Fairfax County could lower income ceiling of for-sale workforce housing policy

In the future, people who earn more than Fairfax County’s median income will likely no longer be able to buy workforce housing.

A task force recommended to the Board of Supervisors housing committee on Tuesday (Nov. 28) that the top income bracket be dropped from the Workforce Dwelling Unit (WDU) Homebuyer Program, which currently provides price-controlled townhouses and condominiums to people who make 80% to 120% of the area median income (AMI).

Building on a revision of the county’s rental WDU program in 2021, the task force proposed dropping the 120% AMI tier and adding 70% AMI households — which are already offered at some properties — as part of a general policy overhaul intended to make the homebuyer program more efficient and effective.

“The recommendation that came out of the task force was really to reset the program and shift everything down by a third,” Anna Shapiro, the county’s deputy director of real estate finance and development, said. “…It was recognized that there is a financial impact to resetting the program, but it would be balanced by the predictability of having the policy reset in a way that developers understood going into the program what they’d be required to do.”

Initiated by the Board of Supervisors in February, the 13-person WDU For-Sale Policy Task Force included county staff, residential developers, affordable housing advocates and other industry experts. With help from the consultant HR&A Advisors, it met from April to October to evaluate the existing program, research best practices and develop recommendations for improvements.

Right now, the county grants residential developers bonus density if they designate at least 12% of all units as affordable or workforce housing, except in Tysons, which has higher requirements. For WDUs, the countywide policy requires that 4% of the total units target each of the 80%, 100% and 120% AMI tiers.

According to Shapiro, the 120% AMI WDUs are more difficult to sell, staying on the market for 419 days on average — almost twice as long as even the 100% units, which average 235 days. In comparison, units at 70% and 80% AMI sell in around 74 and 104 days, respectively.

In general, the county’s supply of for-sale WDUs is limited, but of the 12 units for 120% AMI that have been produced, 42% remain unsold. The lack of demand reflects stronger competition from market-rate housing, Shapiro explained, noting that 46% of the homes sold in the county since 2020 are affordable to those in the 100-120% AMI range.

With developers shouldering the cost of any unsold units, they have shifted toward units aimed at lower income levels during proffer negotiations, where the county can set conditions for a project’s approval.

“There is a huge demand that we see for units below 80% AMI, so we really wanted to see how we can serve that population better,” Shapiro said.

In addition to adjusting the AMI range, the task force recommends requiring that the number of WDUs with three or more bedrooms be proportional to the number of similarly sized market-rate units.

“If you then produce a lot of two and three-bedroom market rate units but then a lot of your WDUs are one-bedroom or studio, it’s really an equity issue as well as a marketability issue for the property,” Shapiro told the committee.

The task force also proposed expanding the WDU for-sale policy to all sites zoned or planned for medium or high-density residential development, defined as eight or more dwelling units per acre.

According to county staff, the expansion would create relatively limited but still valuable opportunities for workforce housing, particularly in the central and southeastern parts of the county. Board of Supervisors Chairman Jeff McKay asked for an estimate of how many units could potentially be added.

“Just to expand it to expand it without any idea of what we’re actually talking about concerns me a little bit,” he said.

Other recommendations are more focused on administrative changes, including tweaks to how the county calculates both initial and resale pricing for WDUs.

While the board generally seemed impressed by the task force’s work, some supervisors questioned whether the 100% AMI tier should also be eliminated to encourage more units at lower incomes, possibly even down to 60% AMI.

“If that number is reduced, we can serve even more people,” Mount Vernon District Supervisor Dan Storck said. “The core of what I think the county’s responsibility is [should be] to support folks at the lower income level first and help those folks build that generational wealth.”

Shapiro noted that 60% AMI households can utilize the county’s Affordable Dwelling Unit (ADU) rental program, which has two tiers for households earning up to 50% and 70% AMI.

Even though the county’s AMI has climbed to $152,100 for a family of four, residents at that income level or lower could only afford 28% of the homes sold between 2020 and 2023, according to sales data collected by HR&A Advisors.

“That’s a lot of people,” Fairfax County At-Large Planning Commissioner Candice Bennett, who chaired the task force, said. “…This is actually, oddly enough, the ‘missing middle.’ So, think about the three out of four people that we are not able to serve because the market is so astronomically high.”

The Board of Supervisors is expected to endorse the task force’s recommendations, potentially as soon as its meeting next Tuesday (Dec. 5). From there, the board will direct county staff to draft a comprehensive plan amendment revising the WDU for-sale policy.

Image via Google Maps