Virginia Housing denied the Richmond Redevelopment and Housing Authority’s application for about $15 million dollars in federal tax credits to build the second phase of new housing in Creighton Court.
The 9% Low-Income Housing Tax Credits would have partially funded the housing authority’s plan to build 72 income-restricted units in the East End neighborhood.
“The LIHTC 9 percent application is a competitive funding process with limited resources available. Unfortunately, not all applications are able to be funded,” RRHA spokesperson Angela Fountain said in an email.
The application was one step in RRHA’s plan to replace what used to be 504 units of public housing at Creighton Court with 681 rental units, including 561 income-restricted units and 120 market-rate units. Fifty homes are also planned for sale. The project is being undertaken in partnership with The Community Builders, a Boston-based nonprofit.
The first phase of the project was funded with a 2021 LIHTC award, and construction is underway on 68 new units.
Fountain said RRHA is now considering applying for 4% LIHTC credits to start the second phase, which would cover a smaller portion of the cost. Those credits are often paired with other funding sources, such as tax-exempt bonds.
RRHA did not directly answer a question about how the denial will affect the timeline for the Creighton project. About 150 families still live in public housing units in the neighborhood, and Fountain said the authority is currently working to relocate those residents so the neighborhood’s demolition and redevelopment can continue.
Relocated residents are guaranteed “comparable housing” under federal guidelines, which could be another public housing unit or rental subsidies for privately owned units.
Why were the credits denied?
Each year, Virginia Housing releases a set of criteria by which LIHTC applications will be scored, ranging from details about the property’s location to funding sources to the types of units included. There is a set amount of money available for projects undertaken by local housing authorities, and the highest-scoring proposals are funded until that amount is exhausted.
This year, only one housing authority project — Samuel Madden Homes in Alexandria — scored highly enough to be funded, according to preliminary rankings from Virginia Housing. The organization’s Board of Commissioners approved a few additional housing authority developments using credits reserved for next year.
“The Board is authorized to forward allocate credits from the following year. However, they do try to limit the forward allocation to approximately 50% of the following year’s credits so that the competitive pools will still have credits the following year,” said Virginia Housing spokesperson Adrian Robinett.
Three additional projects were funded this year, one each in Norfolk and Newport News that scored higher than Creighton, and one in Waynesboro seeking only $65,000.
Virginia Housing scored Creighton Phase B lower than the Alexandria project on a number of measures. Those included bringing in less subsidized funding, a relatively higher per unit cost, and not reserving any units for people making less than 40% of the Median Family Income (also called Area Median Income), among other criteria.
Omari Al-Qadaffi, a housing organizer at the Legal Aid Justice Center, said in a statement that the denial follows concerns advocates have raised throughout the planning process.
“It appears that many of the reasons that these tax credits were denied are concerns that Legal Aid Justice Center and other advocates have repeatedly sounded the alarm on regarding RRHA’s redevelopment plans for Creighton Court and beyond,” Al-Qadaffi said. “It’s very disappointing that Richmond consistently demonstrates a lack of will to adequately address the housing needs of families, and this denial is evidence of that.”
In May, Legal Aid Justice Center — along with the Virginia Poverty Law Center and the Central Virginia Legal Aid Society — released comments on RRHA’s annual plan. The organizations called for the agency to focus on housing for people who make less than 30% of the Median Family Income (about $32,000 for a four-person household).
“RRHA’s plans call for a reduction in the number of hard units that are affordable to these very low-income households, which is unconscionable given the Richmond City Council approved a resolution on April 10, 2023, declaring that our city is currently in a ‘Housing Crisis,’” the comments read.
That declaration stated that 86% of extremely low-income residents are burdened by high housing costs.
Plans submitted by RRHA to City Council state the organization plans to seek LIHTC funding for seven of the remaining nine phases of construction in Creighton, and Fountain said that remains the plan. She added that the organizations will look at Virgina Housing’s annual rubric to improve future applications.
What units would have been built?
About half of the units planned for Creighton Phase B (40) would have been reserved for people making up to 60% of the Median Family Income, while the others (32) had an income cap of 50%. According to the LIHTC application, The Community Builders planned to rent 700-square-foot, one-bedroom apartments for between $722 and $912 a month. Two-bedroom units would have cost between $858–$1,085 per month for about 1,000 square feet.
“Although the LIHTC program incentivizes admissions to families that earn below 60% of the Area Median Income, such a move would result in higher rents for current public housing residents,” the coalition of progressive organizations wrote in May. “The majority of RRHA residents cannot afford LIHTC units, as LIHTC rents are not set at 30% of the household’s adjusted annual income.”
Tenants in 18 of the Creighton Phase B units would have received subsidies to cap rent at 30% of their income. Those subsidies would have expired in 15 years, though there was an option to renew the contract. The units would have been among those reserved for households making 50% of the median income or less.
The number of units developers can make available to extremely low-income households is limited by an agreement signed by RRHA in exchange for infrastructure funding from City Council. According to the agreement, “no more than twenty-five percent (25%) of the units in each phase of the Redevelopment Project shall be made affordable to households earning at or below thirty percent (30%) of the Area Median Income.”
In addition, no more than 60% of the units across the entire development may be rented or sold to households at or below 60% of the Median Family Income. Of the 731 total planned units, only about 440 may be occupied by such families, including a maximum of about 180 that can be made affordable to extremely low-income families.
