Norfolk’s shortage of affordable housing is growing. Study recommends trust fund.

NORFOLK — For the second time in eight years, a comprehensive housing study has yielded the recommendation for Norfolk to start a housing trust fund in order to create and preserve more affordable housing.

But City Council members didn’t enthusiastically jump at the idea. Instead, they had some other thoughts on how to bring down the cost of living in the city.

“Your challenges far outweigh the resources available,” said Phillip Kash, a consultant with HR&A Advisors who presented the final findings of the most recent housing study at Tuesday’s City Council work session.

Though the city’s various housing programs are generally well-run, they are smaller than what is needed, according to Kash.

“We have a shortage of affordable rental housing and it’s dropping,” Kash said.

He said housing costs are on the rise sometimes because of improvements and sometimes because landlords know they can increase rents.

Norfolk’s most dire shortage of rental units is for those making less than $35,000 a year, which is about 3 in 10 city households -— about double the rate of neighboring Virginia Beach. The city is short about 6,800 units for these households and short another 4,600 units for households making less than $20,000 a year, according to the consultant’s comprehensive study.

Establishing a housing trust fund would mean dedicating a pool of local money to affordable housing, according to Kash, who did not make any recommendations for a specific dollar amount during his presentation.

The idea is not new or unique to Norfolk. Richmond established its own housing trust fund in 2004 and Virginia has a state fund . Kash said the advantage of the trust fund is that the money is more flexible than federal funding, such as the often used low-income housing tax credit, and helps build capacity for nonprofits who would be more willing to expand or invest more in Norfolk if they knew there was a pool of money dedicated to the issue.

A previous study completed in 2016 also recommended Norfolk establish a housing trust fund. At Tuesday’s work session, council members voiced a variety of concerns around affordable housing, but there was no obvious excitement around establishing a housing trust fund.

Councilwoman Andria McClellan said if the city were to set one up, Hampton Roads Ventures should put forward money to the effort. HRV is a community development fund.

Councilman Tommy Smigiel voiced concern about the city’s middle class. He said zoning constraints and municipal red tape cause costs to rise for residential developers.

“I think there’s some other things we need to work on as a city to make it a little bit easier to make the process of providing affordable housing easier,” Smigiel said.

The city’s growth is stagnant at 1%, compared to the region’s 6% growth between 2010 and 2020. The total number of units built in the city has steadily dropped each decade since the 1970s, when almost 8,300 units were built. Between 2010 and 2019, only 2,170 units were built, according to the study.

“The majority of housing investment is occurring in a few neighborhoods, while many other neighborhoods continue to experience market-driven disinvestment and decline,” the housing study says.  Some of the neighborhoods with the most growth include East Ocean View and around Old Dominion University.

Councilwoman Mamie Johnson said she has tried for years to get developers to look at other areas to develop, such as her ward, which spans mostly east of Tidewater Drive from East Little Creek Road down to around East Virginia Beach Boulevard, yet they have been hesitant.

“We’re trying to change that and it starts with me to get developers so they can have an opportunity to see everything that is offered in the city of Norfolk and not just where they are used to building,” she said.

She also voiced concern about making sure middle class families are able to stay in Norfolk and investing in those areas.

“But if we’re not careful, those neighborhoods that have withstood the test of time will become tipping points and we’ve discussed those and once those communities become tipping points, it’s extremely difficult to bring them back to where we need them,” Johnson said.

Councilwoman Courtney Doyle said the city should also focus on landlord outreach to connect and deal with “unbelievably reckless” landlords who are irresponsible with their properties.

“I know we only have so much room over that landlord who owns their own property but I think if we could do more to really make it difficult for those landlords to be as dismissive as they are,” she said.

Doyle also said the city should accelerate its program that auctions of properties the city has seized for unpaid property taxes.

“We have a lot of properties that are just sitting there,” she said.

In addition to recommending the establishment of the housing trust fund, the report also included a five point strategic plan for the city’s office of housing and community development to accomplish through 2028.

Norfolk has the most diverse stock of housing in the region, including the most variety in number of bedrooms in rental units, and most of its affordable housing is not income-restricted. But the city is also a regional concentration of poverty, with pockets of poverty within the city itself. A draft report required by a federal department every 10 years found that segregation patterns in Norfolk public housing still exist almost 100 years on .

“There is an improvement on where new affordable housing is being developed,” Kash said. “You still, of course, have a legacy of of historic affordable housing in areas of concentrated poverty.”

Deconcentrating poverty is also a focus of the council’s, as several members mentioned and lauded the remaking of St. Paul’s and the Tidewater Gardens overhaul.

The issue came up Tuesday as the council considered a request from the Norfolk Redevelopment and Housing Authority to approve $56 million in bonds to cover in-unit renovations at three Section 8 housing complexes. The council was asked to approve the funding as NHRA had to act as a pass-through entity for the funding.

Standard Communities, a national affordable housing developer, has 260 units of Section 8 housing across three complexes: Lexington Park on Tidewater Drive, Oak Park Apartments on Berkeley Avenue and Colonial Hall Apartments on Colonial Avenue.

Steven Kahn of Standard Communities stressed no one would be displaced and rents would not rise unless the resident earned more money, which is a condition of the federal program not a decision by Standard.

Concerns around the City Council table revolved around the impact of doubling down on areas of concentrated subsidized housing and members chafed at the rigidity of the conditions for the federal funding. But the City Council voted Tuesday to approved the measure for the funding.

Ian Munro, 757-447-4097, ian.munro@virginiamedia.com