‘It Takes a Lot of Subsidy’ in Alexandria

‘It Takes a Lot of Subsidy’ in Alexandria

Sources stretch to fund forthcoming homeless shelter, affordable housing.

Public officials, including Gov. Ralph Northam and U.S. Rep. Don Beyer, break ground on The Bloom / Carpenter’s Shelter.

Public officials, including Gov. Ralph Northam and U.S. Rep. Don Beyer, break ground on The Bloom / Carpenter’s Shelter.

City, public officials broke ground on a combined affordable housing development and homeless shelter in Old Town on Aug. 29. While the event signaled broad public support, the project also illustrates the increasing difficulty of accommodating lower-income and struggling households in a high-cost environment.

The development, known as The Bloom, will be located a few blocks northeast of the Braddock Road Metro station. It’ll include Carpenter’s Shelter, a nonprofit 60-bed shelter and human services provider. It’ll also include 97 apartments owned by the Alexandria Housing Development Corporation (AHDC), a nonprofit developer. Eight-seven apartments, ranging from one- to three-bedrooms, will target households earning 50-60 percent of the area median income (AMI) — between $58,600 and $70,300 for a household of four. Ten studios will target households earning 30-40 percent of the AMI — between $28,200 and $37,500 for a household of two. These will be reserved for former Carpenter’s Shelter residents, who will continue to receive supportive services while transitioning into a permanent housing solution. Alexandria-based Cooper Carry provided architecture, interior design and sustainability services to Alexandria Housing Development Corporation’s The Bloom and Carpenter’s Shelter.

“As this area rapidly adds luxury rate housing, The Bloom and Carpenter’s Shelter will create space for lower-income households to continue to access the Braddock Road neighborhood’s amenities — easy access to the Metro, convenient post office, health, and grocery resources, and community locations such as the Charles Houston Rec Center,” according to AHDC.

A who’s who of city, state and federal elected officials attended the groundbreaking. They included several city councilors as well as state Sen. Adam Ebbin (D-30), state Del. Mark Levine (D-45), U.S. Rep. Don Beyer (D-8) and Gov. Ralph Northam (D).

“When a governor and a congressman are present, it sends a very special message,” said Dale Wittie of the Virginia Housing Development Authority (VHDA).

Mayor Allison Silberberg said the project represents the community’s solidarity with struggling households.

“Any of us can fall on hard times. Something can happen in the family: a medical crisis or any number of things. And so it’s not just ‘us’ and ‘the residents.’ We are the residents, the residents are us, and we’re there for them. This is a day to acknowledge and contribute to their courage to step forward and say that they want to make a change in their lives, and it’s very hard to do so,” she said.

A combination of federal, state and local subsidization makes the project possible.

“In high-cost areas like Alexandria … it takes a lot of subsidy to get quality affordable housing,” said Wittie. “It takes a lot of assistance to reach down that far” in the spectrum of household incomes. In large part, the reason is that land and construction, particularly of underground parking, cost a lot and must be financed. “Affordable” rents could not generate sufficient cash flow to cover market-rate debt service, unless aided by some combination of sub-market interest rates, grants, and intermixture with higher-rent units.

For its part, City Council committed in 2016 to loan up to $7.1 million at low interest to the project. This comprises one layer of a multi-layered subsidized financing package. The $50 million combined project will also utilize nearly $23 million in equity from federal tax credits, which encourage private investment in affordable housing by enabling investors to reduce their tax liability; $12 million in low-interest VHDA loans; and nearly $2 million in state and federal grants.

But, due to decreasingly favorable market conditions, the deal isn’t completely sealed. The city will likely have to kick in an additional $1.7 million in order to keep the housing portion of the project afloat.

Helen McIlvaine, the city government’s housing director, said in an Aug. 29 memo: “Due to volatile construction pricing trends, including unprecedented increases in costs, labor shortages, and uncertainty regarding tariff policy which is driving the cost of some building materials sharply upward, the project construction budget has increased by more than 25 [percent] since AHDC’s 2016 funding application. AHDC had been able to absorb several rounds of increases due to the cushion provided by its state and national housing grant award totaling $1.6 million, increased VHDA loan funding and by deferring more of its developer fee, however, a gap projected to be up to $1.7 million remains to be closed, and AHDC has requested that the city provide additional financial support now so the project can close and move forward in mid-September.”

This article was updated Sept. 14, 2018.