BALLSTON-VIRGINIA SQUARE

Civic Association Newsletter

April/May 1997 - Volume 20, No. 6



BOARD APPROVES DRAFT CONSOLIDATED PLAN

On April 12, 1997, the Arlington County Board voted 5 - 0 to approve the draft Annual Consolidated Plan for Fiscal Year 1998, ("Agenda Item 8b."). At the Board meeting, BVSCA President Ernie Ragland testified on behalf of the Association (see the following highlights of the discussion). He reported the results of our Fall 1996 Membership Survey, on the question of whether or not the County should increase its spending on subsidized rental housing, and discussed external factors affecting the plan.

The detailed results of the BVSCA Membership Survey, the fourth annual survey, were previously reported in the Association's Newsletter dated October/November 1996. The results are also available on the Association's home page, located at "http://www.bvsca.org" (click on the Newsletter for October/November 1996).

Because of the Association's longstanding interest on the subject of affordable housing, we have provided additional information in this Newsletter for our members consideration. This includes the following: (1) the Executive Summary and Section 1 discussion on Affordable Housing from Arlington's draft Consolidated Plan for FY 1998; and (2) the letter to the County Board from Reid Goldstein, President, New Arlington-Douglas Park Civic Association, on the Consolidated Plan and the County Manager's Response (Agenda Item 8b Attachment, County Board Meeting April 12, 1997).

Also, for comparative purposes, we have included the highlights of the draft City of Alexandria, Virginia, Consolidated Plan for Housing and Community Development, One-Year Action Plan for the Period July 1, 1997 - June 30, 1998.

According to the City of Alexandria's Consolidated Plan, over the past decade, the City has experienced a continued increase both in the number of persons making use of City services, specifically housing, health and human services -- and in the cost of providing those services. The City of Alexandria believes that one of the reasons increases in health and human services expenditures have been greater in Alexandria is that the city has a higher percentage of assisted housing, a higher percentage of rental units in its housing stock, and lower median rents than other Northern Virginia jurisdictions. The City's Plan describes the City's policy with regard to new Section 8 vouchers and certificates, tax-exempt financing, Low Income Housing Tax Credits and other similar programs is that the assistance will be used for the maintenance or replacement of Resolution 830 units in the City, and will not be used to increase the City's subsidized rental stock without specific City Council authorization. Also, the City has provided increased emphasis to homeownership initiatives and committed significant resources to that goal.

Finally, the Association has obtained detailed information on the County's "committed affordable units," and the location of these units (see the last two pages of this Newsletter for details).

Highlights of the April 12, 1997, County Board Meeting, Agenda 8b, Draft Consolidated Plan for FY 1998, Public Comment.

BVSCA President Ragland: "Good Morning Madam Chairman and members of the County Board. My name is Ernie Ragland and I am the president of the Ballston-Virginia Square Civic Association. I'm here today to express some concern about the proposed Consolidated Plan for FY 1998. Our Civic Association conducted a membership survey in Fall 1996 for a two week period. We received a number of comments of concern about the proposed increase in subsidized rental housing. We asked [in our survey] under Question/Item number 7, Quality of Life, Should Arlington spend more on each item? We had listed subsidized rental housing. Only 7.1% of our members who responded, there were 78% responses, said they were willing to support more spending, 30.9% said about the same, and 61.8% said spend less money on subsidized rental housing.

Also, in reviewing the proposed Consolidated Plan, I see a discussion on Section 8 Housing involving [1,091 Section 8 Rent Assistance certificates and vouchers], who receive over $12 million in federal rent assistance. And yet, I see no contingency plan as part of that document, especially given the recent statements by HUD Secretary Andrew Cuomo.

I read from the Richmond Times Dispatch. On March 26, 1997, there was an article titled "4,500 Residents to Lose Homes?" [It was reported that] 20 years ago the federal government reduced the number of Americans who couldn't afford decent places to live by subsidizing their rent and giving subsidy contracts to property owners who agreed to house them. Now the contracts have begun to expire, and federal lawmakers must approve a 30% increase in the U.S. Department of Housing and Urban Development's budget to reauthorize them...HUD Secretary Andrew Cuomo has asked Congress to increase the agency's Section 8 appropriations from $3.6 billion this fiscal year to $9.2 billion in fiscal 1998, which begins October 1.

Also, the article states that HUD's dilemma stems from several Section 8 acts passed in the mid-1970s and early 1980s, which allow low-income individuals to apply for residence at designated Section 8 housing complexes or to receive vouchers permitting them to pay only 30% of their income for rent...Further, to slow the growth of Section 8 spending, 'HUD has proposed limiting annual rent increases for Section 8 properties, asking property owners to voluntarily reduce their rents to the current market rate and filling vacant units with working families who would require smaller subsidies.'

So, I ask the County Board to consider a contingency action for the Consolidated Plan for the future in the event there is not sufficient increase in funding for Section 8 housing and to consider providing an increased number of working families in Section 8 housing. I thank you."

Board Member Hunter: "Madam Chair."

Madam Chair Bozman: "Mr. Hunter."

Board Member Hunter (former President, Arlington Housing Corporation): "Mr. Ragland, your Newsletter is probably the most preeminent in Arlington, very widely read, and it's a very nicely put together Newsletter. And I know you do have a survey because you refer to it a number of times each year. Do you have a survey every year?"

BVSCA President Ragland: "Every year [since former BVSCA President Bob Sherretta began the formal membership survey in 1993]."

Board Member Hunter: "I was interested in the survey question that you related about should we have more or less subsidized housing. A lot of times surveys are (1) affected by the formulation of the question and I know you know that as a person who takes surveys, and (2) by the amount of information that's been received beforehand. Because your Newsletter is widely read, you may want to consider having an article, say by Mr. Antonelli, or someone who is decidedly against having assisted housing of various sorts. And having an article, I don't know if Mr. Eisenberg would agree to author one, or an article by somebody who could point out the advantages. Also, there was a study put together by the Business Roundtable in Arlington about five or six years ago."

Board Member Eisenberg: "1990." Board Member Hunter: "That pointed out the benefits to Arlington in having for our economic development, which in turn helps all of us by having both a better transportation network and better housing for citizens of all income levels. So, I'm not obviously going to direct or require, not that I could, what you put in your Newsletter. But you may want to put that sort of information in, both pro and con, in your Newsletter. And then have the survey again, as I know you will, and ask the same question again and see if it changes. I think it would be interesting to see."

BVSCA President Ragland: "I certainly will do that [especially to help determine what constitutes a reasonable and realistic target level of subsidized rental housing in Arlington, and assuming I continue to be the BVSCA Newsletter Editor, next Membership Year]. One of the things I will include too are other jurisdictions initiatives, such as Chesterfield County's, which has provided a tax exemption for improvements to properties for a period of up to eight years, if [property owners] fix up older homes that are 25 years or older. I think to address affordable housing you have to look at both, the private market stock and the subsidized rental housing portion in fairness. And I think one of the things the County Board should consider are other initiatives like what Chesterfield County has done to increase improving the housing and as an offset [indirectly, increasing the supply of high quality affordable housing]. In the private market you often end up passing on greater rents [to cover not only the cost of improvements, but additional real estate taxes associated with reported improvements. It should be noted here that sometimes improvements to rental property have a greater impact on the overall value of the property than the dollar cost of the improvement, resulting in substantially higher real estate taxes and making the property less affordable.]"

Board Member Hunter: "I would be very happy to work on that with you. Thank you very much."

Board Member Eisenberg (former lobbyist for the American Institute Of Architects): "Mr. Ragland has brought up a number of very interesting topics and I think he has identified a number of problems and issues. The Section 8 program was a program devised in 1974 by the Nixon Administration. The program as we know it today ended. Pieces of it continued, predominantly that portion of it that provided what they call certificates or vouchers. Basically, assistance that low-income families or elderly or disabled comprise a substantial bulk of Section 8 users can carry with them from apartment to apartment. The part of the Section 8 program that went to subsidize the rents on the units and stayed with the units, so that developers could get a private loan and build the project, or rehabilitate it, and at the same time cover the costs of renting to people that could not otherwise afford the units. That program disappeared, and the reason it disappeared is because of the extraordinary costs associated over the long term, as many as 40 years of cost that escalated. I was one of those that participated in ending that program and the reason was a study done by the Congressional Budget Office at that time, that demonstrated the very high cost.

Now we have a couple of those projects here in Arlington County. I don't say and won't say that they've been tagged with particularly high costs. They happen to be Claridge House and Woodland Hill, two older adult projects in Arlington, which are financed through the State Development Housing Authority and happen to carry guaranteed Section 8 unit assistance for at least in one case up to 40 years. The program actually in concept was a good program. But again, there were cheaper ways of doing it. What's happened is the cheaper ways have themselves been diminished and that's where Mr. Ragland has focused some additional attention.

The County's Housing Grants program is in effect a very poor cousin of the Section 8 voucher and certificate program. It doesn't require people to pay up to a minimum of 30% of their income in rent. It requires people to pay a minimum of 43% of their income in rent, and then the dollar amount itself is capped. It's not like the Section 8 program. And what you end up with if we were to fill the gap, is basically, staff will correct me if I am wrong, but I think we would pretty much have to double our Housing Grants program just to maintain those individuals at the 43% of their income in those units. But it is a problem, and we face that problem, because some people are going to be blown out of their units and have no other place to go...."

DRAFT ANNUAL CONSOLIDATED PLAN for Fiscal Year 1998, February 12, 1997

At the County Board Meeting of April 12, 1997, the Board approved the Consolidated Plan for Fiscal Year 1998. The Executive Summary and Section 1 of the Plan follow for members' information.

EXECUTIVE SUMMARY

The draft Annual Consolidated Plan for Fiscal Year (FY) 1998 is an action plan describing the proposed allocations of FY 1998 federal funding to meet the five major goals identified in the Three-Year Consolidated Plan for FY 1996-1998. These goals address: Affordable Housing, Homelessness, Community Development, Citizen Participation and Institutional Structure. The County will have almost $4 million in funding in the coming year from the following four federal programs administered by the Department of Housing and Urban Development (HUD)....

Highlights of the FY 1998 Annual Consolidated Plan are listed by goal areas:

Affordable Housing -- Expand the supply of affordable housing, provide rent assistance, address special housing needs and ensure equal opportunity in housing.

Proposed uses for CDBG funds include developing multi-family rental housing, rehabilitating single-family housing and providing home ownership opportunities. HOME funds will be used primarily to expand the supply of affordable multi-family housing. The County plans to leverage the HOME funds with $855,000 in the local Housing Fund Contingent (HFC) as well as with private resources. Public-private partnerships with nonprofit and for-profit housing developers will be key to attaining affordable housing goals. In addition, rent assistance is provided through three programs: The locally-funded Housing Grants Program ($2.1 million), the federally-funded Section 8 Program ($12.6 million) and HOPWA ($183,000). The local Real Estate Tax Relief Program ($358,000) assists low and moderate income homeowners. Also noted are new programs serving special needs, e.g., the TriAgeing program which is designed to help seniors remain in their apartments. This year the County is placing a special focus on identifying actions to address the barriers to fair housing identified in the Analysis of Impediments to Fair Housing Choice and in subsequent community forums.

Homelessness -- Eliminate homelessness, enabling all persons to attain self-sufficiency or optimal functioning and stable housing.

HUD awarded over $1.1 million in McKinney funds in 1996 for two projects serving the homeless in Arlington, $575,000 for a long term transitional home for homeless street people with mental illness and $587,000 for substance abuse, mental health and other health services to be provided at the homeless shelters. A HUD Supportive Housing Program grant is being used to expand an existing transitional housing program for homeless families. The Emergency Shelter Grants are focused entirely on programs serving the homeless. The County has six emergency shelters and seven transitional housing programs which provide temporary housing while preparing households for transition to permanent housing.

Community Development -- Plan and implement programs addressing the community and economic development needs of low/moderate income special populations and neighborhoods.

Programs designed to address neighborhood improvement and economic developments are focused on four designated Neighborhood Strategy Areas (NSAs): Nauck, Columbia Heights West (CHW), Arna Valley and Buckingham. Appendix 2 provides maps and profiles of the NSAs. County strategy to concentrate CDBG and other programs to maximize the impact of neighborhood revitalization efforts. Revitalization Plans for Nauck and CHW will be completed in FY 1998 and implementation activities will begin. Residents of Nauck and CHW are guiding development of these plans through citizen planning committees and at neighborhood meetings, reviewing drafts of major components of the plans. Staff will initiate planning for the Arna Valley and Buckingham NSAs in FY 1998.

Citizen Participation -- Involve Arlington citizens and service providers in housing and community development planning, program development and program evaluation.

Citizens are encouraged to review and comment on the proposed Consolidated Plan Citizen Participation Plan (Appendix 3), to be considered by the County Board along with this FY 1998 Annual Consolidated Plan on April 12, 1997. Two citizen participation plans (CPPs), required by HUD for the Consolidated Plan and for the CDBG Program, have been merged, creating the new plan. Changes to the Community Development Citizens Advisory Committee (CDCAC) are described in the draft CDCAC Role and Composition (Appendix 4). Summaries of citizen comments on needs, strategies and fair housing issues, along with staff responses, are in Appendix 5....

SECTION 1: AFFORDABLE HOUSING

This section includes goals, strategies, accomplishments and action plans addressing four goals: 1) expanding the supply of affordable housing; 2) increasing home ownership opportunities; 3) providing rent assistance; 4) addressing special housing needs; and 5) ensuring equal opportunity in housing.

Expanding the Supply

GOAL: Expand the supply of housing affordable to low and moderate income households.

FY 1998 STRATEGIES

ACCOMPLISHMENTS: The Plan articulates a goal of adding 360 Committed Affordable Units (CAF units) per year.

[A "Committed Affordable Unit" (CAF unit) is one that is pledged by agreement with the county, state, or federal government to remain affordable to low and moderate income households for a specified period of time through mechanisms such as nonprofit ownership, site plan requirements, contracts with private owners, or IRS regulations governing tax-exempt financing.]

Two projects involving a total of 272 units were accomplished in FY 1996. They are:

1) Buckingham: a partnership between Paradigm Development Corporation and the Arlington Housing Corporation to acquire and renovate 512 units, of which 233 are affordable; and

2) Queens Court: a 39-unit garden complex acquired by the Arlington Partnership for Affordable Housing (APAH).

Roughly $5.7 million, including program income and prior year money, in local HFC monies was available in FY 1996 to expand the supply of affordable housing. Of that, $4.5 million was used to assist two nonprofits in the acquisition of 272 affordable units. The County has been able to leverage approximately $15 private dollars for each dollar of local subsidy from HOME, CDBG or Housing Fund Contingent (HFC) funds.

Leveraging: The practice of leveraging (using county, state or federal funds to supplement private developers' investments) has yielded, on average $8 in private funding for every $1 of public funding of housing developments. In FY 1996, the "extraordinarily high ration" of non-County funds leveraged ($15:$1) was achieved by the unusual combination of mechanisms used to finance the Buckingham Apartments development. In this case, the County used a moral obligation pledge to provide credit enhancement to the tax-exempt bond second trust. The use of the moral obligation helped to reduce the interest rate on the bonds and allowed a higher mortgage amount. In addition, Historic Preservation tax credits and Low Income Housing Tax Credits (LIHTC), along with $2.5 million of developer equity were used. Together, these mechanisms served to greatly reduce the net amount of County HFC loan needed to assist this large development.

ACTION PLANS FOR FY 1997 AND FY 1998:

Multi-Family Housing Development: Almost all of the federal HOME funds and local HFC funds will go to expanding the supply of affordable housing. In FY 1998 the County's HFC fund will receive $845,000 in federal HOME funds, to be leveraged with a proposed $855,000 in local general revenues. Of that amount, $65,000 will be used for program administration. The remaining $780,000 will be allocated primarily for new construction, acquisition and rehabilitation projects. Roughly $36,000 of these HOME funds will serve Falls Church. The proposed FY 1998 CDBG allocations include a Housing Development Fund of $163,900.

The Office of Housing Development (OHD) will be working with both the nonprofit and for-profit sectors to develop affordable housing projects during FY 1998. OHD staff administer the HFC (comprised of local general revenues and federal HOME funds), the Housing Reserve Fund and various state funds which may be allocated to local jurisdictions. In addition, OHD staff facilitates and assists in obtaining the primary financing for affordable housing development through such mechanisms as tax-exempt mortgage revenue bonds, other bond financing or federal tax credit programs. Two projects currently in process are:

Calvert Manor: On February 8, 1997 the County Board authorized the allocation of $585,000 in Housing Fund Contingent (HFC) funds for APAH for the acquisition and renovation of this 23-unit garden apartment. APAH is also applying for state funding for the project. Twenty-one of the 23 units are currently occupied by households earning at or below 50% of the area median. The proposal, through the provision of tenant rent subsidies, is designed to avoid displacement of current residents. Fifteen (or 65%) of the units (including the 3 three-bedrooms) are CAF units, committed to remain affordable to low income households over the long term. Calvert Manor is an architecturally significant garden apartment complex. APAH is applying for historic designation by the National Register of Historic Places. APAH has applied for a $30,000 grant from the Weinberg Foundation to provide an accessible apartment in a vacant basement area.

Fort Henry: The County is currently working with the Landex Corporation and AHC, contract-owner of Fort Henry Gardens, an 82-unit townhouse complex. In February 1996 the County Board reserved an initial $1.5 million allocation of HFC/HOME funds for this project. The project has received an allocation of federal LIHTC tax credits at 4% from the Virginia Housing Development Authority (VHDA). The final financing will include $1,840,000 in County funding from CDBG and local HFC funds. The project as proposed involves rehabilitation of 82 townhouse units, including the expansion of 17 units from two-bedroom to three-bedrooms. The 82 renovated units would be operated as rentals for 15 years with the potential of conversion of all, or some, of the units to home ownership at that time.

Carlin Springs: An HFC application was received by the County from APAH to purchase Carlin Springs Apartments, a 27-unit apartment complex in North Arlington. County staff is currently reviewing the proposal for feasibility.

Legislative Initiative: The County Board has included in its 1997 state legislative package, a proposal to expand the finance powers of Industrial Development Authorities (IDAs). The proposal would allow IDAs to issue tax-exempt private activity bonds to finance multi-family housing projects owned and operated, in whole or in part by for-profit enterprises that utilize federal low income housing tax credits. Currently, the County has a formal cooperation agreement with the Alexandria Housing and Redevelopment Authority (ARHA) to issue such bond financing. IDA financing is permitted for housing developments owned by nonprofits.

Significant funding can be saved by the County using its own staff and the local IDA to finance local affordable housing projects. Efficiency and timeliness would be increased as meetings with ARHA and with the Alexandria City Council would be eliminated. County staff already has the burden of responsibility for monitoring local projects, even though ARHA collects annual fees for that purpose over the 30-year life of the mortgage. This proposal is not designed to expand the scope of the County's affordable housing activities but simply to save County funding on projects it would already be undertaking.

CDBG Proposals: Staff is recommending the following allocations of FY 1998 CDBG funds for multi-family housing development:

Housing Development Fund: $163,900 for a contingency fund to be available for multi-family and/or single-family housing projects.

Expected Outcome: 200+ units produced, e.g., by nonprofits, as cited below. (All outcomes listed are preliminary and will be further refined in discussions with implementing agencies.) Arlington Housing Corporation: $175,100 for staff and related administrative costs to develop large multi-family housing projects (100+ units) for low and moderate income households. Funding for acquisition and rehabilitation could be requested from CDBG, the state, HOME, HFC, private lenders, when a project has established feasibility.

Expected Outcome: 175 units of committed affordable housing. Arlington Partnership for Affordable Housing: $68,200 for staff and related administrative costs to develop small multi-family housing projects (25-100 units) for low and moderate income households. Additional funds for acquisition and rehabilitation could be requested as stated above.

Expected Outcome: 70 units of committed affordable housing.

Housing Rehabilitation and Development: $50,000 for County staff and for predevelopment project costs to rehabilitate privately owned rental units for low and moderate income persons. Rehabilitation funds could be requested as previously stated in Housing Development Fund and from owner's funds. Expected Outcome: Technical assistance and oversight of development activities of nonprofits' production, e.g., of 245 affordable housing units cited above.

Single-Family Housing Programs: County-funded home rehabilitation programs assist 45-50 low and moderate income owners and renters of single-family houses with rehabilitation, barrier removal or weatherization of homes each year. CDBG Proposals: Staff is recommending the following allocations of FY 1998 CDBG funds for single-family housing development:

Christmas in April: $18,800 to the Robert Pierre Johnsome Housing Corporation (RPJ) for staff and related costs to organize a one-day blitz, using donated labor and materials, to repair 32 houses occupied by low and moderate income persons who are elderly or have disabilities.

Expected Outcome: 32 properties rehabilitated. AHC Single-Family Programs: $392,500 for four AHC programs and for program administration:

1) The Home Improvement Program (HIP) (no new funding) provides financial and technical assistance to low and moderate income homeowners County-wide to rehabilitate their homes, with priority given to homes in NSAs. No new allocation is needed as the unspent CD Fund balance, supplemented by loan repayments, should be adequate to continue the program at its existing activity level. AHC leverages these funds with state funds, bank financing and owners' contributions and sweat equity. Expected Outcome: 27 owner-occupied, deteriorated homes brought up to code.

2) The Replacement Housing Program ($50,000) is a component of the HIP program which includes demolition of a severely dilapidated house and replacement with new construction in CDBG areas. Expected Outcome: 1 dilapidated home replaced.

3) The Barrier Removal Program ($30,000) provides accessibility improvements for owner-occupied and rented dwellings. Expected Outcome: 18 properties improved to meet needs of occupants with physical disabilities.

4) The Moderate Income Home Ownership Program (MIHOP) ($25,000) enables AHC to acquire and rehabilitate deteriorated houses in NSAs and High View Park (a former NSA) and sell them to low and moderate income families. Expected Outcome: 4 deteriorated homes rehabilitated and sold to first-time home buyers.

5) Administration: $287,500 for staff and related costs for all of AHC's single-family programs.

Expected Outcome: Program administration resulting in 50 units of affordable single family housing rehabilitated, as noted above.

HOME OWNERSHIP

GOAL: Assist first-time buyers purchase homes.

FY 1998 STRATEGIES: