The Alternative: Recapture and Recycle

Manna is not in support of long-term or permanent resale restrictions, and supports an alternative. In response to concerns by long-term resale restriction advocates who fear that lower income homebuyers will “flip” affordable properties and make large “windfall profits”, thus depleting the stock of affordable housing in the City, Manna supports a “Recapture and Recycle” provision. Manna believes this provision to be a better, more equitable way to insure against many of the concerns voiced by advocates of long-term resale restrictions.

The “Recapture and Recycle” provision recaptures all funds that are considered “subsidy” to the buyer, including what is seen as “the windfall profit,” which is the difference in the original sales price to the low income buyer and the higher appraised/market price at that time. This difference would be repaid if and when the lower income buyer resells his/her unit. This allows the “recaptured” funds and any funds considered subsidies to be treated as a loan that gets repaid (with interest) and  “recycled” back into additional affordable units for more qualified lower income families. Rather than permanent or long-term resale restriction, Manna advocates and employs at most a 5-10 year resale restriction.

To read about legislation (passed on October 28, 2014) that uses this model, see A Bifurcated DC. Implementation will begin on newly constructed affordable homes in 2015.

To read about another city that uses this model (San Jose) and discussions over the last several years on this issue in DC, see http://hatdc.org/wordpress/wp-content/uploads/IZ-Ownership-Lessons-for-the-District-.pdf.

An example of the “Recapture and Recycle” provision:







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