Early this year, Orlando Artze stepped in as interim chief executive of the Richmond Redevelopment and Housing Authority after a January cold snap left hundreds of public housing residents without sufficient heat. His predecessor T.K. Somanath had resigned amid the controversy.
With an intimate understanding of federal regulations, tax incentives and other housing programs, Artze accepted the role in hopes of improving the relationship between the authority and its residents, which has been fraught with tension for years.
But even as construction begins on Church Hill North, a mixed-income development at the site of the demolished Armstrong High School that will eventually be available to qualifying tenants of a dilapidated housing project, Creighton Court, some residents remain skeptical. They've heard it all before, they say, and will believe it when they see it.
"I very much understand it," says Artze, noting that some projects over the years have hit roadblocks. In 2016, a groundbreaking ceremony on the Armstrong site, similar to the one held a couple weeks ago, raised the hopes of Creighton residents. But when a federal grant of nearly $30 million fell through, the authority had to pause its plans for Church Hill North and an overhaul of Creighton Court.
Artze says the authority remains committed to redevelopment efforts, but a steady decrease in federal funding has forced the housing authority, like others across the country, to consider models that rely on public-private partnerships.
"What has been an almost 80-year history of reliance on the federal government for funding and for support is gradually being transitioned," Artze says.
According to Melissa Jones, a research scientist at the Center for Housing Research, based at Virginia Tech, that decrease in funding from the U.S. Department of Housing and Urban Development was "set into motion a long time ago" and is unrelated to one political party or another. She doesn't anticipate seeing an increase in public money, which she says forces housing authorities and local governments to reconstruct their funding models.
That's where nonprofits like the Community Builders, known as TCB, come in. The Boston-based organization builds affordable housing all over the country, utilizing the Low Income Housing Tax Credit, a federal program that came out of the Tax Reform Act of 1986. It offers a dollar-for-dollar reduction in a property developer's income tax liability for investing in affordable rental housing.
The authority chose TCB as a partner due in part to its history of keeping developments affordable, Artze says, and he's optimistic that such an arrangement is in the best interest of the authority and its thousands of low-income residents.
But it also means that three decades after residents move into Church Hill North — some of them using federal housing vouchers and others qualifying as low-income but without government assistance — the developer could raise the rent on the units to market rate.
"We've seen this in many parts of the country where housing that was originally developed as affordable, 30 years later are in really hot market areas," Artze says. "There's all kinds of pressure to convert those to market rate." Even with this risk, he says he believes it's safer than continuing to rely on the federal government for long-term redevelopment and capital improvement funding. Also there are steps the authority can take to ensure affordability beyond the required 30 years, he says.
At the 15-year mark, the developer has the option of selling the property to the housing authority, having already benefited from a decade and a half of the tax credit. The authority will have first right of refusal, and Artze says the agency has "every intention to be able to do that" when the time comes. If the partner remains in ownership of the property, after 30 years it can either switch to market rate rental prices or renew the tax credits for another period of affordability.
Juan Powell, a regional development director with TCB, says it's unlikely that the units in Church Hill North will convert after the period of required affordability.
"We're long-term owners, and we're a mission-driven nonprofit," Powell says. "Converting that to a market rate would be so contrary to the mission of the organization."
Jones notes that cities across the country are adopting this model, some setting affordability requirements well beyond the 30-year mark, like 60 or even 100 years. But it's difficult to predict now what a city's housing needs will be in 100 years, she says, and with shorter timelines, sometimes it makes more sense to redevelop at market rate and use the money gained on the new deal to build affordable housing somewhere else.
"We have to be strategic when we put numbers onto those things, while still holding ourselves accountable to preserving affordable housing," she says.
Artze says it's safe to assume that any future affordable housing developments in Richmond will operate using the same model, including whatever happens at Creighton Court. The 504 units comprising the nearly 70-year-old housing project may be demolished and reconstructed from the ground up, or rehabilitated, or any combination of the two. Plans likely won't move forward until at least six months after construction of Church Hill North is complete, he says. The development will use the low-income housing tax credit program to redevelop Creighton, meaning it too will be subject to the 30-year minimum.
Now that Artze's year leading the housing authority is coming to an end, he says the board is close to hiring a new permanent director. He says the new executive will need excellent communication skills, along with an understanding of the communities the housing authority serves and its partner organizations. Arguably even more crucial, though, is experience with this kind of transition.
He says the board has narrowed the pool of applicants down to a few finalists and he expects the new hire will begin early next year. S