Set-Asides for Affordable Housing, Open Space Eliminated Due to 'Miscommunication'

Alexandria City Council eliminated the mechanism of set-aside funding for affordable housing and open space acquisition when it adopted its fiscal year 2014 budget last week in a move that is being chalked up to miscommunication between city staff and council.

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“If this was a misunderstanding or miscommunication, we still have a chance to go back and fix it,” Mayor Bill Euille said Friday. “We’ll have more conversations about this at Tuesday’s meeting.”

The city takes a percentage of the real estate tax rate for both affordable housing and open space funds. 

Throughout budget work sessions, some councilmembers expressed a desire to move away from dedicated funding mechanisms, saying they hamper council’s ability to set priorities and elevate certain issues above others.

However, councilmembers on both ends of the set-aside issue said there was no definitive decision to do away with them.

Following a final add-delete session on Monday evening, council entered chambers to adopt the budget. Each member read one or two of the multitude of ordinances that must be approved for the budget to be adopted.

“These ordinances were presented and handed to me by staff to hand to members to read,” Euille said. 

Councilman Paul Smedberg went first, reading the ordinance related to the real estate tax rate.

According to the minutes of Monday’s meeting, the following language was included in the ordinance:   

Beginning, July 1, 2013, the sum of six tenths of one cent ($0.006) on each $100 of assessed value of the real property tax rate will no longer be dedicated for affordable housing purposes. The city will continue to pay budgeted debt service on affordable housing bonds.

In addition, the sum of three tenths of one percent (0.3%) of total real property tax revenue will no longer be dedicated to the Open Space Trust Fund. The City will continue to pay budgeted debt services on borrowing that has occurred for open space purposes.

All seven members of council voted for the ordinance. When the meeting minutes were distributed later in the week, Vice Mayor Allison Silberberg said she was shocked at the language eliminating the set-asides. 

“These are long established funds that have made a difference in our city and help us achieve our strategic plan,” Silberberg said Friday over the phone from Dallas. 

City staff told Euille Friday they were under the impression council wanted to eliminate the set-asides, the mayor said.

“I didn’t know it was coming ahead of time. Staff put it in the motion,” said Councilman Justin Wilson, who along with Smedberg and Councilman Tim Lovain is opposed to set-asides as a practice. “Staff responded to points made in budget work sessions.”

Council is scheduled to discuss the city’s action plan for housing and community development on Tuesday night. Councilman John Chapman said the set-aside for affordable housing is “integral” to the plan.

“It gives us funds every year to implement that master plan,” said Chapman, who believes it’s not the right time to eliminate set-asides. “Otherwise it’s left up to the whims of budget season. …This is all sort of start up money that gets us off the ground in terms of implementation.”

During FY 2014 budget discussions, council decided not to go above the six-tenths of one cent on each $100 of assessed value of the real property tax rate for affordable housing. Council did approve an increase of $174,235 for affordable housing in the general fund. 

Councilman Tim Lovain said the elimination of the set-asides is not a huge deal, but he wished there was a final work session to get another look at everything before it was approved. Other councilmembers expressed a desire for more work sessions related to the budget.

“The process broke down, but it doesn’t mean there will be any less funding,” Lovain said. “A lot of this goes to debt service… It’s symbolic at best.”

This year’s budget planning process was the first time City Manager Rashad Young had participated from the get-go. He started the job in the middle of the FY 2013 process. This year, the city also had several new personnel in the budget office, including a new director.

Euille said council can bring the ordinance back for discussion. Council also must codify the ordinance in June.

Silberberg, who wants to keep the set-asides, will miss Tuesday’s meeting to attend to family business in Texas.