Albemarle Supervisors skeptical of proposal to use dedicated housing fund proceeds as debt service

Recent editions of the newsletter have featured stories on Albemarle County budget that document meetings from the recent past. Today’s edition concludes with at least one story from the April 7, 2025 budget work session.

“We have a few topics but we’re going to spend most of our time talking about affordable housing and the [Capital Improvement Program] to continue the discussion or kind of an idea that began at the last budget work session on March 19,” said Andy Bowman, the chief of the budget.

That idea was whether the county had more capacity to borrow money to invest in affordable housing projects.

Supervisors had canceled one scheduled for March 26 after agreeing on March 19 to advertise increases in the real property tax rate and the personal property tax rate. The real property tax rate would increase by four cents, with 0.4 cents going to the affordable housing trust.

At the start of the April 7 work session, Chief Financial Officer Jacob Sumner went back to a basic concept in affordable housing. Affordable housing is on a spectrum.

“There [are] multiple needs at different levels on the affordability spectrum,” Sumner said. “As we’ve talked before, there [are] many tools that can be used to address affordable housing on these different levels within the affordable housing spectrum.”

The bottom axis of this spectrum begins on the left from 0 percent to 30 percent of the area median income, a population that may need access to emergency shelters or transitional housing. This extends up to workforce housing which is needed for households making up to 120 percent of area median income.

The 0.4 cents will be the first time there will be a dedicated stream of revenue for the county’s affordable housing investment fund. Until now, the fund has been fueled by one-time money from various surpluses and carryovers.

“Some of the past uses of the Affordable Housing Investment Fund has been our investment with Virginia Supportive Housing [at] Premier Circle, our investment in the Southwood redevelopment, phase one and phase two with Habitat,” Sumner said. “And then also in the Southwood Redevelopment area, the Hickory Hope Apartments with Piedmont Housing Alliance.”

As chief financial officer, Sumner is responsible for providing guidance on the mechanics of the county’s use of debt to invest in infrastructure. There are guidelines and proposals and so far there is no precedent for the county itself taking on debt to pay for housing projects.

“Borrowing for full housing projects would be new for the county, but also be new across the state for many localities, many counties in particular,” Sumner said.

In Virginia, counties and cities often have different powers. Charlottesville does contribute funding to affordable housing projects, but payments to groups like Habitat for Humanity and the Piedmont Housing Alliance are in the form of cash because those are private developments.

Payments for projects run by the Charlottesville Redevelopment and Housing Agency can be paid for through debt service because CRHA is a public organization whose infrastructure is public. The bonds that are sold are tax-exempt which limits their use to public facilities.

Sumner said if Albemarle were to borrow money for housing, they could use the proceeds to make grants, pay for infrastructure such as roads or water lines, or purchase land.

“If the Board wanted to borrow funds to help invest infrastructure related to development for affordable housing projects, as long as in the end what we expend those funds on is related back to a public facility, that would be an eligible expense for borrowing,” Sumner said.

The county could not borrow money to establish a revolving loan fund.

A question before Supervisors is whether that 0.4 cents could be used for debt service to pay for affordable housing projects in order to leverage funds.

• In Option A, the full $1,239,203 in FY 26 would be used as direct payments to those providing housing for a total of $6.834 million over five years.
• In Option B, half of the 0.4 cents would be used to pay for debt service which Sumner projected would over five years would generate a potential $7.325 million in bond revenues which would be paid off over 20 years.
• In Option C, the entire 0.4 cents would be used for debt service which would enable $14.65 million in one-time bond proceeds. That would require the 0.4 cents to be dedicated to debt service over 20 years.

Supervisor Mike Pruitt said both Option B and Option C seemed like bad ideas. He wants Supervisors to create a plan to increase the amount of dedicated money from Albemarle for housing projects to $10 million a year as has been requested by a coalition of advocacy groups. He said using the money for debt service would make that more difficult.

“I feel like we’re looking at this and we’re all interested in this because we want a shortcut,” Pruitt. “And I think the reality is there isn’t a shortcut period other than like knuckling up and having the political will.”

Pruitt said he wants there to be enough money for the county to be able to step in and work to purchase an apartment complex that may be on the market to be converted to luxury apartments as with happened with the former Cavalier Crossing apartments. (read a story)

“If we actually had a land acquisition policy, if we actually maybe updated our blight policy to include a thought for the acquisition of land and… building our own social housing, right?” Pruitt said. “That’s what CIPs for housing are used for.”

Pruitt said he recognized the rest of the Board might not have the appetite to get into that business. He suggested later in the meeting it would mean increasing the real property and property tax rate and dedicating more than 0.4 cents per $100 of assessed value.

Supervisor Diantha McKeel said she is concerned about the economic landscape and the ability for the county to get to $10 million a year is complicated. She suggested the county instead pursue another initiative.

“This board could look at acquisition of land,” McKeel said. “We have that blight ordinance. I think looking at some of that is a much more viable option certainly right now, given where we are.”

Supervisor Ann Mallek suggested that the county would work with partners and not go it alone. She wanted to continue to find a way to leverage county funds with funding from philanthropic agencies.

“My goal is to try to figure out a way to get structures, bricks and mortar, for the taxpayer money that is going in to help the people that don’t have any houses of any sort,” Mallek said.

Supervisor Jim Andrews said he would prefer not to focus on an annual funding amount but instead another metric.

“We focus so much on $10 million and we should focus more on how many units we expect to get built and how will we accomplish that?” Andrews asked.

Andrews suggested using tax-increment financing arrangements for eligible projects.

Supervisors did not make a firm decision on how to proceed on April 7. Toward the end of the conversation, Sumner returned to the idea of the continuum to explain why staff brought the three options forward.

“One of the reasons why we brought back the housing continuum is to show that there are multiple tools that will need to be used to address affordable housing in our community,” Sumner said. “And this is a tool we hadn’t explored before, really discussed with the board before, but it is a tool and we kind of walk through with the trade offs-are and how we could utilize that tool if the Board wanted to use that.”

Before you go: Before you go: This story was originally posted in the April 8, 2025 edition of Charlottesville Community Engagement. To support this work, consider a paid subscription to the newsletter or support through Patreon. Checks are also welcome!