Brian Haluska’s office is tucked down a winding hall of offices on City Hall’s second floor downtown. Nearly every available surface in it is covered with large stacks of paper — his desk, side tables, the floor. It looks like a miniature city, but instead of scaled model buildings, there are giant stacks of paper orderly situated next to one another. Each stack actually is a building — they’re site plans for different projects and represent a future building, or series of buildings. One of the biggest stacks is Friendship Court’s site plan. “It’s probably one of — if not the — largest plan that we are going to review as a department,” says Haluska, looking at it from across the room. “Probably the most complicated project we’ll see in the city.”
Haluska is the principal planner in the city’s Neighborhood Development Services (NDS) department. He’s worked for the city for 14 years and has some of the most extensive institutional knowledge about how things work — or don’t work — and why. “This one's probably going to be the biggest,” he says of the Friendship Court redevelopment plan. “And every time, it gets bigger — the layers and complexity, they get added on top of it, so it's a challenge…There's just a lot of moving parts and it's going to be a slog to get through the whole thing, but that's the way the review of something like this goes, there's just no other way to do it. It's never simple.”
This year is going to be huge for housing in Charlottesville. And Friendship Court’s redevelopment, with all of its complexity, is but one piece of it. The city’s comprehensive plan and land use map are in the process of being overhauled, which will likely lead to some significant zoning changes that will attempt to incentivize greater density levels in formerly racially restricted neighborhoods. Developers city-wide and throughout Albemarle County continue to build at a startling pace, while the area’s market is flush, gentrification is in full swing, and assessments are through the roof (e.g., a series of new 24 brownstones on Water Street have nearly all sold within the last year, each for more than $1 million). The first African-American community development corporation, New Hill, recently launched. The largest trailer-to-house redevelopment ever attempted in the nation has commenced. Public housing residents and the housing authority are mid-stream in their own redevelopment process, making more progress than ever before. And three City Council seats are up for election in November.
This is the landscape that Sunshine Mathon, the CEO of Piedmont Housing Alliance (PHA), which owns the 12-acre Friendship Court property south of downtown, is navigating. There’s been so much talk about redevelopment — serious talk over the last 3 years, but more loosely going back at least a decade — that Mathon says residents just want to see shovels in the dirt. Nevertheless, there are hundreds of boxes that PHA needs to get checked before construction commences. The most immediate is the non-profit’s lengthy application to the Virginia Housing Development Authority (VHDA) for Low-Income Housing Tax Credits (LIHTCs). Administered by state agencies across the country, LIHTCs were created by the U.S. Department of Housing and Urban Development (HUD) to be the single biggest financial resource for developers wanting to build affordable housing. Each phase of Friendship Court’s redevelopment will need its own set of LIHTCs to become a reality, and this application, due in March, will cover as much as 50 percent of the project’s first phase.
“We have a AAA bond rating, let’s use it.”— Wes Bellamy
The LIHTC application process is hugely competitive, and to show the VHDA review board that the city values and stands behind the massive Friendship Court project, PHA needs to lock down the city’s funding support before it applies. All told, PHA is asking the city for $19.2 million. (In 1969, the 184 buildings in the Garrett Street area were assessed at $2.1 million — adjusted for inflation, this is the equivalent of $14.8 million today.) This past November, Mathon asked City Council for the funding and was met with encouragement. “I think it’s necessary,” said Councilor Wes Bellamy. Interim City Manager Mike Murphy cautioned councilors that there are more than $200 million in funding requests currently outstanding from across the city, and that they cannot over-extend the city’s budget, lest they risk losing its current AAA bond rating — the most prestigious ranking that allows the city to borrow more money at lower interest rates. “We have a AAA bond rating, let’s use it,” said Bellamy, also suggesting that, among other things, the city look at increasing its lodging tax by 1-cent, which would yield an estimated $850,000 a year. “We have to look at other funding streams,” said Bellamy. Councilor Kathy Galvin voiced her support for funding Friendship Court’s redevelopment as well, pressing, along with Mayor Nikuyah Walker, for a longer-term housing strategy plan, which is currently being conducted by the Housing Advisory Committee and city staff.
If PHA secures the city funding and is awarded the LIHTCs, it then needs to sell those tax credits to a multi-million dollar institution — usually a bank or an insurance company — in exchange for actual money that it can use to cover development and operating costs of the new Friendship Court. But the value of those tax credits is not static. The Tax Cuts and Jobs Act of 2017 that President Donald Trump signed into law a year ago shrank the value of those tax credits by 25-cents — from $1.10 on the dollar to $0.85 on the dollar — which doesn’t sound like a lot, but it quickly adds up when it’s millions of dollars. For example, if a developer received $10 million in tax credits for an affordable housing project, they used to be able to sell those to a company for $11 million ($1.10 on the dollar), but now, a developer stands to get $8.5 million ($0.85 on the dollar) for that same $10 million worth of tax credits. This causes a developer to have to come up with other funding streams to cover that shortfall. In PHA’s case, the city may be able to help. And if the city doesn’t fund the redevelopment in full, Mathon says they will fundraise with private donors, which they may have to do regardless.
If this all goes smoothly — if the LIHTCs are awarded and PHA is able to sell them quickly, if the city funds the project, if private fundraising is successful — then construction of Phase 1 is slated to begin in 2020, with the first families moving into their new homes in the summer of 2021. Concurrently, this coming summer, the advisory committee and PHA will begin meeting to plan out Phase 2, submitting for LIHTCs in 2021, and beginning construction in 2022, with the first families moving in 2023. Design for Phase 3 will begin in the summer of 2022, the LIHTC application submitted in 2023, construction beginning in 2024, and the first families moving in 2025. And Phase 4 construction is slated to begin in 2026 and finish by the summer of 2027.
One more layer of complexity to the project, because it will be underway for 7 years, is the fluctuating cost of construction materials during that period. For example, over the last year, since Trump imposed the steel tariffs, the price of imported milled steel has risen by about 25 percent. This, in turn, drives up the cost of domestically produced steel. Haluska, the city planner, says they have to take all this into consideration when evaluating the site plan for just the first of Friendship Court’s four phases. “I understand that PHA wants to build all four and have this all work cohesively,” says Haluska. “But we've got to look at it from the standpoint of: What if they get Phase 1 done and don't do anything else — will it still operate and function as an independent piece?” Haluska directs people’s attention downtown to the giant exposed skeleton of the Landmark Hotel for anyone who questions whether a project can stop halfway through.
For Mathon and residents on the Friendship Court advisory committee, they see redevelopment not just in terms of how it will impact current residents in their neighborhood, but how it plays into the greater landscape of housing in Charlottesville. Councilor Kathy Galvin points to the Housing Needs Assessment report done last year, which found that 3,318 more units are needed in the city to adequately house lower income residents at affordable rates — 439 of those are replacement units for existing public housing and Section 8 units, which will be redeveloped, but this still leaves 2,879 units that need to be built. And, Galvin says, if the current pattern continues of developers only offering to build one low-income affordable unit for every four high-income market-rate units, this would mean that to get 2,879 more low-income affordable units, developers would need to build more than 11,000 units set at higher income market-rate levels as well. This would add a total of nearly 14,000 units to the city’s existing housing stock, a growth of nearly 70 percent over its current levels. (In 2015, the city’s total housing stock was 19,866.)
Friendship Court residents, by adding another 300 units at higher income levels, are not only trying to position themselves for success and non-displacement, but also trying to contribute a neighborhood solution to the city-wide housing crisis. The only trouble is, in order for housing solutions to be truly effective, they have to be widespread, say city officials, housing experts, and developers. What would happen if every neighborhood contributed its fair share to the affordable housing market? Mathon has raised this question with others on the Housing Advisory Committee (HAC), on which he serves, and at the city level, but though it has piqued people’s interest, it has yet to garner significant traction.
“I do think our neighborhoods have to become more inclusive for us to really live up to our values of Charlottesville as a world-class city.”— Dan Rosensweig
The city’s past racist housing policies have meant that most of today’s available, vacant, or inexpensive land is within historically African-American neighborhoods, says Dan Rosensweig, executive director of Habitat for Humanity of Greater Charlottesville, who also serves on the HAC. “We can't expect those neighborhoods to bear the burden of all the affordable housing in this community,” says Rosensweig. “We have to broaden our idea of equity and justice and fairness to really understand that affordable housing is all of our issue.” It’s not a burden to have affordable housing in your neighborhood, he says, it’s a blessing. And if Charlottesville residents are serious about issues of equity, then every neighborhood should come up with its own plan to have at least 15 percent of its housing affordable to low-income residents. (The city’s overall goal for 2025 is 15 percent; NDS has yet to map affordable housing by neighborhood.) “I do think our neighborhoods have to become more inclusive for us to really live up to our values of Charlottesville as a world-class city,” says Rosensweig.
But after 14 years in the city’s planning department, Haluska says, that is easier said than done. “It's not just Charlottesville, it's every community out there that has an affordable housing issue,” says Haluska. “When they actually start to do policies, when people start saying ‘Okay this is what it actually does,’ then you see this backlash.” That backlash is a result of people believing the myth that affordable housing for low-income people hurts their property value or hurts the neighborhood in some way, he says. “I think you have to be able to not just set that vision, not just set those goals, but also have a discussion of how we can accomplish these changes and add these units without jeopardizing the value of your nest egg,” says Haluska. Additionally, the policies, ordinances, and citywide strategies need to support these neighborhoods if they’re going to take this on, he says.
One of those significant changes in 2019 is likely to be the city’s zoning. More than half of Charlottesville’s housing stock is zoned for single-family homes, says Haluska. “Single family detached housing is the most expensive housing type to build, per unit, and it takes up the most amount of land,” he says. And now, the planning commission is in the process of revising the comprehensive plan and land use map to increase the allowable density for each property. “Is there anything really bad about a duplex next to you?” Haluska asks, adding that he has one next-door to his house in Locust Grove and those neighbors are wonderful. [brian-haluska-audio-03.mp3]
“Get that development to work for us from a social justice standpoint.”— Kathy Galvin
Councilor Kathy Galvin also says she wants to move towards this shared neighborhood approach to affordable housing for low-income residents, and more. In an email to Neighborhood Development Services and city staff last summer, Galvin listed 11-pages worth of affordable housing ideas and strategies, including one that pushes for a more robust accessory dwelling unit ordinance that would incentivize single family homeowners to build smaller units on their land, and charge affordable rents. “We’ve got to make it easier to do the right thing,” says Galvin.
Galvin is also pushing for something called a “tax increment district,” which would use a significant percentage of the new real estate and property taxes generated from commercial and high-income residential properties coming online for the first time and designate that money directly to the city’s affordable housing fund. As those properties continue to rise in value, so too would the amount of tax dollars to be set aside for affordable housing. Galvin used the Water Street corridor as an example where, in addition to the brownstones, there are a series of luxury apartments and penthouse condos being finished and sold for as much as $2.5 million apiece. “Let's lasso that district now, it's already built up, it's big — and let's take 30 percent of the revenue [or] 40 percent — and then every year that 30-40 percent of the tax increment goes into the housing fund, so that you could be generating $1.5 million every year,” says Galvin. “Get that development to work for us from a social justice standpoint, accepting that it's too expensive to build affordable housing units there, let that be the way we get the revenue to build it elsewhere.”
There are dozens of other ideas being floated and projects commencing in the city that all attempt to tackle portions of the area’s affordable housing problem — there’s talk of the University of Virginia, Charlottesville’s largest employer, raising the living wage for the people it pays the least; the city is trying to finalize plans to create a land bank to help it acquire more property to build affordable housing on; and there’s a meaty 66-page report being released by the Charlottesville Low-Income Housing Coalition (CLIHC) later this month with a bevy of new data and suggestions. Mathon says, we’ll need all of these, and more.
“If you look around the country, no single city has ‘solved’ the interwoven challenges of both the historical structural racism that systematized unequal segregation, both of wealth and of space, as well as the growing crisis of housing stability and affordability in the present day,” says Mathon. “The layered complexity of the challenges coupled with the existing structural framework make even the best of efforts legitimately criticizable as imperfect. Whether we are talking about addressing affordable housing in Charlottesville as a whole, or the redevelopment of Friendship Court specifically, there is no silver bullet solution or perfect recipe that can flawlessly guide the progress.”
Over the course of more than two-dozen interviews for this project, consensus centered around just one thing: disagreements are guaranteed, interests will diverge, and constituencies are going to vary widely, but everyone needs to be at the table, talking, sharing actionable ideas, and honoring their commitments. But to do that, there needs to be something that’s in short supply in Charlottesville right now: trust.
Back in his office, in City Hall, Brian Haluska tilts back in his chair and looks over again at the giant stack of paper that is the site plan for Phase 1 of Friendship Court’s redevelopment. He’s been watching the process that PHA has embarked on with the resident advisory committee over the last three years, and he’s in awe. “It’s probably the best example that we have of somebody doing it that way,” says Haluska. “There was a lot of time invested in that, but it honored the community that they were serving.” It’s a lesson that Haluska says he hopes the city will take away, and try to find ways to employ as it engages the community on future development projects that it’s leading. Up until recently, he says, the city’s idea of community engagement has been, “‘Oh, we held a community meeting, we wrote down every note that we got.’ And, there’s a trust issue.” There’s an expectation by city staff that they know best, and they should be trusted to make the best decisions for all city residents.
But, Haluska says, the city should instead be pushing to provide residents with more resources, more education about how housing and development works — how do parking minimums impact affordable rents, how does zoning constrain or incentivize a developer, how could a land bank be used to create more affordable housing. True community engagement is going to mean arming residents with the tools necessary to make these decisions themselves, once they understand the cause-and-effect relationships, the trade-offs. “That's where we have to do a better job of educating people,” says Haluska. “We’ve got to find creative ways to do it. We can't stand in the front of the room and just lecture people. We’ve got to have more creative and interesting ways of getting that information across, so that people can make informed decisions.”