Amazon’s plan to hire 25,000 high-paid workers in Northern Virginia prompted a surge of interest in affordable housing and gentrification this year.
Finding state money to address the issues, however, remained a tough sell in the General Assembly, where Gov. Ralph Northam had proposed a $20 million increase in funding but ended up barely eking out a $4 million boost during the veto session — not a ton considering apartment complexes cost an average of $200,000 per unit to construct, according to some research. Building affordable housing, in fact, “is not particularly affordable,” according to the Urban Institute, because of “a huge gap between what these buildings cost to construct and maintain and the rents most people can pay.”
Some members of the GOP majority say they aren’t sure there are even issues to address, reacting with skepticism and exasperation to a long presentation on gentrification at a State Housing Commission meeting earlier this month that ended with a plea for additional state money.
“We want the extra jobs coming to a locality. I want nice houses. I want to up the property values,” said Del. Barry Knight, R-Virginia Beach. “We in the General Assembly — I know you talk about trying to get more money and we don’t have enough for housing and all this and all that — we just can’t be all things to everybody.”
While advocates contend that the state can grow property values while maintaining affordable housing with dedicated funding and the right policies in place, the exchange echoes a debate that began quietly when Virginia was still negotiating with Amazon last year and continued through the General Assembly’s veto session: Is affordable housing something for the state to tackle, or should it be left to cities and counties to address with local money?
Virginia’s deal with Amazon initially included a proposal for $100 million in state funding for affordable housing, but GOP leaders balked at the allocation, arguing that the impacted localities should address housing issues with local funds, said Northam’s Secretary of Finance Aubrey Layne.
Layne said that, to a certain extent, the administration agreed.
“The local developers, who are obviously going to do very well on the deal, and the localities that will receive the property tax increases — they should use some of that for affordable housing,” he said.
And ultimately, that’s how the final deal was structured. Amazon and Arlington have pledged to invest $150 million in affordable housing over the next 10 years.
That’s done little to allay the concerns of local advocates.
“The reality is, it’s insufficient,” said Derek Hyra, a professor at American University and director of its Metropolitan Policy Center. “Because there are thousands of low and moderate income rental units that are in those municipalities that will likely become higher rent because of the pressure of those investments that are coming in.”
Hyra, who made the aforementioned presentation to the Housing Commission, says that Republicans are right that localities should dedicate money to affordable housing. But he said the state needs to chip in, too, because the need is great and the problem is growing around the state, not just in Northern Virginia. He pointed to a study released earlier this year by the National Community Reinvestment Coalition that placed three Virginia metro areas — Washington, D.C. (which includes Northern Virginia), Virginia Beach and Richmond – among the 10 “most intensely” gentrified. (More on that here.)
Northam’s administration doesn’t disagree. Layne said the state’s arrangement with Amazon shouldn’t signal that Northam doesn’t see any state role in funding affordable housing, noting his push for $20 million for the state’s affordable housing trust fund.
The state had been dedicating $5 million a year to its affordable housing trust fund, a figure Hyra calls abysmal compared to, say, the $100 million D.C. dedicates to its trust fund. Research shows more and more Virginians are paying an increasing portion of their income for housing costs.
The extra $4 million Northam won during the veto session brings the total available during the current fiscal year to $9 million — still not a lot, but enough to issue low interest loans for about 14 projects that will provide between five and 100 affordable units each, says Pam Kestner, the state’s deputy director of housing.
Affordable developers generally rely on the ability to patch together low-interest loans and grants to make projects work.
“We try to make it as feasible as possible for developers, recognizing they can’t charge the market rate rent in order to recoup their investment,” she said.
For his part, Northam recognizes that the $4 million in additional funding he was able to secure is a drop in the bucket. But he says it represents his administration’s commitment to mixed-income housing and “not pushing people out of the urban areas.”
“Why $4 million?,” he said after a recent appearance. “I will use this analogy: After the budget session, I didn’t have a whole lot of cookies or even crumbs in the jar. … We decided the most impact we could have is to put most of it back into affordable housing because of what was going on with Amazon.”
Northam said he expects to propose additional funding next year. Some lawmakers, meanwhile, remain skeptical of the need.
“I understand Washington D.C. may be putting $100 million in there and we don’t have as much in the housing trust fund, but I kind of like pulling yourself up by your own bootstraps,” Knight said.