319 Apartments, One Penny at a Time

319 Apartments, One Penny at a Time

County uses housing funds to keep Janna Lee Village affordable.

In the 30 years since Janna Lee Village was built with state money, the complex of 319 affordable apartments near Buckman Road has been pulled in two contradictory directions. The apartments themselves, with rents between $840 and $1,100, have become increasingly dilapidated, according to county officials. But the land on which they sit has exploded in value.

Confronting an economy marked in recent years by speculative real-estate buying and expensive development projects, Mount Vernon Supervisor Gerry Hyland said the fate of properties like Janna Lee is all too predictable: its owner sells out for millions of dollars; the run-down buildings are razed and replaced by high-end apartments or exclusive townhouse communities and a few hundred displaced families must comb through the area’s dwindling supply of homes with a modest rent. Most will probably have to leave the area, and perhaps the county. Commutes will be lengthened or jobs will be lost. And the economic recovery that has marked the Richmond Highway corridor will be incrementally slowed, as new grocery stores, coffee shops and retail businesses find it that much harder to fill job vacancies that pay only six or eight or 10 dollars an hour.

“We need affordable housing in our area,” Hyland said. “To make this community viable we need people off all income ranges to live and to work and to do all of the jobs that are necessary to make a community run and run well.”

Because the county recognizes this necessity, the story of Janna Lee Village is likely to have an alternate ending. Its apartments are set to be refurbished with only a slight increase in rent. They will stay affordable for years to come.

But changing the ending comes at a cost: $19 million in county housing funds. According to Aseem Nigam, a director in the Fairfax County Redevelopment and Housing Authority, the county is spending $5 million to buy the land beneath Janna Lee Village. It’s loaning an additional $14 million at low-interest to a for-profit affordable housing developer that will take ownership of the buildings and refurbish them.

Nigam said the $19 million outlay is the most the county has ever spent using the recently established “penny for affordable housing” initiative, which sets aside one penny out of every dollar of real estate taxes the county takes in, totaling $21.9 million this year.

Nigam said the project “goes right to the heart” of the Housing Authority’s mission, “to provide affordable housing to the residents of Fairfax County.”

RICK EDSON, THE DIRECTOR of a national for-profit builder, AHP, LLC, said he brought a proposal to the county after learning that Janna Lee’s owner was planning to sell. Fairfax County authorities returned to him with an offer to buy the land and loan money for the structures, an approach to preserving affordable housing that Edson described as “very creative.”

He agreed to the deal and put the property under contract one year ago. The Board of Supervisors approved it on June 5. Now, Edson is in negotiation with a private company that will invest in the project in exchange for federal tax credits. He hopes to have a commitment by the end of the year, and to start renovations immediately afterwards.

Edson said that tax breaks, grants and low-interest loans from local, state and federal governments are the only reason companies such as his can provide rental units at rates too low to offset the cost of land, construction and maintenance. “That’s the key,” he said. “There’s a gap, and you need to fill that gap with essentially free money.”

But Edson added that the free land provided by the state is an investment as well as a subsidy. Even as the county leases it for one dollar a year to Janna Lee Village, the land will continue to grow in value. “It works for us. It works for them. It makes this deal happen. They deserve a lot of credit for coming up with this structure.”

The math behind affordable housing is a carefully calibrated mix of charity and profit, for the government as well as the developer. Edson said the first priority of non-profit and for-profit housing developers alike is to provide affordable housing. “There really is no distinction in the affordable housing business between for-profit and non-profit.” Being for-profit means Edson must pay taxes, but it simplifies his business model. The deals he strikes must be sustainable, but high-profits are not a priority. “How much money you make has nothing to do with whether you’re for-profit or non-profit,” Edson said. “I know for-profit people who make very little money and non-profit people who make a lot of money.”

Edson said each apartment will cost $35,000 to renovate. But when all renovations are complete about two years from now, rents for one-bedroom units will rise from $840 to $850. Two-bedroom units, which now rent for $1,000 will cost $1,050 and three-bedroom units will rise from $1,100 to $1,175. In addition, 50 units will be set aside for a federal housing program with variable rates set at one-third of a renter’s income. All units will be eligible to people with federal housing vouchers.

Both Edson and county officials said they expect most current renters to stay in their apartments. Edson said that although the buildings are scheduled to undergo extensive renovations to roofs, windows, heating and air-conditioning systems, kitchens and bathrooms, as well as landscaping and new a office and club house, most residents shouldn’t have to move out for more than a few days. He said he had renovation experts who could remodel around a family’s lifestyle with a minimum of disruption. “You leave in the morning and come back to a new kitchen.”

PAM MICHELL, THE EXECUTIVE DIRECTOR of shelter-provider New Hope Housing and a prominent advocate for affordable housing, said she knew little about the deal. But she added that more affordable housing developments should be fitted with efficiency studio apartments that can be rented cheaply to people on the cusp of homelessness. “I continue to be concerned that affordable is not as affordable as we’d like it to be,” she said. “We need to be sure that folks who are very low income don’t end up getting squeezed out.”

Edson said the configuration of the building’s bedrooms dictated his plans. “We’re buying a property that happens to have ones, two’s and threes. It doesn’t make sense to convert one-bedrooms to studios.”

Lee District Supervisor Dana Kauffman, said he was pleased that apartments “in great disrepair” will be upgraded, “so they don’t just become warehousing for the poor.”

And Edson praised the Board of Supervisors for its aggressive action to preserve affordable housing. “They’ve really taken a leading role in recognizing something and doing something about it.”

When instituting the penny for housing, the board called for 1,000 affordable units to be preserved by 2007. Nigam, of the Housing Authority, said the purchase of Janna Lee Village will bring the county over that mark one year early.

But he warned against complacency. “Affordable housing issues are not going to go away by achieving this goal. It’s an issue that will remain in Fairfax County and across this nation for years to come.”

Hyland agreed. “You may end up with the county having to be a player even more significantly when and if these development owners are tempted to sell out,” he said, before affirming his commitment to keeping affordable housing in the area.

But he cautioned that the pennies from the government will never add up. “You’re looking at a funding source that even if you double and triple it and quadruple it, it still wouldn’t give you enough money as is need for affordable housing in Fairfax County.”