TENNIS, ANYONE?

Like the name states, AMI is an average of reported wages within a given area, adjusting for household size, calculated annually by the U.S. Department of Housing and Urban Development (HUD). The number varies widely based on area and adjusts for household size. Visit dhcd. virginia.gov/sites/default/files/ Docx/dpa/median-area-incomelimits.pdf to see the comparisons. Federal guidelines set by HUD demarcate those who make less than 80% of the AMI in a given area “low income,” and anyone who makes less than 50% of the AMI is classified as “very low income.” That distinction is important, because it qualifies a person for federal housing subsidies like participation in the Housing Choice Voucher program— sometimes referred to as the Section 8 program—which is run by HUD.

Beyond metrics like those, “affordable,” is a term of art. Like any other commodity, housing is subject to market forces. Unfortunately in the modern history of the United States, we have evolved such a deep shortage of rental housing relative to demand that supply cannot effectively take pressure off of demand. That means that “affordable,” has drifted further and further away from the reality in peoples’ wallets over the course of time. That has led to a concerning forty four percent of renter households in Virginia being “costburdened.” See the Joint Legislative Audit and Review Council’s (JLARC) findings at jlarc.virginia.gov/landing2021-affordable-housing-in-virginia. asp.

There is a shrinking little argument about whether we need new housing developments—or even the price points of the people who will need to be in those developments—and yet tremendous disagreement about every other element of its production.

Where does affordable housing come from?

Many of the apartments which rent at or below an area’s Fair Market Rent (FMR)—another annual calculated number released by HUD—that exist in any new housing construction are the product of federal programs like the Low-Income and MiddleIncome Housing Tax Credit (LIHTC and MIHTC respectively). In return for tax credits distributed by a state housing finance agency, a given developer will set aside a certain percentage of the units in a planned community at a certain price point relative to AMI. These tax credit programs are what makes new, purpose-built “affordable housing” construction financially possible. Fair market rent comparisons by county: www.virginiahousing.com/partners/ housing-choice-vouchers/federalfair-market-rents

The inconvenient, hard-to-face truth of the matter is that without these programs, housing developers have few, if any, ways to construct any large-scale market-rate housing that would look affordable to an applicant at or below AMI. The costs of labor, materials, time, and government bureaucracy make investing in new construction of anything but high-end housing very difficult without LIHTC or MIHTC to support it.

Market-rate construction, even though it is aimed at a higher-income segment of the market, also has an extremely important role to play in creating a local environment where housing is available at a variety of price points.

That brings us to the precious, all-too-rare resource of “naturallyoccurring affordable housing,” or NOAH, and what that actually means. You would know NOAH if you saw it. These are older construction communities which have often been through one or two rounds of rehabilitation and update. They usually represent most of a locality’s housing options at or below FMR. NOAH is the underpinning of our need to slam open the taps of housing construction right now. NOAH is composed of communities that were initially built for the luxury market, but have been in operation long enough to lose that market to newer construction. One industry maxim is, “How do you get affordable housing? Build luxury and wait twenty years.”

Despite the name, NOAH does not naturally renew, and it cannot be purpose-built on a two-year timeline. NOAH is a resource that takes decades to build up; it requires a large degree of construction at the top of the market to inspire long-term competition and drive prices down sustainably. This answer is frustrating to local government officials and long-time community residents who are looking for a fast solution to the slowly-evolved problem of housing affordability.

So how can we solve affordable housing?

If all of this seems complicated and hard to follow, trust that you are not alone. Though there is nothing controversial about the understanding that every human being needs shelter, past that point politics get involved. Housing has to be located somewhere, preferably somewhere with road access and the ability to connect to municipal utilities. It will come as no surprise that there are usually some people in those areas already who will have questions and concerns about what that housing construction means. There will even be a number of people who refuse to support new housing construction no matter how clear the need for it is.

Community opposition is one of the most pervasive obstacles to housing construction of any kind, but specifically housing that is envisioned as affordable to a broad spectrum of the population. Since most of the decisions that make building housing in a locality easy or difficult revolve around elected bodies of local government—separating it from politics is impossible. Voters who oppose new housing construction tend to view it as a threat rather than looking at the value that it will provide for them as part of the community. When people feel threatened, more often than not they react negatively and with force.

This usually takes the form of ominous predictions that allowing “those people” into the neighborhood will make “us” current residents less safe, or will overstress utility infrastructure, or will crash their property values—outcomes which rarely ever come to pass, but excite an emotional response. This drives a labyrinth of bureaucratic processes which all must be wrapped up into the cost of the project and ultimately passed on to the renter in the form of higher rents. This “not in my back yard” activism at the local level can be a brick wall to housing development at an affordable price point, and confronting it head-on is crucial if we are serious about expanding it.

According to that same JLARC study, Virginia is short more than 200,000 “affordable” rental units. The National Apartment Association expects Virginia needs to construct more than 7,000 units of new apartment housing per year through 2035 just to meet the existing trends of demand according to new research. The situation is no longer simply inconvenient, it is dire. Working up the political will to face it instead of taking the perennial easy way out by ignoring it for tomorrow will take effort not only from builders and government, but from the people who want the benefits of a city in which local employees and families can afford to live.

Sustainably addressing housing supply will mean that families can invest in their children, businesses and public services can attract the best talent, and new companies are attracted to move to the area. Through this, making housing affordable benefits every member of a community, not just the friends, families, and co-workers who finally have the choice to join them there.

Pat Shumaker is executive vice president at Artcraft Management and past president 2020 and 2021 of Virginia Apartment Management Association

Tommy Herbert is government affairs manager at Virginia Apartment Management Association

Patrick McCloud is CEO at Virginia Apartment Management Association