An additional $3.5 million from City coffers will finance the purchase and rehabilitation of 60 existing Alexandria Redevelopment and Housing Authority (ARHA) affordable housing units at Quaker Hill that were in danger of being lost. The unanimous vote by Council occurred at its Dec. 16 meeting.
"The plan approved by City Council is a responsible solution to the challenge facing the city and ARHA to preserve the 60 affordable housing units at Quaker Hill," said Alexandria Mayor William D. Euille. "Without City involvement, the units would have likely reverted to market-rate rents and become unaffordable to current residents. The Council cannot allow that to happen."
Under the terms of the agreement approved by Council, the City will continue a current $1.2 million City loan to ARHA for the Quaker Hill units and approve a new loan of up to $3.5 million. This will allow ARHA to purchase and rehabilitate the units.
ARHA has managed the units since they opened in 1990. They replaced the prior Cameron Valley public housing development.
Council's action includes measures to exempt the ARHA units from City real estate taxes and provides security guarantees for the City's ARHA loans, according to a news release following Council's vote.
As much as $1 million of the new loan would be repaid within 18 to 24 months under terms approved by Council. Additional provisions, to be approved by the ARHA Board of Commissioners, provide an "increased role in oversight of ARHA finances" by the City, the release stated.
"I'm glad they approved the loan. We are willing to work with them [Council] on the financial conditions," said ARHA Board of Commissioners Chairman A. Melvin Miller.
"Most of their conditions deal with details of the loan and we don't feel they really need to be voted on by the ARHA Board. But, we'll study them more carefully, probably after the first of the year since they deal with a longer time span, and act on them at that time if necessary," Miller said following Council's action.
The refinancing request resulted from ARHA's having held the right of first refusal to purchase the units which were originally financed in large part by federal Low Income Housing Tax Credits (LIHTC). Those credits have now reached the end of their compliance period, and the private owners want to sell the property, according to ARHA.
In order to exercise its right of first refusal, ARHA proposes to make use of federal tax credits as a key financing source, according to information given to Council. While ARHA has until 2008 to exercise its purchase option, the State has begun accepting applications for its new Northern Virginia affordable housing preservation tax credits program. ARHA is under deadline pressure to decide on its Quaker Hill financing structure to make application for those tax credits.
The units are presently occupied by residents who have tenant-based Section 8 Housing Vouchers. Under the federal Section 8 housing program, authorities do not receive U.S. Department of Housing and Urban Development (HUD) operating subsidies. The sole source of income to the housing authorities under Section 8 is rental income, which includes tenant payments and voucher subsidies.
In addition to the normal operating expenses for a rental property, ARHA pays condominium homeowner association fees for the units, which are part of the larger market-rate Quaker Hill development. Section 8 vouchers are also portable by the tenants, allowing residents to utilize those vouchers anywhere in the nation where landlords have agreed to accept them.
Prior to Quaker Hill residents utilizing of Section 8 vouchers, unit income to ARHA came solely from low-income resident rents equal to 30 percent of their adjusted income. That revenue was not sufficient to cover ARHA's expenses.
Over time, ARHA made operating deficit loans from its other programs totaling $6.9 million to cover Quaker Hill operating costs. The loan must be addressed when the sale concludes, according to the City.
The existing $1.2 million City loan to ARHA was originally due in August 2006. That was extended by the City for one year to allow ARHA time to work out the details for the Quaker Hill buy out, the City stated in the release.
Under the current ARHA proposal, the City would loan ARHA $4.7 million and ARHA would repay the $1.2 million outstanding loan, thereby creating a new City loan of up to $3.5 million. A portion of that would be a short-term loan, according to the City.
"As the federal government continues to slash housing funding, we must do all we can to hold onto the existing affordable housing units we have. This plan will provide the City with adequate guarantees to ensure its funds are being used appropriately to help address the ongoing crisis in affordable housing," Euille said.