Government pays to house poor in luxury apartments with pools, wine cellars

Verde Point is a self-described “luxury apartment” complex with a rooftop pool and “personal wine storage” that is currently accepting public housing assistance recipients who will live there practically for free, courtesy of the taxpayers — at least until they become gainfully employed and their incomes rise. That’s when the pool parties and wine tastings end and they will have to downgrade to a more middle-class abode.

The Gramercy is another luxury apartment, also in Arlington, Va., where holders of the federal vouchers formerly known as Section 8 can live, taking advantage of its “massage room and sauna” and “clubroom with bar.” Also included, according to its promotional materials, are a “first-class sports club,” “theater/screening room,” and computer room.

Someone will actually come and do a manicure right in your home,” its promotional video says, adding that the units have “Berber carpet, GE stainless steel appliances, granite countertops.” There are 20 residences at the Gramercy set aside as “affordable,” and where Section 8 can be used.

The Gramercy

As with those at Verde Point, federally-subsidized Gramercy residents can face the unpleasant choice between living in luxury on public assistance or getting a job and having to move to a neighborhood with far fewer amenities.

Washington and local governments also pay for subsidized housing in luxury units by giving tax breaks to often-wealthy real estate developers who set aside units. Critics say such tax breaks impact the budget just the same as direct payments, but can make it more difficult for legislators and members of the public to know the full extent of the subsidies.

An official list of 70 buildings in Arlington, Va., many of them gleaming luxury towers in the most sought-after neighborhoods, has a curious note: It says that taxpayer funds were used on the highly profitable luxury rentals, as they might be on a public housing project.

“The complexes listed below were built, acquired or renovated with public funds, and therefore are required to set aside a certain number of affordable units,” the county web page says.

Another complex on the list is the Lenox Club, which has an indoor pool, hot tub, rooftop overlooking Washington’s monuments and 77 government-subsidized units.

Parc Rosslyn has a whopping 101 units set aside. It also has a rooftop pool and other amenities common in luxury buildings. In exchange for government subsidies, its operators rent the 101 units at lower-than-normal rates, which can still reach as high as $1,000 a month.

Parc Rosslyn

Those units can also be filled, however, by the vouchers wherein the federal government picks up most of the tab. Recipients pay 30 percent of their income, and lose their vouchers if their income increases too much.

Despite the cost to taxpayers and thousands of set-aside units, most of the benefits go to only a lucky fraction of poor people. Residents of units like the Gramercy are unlikely to leave once they get in, even as others with similar incomes are left out in the cold. The waiting list to get Section 8 help is several years long in many jurisdictions. In Arlington, it’s so long that it’s not even accepting new applicants.

Advocates say it is better to bring poor people into luxury buildings like those in Arlington than to put them in housing projects where other tenants and their criminal associates are bad influences (Unlike many cities, including nearby Alexandria, Va., Arlington has no public housing projects.).

The Gramercy’s promotional video says that “the lifestyle at the Gramercy really, just an easygoing kind of vibe because you don’t have to work hard to get anywhere to do the things you like to do.”

And that unwittingly describes one of the problems, said Robert Rector, a scholar at the conservative Heritage Foundation who formerly served on the federal Millennial Housing Commission, which was set up to build more public housing. Rector was also one of the architects of the landmark bipartisan welfare reform of 1996.

Their housing units are so nice that 95 percent of people could not live in this building. You’d never be able to rent in those buildings,” he said.

Asked how a policy that put the unemployed in houses nicer than they could afford on a salary encouraged them to seek self-sufficiency, Russell Dano, an Arlington city planner, said it was unrealistic to expect that many would work regardless.

The Gramercy

“What you’re talking about is kind of an entrapment situation where there’s a disincentive to do better in the world, and I think there are specific instances where that might happen, but I don’t think people are as economically mobile as we believe them to be.”

Eighty percent of voucher holders in Arlington live in the reserved affordable units, he said. But he emphasized that most units set aside as “affordable” aren’t occupied by voucher holders.

Rector questions whether there is a justification for economically elevating housing assistance recipients above middle class taxpayers and suggests that when it happens in cities across America, it’s usually because localities were playing with a mix of tax breaks and federal money, so it didn’t feel like a real cost.

“They’re building luxury housing for poor people because they think it’s a neat idea that makes them feel good,” Rector said. “What you have is a corrupt log-rolling between these big developers and the bureaucracy, and they feed off each other. They get a tax write-off for putting a limited number of low income units into a luxury building.”

He noted that many housing project residents live in run-down buildings, and that even more with the same incomes don’t get any subsidy at all.

Washington and local governments “run these very unbalanced programs…It gives a high benefit to a limited number, when there are many people with the same or less income that don’t get anything,” Rector said.

Dano noted that Arlington’s local programs seek to leverage developers’ dollars to make public money go further, and that many of the incentives to developers are not monetary, but rather being allowed to build projects with increased density.

But other pools of money are federal, which state and local officials often characterize as “free.” Officials of local governments sometimes say that even if the rate of return on such money is relatively low, it is better than letting it go unused.

“We don’t have any discretion” over federal policies, Dano said.

Verde Point

One of the largest is the Low-Income Housing Tax Credit, which causes losses of billions of dollars in tax revenue each year by allowing developers to pay a dollar less in taxes for every dollar they spend building low-income housing.

Rector described it as an “off-the-books public housing construction program” with “no oversight at all” that moves housing decisions from politicians who might focus on the end goal of breaking the cycle of poverty to major developers, whose expertise is simply building high-end units.

Dano said there are a finite amount of tax breaks that are divided between the states and then doled out competitively.


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