Extends loan for Dogwood Housing

The Charlottesville City Council was briefed Monday on a $900,000-a-year rental assistance program but asked for some loose ends to be tied up before a vote is taken later this month.

“All of us want this voucher program,” said City Councilor Kathy Galvin. “But I do believe in the value of process and getting a more stable presentation before council.”

It remains to be seen how many households that the city-funded program would cover and whether it should be restricted to those who are under 30 percent of the area’s annual median income.

In June, councilors directed staff and the Housing Advisory Committee to create a mechanism to expand the number of people who can receive government vouchers to help pay for their housing costs.

“The Charlottesville Supplemental Rental Assistance Program will provide monthly tenant-based rental assistance for extremely low-income households,” said Stacy Pethia, the city’s housing coordinator. “That’s defined as those households with incomes less than 30 percent of the area’s annual median income.”

Currently, the Charlottesville Redevelopment and Housing Authority has permission from the U.S. Department of Housing and Urban Development to hand out 531 vouchers, but it only has enough funding to distribute about 400.

The first 10 vouchers would go to families that are currently homeless. Twenty would go to a household with a member enrolled in a self-sufficiency course.

“The remaining vouchers would be issued to households on the CRHA’s housing choice program waiting list,” Pethia said.

Pethia presented two scenarios by which the program would work with HUD and CRHA, assuming City Council would continue to allocate $900,000 a year to the program. Under one, the city could distribute 125 vouchers a year but the program would run into a deficit in the second year due to anticipated rent increase caused by inflation.

Another option would be to use the funding to guarantee several years of housing for fewer families. Pethia argued that this would provide long-term stability for those households.  

“This decreases the number of units that [would] be served significantly and brings it down to 52 households,” Pethia said.

The information on the two scenarios had not been made available in advance to councilors, and Galvin wanted the Housing Advisory Committee and staff to make a further recommendation on which scenario to implement.

Some councilors thought the program should be flexible enough to extend to households that have incomes slightly higher than the current 30 percent of the annual median income threshold.  

“As it’s currently constructed, in my opinion, it’s really going to impact those who are the lowest of the low, and then those of whom are not there will be left out,” said City Councilor Wes Bellamy.

However, City Councilor Kristin Szakos said finding affordable homes for people who make less than 30 percent of the annual median income is difficult.

“We can’t get private developers to build for 30 percent and there are very few tools in our toolbox,” Szakos said. “Personally, I want this program to address the people at 30 percent and below.”

Phil d’Oronzio, the chairman of the Housing Advisory Committee, said the decision was made to keep the policy flexible. He said data will be collected from the rental assistance program.

“We want metrics from this and quarterly data back on this,” d’Oronzio said. “This is an idea to move things forward, and then next year, when it comes time to re-appropriate, we will actually have useful data and a useful way to target [funding].”

Pethia said the program would only be open to those currently living or working in Charlottesville. Vouchers are only supposed to be used within city limits.

“However, if they are unable to locate a unit within the city within 90 days of receiving their assistance, then, with CRHA approval, they can use that voucher to look for units within Albemarle County,” Pethia said.

Galvin said she wanted to make sure that aspect was monitored.

“If it starts looking like more of the units are in Albemarle County, this needs to be a regional program shared by the city and the county,” Galvin said.

The matter will come back to council at its next meeting. An HAC subcommittee will meet in the next week to finalize the policy.

Councilors also agreed to further extend a loan to Dogwood Housing.

In September 2007, the council approved an interest-free loan of $850,000 to the Piedmont Housing Alliance to assist developer Keith Woodard in the purchase of 57 rental houses.

“The original loan term was for a period of five years, and in August 2012, council approved a five-year loan extension,” Pethia said.

Woodard approached the city this summer to ask for another five-year extension and to request some modifications to the terms of the loan. One modification would allow residents to pay up to 35 percent of their income toward rent. Currently, that amount is capped at 30 percent.

“That ends up with some of the residents, through rent increases over the years, paying slightly over that amount,” Pethia said. “The current terms of the loan require that the residents leave those units.”

Residents currently must recertify their income every year to demonstrate that they qualify. Pethia said she wanted that extended to every two years in order to reduce administrative costs and to allow residents to stay a little longer if their income increases past the qualification limit.

Szakos said she was concerned about increasing the limit to 35 percent.

“What I don’t want to have happen is that suddenly and automatically every family in Dogwood Housing is going to have their rent upped to 35 percent,” Szakos said.

Pethia said she was told by the property manager, Amanda Hester, that there is no intention to raise the rents. She added the rents cannot increase more than 5 percent each year.