Unaffordable housing: Developers pay to not build affordable units

Stacy Pethia, hired as the city’s housing program coordinator in August, says she thinks the money—$2.3 million—in the Charlottesville Affordable Housing Fund could be “used more effectively.” The developer of The Uncommon paid $331,450 into the fund. Photo by Martyn Kyle Stacy Pethia, hired as the city’s housing program coordinator in August, says she thinks the money—$2.3 million—in the Charlottesville Affordable Housing Fund could be “used more effectively.” The developer of The Uncommon paid $331,450 into the fund. Photo by Martyn Kyle

Sharonda Poindexter-Rose is a 24-year-old single mother who works as a server at a local restaurant. She lives in a one-bedroom home, and as she’s looked for a two-bedroom place over the last several months, she’s discovered a harsh reality. “It is so expensive out here, it’s ridiculous,” says Poindexter-Rose.

In the last six years, 1,530 new housing units have been created in the city, but only 73 of these—fewer than 5 percent—are priced to be affordable. “Affordable” means that a two-person family making $52,650 a year or less could afford to rent it. In Charlottesville, 1,800 families—25 percent—make less than $35,000 a year, according to the Orange Dot report released last year.

The city has set a goal to have 15 percent of its housing be affordable by 2025. Overall, the percentage of affordable units in Charlottesville has declined from 10.5 percent six years ago to 10.06 percent.

In large part that’s because so many new high-priced units have entered the market. More than half of these are coming from three apartment buildings on West Main Street. Between The Flats at West Village, The Uncommon and The Standard, which is currently under construction, a total of 861 units will have been created. None of them has been priced as affordable for lower-income families. Instead, with rents ranging from $1,500-$3,200, the target tenant has been students.

“Everywhere you go in Charlottesville, it’s always about UVA students,” says Poindexter-Rose. “Look at all the people who work at UVA, look at all the people who work at hotels. Where do you want us to live? It comes across as if they don’t care about us. That’s what the message comes across as.”

Instead of lowering rental rates, each of these out-of-state developers has paid into the Charlottesville Affordable Housing Fund. If a developer seeks a special use permit to increase the number of allowable units in a development, a local ordinance lets companies pay the city a lump sum rather than designate “affordable” rents for a small percentage of units in the building.

But since the CAHF’s creation in 2007, every developer required by the ordinance to contribute to affordable housing has paid into the fund instead of providing affordable units. The Flats paid $487,491; The Uncommon paid $331,450; and, most recently, The Standard paid $664,777. None of those developers responded to a request for comment.

“Obviously we would have preferred to have the units,” says Stacy Pethia, the city’s housing program coordinator. “But we’ll take the money. We will find a way to spend it.” Coming from Pittsburgh’s housing authority, Pethia was hired by the city in August to oversee the CAHF. “I think it can be used more effectively, we just need to find a way to do that,” says Pethia. The fund currently has a $2.3 million balance.

Pethia says it does a great job of preserving and rehabilitating existing affordable housing—by funding projects with nonprofits such as Habitat for Humanity, Piedmont Housing Alliance and Albemarle Housing Improvement Program—but she thinks the fund needs to do more to add affordable housing to the marketplace.

Acreage in the 10.2-square-mile city is scarce and expensive, which is why Dan Rosensweig, president and CEO of Habitat for Humanity of Greater Charlottesville, says the city should use the CAHF to strategically buy land for affordable housing. Habitat for Humanity has used CAHF money for nearly all of the more than 160 homes it’s helped families build.

Rosensweig says the current affordable housing system is “broken.” For starters, he argues that the city should ease its density restrictions.

“There’s no substitute for an increase in inventory,” says Rosensweig, adding that since the West Main Street developments, he’s heard that rents elsewhere in the city are falling “ever so slightly”  for the first time in years.

Pethia is also making a push for increasing residential density levels in some areas of the city. If a developer is permitted to build two additional stories on a building in exchange for making 15 percent of the units affordable to lower-income families, that would go a long way, she says.

But increasing density is not always popular. The local Great Eastern Management Company is vying to be the first to include affordable units—at least four—in its proposed 126-unit apartment building on East Jefferson Street, but has received pushback from some area residents who say it’s too large.

In November, increased density was one of 35 recommendations Pethia and the Housing Advisory Committee delivered to City Council. They also recommended doubling the amount of money developers pay into the CAHF if they opt not to build affordable units, while calling on the city to increase its own funding of the CAHF, about $1.3 million annually.

“That’s simply not enough,” says Brandon Collins, an organizer with the Public Housing Association of Residents. Providing more affordable housing, Collins says, is key to preserving the fabric of neighborhoods by helping ensure existing residents don’t get priced out.

Pethia is hopeful the city will reach its affordable housing goal in eight years. “If we look at different ways to use the housing fund and to approach affordable housing development and preservation in the city, we’ll get there. The affordable housing fund has done a lot of good and has grown, but I think it’s now time to really grow.”

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