Stacy Pethia – C-VILLE Weekly

Affordable housing remedies include land purchasing and city-funded rental assistance

City Council is forging ahead with a multi-pronged attempt to stymie the affordable housing crisis in Charlottesville. The moves call for building new affordable housing, while also creating incentives for existing landlords to rent at rates affordable for lower-income families, and developing a city-funded rental assistance program for residents who are most in need.

“The affordable housing problem in Charlottesville is not going to be solved by simply building new housing, so I’m trying to find different ways to attack the issue,” says Stacy Pethia, the city’s housing program coordinator, who presented the recommendations from the Housing Advisory Committee last week to Council. “We’re looking at every tool that we have. What can we do to build new units while preserving the affordable housing we already have? And then, find ways to encourage existing landlords to help out. I’m trying to attack it on every front.”

In 2010, the city set a goal to have 15 percent of its housing by 2025 be affordable, which for two-person families means earning at least $52,650 a year. In Charlottesville, 1,800 families—25 percent—make less than $35,000 a year, according to the Orange Dot report released in 2015. City Councilor Kathy Galvin said recently that only 20 percent of the 944 people who work for the city actually lives in Charlottesville.

Over the last seven years, the percentage of affordable units in Charlottesville has declined from 10.5 percent six years ago to 10.06 percent. During that time, 1,530 new housing units were created, but only 73 of those—fewer than 5 percent—were priced as affordable. And of the roughly 1,200 future units that have either been approved or are seeking approval from the city for construction, only 40 of them—fewer than 4 percent—are slated to be affordable.

Last week, councilors voted to move forward with several steps to combat the waning amount of affordable housing, beginning with creating a list of vacant city-owned pieces of land in residential areas. Because Charlottesville is landlocked and just 10 square miles, land is scarce. City Manager Maurice Jones has been tasked with identifying what city-owned land could be sold or leased to developers on which to build affordable housing. Jones was also asked to look into other possible land purchases for affordable housing sites.

Last week Council also approved the creation of a $900,000 rental assistance program. Under the current federal housing assistance program, the Charlottesville Redevelopment and Housing Authority is authorized to fund 533 rental vouchers. But because rental rates are so expensive in Charlottesville, the CRHA can only afford to fund about 400 of those. Funding for this new rental assistance program would come out of the Charlottesville Affordable Housing Fund, which Pethia oversees, and which received an additional $800,000 in the city’s budget for the next fiscal year, for a total of $2.3 million. (Over the next four fiscal years the CAHF budget will increase to $3.4 million per year, for a total of $16 million over the next five years, which is more than double the amount the city has funded in the past five years.)

This new city-funded rental assistance program is expected to pay for the monthly rent of about 120 people—at a rental rate of about $600 per month, per person. Still at question, however, is who would be prioritized to receive the funds—people who are homeless, living with disabilities, on the CRHA wait list, etc. Also, would housing in Albemarle County be possible if city rentals proved too expensive? How long would the funding last? And does CRHA have the capacity to run such a program? Council delayed the actual implementation of the program until September 16, when the HAC is expected to report back with a set of guidelines and a structure.

The third measure Council approved was the creation of a Landlord Risk Reduction Fund. A significant hurdle to creating affordable housing, says Pethia, is convincing landlords they won’t lose money by renting to people who earn low incomes. This new fund would be used to reimburse landlords for repairs if a rental unit is damaged, with the agreement that they continue to rent the unit at an affordable rate. The fund would also serve as a security deposit for some lower-income residents who can afford to pay the monthly rent on a new unit, but can’t afford the security deposit.

The final component included in the approved proposals was aimed at incentivizing developers to build more affordable units. The proposal would waive preliminary and final site-plan review fees, as well as building permit fees, for projects that constructed at least 15 percent of their total units as affordable. It’s expected to save developers approximately $5,000 per unit, which would in theory allow landlords to price their rents lower for those units.

Unaffordable housing: Developers pay to not build affordable units

Sharonda Poindexter-Rose is a 24-year-old single mother who works as a server at a local restaurant. She lives in a one-bedroom home, and as she’s looked for a two-bedroom place over the last several months, she’s discovered a harsh reality. “It is so expensive out here, it’s ridiculous,” says Poindexter-Rose.

In the last six years, 1,530 new housing units have been created in the city, but only 73 of these—fewer than 5 percent—are priced to be affordable. “Affordable” means that a two-person family making $52,650 a year or less could afford to rent it. In Charlottesville, 1,800 families—25 percent—make less than $35,000 a year, according to the Orange Dot report released last year.

The city has set a goal to have 15 percent of its housing be affordable by 2025. Overall, the percentage of affordable units in Charlottesville has declined from 10.5 percent six years ago to 10.06 percent.

In large part that’s because so many new high-priced units have entered the market. More than half of these are coming from three apartment buildings on West Main Street. Between The Flats at West Village, The Uncommon and The Standard, which is currently under construction, a total of 861 units will have been created. None of them has been priced as affordable for lower-income families. Instead, with rents ranging from $1,500-$3,200, the target tenant has been students.

“Everywhere you go in Charlottesville, it’s always about UVA students,” says Poindexter-Rose. “Look at all the people who work at UVA, look at all the people who work at hotels. Where do you want us to live? It comes across as if they don’t care about us. That’s what the message comes across as.”

Instead of lowering rental rates, each of these out-of-state developers has paid into the Charlottesville Affordable Housing Fund. If a developer seeks a special use permit to increase the number of allowable units in a development, a local ordinance lets companies pay the city a lump sum rather than designate “affordable” rents for a small percentage of units in the building.

But since the CAHF’s creation in 2007, every developer required by the ordinance to contribute to affordable housing has paid into the fund instead of providing affordable units. The Flats paid $487,491; The Uncommon paid $331,450; and, most recently, The Standard paid $664,777. None of those developers responded to a request for comment.

“Obviously we would have preferred to have the units,” says Stacy Pethia, the city’s housing program coordinator. “But we’ll take the money. We will find a way to spend it.” Coming from Pittsburgh’s housing authority, Pethia was hired by the city in August to oversee the CAHF. “I think it can be used more effectively, we just need to find a way to do that,” says Pethia. The fund currently has a $2.3 million balance.

Pethia says it does a great job of preserving and rehabilitating existing affordable housing—by funding projects with nonprofits such as Habitat for Humanity, Piedmont Housing Alliance and Albemarle Housing Improvement Program—but she thinks the fund needs to do more to add affordable housing to the marketplace.

Acreage in the 10.2-square-mile city is scarce and expensive, which is why Dan Rosensweig, president and CEO of Habitat for Humanity of Greater Charlottesville, says the city should use the CAHF to strategically buy land for affordable housing. Habitat for Humanity has used CAHF money for nearly all of the more than 160 homes it’s helped families build.

Rosensweig says the current affordable housing system is “broken.” For starters, he argues that the city should ease its density restrictions.

“There’s no substitute for an increase in inventory,” says Rosensweig, adding that since the West Main Street developments, he’s heard that rents elsewhere in the city are falling “ever so slightly” for the first time in years.

Pethia is also making a push for increasing residential density levels in some areas of the city. If a developer is permitted to build two additional stories on a building in exchange for making 15 percent of the units affordable to lower-income families, that would go a long way, she says.

But increasing density is not always popular. The local Great Eastern Management Company is vying to be the first to include affordable units—at least four—in its proposed 126-unit apartment building on East Jefferson Street, but has received pushback from some area residents who say it’s too large.

In November, increased density was one of 35 recommendations Pethia and the Housing Advisory Committee delivered to City Council. They also recommended doubling the amount of money developers pay into the CAHF if they opt not to build affordable units, while calling on the city to increase its own funding of the CAHF, about $1.3 million annually.

“That’s simply not enough,” says Brandon Collins, an organizer with the Public Housing Association of Residents. Providing more affordable housing, Collins says, is key to preserving the fabric of neighborhoods by helping ensure existing residents don’t get priced out.

Pethia is hopeful the city will reach its affordable housing goal in eight years. “If we look at different ways to use the housing fund and to approach affordable housing development and preservation in the city, we’ll get there. The affordable housing fund has done a lot of good and has grown, but I think it’s now time to really grow.”