CHARLOTTESVILLE HOUSING FUNDING REVIEW CITY COUNCIL UPDATE 12/20/2021 HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 1 HR&A was hired to review the City’s affordable housing funding over the past ten years, and to inform an update to the City’s NOFA/RFP processes. COMPONENT II: INCLUSIONARY COMPONENT I: PROCUREMENT REVIEW AND REDESIGN ZONING PROGRAM DESIGN TASK 1, PROGRAM REVIEW TASK 2, PROGRAM REDESIGN • Review performance of City- Detailed recommendations for: funded projects and programs In parallel, as part of the zoning over a 10-year period • RFP/NOFA process redesign rewrite, HR&A is analyzing the feasibility and design of an • Create inventory of affordable • Selection and contracting Inclusionary Zoning policy. housing supported by City • Monitoring and reporting • Review existing processes HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 2 For Task 1, Program Review, HR&A’s methodology analyzes multiple metrics of funding impact. METHODOLOGY METRICS • Grant recipient • Thorough review of City documents, including • Unit creation and households served grant agreements, NOFAs, RFPs, reporting • Project delivery and completion documents, email exchanges, etc. • Project cost and cost efficiency • Property ownership and transfer • One-on-one interviews and data • Target affordability level and duration requests/reviews with nine major nonprofit • Program income beneficiaries • Verification of demographics: race and ethnicity, household size, presence of children, disability, • Compilation and verification of project inventory verified income, city residence or work status • Project performance: cost overruns, cancellation, • Targeted follow-up unplanned outcomes Items in progress HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 3 Initial Summary Statistics | Since 2010, the City has administered $46.7M to support affordable housing, drawing from local and federal funding sources. Total Administered Funding 2010 - present CDBG/HOME Housing Trust Fund and $2,920,628 Capital Budget $38,623,967 General Fund $5,185,260 HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 4 Initial Summary Statistics | Nearly half of housing funding has gone to housing development, with an additional 40 percent to housing programs. Types of Grants Total Spending by End Use 2010 - present Program 40% Operating City 11% Administration 2% Development 47% HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 5 Initial Summary Statistics | 95% of City funding was concentrated in grants to the largest 11 recipients, who provide a range of housing services. Total Funding (and Cumulative Share of Funding) by Recipient, Largest to Smallest 2010 - present Operating Program Development $12,000,000 $5.9M of PHA development funding was for Friendship Courts project $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 6 Initial Summary Statistics | On an average per-unit basis, public subsidy for new construction ranged $20K – $45K, and rehab ranged $3K – $25K. Average Cost Per Unit and Number of Units, by Development Project Type and Grantee 2010 - present $50,000 SF NC SF Rehab SF Retrofit MF NC MF Rehab MF Retrofit $45,000 CALM Habitat for Humanity NOTE: Cost per unit is only one of many important metrics. $40,000 TJCLT It is driven by factors such as depth of affordability, Cost Per Unit PHA $35,000 Virginia Supportive Housing location, and type of work (e.g., land acquisition, horizontal infrastructure development, vertical development). Many of $30,000 Virginia Organizing the grantees use these funds for both “hard” and “soft” $25,000 costs, from labor and materials to design services. CRHA CRHA JABA PHA $20,000 Community Services Housing $15,000 AHIP $10,000 LEAP $5,000 JABA $0 0 100 200 300 400 500 600 700 Number of Units HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 7 Initial Hypotheses | HR&A is reviewing areas to improve performance for both the City and nonprofit funding recipients. The relevance, significance, and prevalence of the issues below require further project-specific investigation. List of Potential Issues - Funding that was authorized by City was not spent or followed up on - Projects are incomplete or significantly delayed; units were not built - Properties located outside of City did not leverage regional funding - Need for better reporting and monitoring requirements to track key information, e.g. program revenue, property ownership, detailed project status, etc. - Demographics of LMI households served do not reflect City’s goals of anti-racism and redressing longstanding racial disparities - City-led processes (e.g. permitting, contracting) contribute to delays or uncertainty - Measures that protect City and public interests (e.g. recapture provisions, requirements around affordability depth and duration) are not consistently in place HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 8 Next Steps for Task 1, Program Review HR&A Tasks Ongoing program review following Council inquiries December 20, 2021 Update to Council Continued follow-up with non-profits to receive and verify detailed reporting; continued iteration with City Staff to surface concerns By January 28, 2022 Final Component I Memo containing findings of program review HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 9 Next Steps for Task 2, Program Redesign HR&A Tasks Ongoing review of NOFA process and RFPs By January 28, 2022 Final Component I Memo containing detailed draft recommendations for program redesign: • Overall structure and process map • Scoring criteria, including organizational capacity, project financials, and mission/impact • Reporting and monitoring processes Additional Steps: Incorporate recommendations into formal NOFA/RFP documents Staff recommendations on funding allocations and priorities Council approval Formally issue NOFA/RFPs Establish capacity and governance to review funding applications HR&A Advisors, Inc. CONFIDENTIAL DRAFT FOR DISCUSSION Charlottesville Housing Program Review and Redesign | 10