Council holds first reading of Dogwood Properties purchase

Tonight Council will take up the second reading of a plan to give $5 million to the Charlottesville Redevelopment and Housing Authority to acquire a large amount of housing that is currently rented to people with incomes much lower than the area median income. 

The purchase price for the units currently owned by Woodard Properties is $10 million and a “philanthropic donor” previously identified in CRHA documents as Riverbend Development will provide the rest of the funding for the 74 units spread across 26 locations. 

“The city would retain a half interest in this particular portfolio and the request would be for the portfolio to be preserved at 60 percent of the [Area Median Income] based on attrition of units so any individual that currently lives in one of the units would be able to remain in the unit but upon vacancy that unit would be converted to a 60 percent AMI unit going forward,” said Sam Sanders, Charlottesville’s deputy city manager. 

Sanders said staff have reviewed the budgets of the existing project and have concluded the properties are profitable. Current rents range from $700 for an efficiency to $1,310 for a three bedroom unit. CRHA would be allowed to retain any earnings from the rentals for use. 

“Therefore the funding should be available to support CRHA’s interest in adding two additional maintenance staff to support the ongoing maintenance for the property and they would then retain the ability to lease those properties using current staff within the CRHA organization,” Sanders said. 

Sanders said Woodard Properties hoping to close the transaction as soon as possible to concentrate on their other rental properties, many of which are student-related. 

“There is a concern if this was not acquired then this would no longer be naturally occurring affordable housing, therefore becoming more market rate and potentially causing current tenants to be evicted for inability to pay,” Sanders said. 

These units would not be maintained with any funding from the U.S. Department of Housing and Urban Development for public housing. 

“Meaning within their accounting they would need to keep track of everything related to this portfolio because of the city’s half-interest,” Sanders said. “As having that interest, we are able to take a look at any part of the financials and the performance on this portfolio as a co-owner.” 

Sanders had questions for Council at the first reading, the first of which was whether this should follow the same terms as the city’s assistance to help CRHA purchase properties on Montrose Avenue and Coleman Avenue last year. The city has a half-interest in those units as well, but CRHA gets the earnings. 

Should this be a grant, a forgivable loan, or a deferred loan? If a loan, would there be interest or none? Another is whether this purchase should be part of the Sustainability Plan the CRHA is working on? (learn more about that plan)

“I think the question is, what does the city want out of its money and out of its ownership and I think that’s something we collectively need to have a discussion about,” said Andrew McRoberts of the firm Sands Anderson. They’re the entity providing City Attorney services. 

Councilors all indicated they saw the funding as a capital investment rather than a loan or a grant. 

Charlottesville Mayor Lloyd Snook said he has fielded many questions from people concerned about CRHA’s finances. Until recently, the U.S. Department of Housing and Urban Development considered the entity to be on “troubled” status. 

“How do we, number one, make sure that whatever our interest is that we retain a veto power against it being squandered?” Snook asked. 

Snook said this concern came from the possibility of the property being used as collateral for another loan, perhaps. He also said if the properties are sold, the city’s interest would need to be considered. 

City Councilor Michael Payne supported the project no matter the form the financial payment takes. He is a member of the CRHA Board of Commissioners. 

“However its structured, in my mind what we’re going to get out of it is the city investing in CRHA as a partner to preserve this as affordable long-term, bring the AMI levels as they pair them with vouchers to get them down to 30 percent of AMI, and that’s also going to help CRHA’s operations as they are going to start to bring in more income so they can be more self-sufficient,” Payne said. 

Vice Mayor Juandiego Wade agreed with Payne.

“I think this is an asset that is only going to increase in the future so that’s what I see it as,” Wade said. 

This item will not be on the consent agenda. Another item not resolved as of the April 3 reading was the status of the outstanding loan that Woodard Properties has for their purchase of Dogwood Housing from Eugene Williams. 

Mayor Snook spoke to Mr. Williams on April 3. 

“One of the reasons he had formed Dogwood Housing because he was concerned that in public housing, the kids were not faring well, that the families were not faring well, and that he wants to make sure that when CRHA gets into an ownership over these same properties that the concerns he had about the effect on public housing on individual families and individual children was not going to be extended to these kids who were living in these properties right now,” Snook said. 

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