Alexandria enters tricky waters with affordable housing financing deal

There’s nothing unusual in Alexandria financing an affordable housing project, but one specific request from the Alexandria Redevelopment and Housing Authority (ARHA) could set a notable precedent.

The Samuel Madden redevelopment would replace the 66 affordable housing units with a new mixed-use development featuring around 530 units. Two-thirds of those units would be available at various levels of affordability, while the other third would be available at “market rate” –rents without any affordability baked in.

In a report to the City Council from the ARHA redevelopment committee, Mayor Justin Wilson said plans for the Samuel Madden redevelopment project include a request for a tax exemption on the property. While ARHA properties are generally tax-exempt, this project is in partnership with private developers Mill Creek Residential and The Communities Group.

“ARHA properties owned by ARHA are tax exempt, those are off the tax rolls, but when they do a redevelopment that involves a private entity, those projects would go on the tax rolls,” Wilson said. “All the affordable housing projects that exist in the city that are owned by nonprofits do pay taxes. In this case, ARHA is partnering with a private entity, so the ownership structure is a little bit complicated.”

Wilson said that while the city is supportive of the redevelopment project and could contribute additional funding, a tax exemption might open the door for other private affordable housing developers to ask to have their projects taken off the tax rolls.

“Depending on how we sort through that, may or may not be creating a precedent that will have other affordable housing developers and nonprofits come forward and request similar disposition,” Wilson said. “So we need to be thoughtful and careful in how we approach that decision.”

The tax exemption is just one of the financial questions around the redevelopment.

Wilson said the question facing the City Council is whether to loan the money or offer it as a grant. Traditionally, Alexandria loans funding to ARHA, which eventually pays it back to the city with a revolving fund that then goes to fund future affordable housing loans.

“As with any project right now, ARHA is seeing increases in costs,” Wilson said. “The request that we have received and that staff is working on relates to relief for a couple different aspects — some of it is development fees, some of it is questions around whether we are extending a loan or extending grants to support it. ARHA had initially not intended to request city financing, I think they have had to change that approach and they are requesting financial assistance to keep the project viable.”