Category Archives: Redevelopment Updates

Housing Typologies

Housing types montage

When the preliminary Master Plan for the redevelopment of Friendship Court was introduced in late 2016, it proposed replacing the existing townhome-style buildings entirely with apartment-style multi-family buildings.  The intent at the time was to quadruple the number of apartments, from 150 to 600.  Apartment-style buildings were the only way to achieve this number of apartments.

The community as a whole, both from inside and outside of Friendship Court, expressed consistent concerns on multiple aspects of the preliminary Master Plan.  Specifically, pursuing solely apartment-style buildings, and the resulting total number of apartments overall, were raised as primary concerns.  These, and other issues, prompted the need to refine the redevelopment plan in order to properly reflect resident goals.

Currently, nearly all apartments at Friendship Court are two-story townhomes with front doors leading directly outside to sidewalks and/or green spaces.  Many residents, particularly families with young children, have expressed a strong desire to maintain the immediacy of their connection to the outdoors.  For these families, having direct access to the outside is both a lifestyle preference as well as providing a sense of safety and watchful eyes on their children at play.

On the other hand, there are many other residents who are excited at the prospect of an apartment-style building.  Many residents have expressed interest in the amenities provided in multi-family buildings, such as workout rooms, computer labs, and meeting rooms.  Further, for elderly residents, or for those with mobility impairments, the prospect of elevator access and single-level floor plans is deeply welcomed and tremendously beneficial.

The bottom line is that residents want choices that match their desires and needs.  As we finalize the refinement of the site plan, residents on the Advisory Committee have discovered the necessity of balancing multiple, sometimes competing, priorities:  creating ample green spaces, adding new affordable units, providing both townhome and apartment housing types, the need for sufficient parking, the cost of construction, etc.

The resulting updated plan does a remarkable job at establishing this balance, providing as much choice in housing types as possible while creating a neighborhood framework that retains desired characteristics and re-knits the community to the surrounding city.

 

Section 8 Renewal Approved!

Friendship Court with playground

For the last 40 years, Friendship Court has been a home for extremely low-income families due to an ongoing financial operating subsidy, federal Project-Based Section 8 rental assistance.

Just over a week ago, we received notification that a new 20-year Section 8 contract for Friendship Court was awarded!  Nearly two years ago, knowing the original Section 8 contract expired this year, we began planning for this new contract.  We are deeply excited that families at Friendship Court have certainty their housing is secure for many years to come.

Why is this important?

The Section 8 contract is important for two reasons.  First, planning a balanced operating budget is critical to long-term financial sustainability for the property.  Second, providing homes for extremely low-income families with rents they can afford requires operational subsidy.  This post will take a look at how Section 8 rental assistance helps balance operating expenses with income sources.

Operating expenses

Operating expenses include debt payments, onsite staff salaries, saving for long-term replacement reserves, and many other costs.  With the exception of debt payments, which can be controlled through subsidizing construction costs, operating expenses generally stay the same no matter how deeply affordable a community is.  In other words, operating expenses stay steady, regardless of how much rent residents pay.

Income source

On the other side of the scale is the primary income source—rental income paid by the families who live in the community.  Because families pay no more than a federally-mandated 30% of their income towards rent when living in subsidized affordable housing, the total amount of rental income to the property depends on the depth of affordability in the community.  In other words, rental income to the property can change dramatically based on the income of residents.

How this works

Generally speaking, with deep construction subsidies keeping debt payments low, operating expenses and rental income can be balanced when the average family in a property has an income of ~50% of the Area Median Income (AMI).

In Charlottesville, if a family of three has a 50% AMI income, they make ~$38,400/year.  As they would pay no more than 30% of their income towards housing, after accounting for utility costs, their monthly rent would be ~$750/month.

At Friendship court, the average family has an income of ~$11,000/year, which is ~15% AMI.  This income translates to an allowable rent close to ~$150/month.  This reduced rental income creates an operating deficit of ~$600/month per apartment.  The resulting rental income to the property is not nearly enough to balance the property’s operating expenses.

Section 8 operating subsidy

The Project-Based Section 8 operating subsidy received from HUD bridges the gap between the operating costs of the property and the available rental income. The renewed 20-year Section 8 contract guarantees affordable rents to the families who call Friendship Court home!

Financing the Friendship Court Redevelopment

Friendship Court montage

Pulling together the financing for affordable rental housing in general is a deeply complex endeavor.  It is not uncommon for a high-quality, mission-focused affordable rental housing development to layer 10-15 sources of funding.  The redevelopment of Friendship Court will be no different.  In fact, it will be more complex than most, given the broad set of resident-driven goals for redevelopment, including creating housing with multiple tiers of affordability and the phasing of development that prevents displacement of existing resident families.

With few exceptions, all rental housing developments have some debt once completed.  The rental revenue from a property covers those debt payments – as well as all other necessary operating costs such as staff, utility bills, building repair reserves, etc.  By definition, affordable housing communities have reduced rental revenue. However, operating costs don’t generally shrink, so the primary method for reducing operating costs to align with the available rental revenue is to decrease the debt burden.  The only way to decrease debt is to introduce front-end subsidies into the development financing.

The backbone subsidy for affordable rental community development nation-wide is Low-Income Housing Tax Credits (LIHTC).  Effectively, LIHTC financing can account for as much as 40-50% of development costs.  However, LIHTC is a limited federal program, administered by individual states, and is highly competitive.

The redevelopment of Friendship Court absolutely depends on successfully winning LIHTC financing – and all the work of the Friendship Court Advisory Committee over the last year has been focused on achieving resident aspirations and winning LIHTC funding.  However, LIHTC alone is insufficient to “make the numbers work” given the depth of affordability we aim to achieve – we will need those other layered sources, too.

For two reasons, the second most crucial subsidy is local.  First, local financial support provides a meaningful layer of funding.  Second, and perhaps as importantly, we are much more competitive in the LIHTC financing competition with substantial, committed financial support from the municipality.  Fortunately, we live in a city with a strong financial commitment to affordable housing as shown by the Charlottesville Affordable Housing Fund (CAHF). The CAHF was wisely established more than ten years ago to support affordable housing in our community.

To successfully redevelop Friendship Court, we must close the remaining development financing gap depending largely on support from local, regional, and national foundations as well as private philanthropy.

Successfully financing a high-quality, deeply affordable rental housing community is challenging and resource-intensive. The decisively positive results, however, particularly for the families whose lives will be impacted over the ensuing decades, are unequivocal and critically necessary to address the dire need for housing affordable for low-income families in Charlottesville.

Phased Redevelopment: Our Plan for Zero Displacement of Residents

From the outset of the planning process more than two years ago, one of the first clear decisions was establishing an absolute commitment to zero displacement of Friendship Court families through the redevelopment process. This assurance is made possible by using a strategy of phased development.

The existing open space bordering 6th Street SE at the eastern edge of the site provides a remarkable opportunity to build first before anyone moves. Phase 1 of the redevelopment will be built only on the existing open space to make this strategy feasible.

Phases image amendedOnce Phase 1 construction is complete, approximately 100-110 beautiful new homes will have been built. 40 families from Friendship Court will move into their new homes alongside new additional affordable and market rate apartments. Each phase of development will be integrated with mixed income households.

Phase 2 construction will commence soon after the first 40 Friendship Court families have moved in. The 40 existing apartments they will have just vacated will then be torn down and replaced with a new batch of beautiful homes. This sequence of building first and then moving in will continue until everyone is re-housed through all phases, thereby maintaining zero displacement through the entire process.

The preliminary master plan released in 2016, envisioned seven phases of redevelopment, equating to a lengthy twelve year construction period, or perhaps even longer. One of the most significant concerns we heard from residents at Friendship Court after it was released was that this plan would take too long. In partnership with the Advisory Committee, we refined the plan, reducing the redevelopment to four phases. Four phases was the least number of phases we could devise while also maintaining quality of life through construction and other priorities expressed by Friendship Community community. The revised plan aims to have all Friendship Court families in their new homes within seven years.

The next step in the process is that the City needs to review the overall redevelopment plan to be sure the proposed plan will meet required City codes and necessary infrastructure, such as roads, parking, emergency vehicle access, etc.  On June 13, we submitted this overall Preliminary Site Plan to the City for their review. When the review is completed, we will submit a detailed Phase 1 site plan (hopefully in late summer or early fall of 2018) to obtain the necessary Building Permits for construction.

With permits in hand and financing secured, construction is planned to begin around the beginning of 2020. Phase 1 construction will be completed, with families ideally moving in, towards the end of 2021. Through this process, like every development, we will face some factors that are partially outside our control. Examples include permit and entitlement approval, federal interest rate hikes and impact on financing, etc. As we have been so far, we will continue to do everything we can to mitigate for these factors and are deeply committed to maintaining this timeline.

The advantages of a phased development process to the Friendship Court community are immense. Given the painful legacy of urban renewal and institutionalized racism in our community and across the country, the opportunity to redevelop with zero displacement of community residents is both rare and exceptionally powerful.

Friendship Court Advisory Committee Accomplishments To Date

Over the last two years, the Friendship Court Advisory Committee has provided crucial advocacy for the Friendship Court community through its thoughtful guidance and a clear conviction of purpose – the redevelopment of Friendship Court must unequivocally keep the aspirations and needs of the residents as its core focus.

The Advisory Committee is a team of nine Friendship Court residents elected by their neighbors and six members of the at-large Charlottesville community. They have met at least monthly over the past two years, sometimes twice a month during heavy work times.

Grimm+ Parker charette

In addition to engaging with fellow residents to gather insight and share information about the progress of redevelopment planning, the Advisory Committee members have been co-designing the redevelopment in partnership with other members of the design team, Grimm + Parker Architects, Timmons Group civil engineers, and Piedmont Housing Alliance staff. Part of this work is experiential, including design “charrettes” (charrettes are facilitated design brainstorm exercises) and educational trips to established mixed-income communities and successful early childhood education centers in other cities.

bus tour inside

The work the Advisory Committee has accomplished to date is extraordinary. Their commitment and vision have been, and will continue to be, vital to the success of redevelopment. We are deeply grateful for their time and devotion.

 

The Spring 2018 Update on the Friendship Court Redevelopment

For the last 40 years, Friendship Court has been a place to call home for hundreds of families. For some, the community has been a vital stepping stone, a refuge during times of financial crisis or the first step towards self-determination. For others, especially families or individuals who depend on small, fixed incomes such as disability or social security, Friendship Court has been, and will likely continue to be, a lasting home. At the same time, some families who arrive at Friendship Court hoping for stability become entangled in the veiled web of systemic hurdles that make it so difficult for anyone to fracture generational cycles of poverty.

Nevertheless, for all the families who have called the community home over the last four decades, and for the rest of us who recognize the necessity of supporting our neighbors and families during periods of vulnerability, Friendship Court has provided critical civic infrastructure that benefits all of us – the entire community of Charlottesville.

So why are we redeveloping Friendship Court? We are doing so because it is time. It’s time to replace the 40-year old buildings that are approaching the end of their useful life. It’s time to rewrite the stigma of economic and social isolation. It’s time to engage the residents with earnest transparency and committed partnership. Though redevelopment alone can’t redress the full history of structural racism and other systemized inequities, the work of redevelopment will continue to be fundamentally rooted in bending the arc of the future.

Courtyard conversationsOver the coming weeks, we’ll be sharing more details of the work we’ve accomplished so far in partnership with the residents. The focus of our work over recent months has been taking the early master plan that was released in late 2016 and listening to the community, collecting the emerging comments and concerns. In partnership with an amazing design team, inclusive of residents and community advocates on the Advisory Committee (who we’ll share more about in a future post), we have been hard at work refining the plan to address critical issues.

How many new apartments should be built? What types of housing will be built? Where will the open and green spaces be located and what character will they take? What will the income mix of future residents be? How does a new, reconnected neighborhood get built while also retaining the existent sense of culture and place? How will the redevelopment balance zero displacement while minimizing the overall timeline? How do we maintain a positive quality of life during each phase of construction?

As we begin to unveil this resident-led work, you will see a site framework that reconciles these difficult questions remarkably well. While we know a great deal of complex work and difficult decisions remain in front of us, we have built a thoughtful foundation that will lead us all, the entire community of Charlottesville, towards a more equitable and accountable future.

Visit www.friendshipcourtapartments.com to learn more and follow the community’s progress by subscribing to e-news updates.