them west of the park, from Virginia and Maryland. Six of them were bought by Capitol Hill real estate agents...Because of these problems, we on Linden Place decided to organize a block club to help each other to stay in our homes... 

To stop this displacement and "the cancer spreading all over the city," they asked the DC Council to:

  • Give tenants the first opportunity to buy the properties. 
    • With the assistance of "a citywide revolving loan fund, which could be financed from the sale of bonds, and the revenue from the sale of bonds, and the revenue from the passage of taxes on tangible property and professional services."
  • Implement a speculation tax.

The DC Council realized their request with a speculation tax in 1978 and Tenant Opportunity to Purchase (TOPA) in 1980. We know from Katie Wells' work that the the speculation tax was quickly overturned. In the meantime, Rosetta Byrd appeared on a 1978 news segment "Disappearing People," in which "Rosetta Byrd describes her experiences after being evicted and moving from place to place looking for low-income housing she could afford." 

How might we use policies like these (as well as protecting public housing) to help low and moderate income residents stay in DC?