CRHA seeks $15 million in city funds for redevelopment of Westhaven as part of sustainability plan

The agency that owns and operates public housing sites and other affordable housing units throughout Charlottesville wants a major investment from City Council to redevelop Westhaven in the 10th and Page neighborhood. 

“The ask from the city will be 15 million,” said John Sales, the executive director of the Charlottesville Redevelopment and Housing Authority. “We’re projecting its going to be a $115 million project which is ten percent of the overall budget for that project.” 

The redevelopment is part of a Sustainability Plan that’s been developed by the firm Northern Real Estate Urban Ventures. That same firm assisted the University of Virginia in selecting three sites for its commitment to develop between 1,000 and 1,500 affordable housing units. 

This is the latest ask for CRHA an agency that will receive $9 million for redevelopment from the city over the next three years in the Capital Improvement Program.

Earlier this year, Council agreed to give $5 million toward CRHA’s $10 million purchase of the 74 units across the city known as Dogwood Housing. That purchase is not within the scope of the sustainability plan, nor are the other three land purchases made by CRHA within the last two years. 

Council last reviewed the planning for the sustainability plan in March of this year. They got an update from the firm’s Gina Merritt at their meeting on September 18. (view the presentation)

“The intent of the study was to demonstrate the ability of the agency to be a viable agency over the long term and to prove that the agency’s plan for redevelopment hopes to elevate and stabilize the agency’s overall long term financial position,” said Gina Merritt of NREUV.

View the presentation for more details

The work involved a thorough review of CRHA’s public housing stock as well as market research. 

“We did conceptual plans for two sites,” Merrits said. “We researched and produced case studies. We developed a road map which included outlining goals for the whole study. We formulated along with CRHA a redevelopment strategy for the balance of the portfolio and then lo and behold we created a sustainability plan.” 

Merritt said CRHA will work with development partners to redevelop specific sites and to renovate some of the existing low-density sites. CRHA would earn additional revenue from selling at least one property, collecting developer fees, and getting more money from the redeveloped properties. Overall, CRHA’s portfolio has aged over the decades. 

“Essentially what we found is that in order to bring these assets up to par and extend their useful life, including all the deferred maintenance, it would cost CRHA $40 million in basically capital expenses,” Merritt said. 

The sustainability plan suggests redevelopment by creating a series of privately owned developments that are still managed by the public Charlottesville Redevelopment and Housing Authority.  

Under one scenario, CRHA would expand from around 376 units to 896 total units. 

“One hundred of those units we’re estimating [at] Avon/Levy would be developed by a third party and so the net new units that CRHA would be responsible for would be about 796 units,” Merritt said.

Merritt referred to 405 Avon Street, a site of a former automotive repair shop purchased by the CRHA in 2010.  The 1.2 acre site will be zoned Node Mixed-Use 10 under the future Development Code. 

“Small site, but high value in terms of the ability for an outside developer to come and build say a market rate development that it could be worth selling that property and yielding a significant value for the sale of the land and being able to create a reserve for CRHA for the future,” Merritt said. 

The two parcels that make up that site have a 2023 assessment of $2,649,400. One of the scenarios for this project assumes CRHA could get $11 million for the sale of the property. The other is for a long-term lease. 

There are two scenarios for development in the packet neither of which would include a public subsidy. 

The two scenarios for the Avon / Levy site (Credit: Northern Real Estate Urban Ventures)

A public subsidy would be requested to assist with the redevelopment of Westhaven, CRHA’s oldest residential complex. The sustainability plan has three scenarios. 

“We looked at three different options in terms of density,” Merritt said. “All of them really need between $66 million and about $34 million in subsidy and so that’s what we looked at in terms of strategy. Can we do development plans with different densities to determine how much capital would be need?” 

Merritt said the redevelopment plan would yield $23 million in developer fees, $11 million for the the Avon-Levy site, and $21 million in additional cash each year. 

All of this depends on CHRA continuing to change the way it does business with a mixture of different revenue streams from the U.S. Department of Housing and Urban Development and by improving upon rent collection.  The sustainability plan assumes positive redevelopment will yield financial results.

“For the next 20 years, 30 years, you will see that the agency actually starts making a lot more money because one, you’re creating new voucher opportunities, you’re collecting more rent, you’re collecting fees on those vouchers, and again you’re redeveloping the properties, collecting developer fees, as well as being able to sell an asset, yields a lot of cash for the sustainability for the agency.” 

Merritt said CRHA has a very generous development partner.  A name wasn’t mentioned, but it’s Riverbend Development .

“The housing authority has a great partner in Charlottesville that they work with that helps support big transactions from a financial perspective and allows the housing authority to collect all of the developer fee, which is just awesome,” Merritt said. “What you typically see is housing authorities are making 25 percent of 50 percent of the developer fee.” 

Later in the discussion, Sales explained more about what these fees actually are.

“Developer fees are captured when you develop a project,” Sales said. “Crescent Halls and South First Street Phase One are the first project CRHA has developed since public housing was created.”

Sales said in those projects, half of the developer fees were put back into the project to cover cost overruns to avoid asking the city for more money to more funds to complete. 

Now back to that $15 million ask for funding for Westhaven. That request was not within the packet of the work session but was the main point of Council’s discussion. 

Sales said Westhaven will be redeveloped with input of existing residents.

“We’ve been engaging with them already,” Sales said. “We’re looking to hire an architect. We’re getting ready to put that out now so through the engagement process so far we’ve talked to residents about economic opportunities in the site. Child care facilities, recreational facilities, and of course more housing including homeownership opportunities.” 

Such a homeownership opportunity will be part of the second phase of CHRA’s redevelopment of the 6th Street properties. 

A nonprofit called simply Preservation of Affordable Housing will develop a two acre site at 10th & Wertland as part of UVA’s initiative. Sales said he’s been in talks with that entity already about possibly having some of those units be used to relocate some of the existing residents on a temporary basis during construction. In addition, CRHA is partnering with Piedmont Housing Alliance for the redevelopment of the Piedmont site on Fontaine Avenue. 

Sales said the local investment is necessary due to gradual reductions in federal funding over time. He also said he will ask Merritt and her team to add revenues from the non-public housing CRHA now runs.

“That portfolio, Dogwood alone, just the 74 units, produced more than all of our public housing units combined in a month,” Sales said.

Sales said CRHA also collects a small fee for allowing bonds for the redevelopment of Midway Manor to be issued under its legal authority.

“We’re talking to two other developers about doing that for their project where CRHA is going to get a small fee every year for providing tax bonds,” Sales said. 

Sales said the $15 million in city investment would be leveraged to raise up to $150 million to apply for grants such as HUD’s Choice Neighborhoods program.

“We think Westhaven will be a great candidate based upon its history and so we’re going to put in an application for that and that will be for $50 million,” Sales said. 

Vice Mayor Juandiego Wade said he wanted to support the $15 million but wanted to know when the money would be required. Sales said the official ask would be for $3 million a year beginning in FY26. The capital improvement program currently shows $3 million for that year. 

Before you go: The time to write and research of this article is covered by paid subscribers to Charlottesville Community Engagement. In fact, this particular installment comes from the September 27, 2023 edition of the program. To ensure this research can be sustained, please consider becoming a paid subscriber or contributing monthly through Patreon.

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