Preface
Background
In the 2020 Regular Session of the General Assembly, legislators unanimously approved House Bill 854, which directed the state to begin this statewide study on affordable housing. HB854 was signed by Governor Ralph Northam into the Acts of Assembly (Chapter 482) on March 27, 2020.
The full text of House Bill 854 is available on the Virginia LIS website.
The bill directs the Commonwealth’s two housing agencies—the Department of Housing and Community Development (DHCD) and Virginia Housing—to “study ways to incentivize” affordable housing in the state. To accomplish this, HB854 requests these organizations to:
- Determine the quantity and quality of affordable housing and workforce housing across the Commonwealth,
- Conduct a review of current programs and policies to determine the effectiveness of current housing policy efforts,
- Develop an informed projection of future housing needs in the Commonwealth and determine the order of priority of those needs, and
- Make recommendations for the improvement of housing policy in the Commonwealth.
The bill also requires the study to consider recommendations for:
- A [new] Virginia rent subsidy program to work in conjunction with the federal Housing Choice Voucher Program,
- Utility rate reduction for qualified affordable housing,
- Real property tax reduction for qualified affordable housing for localities that desire to provide such an incentive,
- Bond financing options for qualified affordable housing, and
- Existing programs to increase the supply of qualified affordable housing.
When work began on this report, the agencies and stakeholders agreed to add two more elements reflective of the major societal and economic shifts of 2020:
- The immediate and long-term impact of the COVID-19 pandemic on housing needs, programs, and providers, and
- Efforts to address racial equity in housing across Virginia.
The original completion date for this study was the first day of the 2021 Regular Session. However, three days after signing HB854, Governor Northam issued a statewide Stay at Home order to limit the initial spread of COVID-19 in Virginia.
Lawmakers subsequently granted a 12-month extension to the report deadline following increased workloads of agency staff in response to the pandemic. This final report was delivered to the Governor and the General Assembly in December 2021.
Outline
This report is organized into five major parts, described below.
Part 1: Introduction
- Part 1 introduces the major concepts, frames, and terms used throughout the study. This includes why housing affordability is important and how it can be measured. In addition, Part 1 provides a brief outline of previous housing studies and public opinion of housing, along with descriptions of data and geographic housing markets used for analysis.
Part 2: Engagement
- Part 2 shares the outcomes of various engagement efforts conducted throughout the HB854 process. This included the convening of a Stakeholder Advisory Group (SAG) per the bill’s requirements, and numerous surveys, focus groups, and interviews.
Part 3: Research and Findings
- Part 3 describes the major demographic, economic, and housing trends impacting housing availability and affordability across Virginia. The report uses the most recently available data to make determinations about the current quantity and quality of affordable housing in Virginia. This part also provides an approximation of future housing needs and priorities, while acknowledging the impact of COVID-19 on projections.
Part 4: Analysis of Existing Programs
- Part 4 reviews the current successes and challenges of existing housing programs administered by the Department of Housing and Community Development and Virginia Housing. That analysis informed the development of recommendations for sustaining and improving these initiatives.
Part 5: Focused Topic Recommendations
- Part 5 covers the four new policy proposals outlined in HB854: 1) a state-funded rental assistance program, 2) real property tax reduction, 3) utility rate reduction, and 4) bond financing options in support of qualified affordable housing in Virginia. It also includes recommended strategies for addressing racial inequities in housing across Virginia.
Report process
Work on this report began in the summer of 2020 when DHCD and Virginia Housing assembled a Stakeholder Advisory Group (SAG), per HB854 requirements, to guide the study. Prior to the first meeting of this group, DHCD and Virginia Housing engaged HousingForward Virginia to serve as the primary consultant to help the SAG complete this report.
HousingForward Virginia (HFV) is a nonprofit, nonpartisan research and education organization dedicated to expanding housing affordability in the Commonwealth. HFV regularly supports housing studies throughout the state and helps train local government officials, nonprofit providers, developers, and other stakeholders on affordable housing issues.
The SAG first met in November 2020. Between then and October 2021, SAG members participated in dozens of meetings in small and large groups to review data, analyze program information, and make recommendations to fulfill the bill’s requirements.
In September 2021, HFV completed a full report draft. Following review by agency staff, the Secretary of Commerce and Trade, SAG members, and other stakeholders, HFV completed the final report in December 2021.
Table 1 lists the organizations and groups responsible for creating this study, along with each of their roles.
| Organization | Role |
|---|---|
| Department of Housing and Community Development | Virginia’s housing and community development agency. Provided staff support, expertise, and program data to support study effort. |
| Virginia Housing | Virginia’s state housing finance agency. Provided staff support, expertise, and program data to support study effort. |
| Stakeholder Advisory Group | Affordable housing experts and practitioners from across Virginia recruited to guide and contribute to this report. |
| HousingForward Virginia | Research and education nonprofit engaged to conduct and draft report. |
| Secretary of Commerce and Trade | Cabinet-level office responsible for final review of report. |
What this report does and does not cover
This study focuses on the effectiveness of state-level programs in addressing the Commonwealth’s housing needs. This includes the challenges those programs face and the need for additional programs to fully meet those needs.
There are several factors that impact housing affordability in Virginia that are not addressed in depth within this study. These topics include:
- Local zoning and land use regulations,
- Federal housing program design and eligibility,
- Economic and workforce development efforts, and
- Transportation policy and investments.
While these factors are important to consider, and are mentioned throughout where relevant, they were beyond the scope of this study.
Concurrent state housing studies
Several other state-level housing studies will also be completed in 2021:
- DHCD completed a report on accessory dwelling units (ADUs) in November 2021, as required by House Bill 2053 from the 2021 General Assembly Special Session I. This study evaluated ways the state might support ADUs as a “strategy to address the Commonwealth’s growing demand for affordable and market-rate housing.”1
- The Joint Legislative Audit and Review Commission (JLARC) recently completed “Review of the Commonwealth’s Housing Needs” as authorized by the Commission on November 16, 2020. This study also analyzed state housing programs, but it went beyond the scope of HB854 by assessing challenges local land use regulations present to affordable housing options.
- The Virginia Housing Alliance is conducting an update of its State of Supportive Housing Report, which will consist of an estimate of supportive housing demand for populations in need (excluding individuals with intellectual and developmental disabilities). This update will include recommendations to address the overall statewide supportive housing needs.