Affordable housing efforts show little progress

By Rachana Dixit

Published: October 13, 2008

Third in a three-part series.

After renting a house on 10 1/2 Street for 39 years, Mary Banks’ aching hips, knees and back convinced her it was time to buy her own home.

With the money she had — a modest but steady retirement income — she thought she would be able to afford a home that would be more manageable. Banks said she’s been able to get by on relatively little because she does not have a car or cell phone, extra bills that many people factor into their monthly finances.

“I’m not a big spender,” she said.

But Charlottesville’s housing market was much too expensive for her. It was only with the help of the Piedmont Housing Alliance, a nonprofit that addresses affordable housing and other community-development needs, that she was able to become a first-time homebuyer.

Now, Banks, 73, lives in a one-floor affordable home that’s part of a mixed-income project on 10th and Page streets. The home, built with her health needs in mind, has wider doors and other design elements meant to make her life easier.

“I know I wouldn’t have been able” to buy a market-rate home, Banks said, adding that her brother had to give up his Vine Street home last year after he couldn’t afford his mortgage.

The ACCRA Cost of Living Index showed that for the Charlottesville Metropolitan Statistical Area — which includes the city and the counties of Albemarle, Greene, Fluvanna, Louisa and Nelson — the cost of living was 8.5 percent higher than the national average during the second quarter of 2008. The most recent poverty estimates from the U.S. Census, from 2005, showed that 23.7 percent of Charlot-tesville’s population was living in poverty.

Banks is one of the fortunate individuals to receive affordable housing. But officials acknowledge there is still a dire need for more affordable units in Charlottesville, where the cost of living is relatively high and land values are still rising despite the slowing economy and housing market.

When she moved into her $143,900 home in 2004, Banks made roughly 54 percent of Charlottesville’s median household income, then roughly $31,000. After assistance from the PHA, she has two loans, for $4,500 and $10,000, and retirement income to help her pay for the house.

In the Charlottesville region from Jan. 1 to Sept. 30, there were 1,962 homes sold, down from 2,506 sold in the same period in 2007. The local real estate market’s median sales price through September was $281,000, down 1.7 percent from last year’s median price of $285,935.

But even with the decrease, median sales prices are still far higher now than in 2000, when they stood at $150,000.

“Some people, they’re working every day but they still don’t have what they need,” said Banks, who retired 18 years ago as a licensed practical nurse from the University of Virginia. “It takes a lot.”

Taking stock

Mayor Dave Norris, a longtime advocate for increasing the number of affordable units, said more attention is being devoted to the issue now than in the past, but the level of funding remains low in comparison with overall need. Two years ago, the city was contributing less than $600,000 annually to affordable housing. Last year, $2.1 million was allocated, but in this year’s budget the amount decreased to $1.4 million. After a work session last week, City Council is thinking of how to spend this year’s fund.

The cost-of-living index also showed an astronomical number in terms of Charlottesville’s housing costs. During the second quarter of 2008, it was about 28 percent higher than the national average.

With the economy’s recent struggles, officials say they need to take into consideration that low- and middle-income families are finding it more difficult to pay for their homes.

“We have to be mindful of not putting people in a position where they’re not going to keep up with their mortgage,” Norris said.

Efforts to increase the city’s affordable stock, Norris said, have proceeded slowly. And a sizeable chunk of the city’s fund has gone into existing units to keep them affordable instead of creating new units — last year, the city spent $850,000 to keep Dogwood Housing rental units affordable.

“I don’t know that we’ve made any substantial gains in terms of new units,” Norris said.

He added, “You can talk and talk and talk about affordable housing, but if you don’t bring resources to the table, it’s not going to happen.”

Councilor Satyendra Huja agreed.

“We need to actually build some houses,” said Huja, who is a former city planning director. He added, “Housing for the poor or rich, the price of bricks are the same. The price of lumber is the same.”

Though housing prices have declined in the area because of the national crisis, city officials said homes that cost around $250,000 are still out of reach for many residents. The U.S. Department of Commerce reported last month that the average price of a new home nationwide sold in August dropped by a record amount, 11.8 percent, to $263,900, compared with the July average of $299,100. The median price was also down, falling 5.5 percent to $221,900.

“The houses are not that much cheaper than they were before,” Huja said.

There are measures in place to help Charlottesville’s low-income population — through the federal Section 8 Housing Choice Voucher program, low-income residents can have their rent subsidized with participating landlords. The city owns 376 public housing units spread over 11 sites, and there are additional subsidized housing sites, such as Friendship Court, that are no longer city-owned. Tax-reduction programs for homeowners and the elderly and disabled are also in place.

Affordable housing “is still a challenge for the poorest of the poor, but it’s moving in the right direction,” said Stu Armstrong, head of the Piedmont Housing Alliance.

But the public housing sites are in dire need of redevelopment and the city has about 300 Housing Choice vouchers for low-income renters, all of which are taken. The demand was so high for the voucher program, officials said, that they had to close the waitlist for five years — and when it reopened last month for a single week, 1,500 people were expected to sign up. Residents can use the vouchers indefinitely to reduce the rent in any apartment approved by the city.

Karen Shepard, executive director of the Monticello Area Community Action Agency, said more affordable housing in the city also would help low-income families by allowing them to pursue more job opportunities.

“It’s hard to work if you don’t have a place to live,” she said. A January 2007 State of Housing report of the Thomas Jefferson Planning District Commission — whose service area is Charlottesville and the counties of Albemarle, Fluvanna, Greene, Louisa and Nelson — showed that by 2010, the region will need an additional 3,950 affordable rental units based on low-income renter projections. In 2000, there were 17,910 low-income renters, with a projected increase to 21,860 by 2010.

Norris said cash proffers given by developers to the city’s housing fund would be beneficial because the city could use the money to fund projects for its low-income population. But those types of contributions have been infrequent.

Last year, developer Bob Englander agreed to give $300,000 to the Charlottesville Redevelopment and Housing Authority, but there is no guarantee the money will be used for affordable units. Additionally, Southern Development Group has agreed to give $253,000 for affordable housing in the Fifeville neighborhood, but some of the funds may be used for other purposes.

Affordable units that have been proffered by developers mostly serve a niche of residents who make around 80 percent of the area median income. Norris said building units suitable for families at 30 percent of the median income is difficult for developers because of monetary considerations.

The same TJPDC housing report supports the assertion. According to the document, most units that are affordable for extremely low-income households — meaning they’re designed to rent at or below 30 percent of the household’s income — are occupied by households with higher incomes.

Developer obstacles

But the will to build affordable housing does not make the units magically appear.

“New construction still costs lots of money,” Armstrong said.

In the wake of the current financial crisis, some Charlottesville residents believe that having a perpetual revenue stream for affordable housing initiatives is fiscally irresponsible.

Rob Schilling, a former city councilor and one of the few Republicans elected to the body, said city officials complain that more affordable housing is needed, but lower taxes and government spending will help create it — which is something, he said, Charlottesville officials have not been doing. More tax relief programs exist, but Schilling said city officials’ choices have helped create the same problems for which the government is providing assistance.

“The call is, we’re not spending enough money,” Schilling said. “There’s never enough.”

Valerie Long, a real-estate lawyer who represents several area developers, said many factors make building affordable units difficult — including land values, site work, laying utilities, proffer expenses and any construction delays that may occur.

“Add that to a slow market and it’s pretty tough,” Long said.

Land values present one of the biggest obstacles for Charlottesville developers. Ken Hankins, chief operating officer for Habitat for Humanity of Greater Charlottesville, said in 2001 the organization could pay $18,000 for a lot large enough for a single-family home. Now, the same lots cost at least $80,000.

“With the way the economy is and the stock market down, all nonprofits continue to stretch to get the money that’s needed,” Hankins said. Habitat has completed eight homes in Charlottesville since December.

The money to finance affordable units rarely comes from one source. Armstrong said on average, affordable housing projects garner funding from seven sources. For the 10th and Page project, the alliance had 14 sources of financing — and the process to secure all of them, Armstrong said, was like simultaneously playing 14 different board games.

“Every piece of money has its own rules,” he said. “It creates quite a menagerie of complexity to make it work.”

Armstrong said that in general, the stock of affordable housing in the city has improved because there’s been a reinvestment in neighborhoods to reinvigorate its homes. The best thing city officials can do to get affordable units, he said, is to establish concrete objectives.

“It would really begin to frame the discussion and identify the amount of resources necessary to achieve those goals,” he said. The Piedmont Housing Alliance set a goal five years ago to help 500 families become first-time homebuyers, which it is on the cusp of achieving. On the city’s end, the Planning Commission is drafting a more distinct proffer policy for developers, in which affordable housing needs are listed as paramount.

No simple solution

City Councilor Holly Edwards said homeownership helps those in poverty improve their situation, and education on the process is needed just as much as building the affordable units.

Banks, who lives in an affordable home, said one of the hardest parts of the process was figuring out how to manage her income to make homeownership possible.

“There are a lot of things to get taken care of,” she said.

The same rings true for city officials, who say that if there were an easy solution to build more affordable housing, someone would have discovered it. The question remains as to whether Charlottesville can afford to provide affordable housing indefinitely, especially with the economy’s ongoing troubles.

Huja said the city may not be able to put up millions of dollars every year to help secure affordable housing — in light of tight budgets projected for the upcoming years — and there will never be enough money to help everyone. Norris said a long-term commitment of resources is needed, but he does not think the problem will be solved in the near future.

“I think we’ve made some progress,” he said, “but a lot of it has just been treading water.”