County Board Affordable Housing Master Plan—Initial Annual Cost of $17 Million to $51 million, depending on type of program

The Arlington County Board adopted on September 19, 2015 the Affordable Housing Master Plan (AHMP) that has useful data and some broad goals. Unfortunately, there was no cost or budget information on how these optimistic goals can be achieved in Arlington over the next 25 years, and nothing on how these funds can be raised or considering alternative ways to achieve the same goal. http://newsroom.arlingtonva.us/release/county-board-adopts-first-affordable-housing-master-plan/
Below is an effort to provide costs and compare two ways of providing these benefits.

The plan’s primary goal is to have a supply in Arlington of 22,800 affordable units by 2040, a rise of about 16,000 units from the current supply of 7,000 committed subsidized units (CAFS). This is an annual goal of adding 640 CAFs over 25 years. Today, an average CAF rents for about $200 per month below comparable private market rents. Another way to effectively add 16,000 affordable units in Arlington would be to provide 16,000 housing vouchers on existing private rental units.

Cost of building or adding 16,000 CAFs
Based on cost data over the past two years, the county affordable housing investment fund (AHIF) has supplied $80,000 per new CAF; thus $51 million of AHIF funding is needed annually to add 640 CAFs. Over the past 14 years, the county added 250 CAFs annually. Since the county now contributes about $12 million for AHIF, another roughly $40 million is needed annually for AHIF. However as housing construction costs rise as they have over the past five years, the required AHIF contribution will have to increase as well.

Most of this additional funding will have to come from local tax sources or developer contributions (that only amounted to $3 million annually over the past decade). Some funds will come from re-payment of prior AHIF loans, but in most cases AHIF loans are for 30 years, and repayments are likely to fund only a small portion of the annual $51 million required. Over the 25 years, the budget cost will be $1.3 billion (current dollars). AHIF funds must continue indefinitely or the CAFs will cease to exist.
Cost of providing housing vouchers for 16,000 households within 25 years

An alternative way to obtain the same effect would be to provide 16,000 housing vouchers. A housing voucher for $200 per month would cost $2,400 per year per household, and the one year cost of 675 new vouchers is $1.6 million. In 2040, 16,000 vouchers would cost thus $38 million. This is still $13 million less per a one year cost of building new 640 CAFs. Vouchers are provided during the entire 25 years, unlike building new CAFs which will only fully appear 25 years from now and provide little housing relief in the next ten years.

Over the full 25 years voucher costs are half those building 16,000 new CAFs. The number of vouchers to meet the full needs of all households earning less than 60-percent AMI is 7,000 in 2016, and then rises by 640 annually reaching 16,000 by 2040. The cost to provide $200 per month vouchers during 2016-40 is $687 million, only half of the cost of providing the $1.3 billion to build 16,000 CAFs.

Vouchers provide about 43 percent more benefits to renters during the 25 years than slowly building new CAF units.
Measured in benefits over the 25 years, vouchers provide 287,000 household-years versus only 200,000 household-years for the CAFs. Vouchers also go to much lower income renters than those in a CAF who are predominantly at the 60-percent AMI.

Below is the written position of Arlington Greens on the proposed Arlington affordable housing taskforce:

September 10, 2015
Arlington Green Party
Affordable Housing Master Plan, Implementation and Framework and General Land Use Plan

Preserve MARKs
The Affordable Housing Plan should explore creative ways to preserve MARKs (as in offering
renters the “first right of refusal”, incentives to building owners, extended land use for affordability, preservation of existing zoning, etc).

Single Form Based Code Policy
All Form Based Code projects throughout the County should include at least 10% affordable units (including those projects that have commercial spaces). Form Based Code projects could conversely represent an equal array of economic strata.

Cost-Saving Housing Options
The County should implement other housing programs that give priority to help Arlington residents who earn less than 40-percent of the area median income ($43,000 for a family of four or $30,100 for a single person).

The County Board should shift at least three-quarters of the (AHIF) funds that are being used today to finance the construction of new subsidized apartments, approximately $12 million to direct housing grants to low income residents. About $9 million of current AHIF funding could be diverted to housing grants, and another $10 million of new local tax revenue should come from raising fees on housing developers.

The County Board should broaden the use of grants which are twice as effective per dollar spent; they provide benefits to low income renters to use all over the County. By contrast, the AHIF fund mostly helps people earning 60-percent or higher AMI.

In examining the benefits of a one year housing grant of $1 million to spending that amount in AHIF, the difference is still large over 30 years. The ten CAF apartments yield $720,000 in lower rents. However, this economic value in 2015 (of such lower rents with regards to time and interest rates) falls to $480,000 ( present day “value”). This equates to a lump sum value in 2015 of receiving $24,000 a year in payments at a 3% interest rate over 30 years. By contrast, benefits of the housing grants are received in the first year; whereas, the benefits of lower rents in the CAFs accrue over 30 years.

Thus, expansion of the housing grants program could provide about double the benefits to renters than the same amount for new construction of subsidized apartments over 30 years. In the first year with a million dollars, housing grants help 167 households, versus only 10 households in CAFs. Housing grant-households are the lowest income persons in Arlington, and in addition must be a senior over 65, disabled or a working family with a child or children; thus, they are arguably the neediest group in our community. This group represents the most vulnerable segment of our population.

1.

Integrated and Inclusive Schools
Affordable Housing Projects should encourage ethnic and social diversity in Arlington Public Schools, as well as address the achievement gap between affluent and less affluent schools by creating more equitable housing distribution throughout the County.

Infrastructure, Services, Densification/Gentrification
There should be coordination of Affordable Housing projects with ALL Arlington Government entities (Schools, parks and recreation, transportation, libraries, etc). Every effort should be made to preserve intact neighborhoods, and avoid relaxed zoning that achieves “densification and gentrification” and displacement of those of moderate means.

When new projects are accepted, special accommodations should be made for those who are disabled, the poor, and the carless who depend on stores such as Food Star for affordable food and ethnic fare. A project such as the one proposed on the Pike near market rate affordable housing would leave many with nowhere to shop. The upscale offerings replacing Food Star would push those of moderate income to shop elsewhere, taking business away from Arlington County.

The County government should incentivize small businesses (particularly those offering cultural food and products) in efforts to maintain “mom and pop” entrepreneurship and international character.

Transit
The County should utilize the tried and tested Circulator Bus which could travel down Columbia Pike and up to the Pentagon or Pentagon City, for a dollar. This would prevent additional costs to road infrastructure and could be implemented immediately. The Circulator Bus could work in conjunction with other transit systems, while offering better alternatives to those of moderate and fixed means.

Strict Oversight
For new apartment buildings which were to include bonus density, 10 percent affordable units should be provided. Additionally, a new policy should require developers to pay mandatory fees that would cover the construction of new affordable units elsewhere, at the very least $250,000 per unit built, with the goal for developers to contribute about $10 million more annually to the housing program costs. This policy should cover all such new zoning-required apartments (up from 5 percent today).

Thank you very kindly for taking time to consider the Arlington Green Party’s analyses and solutions. We understand that there are many stake-holders in the Affordable Housing decision-making process. We thank you for providing us an opportunity to be part of this important process.