County Aims to Incentivize Affordable Housing - The Crozet Gazette
Albemarle County revamped its housing policy last July to address the chronic shortage of housing available for low- and moderate-income residents. Though the new policy language was approved by the Board of Supervisors (BOS) at the time, several substantive parts of the policy were deferred until financial and other incentives aimed at developers could be hammered out by county staff. At the BOS meeting on February 16, county staff presented a draft of one such set of developer incentives called an Affordable Housing Overlay.
Since 2005, the county's chief tool for compelling developers to build less-expensive dwelling units has been to require that 15% of new housing units be offered at affordable prices in exchange for an increase in the number of units that may be built on the site. (This arrangement is called a "proffer," a deal made with the developer during a rezoning process.) An "affordable" for-sale unit is defined by the county using a formula based on how much a household earning the area median income could afford for a home, which in 2021 equated to a home sales price of $243,750.
By all accounts, this policy has failed to produce sufficient affordable housing to meet the county's current or future needs. "Only about 50% of for-sale units proffered by developers as affordable [in Albemarle county] have gone to income-qualified buyers," said Stacy Pethia, Albemarle County Housing Policy Manager. The situation is worsened by the fact that only the initial sale of a unit has to be made at the affordable rate to a qualified buyer—any subsequent sale of the unit can revert to the market price.
For Crozet, the county's Community Development office provided data showing that of 254 for-sale homes proffered by builders as affordable in neighborhoods such as Old Trail, Wickham Pond, and Westhall in recent years, only 23 were sold to income-qualified buyers, a success rate of 9%. The reasons for the deficit vary, but chief among them is the narrow window in which the unit is offered for sale—typically a 90- to 120-day period during the early stages of construction. "The developer must market those units to income-qualified buyers in that window of time, and if the unit is not sold or under contract in that time, then they can sell those units at market rate," said Pethia.
Buyer income requirements compound the problem. "If you are, say, one teacher, and you have money for a down payment, you could qualify [for an affordable unit]," said Neil Williamson of the Free Enterprise Forum, "but if you are a married teacher, you can't make too much money or you aren't allowed to buy these houses. And quite honestly, in 15 years the 15% mandate has produced only a handful of affordable homes [countywide] that the minute the new person took ownership became unaffordable, because there is nothing in the deed to maintain affordability."
A further snarl in the process is that the county's Office of Housing does not maintain waiting lists of income-qualified buyers searching for a home, so the whole process depends on whether county staff can find a buyer able to sign a contract within the 90-day window to secure the house, which it often cannot do. "When the [original] plan was developed in 2004, the county was doing something called the Homebuyers Club that was effectively a waiting list for applicants," said Williamson. "They stopped doing that. They dropped the ball."
"How can we expect the people who have no place to live, to be somehow managing to keep themselves on an ever-changing list?" said White Hall District Board of Supervisors representative Ann Mallek during the February BOS meeting. "I do understand that this may require more staff, but without a list—a functioning list where more people are kept in the loop—the whole thing is doomed. So, I really put that as a very high priority."
To avoid the affordable units requirement entirely, developers can choose to develop their land "by-right," meaning they comply with the property's current zoning (two homes per acre, for example), rather than going through a lengthy rezoning process to increase allowable density. This usually results in fewer, larger and more expensive units on a parcel instead of a greater number of smaller units that include some affordable housing. Pleasant Green, Chesterfield Landing, and Sparrow Hill were all built by-right in the last several years in Crozet.
Long-time Crozet resident and former Planning Commissioner Tom Loach has spoken out many times at community meetings about both the need for affordable housing in Crozet and the inadequacy of the county's housing policy. "Developers don't mind proffering 15% [affordable units] because they know they'll never have to provide it, because the county is so inept at keeping track of it," said Loach. "So now they raise the requirement to 20%, like that will change anything. It's the definition of insanity—doing the same thing over and over expecting a different result."
David Mitchell of Great Eastern Management Company, a real estate developer, points out the basic economics of pursuing affordable home site building. "If you're going to sell a lot for a house for less than it cost you to build it—which is what affordable housing is—then you're going to have to charge more for the other houses. It's simple math—the other lots are going to subsidize that loss. So, then, housing is more expensive for that other 85% of buyers, and that contributes to an increasing cost of living."
Update and Overlay
The updated housing policy approved last summer includes several as-yet unimplemented goals, such as the increase in the affordable housing requirement from 15% to 20% for new (rezoned) projects as well as a decrease in the maximum sales price of an affordable unit down to $204,100, plus a rule that for-sale affordable units must remain affordable for a period of 40 years, via deed restrictions or other strategies. (The waiting list issue does not appear among the policy's priorities.) The question now facing the county is how to attract developers to play ball, and one answer is to offer financial and other incentives.
The proposed Affordable Housing Overlay presented by Pethia in February would only apply in the county's growth areas (such as Crozet), and would give developers who promise to build 20% affordable units a bevy of rewards: a density bonus (an additional 45% of the maximum density allowed in the Comprehensive Plan), building permit fee rebates, and "flexibility" in construction design standards for things like additional building height and reduced setbacks, and reductions in required parking. "It could be like an à la carte menu of options that could be applied to the project," said Pethia.
The density bonus is significant not only in terms of the sheer increase in allowed units, but also in a provision that allows parcels to be developed at the Comprehensive Plan maximum density instantly, without the need for a rezoning. "Zoning" is a parcel's legal building limit, while Comprehensive or Master Plan limits are the county planners' hoped-for densities in the future, which are typically higher than older, "stale" zoning.
For instance, a developer who has a 20-acre parcel which is zoned as R2 (two dwelling units per acre) could build 40 houses on that land by right. If, however, they agree to offer 20% affordable units and the Crozet Master Plan envisions R4 density on the site, the developer can build 80 houses without a rezoning, and then receive a 45% density bonus of another 36 units. That's a total of 116 units on a 20-acre site, including 16 affordable units.
For Crozet, the new overlay could have serious implications. The proposed 14-acre Montclair development on Rt. 240 is currently zoned to allow 0.5 units per acre, but the Master Plan's suggested land use for the parcels would bump the limit up to 12 units per acre without a rezoning process—a 24-fold increase in housing density—and would add a 45% density bonus on top of that for a total of 244 units. Across Rt. 240, Old Dominion Village proposes 110 units on about 10 acres of rural land, but could build up to 174 houses on the land under the overlay's provisions.
As a further incentive to developers, a new "expedited review" component means that new projects that include affordable units would be allowed to skip a big chunk of the arduous approval process—including public hearings and a final review by the Board of Supervisors (BOS). Instead, developers would work with county staff to come to terms early in the process, and staff would be empowered to deny the request if it has "specific adverse impacts" on local residents.
Mallek, for one, was disturbed by what she heard. "My understanding under the current proposal is that the BOS would not be included in the applications, that they would be staff only," she said. "So that's where a careful checklist and our deliberations over the next year or so [on the housing policy incentives] are going to be incredibly important. That's going to be a real leap of faith for our citizens, because we've been working toward more participation and inclusion and transparency for 25 years, and this is now a completely different approach."
Williamson was pessimistic about the overlay's chances for approval. "Developers will agree to development standards ahead of time, but you won't have a meeting where the public gets to weigh in," he said. "Then the project will go forward and meet those performance standards but the public won't get the chance to say, 'Wait a minute, this is going to be 35 feet from my backyard, and I don't like it.' That's why I don't think this overlay is going to pass."
"I think it will take a lot more work," said Mallek of the overlay proposal. "I'm just not satisfied with what they brought us. We have to protect the quality of life of the people who are going to be living there."
Pethia also presented an option for an Affordable Dwelling Unit Program, essentially a mandate that would require developers requesting a rezoning to provide at least 20% affordable housing without the added incentives. "If that happens without any incentives, then developers will simply run the pro forma [hypothetical financial statements] both ways and weigh the outcomes," said Williamson. "I fear they will choose by-right, which will result—and this may be a desired result—in less density, less amenities, and fewer people."
Alternatives
A different but complementary approach to offering similar-sized housing units for lower prices is to build smaller and more dense housing that is more naturally affordable, such as attached multi-family units. "I think an important point is that [developers in Crozet] did not build affordable housing," said Loach. "They built market-level housing that was made available as affordable. The original 'neighborhood model' [zoning] was supposed to incorporate affordable housing, but that's never what happened. They always used the 15% model."
Albemarle County could also consider expanding the designated growth areas in the county. "Right now, less than 5% of the of the county's land mass has been designated as the development area for residential and commercial," said Williamson, "so that's a restriction that they control and could expand, unlike Charlottesville, which is having a different issue because they are landlocked. Albemarle could unlock that and create a plethora of new opportunities. Yes, that would require infrastructure, but would impact affordable housing dramatically."
Williamson points to projects such as Brookdale in Charlottesville as an example of what could work. "Brookdale represents a significant investment by the locality," he said, "and it represents real affordable units that stay affordable for 30 years. Those are important things, and focusing on the rental market is much more attainable." Unlike for-sale affordable units, rental units such as those designated as affordable in The Summit in Old Trail are required to be offered to income-qualified renters and must continue to do so for 10 years.
Regarding for-sale houses, Mitchell thinks those are best managed by agencies such as Habitat for Humanity, the Piedmont Community Land Trust, and the Piedmont Housing Alliance. These entities can hold the property deeds to ensure that the units remain affordable even as they change hands. "You can sell your house, but you only see a return on the value of the improvements," said Mitchell, "so [the trusts] still keep a reservoir of affordability. There's an equity split where they get a benefit from each sale, and they can reinvest in the next project."
Mitchell suggested that in the current hot real estate market, developers are willing to absorb the affordability requirement as simply another project cost, but the market won't stay this way forever. "The 15 or 20% rule, or this overlay idea, it all sounds great but it's not a long-term solution," he said. "There are nonprofits in this community doing the heavy lifting on affordability and doing a damn good job of it. And we, and the county, should support them instead of creating more bureaucracy."
Comments
Post a Comment