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Affordable Housing Remains Illusive — Even with $12.7 Million

July 25, 2002

One of biggest challenges facing City government is the creation of affordable housing. But Alexandria is not alone in this quest.

It is a regional problem, as recognized by the Washington Metropolitan Council of Governments (COG) with the adoption of a resolution in November of 2001, calling for the creation of a regional housing trust fund. And, different from other elements of that resolution, #R41-01, such a trust fund could impact the city coffers.

As stated in a memorandum last February to the mayor and City Council by Alexandria City Manager Philip Sunderland, "the regional housing trust fund initiative, unlike the other principles and policies approved by COG Resolution No. R41-01, will likely require future financial contributions from participating local governments ..."

In order to gain a greater understanding of Alexandria's Housing Trust Fund and its impact on creating more affordable housing within the city, the Planning Commission at its July 2, meeting received a briefing from Mildrilyn Stephens Davis, Director, Alexandria Office of Housing.

Davis explained in her report to the Commission, that under Alexandria's Affordable Housing Plan, developers have two options. The can apply discounts to the sale prices or rents for designated set-aside units or pay $1 per gross square foot of the development into the fund. If they choose the set-aside option, discounts must at least equal the $1 per gross square foot designated in the Trust Fund formula. It was increased from 50 cents by City Council in June.

The set-aside units are made available to income-eligible buyers. Developers, in turn, may be eligible for bonus density or height, or for a reduction in required parking when their plans are being considered by the city.

IN ADDITION TO developer contributions to the HTF, the city recently began allocating general fund monies and federal Home Investment Partnerships Program [also known as HOME] monies to augment the yearly designated amount of $400,000 in HTF monies set aside for affordable housing development activities. In each category these amount to: city - $300,000 in both FY 2002 and 2003; federal monies - $300,000 for FY 2002 and $307,765 for FY 2003.

Contributions to the HTF as of May 31, 2002, totalled $10.4 million. In addition, there is $954,338 in outstanding pledges. The fund also made $1.7 million in interest through February 28, 2002, according to the report.

Expenditures from the fund as of May 31, 2002 totalled more than $7.7 million. Of this amount, $5.4 million had actually been expended and $2.3 remained committed or approved, the report revealed.

"General goals established by the Affordable Housing Policy encourage the expenditure of Housing Trust Fund money on activities that support housing opportunity for households within the Virginia Housing Development Authority (VHDA) limits for first-time homebuyers," the report noted.

THOSE INCOME LIMITS are $68,700 for one or two persons and $79,500 for three or more persons. VHDA also establishes a maximum sale price of $225,000. This was increased in March 2002, from $173,200.

HTF allocations have been made to support the following activities:

* Housing acquisition and/or rehabilitation - $1.3 million;

* Development of sales housing - $833,730;

* Homeless and transitional housing support - $750,995;

* Assistance to homebuyers - $3.3 million;

* Development and preservation of affordable housing -$400,000; and

* Other activities including support for existing affordable rental properties - $1 million plus.

The Housing Opportunities Fund is the new name given to the special affordable housing development fund established by Council in March of this year with a combination of monies from the HTF, General Fund, and HOME Program. As of May 31, $325,000 of the funds from the HTF were approved for use to support the purchase of Lynhaven Apartments to preserve affordable housing in the city, according to the report.

ANOTHER NEW expenditure from the HTF in the first 11 months of FY 2002 was a contract in the amount of $62,500 to the Northern Virginia Family Service to manage a transitional housing program for City homeless families. A total of $500,000 has been designated for this purpose.

A total of 55 affordable set-aside sales units have been established since the inception of the Affordable Housing Policy, Davis reported. It is expected that another six sale units will be available upon completion of The Preston Condominiums and Townhomes and that Northampton Place will yield another 25 new affordable rental units.

The new policy provisions for set-aside sales units give the city an exclusive right to market the units for a period of 90 days after the developer is ready to accept sales contracts. They also require that qualified buyers have at least one member of the household who lives or works in the city, the report specified.

Following Davis' presentation, Planning Commissioner Ludwig P. Gaines, who had requested the report, acknowledged, "This is precisely the type of information I felt would be helpful to the Commission. The report serves the purpose it is intended to.

"Although the money is very important, it is more important to provide the units. It's going to be my role to work with the developers to get more units so that residents that have lived here all their lives can continue to do so."

Gaines also noted, "There is a sense that most developers make contributions rather than set-asides. I believe appropriate pressure can be applied by staff on developers to get more actual units."

The Office of Housing will give the Planning Commission periodic briefings as to the progress and developments of the HTF, according to Gaines. They will also make their annual report to Council available to the Commission.