Owning a home is always the goal for the people Karen Serfis sees every day. As executive director of Arlington Home Ownership Made Easier, Serfis deals with Arlington residents who want to own their first home, many taking the home ownership education classes at AHOME.
Those classes are a requirement for participants in the county’s Moderate Income Purchase Assistance Program (MIPAP), and other programs sponsored by the state’s Housing Development Authority, intended to encourage home ownership among low- to moderate-income Virginians.
But most of the people in Serfis’s classes won’t be able to buy a home in Arlington, no matter how long they wait or how many programs they go through.
“So many families out there want to purchase, and there’s such a small number of properties,” she said. “A lot of single families can buy a one bedroom condo and be happy. But if you have more than two children, it’s hard to find a unit that’s affordable.”
On Saturday, County Board members tried to address that shortage, approving by a 4-1 vote an affordable home ownership program designed to make more new multiple-bedroom condominiums in Arlington available, to own, for lower-than-market prices through the use of deed-covenants.
The program will help allocate condominiums, apartments and houses for sale, many donated to the county’s affordable housing stock by developers in exchange for county concessions on density and other ordinances.
Such units will be dedicated as affordable through the deed-covenant: For a buyer to purchase the condo, he must make less than a county-imposed income cap, and must promise to sell the unit as an affordable unit in the future. Board members are expecting to see final details of the program in March.
<b>IN A YEAR</b> when the county is trying to encourage civic involvement, the best way to do that is to encourage home ownership, said Board member Chris Zimmerman, because owning a home builds that family’s investment in their community.
That may be true, said Serfis, but it may not build civic engagement in Arlington. “We’ve seen a large number of African immigrants, but they’re not purchasing in Arlington,” she said. “A lot are going through Woodbridge and Dale City” to buy homes, because they can’t afford a house in Arlington.
The deed-covenant program may end some of that loss of prospective Arlingtonians, she said. “I think it’s wonderful that this program is going to be out there. But it’s such a small dent in the housing crisis.”
<b>ONCE IT’S IN</b> place, the deed-covenant program will rely on the same method as existing programs to sort out eligible homebuyers. To qualify for MIPAP, prospective buyers must go through the county-sponsored class at AHOME, and must meet income requirements: usually making less than $54,900, 60 percent of the area median income for a family of four, $91,500 in the Washington region.
Buyers who meet those qualifications are placed on a notification, rather than waiting list. When a condominium, apartment or home is available for purchase, buyers with the right family size and income are notified. They must then go through a good-faith income assessment by a lendor, and put down $1,000 earnest money on the property.
If, after those steps are completed, there are still multiple families eligible for the home, the county would conduct a lottery to select the final purchasers. They would have to agree not to lease the home, or use it as anything other than their primary residence, and to sell it within 6 months if they no longer meet the income requirements due to marriage, death or divorce.
That buyer would be able to buy the home at an artificially low cost — lowered not by actual subsidies by the county, in most cases, but by the donation of the unit at a low price. Essentially, the county would have separate housing stock, held at artificially low prices.
Each year, the price of the home would be allowed rise, but it would rise the same amount as the area median income - about 5 percent per year, county staff estimated. Taxes will be assessed on the lower rate, not on market value of the home. When the homeowner is ready to sell the unit, he or she would have to agree to sell it at its lower assessment — the promise involved in the deed-covenant.
That means that the cost of the home, already artificially low, would stay lower than the market rate for homes - sometimes as much as $300,000 lower than market rate, according to county projections.
<b>QUESTIONS ABOUT</b> the lottery process arose during the Board meeting, as Board member Paul Ferguson asked who managed the county’s current notification list.
The list is currently managed by AHC Inc., a non-profit that also serves as developer on affordable housing projects. That raises a problem, said Ferguson, since AHC could be seen as competing with the developers of the affordable units involved in the deed-covenant program.
“There’s going to be some criticism of this,” said Ferguson. “This is a heavy subsidy, and we need to ensure the fairness of the program.”
The difference between the sale price of the homes and the market value of the units can be up to $400,000 if assessments in the county continue to rise. “There is a subsidy involved. It may not be county dollars, but it is affordable housing dollars,” said Fisette.
The size of that subsidy prompted his vote against the deed-covenant program. There were too many possibilities for abuse, he said: What if a young lawyer meets the income requirements, buys one of the deed-covenant homes, starts to make hundreds of thousands of dollars a year but doesn’t want to move? What if someone meets the income requirements when they get on the notification list, then starts to make more money
“This program is fraught with danger,” said Fisette. “There are too many opportunities for abuse.”
But Board Chair Barbara Favola said the county couldn’t afford to wait until every conceivable question about deed-covenant homes is answered, because there are thousands of possibilities to explore.
“We are not going to be able to craft a flawless policy,” she said. “This is a classic example of the perfect being the enemy of the good. This is a policy you craft to help the majority of low-income homeowners.”