Housing Conservation District Advisory Group March 28, 2018
Recap on Initial Poverty Rates by Census Tracts Community Engagement Communit Co ity mem embers and stakeh ehold lders gen enerall lly exp xpres essed: • Support for overall l goa oals of of th the e dis istric ict • In Interest in in: • addin ing units its with ithin exis xisti ting g build ildin ings (i.e (i.e. Engli glish basement units its) • additi itional op opti tions for or tr transferring develo elopment righ rights ts • smalle ler dwell ellin ing units its • clear per clea ermit itting processes and exp xpectations • options and incentives that don’t require “strings” or large investments • updates to o th the e exis xisting Multif ltifamil ily Reh ehabili litation Part rtia ial Property Tax x Exempti tion program • miti itigating pot oten ential l im impacts to o lo low in income ren enters dis ispla laced th through HC HCD in incen centives • property tax x ben enefit its for or providers of of affordable hou ousing 2
Multifamily Rehabilitation Partial Poverty Rates by Census Tracts Property Tax Exemption • Eligib ligible le owners of of mult ltif ifamil ily propertie ies rec eceiv ive an exemption on on th the e in incre crease in in asses essed ed valu lue due e to o reh ehab/renovation wor ork. • The exempti tion is is for 15 years but t is is phased ou out t in in 20% in increments for th the la last t 5 yea ears. Countywide • Must have 5+ dwelling units • No affordability requirements • Assessed building value must increase by 20% or more • Square footage cannot increase more than 30% • Building must be at least 25 years old • Must apply for program prior to undertaking rehab work • 3
Properties Currently Poverty Rates by Census Tracts Using the Program 2018 Total One Year of Value Foregone Tax Year (includes Revenue Exempt Exemption exempt Exemption Exemption (1.006 Tax Property Owner Units Began value) Value Value/Unit Rate) Columbia Heights Apartments (Monterey) Silverwood Companies 154 2005 $14,053,200 $4,439,000 $28,825 $44,125 Wildwood Towers [1] Dittmar Company 134 2005 $31,028,800 $6,194,900 $46,231 $61,580 Gates of Ballston AHC Inc. 464 2008 $80,354,700 $19,764,600 $42,596 $196,467 Dolley Madison [1] Dittmar Company 364 2009 $109,796,300 $52,981,600 $145,554 $526,656 Westover Apartments AHC Inc. 152 2011 $24,223,300 $3,697,300 $24,324 $36,752 Buchanan Gardens APAH 111 2013 $17,183,700 $6,005,300 $54,102 $59,695 Colonial Village Wesley 162 2013 $26,797,300 $4,692,000 $28,963 $46,640 Wayne and 2nd Street Apt. 2nd and Wayne [1,2] Owners 16 2015 $5,799,800 $647,700 $40,481 $6,438 Woodland Hills Preservation Woodland Hills Senior Apartments Association 235 2015 $34,548,500 $8,210,300 $34,937 $81,613 Pierce Queen Apartments [3] Wesley 20 2017 $58,540,200 $678,000 $33,900 $6,740 William Watters Wesley 21 2018 $3,036,500 $976,700 $46,510 $9,709 Total -- 1,833 -- $405,362,300 $108,287,400 $59,077 $1,089,371 1. Units are market rate. 2. Exemption only applies to 16 of total 32 units. 3. Exemption applies only to 20 of total 192 units. 4
Properties Pending Poverty Rates by Census Tracts for the Program Exempt 2018 Total Property Owner Units Value Culpepper Garden Culpepper Garden 1 Inc. 204 $15,693,100 Shirlington House [1] Shirlington House LLC 437 $88,081,800 Dominion Arms [1] 333 S Glebe LLC 188 $34,169,600 Courtland Towers [1] Courtland Towers Ass. LLC 575 $192,262,100 Potomac Towers [1] Snell Construction 406 $88,457,300 Fisher House APAH 68 $8,528,200 1. Units are market rate only 5
Comparison of Rent Levels for Poverty Rates by Census Tracts Recently-Renovated MARKS $1,800 $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 Began Beg Exemptio Ex ion $1,000 Began Beg $900 Exemptio Ex ion $800 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD Average Asking Rent Per Unit* Wildwood Towers Dolley Madison 60% AMI Rent 80% AMI Rent *One bedroom units built prior to 2000 Da Data Sou Sources: Cos Costar and and Ar Arlington Co County 6
Poverty Rates by Census Tracts Locally-Defined Parameters Arlington’s Requirement St State Allo lows s Us s to to Modif ify? Min inim imum Num umber of of 5 Yes Dw Dwelli ling Unit its Must be be rental pr property Yes Yes Age e of of St Structure Not less than 25 years Yes (not less than 15 years) Incr Increase in Asses ssessed Valu lue 20% Yes fr from om Rehabili litation (no limit in VA code) Maximum Inc Increase se in GF GFA 30% Yes Ter erm of of Ex Exemptio ion 10 years Yes with 5 year step down (no longer than 15 years) Appli licatio ion Fee ee $250 Yes (not to exceed $250) Loc Location of of Bu Build ilding Countywide Can be limited to districts Type of of Acti ctivit ity Rehabilitation only Yes (+replacement) 7
Poverty Rates by Census Tracts Property Tax Incentives In In focus groups, owners s fr frequently cit cited property tax relie lief as as a a desi sirable le in ince centive. Staff an and th the community have id identifie ied 4 4 pot otential l property tax mechanis isms: • Exemption • Property tax cr credit • De Deferment or or ab abeyance • Reimbursement 8
Multifamily Rental Assessed Poverty Rates by Census Tracts Value Within the HCD Multifamil ily Rental Property Taxes All l HCD HCD apa apartment pr property asse assess ssments $1,091,1 $1,0 ,125,200 HC HCD CA CAF F Asses ssessments $117 $117,043,9 ,900 Multifamil ily asse assessments ne net t of of CA CAFs $974 $974,081,3 ,300 Taxes fr from om HCD HCD MARKs $9,7 $9,799,2 ,260 HC HCD MARK un unit its 5245 5245 Average pr property tax per per un unit it $1,8 $1,868 Monthly per per un unit tax $156 $156 $156 translates into 6 to 7.5% of AMI affordability 9
National Precedents Poverty Rates by Census Tracts for Tax Incentives Exemptions - Florida, North Carolina, California, and others Property tax exemptions for non-profits providing affordable housing. • Units must be provided as affordable housing as defined by statute. • Montgomery County, MD property tax credit Property tax credit for units rented at reduced rent for elderly or disabled • tenants. Property tax credit allowed for 50% of the amount of reduced rent. • Tax credit cannot exceed property tax amount. • Must demonstrate reduction from market rate rent in same building. • Program limited to $250,000 per fiscal year. • Deferral – Florida Available only to affordable housing providers. • 10 10
National Precedents Poverty Rates by Census Tracts for Tax Incentives Illinois - Housing Opportunity Area Tax Incentive Act Located in low poverty area (Less than 10% poverty rate) • Unit must be occupied by tenant with rent subsidy (Housing Choice • Vouchers) Maximum of 20% of units (or 2 units in buildings with less than 10 units) • 81% reduction of property tax on eligible units. • 11 11
Potential Property Tax Poverty Rates by Census Tracts Incentive Considerations Mechanis ism Imp Impact to to Imp Impact to to APS PS Requires s St State Lien Pl Li Placed County Revenue Cou Revenue Legisla Leg latio ion on on Property Exemption Tax Credit Deferral Short-term Short-term Reimbursement Reven enue im impacts fr from tax x in incen centiv ives wou ould lik likely ely be e con onsid idered as for oregone reven enue and wou ould be e vie viewed in in ligh light t of of th the e overall ll budget for affordable hou ousing g exp xpenditu tures. An of offset for th the e budget im impact wou ould have e to o be e id iden entif tified. 12 12
Potential Property Tax Poverty Rates by Census Tracts Incentive Considerations Should there be a tim ime commit itment? What affordabil ility requir irements would ld be appropriate? 13 13
Potential Property Tax Poverty Rates by Census Tracts Incentive Considerations Should their ir be a min inim imum number or share of unit its elig ligible wit ithin a property? Should there be a maxi ximum number or share of unit its elig ligible wit ithin a property? 14 14
Potential Property Tax Poverty Rates by Census Tracts Incentive Considerations How sh should ld the County guarantee that part rtic icip ipatin ing unit its meet t healt lth and sa safety standards (C (Code)? )? Should an in incentive program in inclu lude a lim limit it on overall fis iscal im impact to County? 15 15
Potential Property Tax Poverty Rates by Census Tracts Incentive Considerations Should the in incentiv ive cover the full ll assessment for each elig ligib ible unit it, , or should ld it it cover a portion of that amount? Any y other factors/components the County should ld consid ider? 16 16
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