Affordable and Moderately-Priced Housing

  

Definitions, Discussion, and Recommendations

  

Attachments

Supporting Housing Trends Data

 

 

 

Prepared May 22, 2006

 

 

Ron White

Albemarle County Office of Housing

 


 

AFFORDABLE & WORKFORCE HOUSING

 

We have defined affordable housing in the adopted housing policy as housing for which the cost of mortgage, taxes, and insurance does not exceed 30% of household income.  We further state that, for our policy, we focus on households with incomes from 0% to 80% of the area median income (AMI) or in dollars $0 to $53,350.

 

Workforce housing has not been defined and, in fact, is not a recommended term for housing that would be affordable to a slightly higher income range (up to 110% AMI or $73,300).  The rationale for this increase is included later in this discussion.  Fairfax County recently approved revising their language to allow this moderately-price housing to be occupied by households up to 120% AMI.

 

A more difficult discussion is one that focuses on who is served rather than what is developed.  From a zoning and land-use perspective, the focus is typically on the built environment.  Based solely on this notion, the extent that affordable and moderately-priced housing is developed would be the measure of performance.  However, the general opinion of housing advocates is that once the housing is developed, the availability of the units should be based on incomes.  While both opinions have merit, it may be necessary to make one view a priority.

 

One of the concerns voiced by the development community is that eligible purchasers will not be available when an affordable unit is built.  Although the County and other entities will seek to prequalify income-eligible purchasers, the efforts may be impacted by the market with changes in the market unable to be controlled by government.  An example of this is changes in the interest rate.  While the following chart provides an indication of affordability, the calculations were made with a 6% per annum interest rate.  Last weeks rate of 6.6% reduces the affordability level for a household at 80% of the AMI to $173,800 and a household at 110% to $239,100.  To deal with a rising interest rate we either would have to expand who we serve, provide more subsidy, or require developers to produce housing units at a lower price than existed when they made their proffer.

 

Income Amt./%

Maximum Mortgage

Downpayment Needed

$39,900/60%

$138,645

$63,000

$46,550/70%

$161,750

$43,250

$53,300/80%

$189,000

$16,000

$66,500/100%

$231,075

 

$73,300/110%

$254,700

 

 

These realities in the market has led to a discussion on 1) who should be able to buy proffered units; and 2) should there be a better mix of housing to minimize a potential gap between affordable units ($190,000) and the median priced new units nearing $350,000?

 

To respond to these questions, we need to consider that creating affordable and moderately-priced units is the priority rather than the priority being who buys the units.  Current proffers would allow affordable units not sold in a specified time period to become market rate units without sales restrictions.  If creating the units and insuring initial affordability is the priority, we must do everything within reason to preserve the unit.  That could, and likely will, mean finding buyers that may exceed the household income of $53,300.  Based on this likely scenario, we would put forth the following recommendation:

 

Any unit proffered for sale as affordable and meeting the definition of affordable to households at or below 80% of the area median income would be available for purchase by households meeting VHDAs maximum income for its first-time homebuyer programs.  Currently those amounts would be $63,300 (90% AMI) for a household of less than three members and $73,300 (110% AMI)  for a household of three or more members.  These sales would be allowed if

1.      No purchasers with incomes not exceeding $53,300 have been prequalified and it is not likely that such a purchaser would be prequalified during the period that the sale is restricted; and

2.      No purchaser exceeding $53,300 would receive County-funded assistance to purchase the unit.

 

This proposal would insure that the unit is initially sold as affordable rather than being converted to market-rate.  NOTE:  The reason for the recommended maximum incomes is to better align availability of units with funding resources available, specifically VHDA loans.

 

The second discussion relates to workforce housing versus affordable housing.  As stated previously, we would recommend that what is being called workforce housing be referred to as moderately-priced housing.  The idea behind this proposal is not to create an opportunity for income creep but to add to the variety of housing in a development.  As noted previously, there is a significant gap between a unit at $190,000 and the balance of units at $350,000 plus.  However, we would not suggest that a moderately-priced unit be given the same recognition as an affordable unit.  We should also encourage affordable units that would be priced lower than $190,000 if a developer can include such units.  For these reasons we offer the following recommendation

 

  1. Use VHDAs maximum sales price for its first-time homebuyer programs as the index for determining various levels of affordability.  This removes interest rates which we cannot control out of the equation and would allow staff and developers a simpler way of calculating proffers.
  2. Utilize the existing Affordable Housing Policy goal of 15% of units developed as a part of a rezoning or special use permit being affordable but create the following factors for various levels of affordability and moderately-priced units as comparable contributions to meeting the goal.
    1. Credit factor of 1.0 - Units created at 66% of VHDAs maximum sales price would be considered affordable to households at 80% AMI.  This would provide units selling for no more than $193,900.
    2. Credit factor of .75 Units selling for not more than 75% of VHDAs maximum sales price or $220,400.
    3. Credit Factor of .5 Units selling for not more than 85% of VHDAs maximum sales price or $249,800.
    4. Credit Factor of 1.5 Units selling for not more than 64% of VHDAs maximum sales price or $146,950.

 

The following are examples of how this proposal would work if a developer wants to have a mix of units to be considered affordable and moderately priced.  The proposed development would total 100 units. 

 

EXAMPLE 1

                                                                        Credit               Units Required to Meet Goal

15 units not exceeding $193,900                       1.0                               15

 

 

EXAMPLE 2

                                                                       

5 units not exceeding $146,950                         7.5

4 units not exceeding $193,900                         4.0

2 units not exceeding $220,400                         1.5

4 units not exceeding $249,800                         2.0                               15

 

 

EXAMPLE 3

 

10 units not exceeding $193,900                       10

10 units not exceeding $249,800                       10                                20

 

 

EXAMPLE 4

 

10 units not exceeding $146,950                       15                                10

 

 

This proposal would provide incentives for the developer to include affordable units and also get additional credit if the much lower sales prices could be achieved but will also allow for the potential for more than 15% of the total units to be affordable or moderately-priced.  

 

These recommendations only apply to for-sale units and there is no consideration at this time to apply similar recommendations for rental units. 


 

 

 

2001

2002

2003

2004

2005

Existing Houses

1045

1086

1145

1363

1500

$175,000 - $192,000

 

 

53

109

68

$150,000 - $175,000

204

148

109

116

108

<$150,000

278

224

165

124

227

% Affordable

46%

34%

29%

26%

27%

SALES OF EXISTING HOUSES


 

 

 

2001

2002

2003

2004

2005

TOTAL New Sales

304

318

317

327

316

$175,000 - $192,000

N/A

N/A

10

11

7

$150,000 - $175,000

6

20

7

0

2

<$150,000

24

7

0

1

0

% Affordable

10%

8%

5%

4%

3%

 

 

SALES OF NEW HOMES


 

 

 

2001

2002

2003

2004

2005 *

TOTAL Sales

1351

1404

1462

1690

1457

$175,000 - $192,000

 

 

63

120

65

$150,000

$175,000

210

168

116

116

91

<$150,000

302

231

165

125

208

% Affordable

38%

28%

24%

21%

25%

 

 

 

 

AFFORDABLE SALES AS PERCENTAGE

OF TOTAL SALES

 


 

 

 

2001

2002

2003

2004

2005

TOTAL Sales

1351

1404

1462

1690

1816

$175,000 - $192,000

 

 

63

120

75

$150,000

$175,000

210

168

116

116

110

<$150,000

302

231

165

125

227

% Affordable

38%

28%

24%

21%

23%

 

 

AFFORDABLE SALES AS PERCENTAGE

OF TOTAL SALES

 

 

 

Income Necessary to Support Median Sales

 

 

Median Sales Price

% Increase

Minimum Income

% of Median

2001

   $210,000

 

$60,434

100%

2002

   $223,000

6%

$64,175

106%

2003

   $254,500

14%

$73,241

115%

2004

   $266,125

4%

$76,586

120%

2005

   $280,000

5%

$80,579

121%

  

 

 

 

Median Sales Price All Sales

 

 


 

 

PRICE OF EXISTING HOUSES

 

 

 

Median Sales Price

% Increase

Minimum Income

% Median

2001

$184,800

 

$53,182

84%

2002

$211,950

15%

$60,995

96%

2003

$228,036

8%

$65,625

98%

2004

$255,000

12%

$73,385

110%

2005

$270,500

6%

$77,845

117%

 

 

 

INCOME REQUIRED FOR MEDIAN SALES

PRICE OF NEW HOUSES

 

 

Median Sales Price

% Increase

Minimum Income

% Median

2001

$277,800

 

$79,946

126%

2002

$254,000

-9%

$73,097

115%

2003

$299,500

18%

$86,191

129%

2004

$290,000

-3%

$83,457

125%

2005

$339,925

17%

$97,825

147%

 


 

WAGES FOR VARIOUS JOB CLASSIFICATIONS

 

The following list includes a partial list of non-management positions included in a recent wage study in this area.  Several positions at the end of the list are mid-range salaries for County employees.

 

Call Center       Operator I         $21,300             Supervisor I      $30,900

Graphic Design Specialist           $39,900

Crater/Packer                           $25,000

Warehouse Supervisor               $36,800

Accountant II                            $44,200

Account Clerk II                       $28,600

Billing Clerk                              $27,400

Bookkeeper                              $30,400

Credit/Collections Clerk             $26,100

Payroll Clerk                             $29,600

Case Manager                          $35,000

LPN                                         $34,400

Bartender                                 $15,500

Cook                                        $22,800

Housekeeper                             $18,600             Supervisor         $25,900

Human Resources Asst I          $29,800

Recruiter                                  $36,000

Help Desk Support                    $35,600

Network Administrator              $57,800

PC Maintenance Tech               $36,200

Administrative Asst II              $28,400

Buyer II                                    $41,200

Executive Assistant                   $40,900

General Clerk II                        $31,000

Office Manager                        $41,600

Purchasing Agent                      $47,600

Receptionist                              $24,100

Shipping/Receiving Clerk           $26,600

Customer Service Rep II           $33,600

Sales Assistant                          $31,300

Auto Mechanic                         $35,400

Electrician                                 $35,300

Facilities Maint. Supv.                $54,500

General Laborer                        $22,800

Genl Maintenance Wrkr II        $28,800

Groundskeeper                          $21,300

Machine Operator II                  $28,600

Security Guard                          $20,500

 

COUNTY POSITIONS (midpoint of payscale)

Firefighter/EMT                                    $44,529

Police Officer                                       $41,503

HVAC Mechanic                                  $33,603

Facilities Maintenance Worker II            $29,191

Food Service Associate                         $20,747

Teacher                                                $45,731

Bus Driver                                            $27,207

 

Go to next attachment

Return to executive summary