In a landmark decision for local developers, an Arlington court ruled Friday that the county must rethink how it enforces its affordable housing guidelines. The decision comes after development company Kansas-Lincoln and two real estate organizations filed suit against the county, claiming it has used the guidelines as hard-and-fast rules for construction and renovation projects.
Arlington adopted its housing guidelines in April, responding to a major shortage in affordable housing due to the rising cost of rents and land in the county. The guidelines state that 10 percent of the space within any development project that requires the county's approval should be earmarked for affordable housing units. The county considers housing affordable if it can be rented by a family making 60 percent of the county's median income, roughly $60,000.
Developers who want to avoid including the housing units in their projects, the guidelines state, were asked to make a donation into the county's affordable housing fund, money that is used to sponsor projects by non-profit groups to build low-cost housing. The guidelines themselves are only intended as principles outlining the priorities of the county government when it comes to new development and construction.
But developers, like Bob Bushkoff, property manager for the Dittmar Company, testified in court that county officials used the policy more like a law than anything else.
"The developers either put up the money or put housing in the site plans," said attorney Chip Dicks, who represented the developers. "If they didn't, they were told their plans would be deferred or denied."
Buskkoff also stated in court that if a developer could not afford to make a donation to the housing fund and could not meet the guidelines, county officials asked them to reveal sensitive financial information about their companies in order to confirm that they couldn't do so, making these financial documents part of public record.
"I just can't imagine that at the government level, a developer is expected to walk into the county offices with a spreadsheet and reveal that kind of information," Dicks said. "That whole process is not a valid one."
Kansas-Lincoln's partners in the suit were the Apartment and Office Building Association (AOBA) and the Northern Virginia Apartment Association.
"We just believe the county over-stepped its authority," said Mark Ingrao, AOBA's vice president of government relations. "Does this solve the affordable housing problem? No, and we still think it needs to be looked at, just in a way that is within the law."
Under the state government's Dillion Rule — which limits the powers local governments can exercise to only those specifically conferred on them by the legislature — Judge Joanne Alper found that the county's reach for affordable housing was beyond its grasp.
The suit also challenged an amendment to county's General Land Use Plan, one that referred to the guidelines as a governing policy.
"The court finds the guidelines and GLUP amendment invalid and illegal as they are beyond the scope of the county's lawful authority," wrote Alper.
County attorney Steve MacIsaac said no decision has been made on whether Arlington will appeal the ruling.
"We haven't decided that yet," he said. "The county remains committed to affordable housing. This case was really about the way those guidelines are used. The court said the guidelines can't be enforced as requirements and we agree with that. They are just guidelines."
He added that, "What we have to do is make sure they aren't used in a way that makes them mandatory. We're going to have to find a way to craft them."
Of the 50 site plans the county has approved by the county since 2001, according to Alper's decision, all but six developers who applied made a donation into the housing fund. That donation breaks down to about $4 per square foot of space. Kansas-Lincoln owns property in the Rosslyn Ballston corridor that it plans to develop.
The cost to the company if it had followed the guidelines, revealed in court documents, would have arrived at roughly $6.5 million. The guidelines, according to Dicks, leave many details to the whims of county officials.
"When Arlington County adopted the guidelines, it didn't do it in a way that limited the application of the policy to projects that generate a need for affordable housing," he said. "That's what state zoning laws require."
Dicks added that his clients are prepared to take the case as far as the Virginia Supreme Court if they must but said an appeal by the county is not likely because the court's ruling is solid.
"It wasn't like the judge held back," he said. "She agreed with every one of the issues we presented."
In 1989, 21,961 Arlington housing units were available to residents at rates between $500 and $749 per month, according to county statistics based on the 1999 U.S. Census. That number, ten years later, stood at less than half that at 10,690. Despite the ruling, both sides agree affordable housing has become a crisis in the county.
"These organizations are advocates of affordable housing," Dicks said of his clients. "They recognize that affordable housing is a problem in Arlington. They don't relish being involved in a lawsuit. What's at issue is that we need a consistent policy that is applied statewide."
LOCAL HOUSING ADVOCATES SEE the decision as a devastating blow to their cause.
"Everybody is going to have to retreat a bit and go back to the drawing board," said Douglas Peterson, executive director of the Arlington Partnership for Affordable Housing. "The non-profit groups and the for-profit business community are going to have to find a way to come together and solve this affordable housing problem. They need to address how this case will impact future development in Arlington."
The solution may come from the state level. Arlington has no bills addressing affordable housing on its legislative agenda for the coming "short session" beginning next month but it may in the future.
"No matter what the outcome, I think either side will seek a legislative remedy," County Board Chairwoman Barbara Favola said of the case during a legislative work session last week, prior to the ruling.