Filling the Gap

FY17 Local Housing Revenue “Filling the Gap”
Alexandria, Arlington and Fairfax County

 

City of Alexandria¹ Arlington² Fairfax County
$884,970 $13,719,787 $0

 

This chart shows new FY17 local tax revenue dedicated to preserving or developing affordable housing. This funding is essential for a jurisdiction to meet its commitment to its adopted affordable housing goals.

Affordable housing developments usually require multiple sources of revenue to make their projects work. These include debt (loans), and equity (low income housing tax credits and/or deferred developer fees, grants). However, there is often a gap or shortfall in needed funds, especially if projects hope to provide housing for families earning less than 60% of the area median income – $65,000 for a family of four.

That is why local public dollars are essential to provide the “gap financing” – that crucial amount of funding needed to make the deal financially viable, or write down the development costs so that lower-income households can be included in the proposed project.

Revenue from the local government that supports affordable housing development demonstrates a commitment to the project, and provides a clear advantage in the awarding of competitive tax credits over projects that don’t have local funding. When local governments build financial support for housing into their annual budgets, they acknowledge the value of affordable housing in the community, and commit to a public-private partnership that uses public resources to leverage private dollars to ‘close the gap.’

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So the question becomes if a developer brings a proposal to the local government to build affordable housing, will the gap financing be there?

Not Included in the Calculation

Developer contributions, which are collected with different formulas by all three jurisdictions, are not included in this calculation. Their predictability as a source of revenue can be impacted by market cycles, and it is also unclear if or how the new proffer legislation passed by the General Assembly might affect these contributions going forward.

Local rental subsidy programs are also omitted. While they do not contribute to development costs, they can provide funding for lower -income households to afford tax credit rents.

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[1] General fund:  $2,229,853 is generated by 0.6 cent allocation dedicated for affordable housing.   $884,970 is committed to funding the Beauregard Relocation Coordinator and affordable housing projects.  The remainder is used for debt service on previously issued bonds for housing. 

[2] $9,300,000 one time funding (carry-over from FY 2015); 4,400,000 is new local revenue for FY17. $9,000,000 was allocated for rental subsidies.