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Affordable Housing Blues

Timothy R. Hughes, Esq.
Hughes & Associates, P.L.L.C.         

A recent decision from the Arlington County Circuit Court held that the county’s guidelines for “voluntary contributions” for affordable housing were illegal and violated Virginia law.  The decision has obvious ramifications for future development and affordable housing in Arlington County.  But more than that, the decision may throw efforts by neighboring jurisdictions to provide affordable housing into serious question.

In the 1970s, as the pool of available affordable housing began to shrink, Arlington County began to a number of to try to solve the problem.  The county added affordable housing to the site plan process more than 15  years ago:  as part of  process, the county “negotiated” with site plan applications to obtain “agreements” from developers to make affordable housing contributions.

The guidelines for affordable housing included a formula where contributions were calculated as a percentage of square footage of above grade construction costs.  Interim guidelines established in December 2003 called for the greater of $4,500 per residential unit or $4 per square foot of gross floor area for all site plan developments.  Contributions were not required for by-right development.

On April 27, 2004, the county board formally adopted affordable housing guidelines for all site plan projects identified in the General Land Use Plan (“GLUP”).  The formal guidelines called for a target of 10 percent of the gross floor area, exclusive of any bonus, to be devoted to affordable housing for all residential and mixed use projects. 

The Subject Property

Kansas-Lincoln, L.C. (“Kansas”) purchased a parcel in the Rosslyn-Ballston corridor in Arlington for the purpose of development.  The property was zoned C-2 which permitted a density of 1.5 floor area ratio with a building no higher than 45 feet. 

The Procedural Posture of the Case

Kansas filed a Complaint for Declaratory Judgment seeking a ruling that the guidelines imposed by the county violated Virginia law.[1]  Two local apartment associations joined as party plaintiffs.  The county argued that the apartment associations lacked standing to sue.  The trial court agreed and dismissed both associations as plaintiffs.

Arlington County further requested the court to dismiss the complaint because Kansas had not filed a site plan application.  The court overruled the county’s request finding that Kansas had purchased the property for development and intended to file such an application.  The issues were thus “ripe” and there was an actual case or controversy as required to maintain a declaratory judgment action.

The Testimony at Trial

Kansas presented extensive testimony regarding the county’s historic actions with respect to “voluntary” contributions for affordable housing.  The court found this testimony important and persuasive.  The court looked to the county’s actions prior to the adoption of the formal guidelines due to the lack of a track record of county action after adoption of the formal guidelines.

Testimony at trial demonstrated that the county approved fifty site plan applications since January 2001.  In all but six cases, the developer made or committed to make contributions to the fund or contributed affordable housing units as part of the county board approval.  The other six cases all involved specific affordable housing projects and were thus exempt from the guidelines.

The Court’s Findings and Rulings

Based on the evidence, the trial court found that the affordable housing contributions were requirements rather than voluntary concessions.  Each site plan application other than specific affordable housing projects contained an affordable housing contribution at or above the guideline levels.  Thus, while the county styled the contributions as “voluntary”, the contributions were in practice mandatory to obtain site plan approval.

The Dillon Rule in Virginia law provides that local governments have only those powers granted by the General Assembly.  The trial court found that the General Assembly had not granted the authority to require that a developer provide affordable housing as part of its zoning and land use regulation.  The trial court found further that while there were statutes discussing imposition of conditions for affordable housing in the special use permit context, there was no such authority granted in the site plan review and approval process.

Another statute permitted the county to allow incentive zoning in the form of increased density in return for desired “features and amenities” to the locality.  The trial court held that affordable housing contributions were not “features or amenities”. 

Regional Impact and Legislative Shockwaves

Arlington is certainly not alone in the struggle to deal with affordable housing.  I have witnessed first hand the tug of war between an affordable housing project and the need to add to open space in the City of Falls Church over the West End Park.  In Alexandria, City officials engaged in an extensive interactive process with local builders and developers in an attempt to craft a negotiated resolution to affordable housing needs.  Indeed, the same pricing constraints and thus the same problems apply across the region.

Against this backdrop, there has been considerable action during this session of the General Assembly regarding affordable housing.  House Bill No. 2167 was proposed to reenact existing legislation to make clear that municipal governments are limited to requesting or receiving contributions only pursuant to an ordinance granting bonus density or height in exchange for such contributions.  That bill was referred to the Committee on Counties, Cities and Towns as of the writing of this article.  Senate Bill No. 1206 mirrored HB No. 2167.  In response to various comments, an amendment in the nature of a substitute has been proposed by the Senate Committee on Local Government as of Feb 1.  This amendment essentially proposes a complete freeze on local adoption or implementation of an affordable housing program for a year with the exception non-profit activities.  The future of this legislation is unclear at this point.

Arlington County has noted an appeal to the Court’s decision.  Anecdotally, the county has rejected three site plan applications since the decision for failing to provide community benefits.  The arguable missing benefit of each project is contribution to affordable housing. 

The possibility of direction from the General Assembly adds further uncertainty to the mix.  Finally, the pending notice of appeal raises the possibility of further direction from the Supreme Court of Virginia.  Thus, builders and developers can likely expect lack of clarity in this arena for an extended period of time.