Among the 115 police officers of the Charlottesville Police Department, fewer than 10 actually live in the City. Soaring real estate prices have pushed many cops, particularly new hires, to homes in Greene County, Buckingham County, Lake Monticello or Waynesboro.
“Charlottesville is a very expensive place to live,” says Sgt. Mike Farruggio, a 16-year veteran of the force who has lived in the City for eight years. “It’s very difficult to afford to buy a house in the City.”
Indeed, the median sales price of a house in Charlottesville hit $196,000 in 2003, doubling the $98,400 median of 1997, and, for the first time in recent history, matching the median sales price for the six-county region. For a newly hired Charlottesville police officer, making the base salary of $29,250, a flip through the real estate section of the classifieds can be a grim experience.
Police Chief Timothy J. Longo confirms that “housing is a big piece” of recruiting and retaining officers.
And it’s not just cops. Teachers, hospital workers and UVA employees struggle to buy or rent an affordable home in Charlottesville and Albemarle County, a problem that inspired much hand-wringing during the recent City Council campaign. This week, a housing task force appointed by City Council will release a report intended to address the housing crunch.
But though local officials are often harangued for not doing enough about affordable housing, it’s not an issue on which government alone calls the shots.
“The marketplace is very complex,” says David R. Phillips, CEO of the Charlottesville Area Association of Realtors (CAAR). “I’m not sure you can blame this on anybody.”
Furthermore, it’s not clear that there is a housing crisis, at least one that has any unique local causes. Though many lower-income residents here are sinking under big rents and face dwindling odds of homeownership, Charlottesville’s housing pickle is unexceptional.
And, as exemplified by recent wrangling over a large housing development on the City’s south side, one that involved the Fry’s Spring Neighborhood Association, of which Sgt. Farruggio is president, there are no easy answers when it comes to affordable housing.
Just how bad is it?
This spring, when Charlottesville began basking in the glow of its No. 1 ranking in Frommer’s Cities Ranked & Rated, Lindsay Dorrier Jr., the chair of the Albemarle Board of Supervisors, told a gathering that he hoped hordes of people wouldn’t move to the area after seeing the ranking. Dorrier’s not the only one to worry that transplants will drive steep housing costs even higher.
In fact, compared to many other small cities and college towns, all of which ate Charlottesville’s dust in the “best places” lineup, we’ve got nothing to complain about.
The ranking book, which was written by Bert Sperling and Peter Sander, tallied sales prices for the “average home type in the area” from the National Association of Realtors—a definition that typically knocks a bit off of home sales prices—finding that the median home price for the Charlottesville metropolitan area in 2003 was $177,840. In Santa Fe, New Mexico, the runner-up to Charlottesville, the median home goes for $234,380. In the third place city, San Luis Obispo, California—a Charlottesville-like small college town surrounded by natural beauty—the median home price is even worse—an astounding $380,130.
Rents are also steeper in these towns. The fair market rent for a two-bedroom apartment in Charlottesville, as determined by the U.S. Department of Housing and Urban Development, is $698. A two- bedroom goes for $798 in Santa Fe, and $917 in San Luis Obispo. Other college towns further down in the rankings, such as Ann Arbor, Michigan, and Boulder, Colorado, easily outprice Charlottesville in both home sale prices and rents. Even Corvallis, Oregon, is more expensive than Charlottesville.
To be fair, most like-sized college towns have more affordable housing than the Charlottesville area, but usually not by much. And after all, shouldn’t housing in cities like State College, Pennsylvania, and Iowa City, Iowa, cost far less than in a blue-ribbon town with a rich history, prime East Coast location and the aura of T.J.? Instead, housing costs in these and other comparatively drab college towns are competitive with those in fair Charlottesville.
The Charlottesville region isn’t even tops in Central Virginia. Fredericksburg, our neighbor to the northeast, nicknamed “Fred-Vegas” for its urban sprawl, touts a median home price of $224,397, according to statistics from the Virginia Association of Realtors. Six other real estate markets in Virginia boast bigger home prices than the Charlottesville area, which is defined as the City and Albemarle, Louisa, Greene, Fluvanna and Nelson counties.
On its own, Albemarle’s 2003 median sales price is $254,500, making it the third most expensive housing market in Virginia, costing less than only two areas of Northern Virginia. Still, the high-dollar County isn’t outlandishly expensive for Virginia, and is roughly on par with the Williamsburg, Prince William and Greater Piedmont markets.
But perhaps the most startling housing statistics that point to the national housing epidemic are those for the United States on the whole. In 2003, the median American home sold for $160,100, according to the National Association of Realtors, while the fair market rent for a two-bedroom apartment was $670—both figures nipping the heels of those in Charlottesville.
“It’s such a common problem,” says County Supervisor Sally Thomas of rising housing costs. “We like to think of ourselves as being unique. But in fact, it’s more of a join-the-crowd [problem].”
Kevin Lynch, the recently reelected City Councilor and likely next mayor, agrees. “Although we’re expensive, we’re certainly not as expensive as the other cities that are in our cohort,” Lynch says. “There are parts of Charlottesville that are still undervalued.”
For people moving to Charlottesville from other areas, the question of whether the region has an affordable housing crisis rests on their perspective.
“People coming from the Northeast or from California get a sense of price relief,” says Jeff Gaffney, CAAR president. “When you’re coming from the South or the Midwest, there can be a some sticker shock.”
The housing market has been red hot nationwide largely because of high demand and plummeting interest rates, which have taken a nosedive since 2000, and are at 40 year lows. For example, the average rate for a 30-year fixed rate mortgage last month was 6.27 percent, according to Freddie Mac—a substantial dip from the 8.52 percent rate in May 2000. At 6.27 percent, a $150,000 mortgage carries a $926 monthly payment while the 8.52 rate carries a $1,156 monthly payment.
Also, as Gaffney notes, real estate looked like a far safer investment than the stock market after the tech bubble burst in 2001. As a result, many investors have taken money out of the market and put it into real estate.
Demand continues to rise, while antisprawl policies have driven up prices in many places, including here, some say.
Hardest hit, according to a 2003 report for Joint Center for Housing Studies of Harvard University, is the already tight supply of smaller, cheaper housing. As a result, lower-income households are spending more of their money on rent and mortgages—a problem made worse by stagnant wages in the Wal-Mart economy. Affordable housing is defined as that which costs a renter or homeowner less than 30 percent of his income. By this definition, 44 percent of renters in the Charlottesville region cannot afford a $698 “fair market” two-bedroom apartment, according to the National Low Income Housing Coalition. Again, Charlottesville is hardly alone in facing this dilemma, as the percentage of renters who are priced out of the standard two-bedroom apartment is actually larger nationwide.
Economics 101: Supply and demand
Johnson Village and Fry’s Spring are classic middle-class neighborhoods featuring modest detached homes interspersed among the big trees and narrow roads typical of quiet, older subdivisions. Change, however, is coming in the form of a large housing development that includes a mix of single-family homes, townhouses and condos.
In January, the City Planning Commission rezoned the new housing development’s property to allow the relatively dense clustering of condos and townhouses in addition to the single-family homes and duplexes for which the site had previously been zoned.
According to Lynch, a goal of the rezoning and City government’s negotiations with the developer, the Kessler Group, was to encourage affordable housing options in Johnson Village.
“I’ve found that the developers are fairly flexible when they’re putting their plans together,” Lynch says, noting that developers can profit roughly equally from building a cluster of $140,000 townhouses or by building fewer, more spread-out $250,000 homes.
A week after the Planning Commission approved the rezoning for the 188-unit subdivision, which was to be sited at Cherry and Cleveland avenues, the Fry’s Spring Neighborhood Association caught wind of the project.
“When we got a look at this, we were flabbergasted,” Sgt. Farruggio said back in March.
Traffic problems were the group’s major complaint about the development. However, the smaller, cheaper homes also raised the dander of some residents.
Glenn Catalano, who lives on Jefferson Park Avenue in Fry’s Spring, says new townhouses in his neck of the woods are almost certain to be snatched up by developers looking to rent them to UVA students. As an example of how this can occur, Catalano points to housing farther up JPA toward the UVA campus.
“None of them are owner occupied,” Catalano says. “What’s going to happen here is the exact same thing.”
Pushing for a major cutback in the number of units, from 188 to 80, the Fry’s Spring Neighborhood Association convinced the City Council to send the plan back to the Planning Commission.
In March, the Planning Commission again approved the development, which had been revised to contain 114 units. This reduction was a voluntary concession by the developer, as the City cannot require fewer houses than zoning allows.
The cutback in units came at a price. Before the City Council finally approved the project on March 15, Mayor Cox asked Steve Runkle of the Kessler Group what the reduced number of units would mean for housing costs. Runkle replied that the price tags would go up, with the cheapest unit now selling for $150,000. He said if only 80 houses were to be built, as neighbors had demanded, there would be an even larger proportion of single-family detached homes—as opposed to townhouses or condos—and the prices would start at $225,000.
Runkle, who has been involved in several large developments, including the Hollymead Town Center, says neighborhood beefs over chunks of affordable housing are nothing new.
“[Affordable housing] generally brings concerns of adjacent areas. That’s fairly standard,” Runkle says. “Everybody thinks these public policies are a great idea until they start affecting them.”
But both Catalano and Farruggio make convincing arguments that more than the standard NIMBY impulse was at play in their neighborhood’s opposition to the Johnson Village development. If the condos and townhouses were to succumb to student rentals, they ask, how would the development boost inexpensive housing stock in the City?
“It’s not affordable housing that the neighbors are against. We are all for affordable housing,” says Farruggio, who is also a member of the city’s housing taskforce. He argues that a block of rented townhouses could destabilize a neighborhood that “was built and designed for single family detached homes.”
To truly tackle affordable housing, Catalano argues, the City should ensure that new units are owner occupied. Or, as Farruggio suggests, the City should adopt a trust to subsidize affordable housing, and penalize homeowners who pull out early to sell the subsidized homes. But local governments have neither option, yet.
Without teeth for affordable housing policies, Catalano says housing developments follow the rule of simple economics: If there’s a market for overpriced rentals, why shouldn’t developers make that buck?
Pointing the finger
Stu Armstrong, executive director of the Piedmont Housing Alliance, says overpriced housing in the region is driven by the housing market in Albemarle County, where housing costs have long been the steepest and where most of the area’s population lives.
Greene, Augusta and other counties, even the City of Charlottesville, have long functioned as “a pressure relief valve” for the overheated Albemarle housing market, Armstrong says, and are now experiencing their own housing cost problems.
To illustrate the root cause of rising housing costs in Albemarle, Jeff Gaffney, CAAR president, whips out a calculator and begins punching in a simple equation. He says a builder typically wants the value of a lot to be 20 percent of the cost of a total home package. He keys up the cost of a home on a $25,000 lot, which will be around $125,000—definitely in the affordable range. However, once the lot gets to $40,000, the home price jumps to $200,000. With parcels going for $75,000 in growth areas off of 29N, affordable housing is out of reach before the foundation is even poured.
“Land costs in the County have increased at a rapid pace in the last few years,” developer Runkle says.
One reason for the spiking land costs, according to several local real estate observers, is Albemarle’s recent efforts to corral development into targeted areas.
“You restrict the growth, prices go up,” Gaffney says.
Most of the new housing planned for Albemarle is to be built in the growth areas, which are geared toward planned urban environments. This is all part of the County’s growth strategy, which seeks to preserve mountain vistas and rustic charm by steering new homes and retail into concentrated areas. To compete with new homes in rural Albemarle, the County’s plan is to create a livable, enticing environment in the development areas by providing the city-living perqs of walkability, parks and public transportation.
These development areas, which were selected as part of the County’s creation of the “Neighborhood Model” in 2001, are located mostly around Charlottesville, Scottsville and Crozet, and account for only 35 of the 726 square miles in the County—less than 5 percent of Albemarle’s land. And though targeted growth on such a small area might be good for urban living, it jacks up land costs and forces developers to plunk down more for infrastructure.
“Smart growth policies had unintended consequences,” Armstrong says.
But opening up the rest of the County to unchecked growth and cookie cutter housing is not a popular solution. Furthermore, it probably wouldn’t do much to solve the problem. As Harrison Rue, the executive director of the Thomas Jefferson Planning District Commission says, “Transportation costs are a huge part of a family’s budget.”
Although a home in a rural area of Albemarle might be cheap, a family in the sticks usually needs two cars to get to work and to shuttle kids around. Rue says a one-car family can save enough to afford $40,000 more on the cost of a house. Therefore, to truly be effective and assist lower-income people, affordable housing needs to be close to jobs, schools and supermarkets, preferably within walking distance.
There are massive housing developments planned for the County’s growth areas. By boosting supply, theoretically, the new developments could help ease the County’s housing cost woes.
“We’ve got hundreds of houses that are just over the horizon,” says County Supervisor Sally Thomas, citing the 893-unit North Pointe Community, which has yet to get the go-ahead from the County, and the 300-unit Hollymead Town Center.
To help ensure that affordable housing is included in new developments, the County recently passed a flexible requirement that 15 percent of the units in new developments be affordable or a “comparable contribution should be made to achieve the affordable housing goals of the County.”
The new affordable housing policy is getting its first test with North Pointe. The developer, Great Eastern Management, has volunteered that only 3 percent of the 893 units in the giant project will be affordable—just 27 units. To compensate, the developer is giving $100,000 in matching funds to both Habitat for Humanity and the Piedmont Housing Alliance, and $50,000 to the Albemarle Housing Improvement Program.
Though disappointing to housing advocates, even this modest affordable housing offer is better than nothing, which had been the norm before North Pointe.
According to Karen V. Lilleleht of the Albemarle Housing Commission, who first started working on housing issues in 1956, extracting any portion of affordable housing from a developer, even a small percentage, is a victory of sorts.
“At this point in time, it’s probably the best we can do, because we can’t require it,” Lilleleht says, referring to the flexibility in Albemarle’s new affordable housing policy. “Really, they’re doing what they can.”
Handout or hand-up?
With limited options for policymakers to force developers to build cheap homes, the three solutions to the affordable housing dilemma that show the most promise are: 1) those that actually funnel cash toward lower- or middle-income homebuyers or renters; 2) those that teach people how to buy a home; or 3) those that treat a primary symptom of the problem, namely low wages.
The nonprofit Piedmont Housing Alliance (PHA) buys, refurbishes and either sells or rents affordable housing in the area. PHA has worked on 264 housing units, and has educated and counseled scores of local homebuyers.
PHA is funded by private donors and grants from Federal, State and local governments, and had about $5.5 million in equity at the end of 2003. A recent success for the organization was its efforts to rescue a 16-unit apartment building in the Rose Hill neighborhood from the blocks, keeping rents at $440 per month for the two-bedroom apartments and preserving the character of the building, which has long catered to African-American teachers and other professionals.
But though PHA’s bottom line looks impressive, it’s small compared to what other areas have mustered. For example, when Santa Fe glimpsed a dismal future of insane housing costs back in 1991, it created the Santa Fe Affordable Housing Roundtable, a coalition of nonprofits and local governments that was able to land $55 million in housing assistance from government and private sources while only spending $900,000 in municipal money. During the six-year life of the project, 621 affordable homes were built, 221 below-market rental units were acquired or built and 1,900 households were assisted in some way.
So does that mean police officers can afford to live in Santa Fe these days?
“It can be done. Sometime it takes a little hunting around,” says Aric Wheeler, the recruiting officer for the Santa Fe Police Department. “We do have options to live here.”
Santa Fe’s starting salary for cops, minus various incentives, is only a few hundred dollars more than the $29,250 salary at which Charlottesville’s police officers are hired.
Of course, a bigger starting salary is another way to keep police officers, firefighters, teachers and service industry employees afloat in a tight housing market. In Ann Arbor, a cop starts at $36,442, while in San Luis Obispo County, a Sheriff Cadet gets $45,552.
And fortunately for Charlottesville’s men and women in blue, wages appear to be on the way up. Chief Longo says Charlottesville police officers have seen “pretty significant increases in their starting salaries this year and last year.”
Sgt. Farruggio says the City is doing all it can to boost cops’ salaries. And more help is coming, in the form of a newly created police foundation, which should provide funding for homeownership programs.
“There are some really aggressive initiatives that I’m told are on the way,” Longo says.
But for other people struggling to find housing, PHA, Habitat for Humanity and the Albemarle Housing Improvement (AHIP), a nonprofit that has rehabilitated 635 homes since 1976, are the biggest games in town. And without serious financial backing, both of these organizations can only take a Band-aid approach to affordable housing.
The powers that be in Richmond are of little help. PHA received only $192,638 from the Commonwealth last year. This is hardly the case in many other cities, where state governments are far more involved in affordable housing.
In October 2002, a group of 19 politicians, developers and other local leaders from Charlottesville and Albemarle trekked up to Burlington, Vermont, to see how things worked in that city. Burlington is almost exactly the same size as Charlottesville in area and population, and is also home to a state university and a thriving pedestrian mall. If Charlottesville bordered a lake, the cities would be almost identical.
Burlington, like most boutique-friendly towns, has had its headaches over affordable housing. During the tour, the Virginians heard how the City of Burlington now requires that 10 percent of all new developments be affordable. They also heard about the many successful affordable housing projects run by the Burlington Community Land Trust.
To inject some reality into the discussion, PHA’s Armstrong says he asked Burlington’s mayor, Peter Clavelle, about the budget of the Vermont Housing and Conservation Board, the state’s housing trust. Since its formation in 1987, the trust has directly funded $142 million in affordable housing projects, secured $516 million from other sources and created 6,419 affordable housing units, all in a state of 615,000 people.
In contrast, Virginia doesn’t have a housing trust fund. It did have one, called the Virginia Housing Partnership Fund, which doled out millions in loans for affordable housing, but the State Legislature sold the fund in June 2003—at a huge loss—to help pay off Virginia’s multibillion dollar debt.
“There’s no money here. We don’t have the financial tools to do all these things,” Armstrong says. “I love what I do. But we live in one of the most challenging states in the country to do it.”
Lowering the ceiling
City housing task force unveils new strategies
Amidst increasing worries about affordable housing, the Charlottesville City Council in February 2003 appointed a task force to come up with a new housing policy for the City. The task force, a diverse group including real estate agents, City planners and neighborhood association reps (including new City Councilor-elect Kendra Hamilton), presents its plan, “The 2004 Housing Strategy,” to the Council this week.
After months of discussing previous policies and scouring housing stats, the group has pinpointed several key challenges. Chief among them is the fact that the number of residents with low and moderate incomes is growing while the number of “affordable starter homes” is decreasing.
The task force also identified a somewhat unique local problem, namely that the City no longer has any “undesirable neighborhoods” with scads of vacant or decrepit homes that could be saved with targeted rehab and converted into affordable housing. In Charlottesville, all neighborhoods are subject to booming real estate prices nowadays.
In order to come up with a fix to the problem, the task force first sought to define affordable housing. Two-thirds of area residents earn less than $50,960 for a family of four, or 80 percent of the area’s median income. Affordable housing is defined in the report as homes that these people can afford. This means that a $218,300 house would be at the top end of “affordable.” Using a slightly different calculation, affordable rents would be $796 per month at maximum.
The plan, which recommends about 40 actions, includes several potentially weighty ideas that, if implemented, could make a dent in the City’s affordable housing woes. These include:
•The creation of a full-time Housing Planner for City government.
•A requirement that 15 percent of most new housing developments be affordable. This proposed rule, similar to Albemarle’s new affordable housing policy, would give developers the option to instead make a “comparable contribution” to the City’s affordable housing goals.
•The development of deed restrictions or other ways to ensure that affordable housing created by the City remains inexpensive for a specific period of time.
•The creation of a housing trust fund with a minimum annual contribution from the City of $300,000, which, it is hoped, would attract other public and private monies. —P.F.