Fairfax County’s AHAC Recommends Bonds for Housing
Last Friday, Fairfax County’s Affordable Housing Advisory Committee (AHAC) took a significant step forward to address the chronic shortage of funding for affordable housing developments listed on the county’s Blueprint for Housing.
These developments have been on the list for several years, but have not been developed due to the lack of county investment. In a unanimous decision, AHAC voted to send a recommendation to the Board of Supervisors that bonds be issued to provide the gap financing required for these projects to provide housing for very low income households.
In the years since the adoption of the Ten Year Plan to Prevent and End Homelessness and the Housing Blueprint, the county has fallen farther and farther behind in meeting its annual goals and objectives for these plans. The proposed bond initiative offers a strategy that has been used by Fairfax County in the past to fund affordable housing development, and we believe now is the time to invest in this planned for, and much needed housing.
Why bonds? Bonds issued by the county offer flexibility, and can be used with other sources of debt and equity such as low income housing tax credits. Proceeds from the bonds can be made available as a loan or a grant; and can help finance public-private partnerships. Bonds were used in the acquisition/development of the Wedgewood Apartments, Masonvale, the Residences at the Government Center (construction will begin in 2015), and the Crescent Apartments in Reston.
The developments identified in the Blueprint are dispersed throughout the county, providing affordable housing opportunities in each district. These projects include county-owned properties as well as some that provide opportunities for private for-profit or non-profit developers. Additionally, these developments represent a mix of incomes and housing needs to be served – for the elderly poor, veterans, and formerly homeless persons – and include both multifamily units and townhouses.
These eight developments represent approximately $140 million in economic activity, create construction jobs, and could take advantage of the current favorable borrowing climate. Proposals submitted to develop these projects would be required to bring their own financing to the table and leverage the bond proceeds. Currently the county requires a 3:1 leverage ratio.
How this would work: These eight developments have been reviewed by county staff, and initial estimates indicate that $62 million in gap financing (and thus bond proceeds) would be needed to complete these projects. As a result, 767 rehabilitated or newly constructed units would be added to the county’s stock of affordable housing. The debt service payment on the housing bond would be $4 million annually, payable by the County.
What’s next? Members of AHAC plan to work with County staff to determine the particulars and timing of the bond issue, and advocate for inclusion of the debt service payment in the planning process for the proposed FY2016 budget. Housing advocates can build support for this as well by contacting their Supervisor and Chairman Bulova to voice their support for this initiative, and reaffirm the value of this sorely needed and appropriate investment in affordable housing for Fairfax County.
To see the eight selected developments go to http://e-ffordable.org/documents/AHAC%20-%209-26-2014%20Meeting%20Agenda%20and%20Materials.pdf. They are listed on page 46 of the agenda and materials for the Sept 26 AHAC meeting.