The monthslong wait was over for Harrisonburg City Council as it was presented with the key findings from last year’s comprehensive housing study during Tuesday’s meeting.
Consulting firm Mullin and Lonergan Associates Inc. presented the findings to council and then answered questions from the elected representatives.
The report, which will be finalized at the end of the month, includes recommendations for how the city can decrease housing strain, data about housing stock, the college student impact and local wages.
Thousands of Harrisonburg households live in homes unaligned with their income level, resulting in a “housing mismatch” as high-income residents living in lower-cost housing cause more strain on an already tight supply of affordable housing.
“Higher-income households have greater choice in the housing market as result of having more income available. However, when higher-income households reside in lower-cost housing, they are effectively squeezing out lower-income households,” Jessica Lurz, housing and community development specialist at Mullin and Lonergan, said at the meeting.
Harrisonburg’s rental vacancy rate is between 2% and 3%, where a healthy rental vacancy rate is between 5% and 7%, according to Mullin and Lonergan staff. Nearly two-thirds, 62%, of Harrisonburg’s housing market is comprised of renters.
The large number of students in the city impacts rental housing stock, according to the report.
“Demand for off-campus rental units to accommodate college students exerts upward pressure on rental rates, at times, pricing out nonstudent households,” Lurz said.
Between 2010 and 2018, 37% of population growth was college students, who also inflate the city’s poverty rate to 28%, according to the report.
Discounting students, the poverty rate in the city is 14% — compared to the national poverty rate of 10.5%, according to the most recent data from the U.S. Census Bureau.
The top recommendation from the study is for the city to hire a housing coordinator, and the second recommendation is to attract good-paying jobs and provide workforce training.
The city’s net employment growth occurred in low-wage jobs between 2010 and 2019, according to the report, resulting in even more demand for lower cost housing, which the city already lacks.
“The cost of living in Harrisonburg is rising faster than wages and income, and the growth in low-wage jobs increases the demand for affordable housing,” Lurz said. “But the cost of housing development are rising as well, requiring even more subsidies for the housing to be affordable. So, it’s this vicious cycle, and the thing is you can’t build your way out of an affordable housing challenge.”
One idea various local activists have spoken to council members about before the report was finished is the creation of a joint housing trust fund, to which the city and county would invest $750,000 annually.
Housing trust funds, once begun by localities, receive public funding and private donations to promote affordable housing, according to the Housing Trust Fund Project, a group that provides information about the initiatives.
Mayor Deanna Reed asked why the recommendation for a housing trust fund was placed 15th out of 17 priority actions that Mullin and Lonergan advised.
Consulting firm staff said the benefits of the other recommendations could provide a framework and stability for an effective housing trust fund to be eventually enacted, if council chose, but the current economic situation locally, statewide and nationally strains budgets that would have to be used to support the fund.
A third recommendation is to do a public education campaign about public housing, and the fourth is to prioritize resources for affordable housing initiatives, according to the report.
Other recommendations include waiving fees for new affordable housing and a tax abatement for new affordable, multifamily developments over the next decade, and to adopt a policy for affordable housing locations. Tax abatements are a reduced level of property tax that increases until reaching standard levels, according to PropertyShark.com, a real estate data website.
“Cities can expect to break even when they grant tax abatements if the amount they forego in tax revenue from the new development is exceeded by the tax revenue’s increase cost by the new housing’s economic impact in terms of tax revenues generated,” Lurz said.
City Manager Eric Campbell said the data and recommendations will help city staff and council develop a “roadmap to a stronger housing policy.”
In 2020, council frequently expressed a desire to wait for the results of the city’s first of its kind study before taking action on housing initiatives.
“The housing [situation] over the next 10 year is going to decay” if nothing is done, said Councilman Sal Romero, citing previous and projected growth trends.
In other business, council approved the request from Christian Light Publications for two special-use permits for the company’s expansion.