How to raise $7 million more for the county housing grants program through a higher developers’ fee

Under the 2005 Affordable Housing Ordinance, the county requires developers of new housing projects needing or requesting a zoning change for the project to provide that at least 5 percent of the additional apartments added as a result of the zoning change to be “affordable rental units” or to pay a fee. Unfortunately, this ordinance was not tightly written, and, for the most part, developers do not provide new affordable units on site, but rather pay a modest fee that amounts often to a portion of the actual cost of the new apartment. (for more information http://housing.arlingtonva.us/development/land-use-zoning-tools/)

The county board could increase the required fee under the ordinance much closer to actual costs of new apartments. This could generate an estimated $7 million more annually to the housing program. Developers exacerbate the problem of rising rents in our community by their activities, and it is fair to shift some of the tax burden of housing assistance programs to them rather than to only general taxpayers.

During 2005-October 2014, a total 295 additional units were approved under this ordinance, of which only 30 units were located in the new developments, whereas developers choose to pay a fee for the 265 units not provided in the new developments. (Source: Arlington County Affordable Housing Implementation Framework, Draft 2.1, Mar. 10, 2015, p. 9).

Thus, this ordinance applied to an average 30 new units per year. These fees yielded only $36.2 million during the 10 years or $3.6 million annually, the equivalent of $137,000 per new additional apartment. These funds were simply added to the AHIF.

This Affordable Housing Ordinance fee should be changed to increase the per unit fee from $137,000 to the developer’s actual cost per unit which currently is around $350,000 or more per unit. With a fee of at least $350,000 per unit for 30 units, the county would likely receive $10.5 million annually, an increase of $6.9 million a year from the current $3.6 million. This entire additional $6.9 million annually could be placed in the housing grants fund.

-2-