Virginia Real Estate, Land Use & Construction Law : Virginia Construction Lawyers & Attorneys : Bean Kinney & Korman Law Firm : VA Real Estate, Land Use & Zoning

For those of you out there who own and/or operate affordable housing subsidized by HUD, you should take note that the protections extended by the Violence Against Women Act (VAWA) have been permanently extended to HUD Section 8 properties.  The final rules published yesterday in the Federal Register now make the prior 2008 interim rules permanent with some alterations and clarifications.  If you did not know that VAWA protections extended to your HUD tenants, take note.   VAWA, when enacted in 1994, was supposed to be self-implementing; however, regulations were needed to explain how these self-implementing provisions would be implemented and incorporated under existing federal regulations. 

Under VAWA and now portions of the Code of Federal Regulations applicable to certain HUD programs (24 CFR Parts 5, 91 et. al.), incidents or threats of abuse will not be construed as violations of a lease for a HUD subsidized unit, or considered other "good cause" for termination of assistance, tenancy, or occupancy rights despite the disruption the abuse becomes to other tenants.  According to HUD Secretary Shaun Donovan, "[e]victions can [now] only take place after the housing or subsidy providers have taken actions that will reduce or eliminate the threat to the victim, including, transferring the abuse victim to a different home; barring the abuser from the property; contacting law enforcement to increase police presence or develop other plans to keep the property safe; or seeking other legal remedies to prevent the abuser from acting on a threat."

Also, VAWA provides an exception to the prohibition against a family moving under the portability provisions that would normally be a violation of a HUD lease, allowing a family to recieve a voucher and move in violation of the lease for safety reasons without having to worry about losing their accessibility to subsidized housing.  Nor can a management company, agent or owner use the fact that family members who are or were victims of domestic violence as a factor to deny them a housing opportunity under one of HUD's programs.

Like most federal regulations, they could be more user friendly for laymen, but I expect a helpful manual will be forthcoming if not already available.

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This year's proposed Constitutional Amendments are now up for review prior to being voted on during the November 2, 2010 General Election this fall.  There are three proposed amendments on the table:

1. Property Tax Relief,
2. Veteran Property Tax Exemptions, and
3. Increasing the Revenue Stabilization Fund

The first proposed amendment, while technically a real estate tax amendment, facilitates aging in place policies.  Currently, the General Assembly can give localities the authority to grant exemptions from real estate taxes to persons 65 years of age or older, or for persons permanently and totally disabled, for their residence where the normal tax bill would amount to "an extraordinary tax burden" in relation to their income and financial worth.  The amendment now proposed, however, would allow localities to remove the requirement about the "extraordinary tax burden" and gives the General Assembly the authority to allow localities to determine their own income or financial worth limitations for tax exemptions.  If approved,  the senior citizen vote would then be open for bidding in localities across Virginia.

The second proposed amendment relates to the first, which contemplates allowing localities to extend the same real estate tax exemptions to veterans.   As proposed, the amendment would require the General Assembly to pass a law exempting from local taxation the principal residence owned and occupied by any veteran with a one hundred percent service-connected, permanent, and total disability. Also, the veteran's surviving spouse could continue to claim the exemption so long as he or she does not remarry and continues to occupy the home as his or her principal residence.  I'm not sure what would qualify as a "permanent, total disability" but I would expect subsequently enacted legislation would clarify and define these terms.

The third proposed amendment, from the fiscal responsibility front, allows the General Assembly to increase the size of its rainy day fund, entitled the "Revenue Stabilization Fund," from 10% to 15% of its revenues derived from annual income taxes and retail sales taxes.  Note that the fund will not be required to be 15% of these revenue, the amendment merely raises the limit of the fund to a maximum of 15% of these revenues.  If the fund exceeds the 15% maximum limit, the excess is required to be transferred to the general fund.

If you're dying to read the amendments yourself before heading to the voting booth this fall, click here for the actual text amendments.

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The area considered to be inclusive of Fort Myer Heights is basically the down-hill slope from Arlington's Courthouse Sector on the hill above of Route 50 north of Fort Myer, bounded to the north by Clarendon Boulevard and to the south by Route 50, Courthouse Road to the west and Pierce Street to the east.  What makes this area interesting, however, is the plan adopted by Arlington County to try and preserve the area's dwindling stock of aging garden-style apartments, which many find valuable from a historical perspective and others find valuable because of the affordability of these units (whether committed affordable units or as market affordable units).  The County has been unable to prevent the redevelopment of a number of sites in this area because planned densities are not sufficient to induce developers from entering special exception processes, and have instead chosen to move forward with by-right townhouse and condominium projects, effectively omitting the County from the redevelopment process.

In an effort to stem the flow of this trend, the County identified which blocks in the plan area had been assembled and when they were originally constructed to determine which sites were at the highest risk of redevelopment.  Recognizing the likelihood of being left out of the redevelopment process and the inability to preserve certain units without having to buy them, through the Fort Myer Heights North Plan, the County has attempted to incentivize certain strategic sites with higher densities in order to preserve the existing nature and affordability of the area.  To do this, the Concept Plan identifies the northern portion of the plan area as a Conservation Area and identifies the southern portion of the plan area as a Revitalization Area being "...a location for a strategic blend of conservation and redevelopment..."  Also, in case you are interested, the plan has prioritized which sites are the most historically important.

For sites in the Conservation Area, the idea is to not allow any additional density beyond what is allowed by-right, and instead to allow the transfer of development rights (or "TDRs") for historic preservation, affordable housing and open space purposes (for more on TDRs click here and here), pursuant to a series of specific formulas set forth in the plan.  Receiving Sites for TDRs may either be located within the Revitalization Area or outside of the plan area.  Note that there a number of ongoing, perpetual duties to maintain and rehabilitate historic buildings required to allow the transfer of density off of these sites.

Targeted redevelopment is permitted in the Revitalization Area, but to maintain the nature of the plan area it is limited to residential and neighborhood retail uses.  New construction may be permitted at targeted sites up to 3.24 FAR (and may exceed this cap under certain circumstances) through the County's unique 4.1 Site Plan process if the community benefits outlined in the plan are achieved (here's the Density Plan that sets forth the location of these sites) subject to certain height limitations.  Note, however, that the plan contemplates that as much as 20% of any transferred GFA could be required to be committed affordable housing.  It is unclear how this would be reconciled with a Receiving Site going through the 4.1 Site Plan process, which would still be subject to the County's Affordable Dwelling Unit Ordinance requirements.  In the Fort Myer Heights North Special District, it looks like these contributions will be expected to be cumulative.

Sound like a plan that is adequately incentivized?  By way of comparison, here's the massing for the existing conditions, the by-right scenario, and the 3.24 FAR scenario.

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At the risk of engaging in a bit of direct self-promotion for perhaps the first time, today we have a guest post from Raighne Delaney, a shareholder of Bean, Kinney & Korman, P.C. and lead counsel in the successful dismissal of a case on April 12, 2010 pending against the Views at Clarendon Corporation, Inc. involving an affordable housing project here in Arlington. Raighne’s comments regarding the case follow:

On April 12, 2010, Judge Hilton of the U.S. District Court for the Eastern District of Virginia dismissed a suit seeking to halt the Views at Clarendon affordable housing project in Arlington, Virginia. The plaintiff, Peter Glassman, claimed the project violated the U.S. and Virginia Constitutions’ establishment clause by allegedly using Arlington County government funds to erect and repair a church and support the church’s ministry. The court roundly disagreed with these allegations, finding that the plaintiff’s complaint failed to properly allege an Establishment Clause case. The court granted the various defendants motions to dismiss as to all counts of the case with prejudice and no leave to amend was granted.

The project, known as the Views at Clarendon, is being constructed on property formerly owned by the First Baptist Church of Clarendon (“FBCC”). In 2003, the FBCC decided to develop its property located one block from the Clarendon metro stop. Rather than sell the property, the FBCC felt that the best use for the site was to erect a ten story building, of which the first two floors would consist of a church sanctuary. The building’s remaining eight floors were designed as affordable housing.
Neighbors raised vocal objections to the project through typical Arlington County entitlement processes and extending into multiple iterations of litigation. After losing their case at the trial court level in the initial litigation, in 2006, various neighbors prevailed in challenging the County’s initial rezoning of the property. The County corrected the zoning procedural issues and again approved the project. The zoning approval eventually survived legal challenge. This latest Establishment Clause case was thus the fourth separate lawsuit filed by nearby property owners using various legal means to challenge this affordable housing project.

However, the suit failed because there is the FBCC, which is building the church sanctuary, and the Views at Clarendon Corporation (“Views”) which is constructing the residential units. The FBCC created the Views as a separate secular non-profit entity. Once created, the Views runs as a separate entity and the FBCC has no further involvement or control over the Views. For a variety of economic reasons, the secular and separate Views entity decided to create a new limited partnership, 1210 North Highland-Clarendon, LP (“1210 NHCLP”), and became 1210 NHCLP’s general partner.

FBCC entered into an arms-length transaction to sell the entire property for $5.6 million to 1210 NHCLP, a price well below the full value $14 million appraisal for the property. Arlington County lent $13.1 million to 1210 NHCLP, the Virginia Housing Development Authority (“VHDA”) lent $14.5 million to 1210 NHCLP, and 1210 NHCLP received an $18.6 million federal grant, collectively for use by 1210 NHCLP in the property acquisition and in construction of the residential units, though some of the funds had designated purposes.

When finished, the building will consist of two condominiums. Condominium A will consist of the former church steeple and the first two floors of the 10 story building for use as a church sanctuary. Condominium B will consist of the underground parking and the third through tenth floors of the 10 story building. The funding for the FBCC project (Condominium A) and the separate affordable housing project (Condominium B) are strictly separated. Not one penny of Arlington County’s money is being used by anyone to pay for the construction of Condominium A.

To access their apartments, future residents will not step onto the church’s land, and will use their own entrance, not the church’s entrance. Furthermore, the condominium rules and state regulations prohibit any religious indoctrination of residents. The FBCC will have zero control over the selection and retention of Condominium B’s residents. Furthermore, the Views’ has contracted with a private management company to run that process.

Ultimately, the court ruled that Arlington’s loan was for the secular purpose of providing affordable housing in Arlington. The judge further found that there was “no factual allegation” of religious indoctrination that would allow for the case to move forward. The court expressly found that the separate entities, their creation, their structure, and their membership created “no legal infirmity.” Finally, the court ruled that the funds received by the FBCC when it sold the property to 1210 NHCLP were not related to the FBCC’s status as a religious entity because a church can sell its property like any other person. We are very pleased as a firm that this exciting and important project is moving forward, particularly after prevailing in the face of repeated oppositions, lawsuit and challenges.

Those interested in learning more about the Views at Clarendon project may wish to visit DC Mud’s previous posts from October 2009 and December 2008.

Image courtesy of MTFA Architecture, Inc.

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If you are an owner or operator of affordable rental housing (property with four or more units), it might be worth noting that the General Assembly has just restricted your local real estate tax assessor's discretion to value your property to one method.   Senator Whipple, apparently at the request of the Virginia Housing Commission, patroned a bill passed by both houses this session to amend Section 58.1-3295, requiring localities to assess real property being operated as affordable rental housing solely via the income valuation approach.  Presumably, the reason for this was that local assessors have been trying to tax committed affordable rental housing (i.e. housing that is legally bound to remain and operate as affordable housing at limited rents), at rates that do not reflect these income stream restrictions, by using methods to determine fair market value other than the income approach.

In a nutshell, before this amendment, a local assessor could assess real property three different ways:

1. The Sales Comparison Method, or "Market Approach;"
2. The Replacement Cost Less Depreciation Method, or "Cost Approach;" and
3. The Capitalization of Income Method, or "Income Approach."

Additionally, when dealing specifically with affordable housing, after application made by the owner, assessors were required to consider:

1. The impact of any legally imposed rent restrictions;
2. Any additional operating expenses associated with affordable housing compliance requirements; and
3. Any legally imposed restrictions on the transfer of title or other restraints on alienation.

Assessors were also expressly prohibited from attributing the value of affordable housing tax credits to affordable housing sites.

So, basically, assessors will still be required to take into account the special affordable housing valuation factors listed above, but will now be required to only use the Income Approach in determining fair market value.  Well, the policies involved being fairly apparent, we just have to wait and see whether local assessors will decide whether they think they need to obey this new valuation as prescribed by this amendment, or whether they may disregard it.  In any event, it may be worth looking into how your local assessor is currently determining the value of your affordable housing inventory.

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I don't know how many people out there tracked the events at the sustainability forum out in Portland a few weeks ago, but one of the notable take-aways from the event was that HUD Secretary Donovan used the event as an opportunity to announce that HUD was launching it's new Office of Sustainable Housing and Communities (OSHC) under Deputy Secretary Ron Sims.  OSHC is funded in HUD's 2010 budget.  This follows on the heels of the announcement to create the Inter-agency Partnership for Sustainable Communities between DOT, HUD and EPA last June.

The purpose of OSHC is to work with DOT, EPA and other federal agencies to ensure coordination between housing and other departments involved with sustainable community public policies that effect transportation, utility infrastructure, jobs and environmental planning.  It will also "...strengthen HUD's Energy Efficient Mortgage product and other retrofit financing options - both for single family homes and multi-family rental housing - through a $50 million Energy Innovation Fund... and will also make available an Affordability Index that measures the costs of where a home is located in relation to jobs, schools and transportation."  Additionally, $100 million will be available for integrated metropolitan regional planning initiatives per the Sustainable Communities Planning Grant Program, and HUD expects to award grants to between 10 and 15 regions around the country.

HUD and OSHC are also seeking input from stakeholders related to creation of regional plans for sustainable development, execution plans and programs, implementation incentives and entities eligible for funding.  You can make recommendations via HUD Wiki, is pretty easy to do.  Also, Builder Magazine interviewed OSHC's Director, Shelley Poticha, last week, where she shed some light on her thoughts on how the federal government fits into regional land use planning.

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A quick “congrats” to Jim Pritchett who has been named Executive Director of Alexandria’s relatively new Housing Development Corporation. The Alexandria Housing Development Corporation (AHDC) is a non-profit developer and owner of affordable housing, primarily focused on projects located in the City of Alexandria, Virginia. 

The creation of AHDC was pursuant to a request from then-Councilman William Euille and Councilwoman Joyce Woodson to Alexandria city staff for a plan of action to address the City's affordable housing needs.  In April of 2003, Mildrilyn Davis, Director of the Office of Housing, and Phil Sunderland, City Manager, responded with a memorandum detailing the establishment of a new non-profit housing corporation. This plan anticipated city involvement in the creation and initial establishment of the corporation, but without direct oversight of its activities.  In January of 2004, the City Council named five incorporators to form the corporation and oversee its initial setup and AHDC was incorporated in May of that same year. 

AHDC is preparing to celebrate the Grand Opening of The Station at Potomac Yard on October 17th.  This unique project is a mixed use development that includes 64 units of affordable and workforce housing, Alexandria's newest fire station, and some retail space that is available on the first floor. 

Good luck to Jim and the rest of the AHDC team.

For more information about this project and AHDC here’s the link to their website.

Thanks to Larry Adams, the project's architect from LeMay Erickson, for allowing us to post the above rendering.  Here's a link to the architect's website:  LeMay Erickson Willcox Architects

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