Housing Advisory Committee Policy Subcommittee (HAC)   3/30/2022

We're going to give folks a few minutes to join.

Just giving folks a few more minutes to join.

I'm expecting Phil, so we'll at least also wait for him.

I feel like I should be doing something to fill this awkward silence, but I'm out of jokes and I'm not a very good singer, so we might just have to sit here and stare at each other.

Always a pleasure to stare in your direction, Rich.

I saw your nose grow just a little bit with that one.

What do we think?

Or should we jump in?

No.

Just go ahead and get started.

I got Emily saying, yep.

OK, let's get started.

I don't know if we officially have to call a policy subcommittee meeting to order.

But if we do need to do so, I will do it now.

This meeting of the policy subcommittee

Work Session is now in order.

I am going to jump right in and share my screen, and that will show the agenda of what we'd like to cover today.

I think for some of us, this is going to feel a little bit like Groundhog Day.

We seem to be revisiting topics, but hopefully we can bring these in for a landing.

And so here's what we're going to cover today.

Whoa.

A brief overview of some provisions that allow the city to create programs for partial income tax exemption for low income homeowners and the landlords renting to low income tenants.

It's going to sound familiar.

The deferral of real estate taxes for low income homeowners and landlords renting to low income tenants, which is a topic we've never discussed before,

But this is really triggered by concerns about both the increase in assessments that people have experienced and the potential increase in the real estate tax rate.

So there is actually a provision of Virginia code that might allow us to address some concerns around those two items.

So we'll talk about that, but that will be a new topic.

And then reduction in assessments and thus lower real estate taxes for landlords renting to low income tenants.

This, as you all may recall, for those of you with long institutional memories, is a discussion that we had a couple of years ago about naturally occurring low-income rentals and trying to help those landlords who rent low-income tenants lower their tax assessments and thus their real estate taxes through a provision of the code.

And I thought it was time to revisit that, to put that tool back in our toolbox.

After that brief overview, we'll discuss the documentation that we think an applicant would need to produce to qualify either as a low-income homeowner or a landowner renting to low-income tenants.

This is where I would like to spend our time today, which is like all of these rules require us to verify that someone is either a low-income homeowner or renting to a low-income tenant.

What do we want to use to verify that information?

And then we can build a program around that verification.

And then as time allows, we can go into some more detail about the particulars of these various programs.

But I really want to get to the certification because that was what was of great concern to staff is like literally the administration of the program, who qualifies and how do we prove that?

Okay.

So just to remind everybody, you know, there are affordable housing plan that city council adopted.

said we should be using all the tools in the toolbox to try to create affordable housing, affordable rentals, and we also want to create wealth for low-income homeowners.

And that has been the common thread through all of these discussions that we've had on these policy recommendations.

I'm going to run through a couple, these four statutes briefly.

We can go into more detail if you'd like, but

The first is what we have been talking about since Jason Vandiver, the city treasurer, brought to our attention the fact that we have an ordinance in Charlottesville that already is implementing this particular statute, but maybe it's not aimed in the right direction.

So this is what gave rise to this discussion, which was the program that the city currently has authorized by statute

that allows a city to provide a partial tax exemption for real estate on which a structure 15 years or older is built that is, or where there is a structure that is 15 years or older that has undergone substantial rehabilitation, renovation or replacement.

So that's what we've been talking about since really in depth last September, developing that program.

So that's familiar to us.

We've been talking about it.

There is another section of Virginia Code brought to my attention by the lawyers at the city that said, yes, there's one provision that allows you to provide a partial tax exemption for this class of folks if they've made improvements to a property that's 15 years or older.

But there's another statutory provision that says it can be any

New structure or improvement in a designated zone of the city that is used for these particular purposes.

So we could look at expanding what we were talking about previously and not just limit the partial tax exemption to homeowners who own property that is 15 years or older, or renovate properties that are 15 years or older for purposes of renting them out to tenants.

So this would allow us to take that same idea that we've been kicking around, but instead of basing it on the age of the structure, base it instead on the location of the rehabilitation or improvement.

There's another section of the Virginia Code that allows the city to adopt an ordinance that would allow folks to defer increases in their real estate tax bill.

So

The code says that if a city can adopt an ordinance that says that if your real estate tax bill has gone up more than 105%, so a 5% increase from what you paid the previous year, the city can adopt a program that says you can defer some or all of that increase until the property is sold or transferred.

So that if your assessment goes up and your taxes therefore go up, the city could adopt a program that says

We're gonna wait to collect that increase in your tax rate or your tax amount, not your tax rate, your tax amount.

We'll defer that until you sell your property or otherwise transfer it.

So it doesn't exempt the tax, but it does say, you know, we'll hold that off until later.

What all of these programs have in common is a requirement

that we determine the income of an owner occupant who we are determining is low income for purposes of accessing, you know, getting access to these programs or a partial tax exemption or alternative assessments for landlords renting to low income tenants.

So the question for us right now is what would we want to use as

Verification that someone is either a low income homeowner or is renting to a low income tenant.

So that is the big question for today.

And then we can go into details about the programs and how they might operate.

But establishing this kind of then lays the foundation for how these programs would work, you know, in actuality.

Yeah, I'll just kick it off with an idea, which essentially is that, you know, verifying, assuming this has some scale to it, it's going to require, you know, staffing and expertise to be able to do it or hours of staff time plus expertise.

The city is not in a position to do that now.

And we don't quite know where, when they will be.

So if we wanted to pursue something like this, it's not uncommon for jurisdictions to contract out to organizations who do this on a regular basis.

That could be Newhill, that could be Piedmont Housing Lines, that could be Habitat, that could be any number of organizations that already do income qualification on whether it's homeownership related or rental related.

I think the simplest version is then also to, is to contract that out frankly, and then secondarily to align it with preexisting verification structures.

So for example, you know, the verification for a LIHTC project for a rental, you know, rental applicant or the verification of, you know, through like what we go through through a down payment assistance program that requires that the homeowner

in that case be income qualifying.

Yep.

I just wanted to ask.

Can you give us some specifics?

Because I think it makes sense to go with pre-existing requirements as long as those requirements are not over the top, are not so onerous that people are then scared off from applying.

And I know that in my own work with federal programs, they sometimes over require in order for people to take advantage of benefits.

And so if you could give us some examples of like if you have owner, you know, like down payment qualifications, what does that look like?

Yeah, I would, to some extent, I think we would need to take that conversation to the staff, my staff who have expertise in those particular areas, but I will say just at a larger context,

You know, I 100% agree that there are certain requirements.

Let's just use the down payment assistance program as an example.

It does not make sense in that particular context to verify and underwrite their income, whether they can qualify for a loan like that doesn't make any sense in this context.

All with a primary purpose here is to go through their, their income, their income documentation, and confirm that they meet the income guidelines.

In the case of a rental property, there are also, as you point out, there are probably some things that are just not directly relevant, for example, or maybe they are directly relevant, but like in the case of a rental property, there is both an income qualification process, but there's also an asset verification process, meaning if there's a certain threshold of assets they have, then that impacts potentially their qualification on the rental side.

So that may or may not be a criteria that we think is applicable in this particular context.

Yep.

Yeah, my main concern would be the bureaucracy of it and making sure that it is tailor made for what we want to do here.

making sure that this also is not just geared towards people who are already in these particular programs who we decide to contract out to.

So that if someone who is not a client of PHA or another nonprofit but qualify because of their income, there is a process for them as well.

My thing is to make sure this is as

unencumbersome to the person who wants to benefit from them.

Not a lot of bureaucracy, because I thought that in the beginning, when we started talking about this, PHA had actually volunteered to do this.

I may be wrong, but I thought that they had volunteered to do this.

Now we're talking about contracting things out.

I would just want to make sure everything is spelled out before I vote to approve moving forward with any of these.

And when we're talking about staff,

Yeah, thanks for that.

I echo that balance that we always have to strike between making sure that people qualify without making the

The qualification is so onerous that people just give up and leave benefits on the table.

And I think there's just a, there's a fine line.

You know, we're talking about, you know, taxpayer money.

And so you want to be, you know, fiscally prudent.

On the other hand, you don't want to deny people benefits just because they cannot get access to, you know, 12 months worth of pay stubs or whatever the case may be.

Yeah.

I think,

It's important to consider that these programs we're talking about here aren't the only programs that we'll need to do this sort of verification for.

As we do the zoning rewrite and what the comp plan is called for, there should be, in theory, a lot more inclusionary zoning required, affordable units, where right now we have more or less two in 600 West Main.

We'll get a few more from Dairy Central.

In theory, that will be ramping up pretty significantly in coming years.

And those are going to have to do the same sort of income verification.

So if we outsource at all, are the landlords who build these new buildings, like 600 West Main, for example, going to then forward these applicants' income information to this nonprofit we're contracting with?

And I think the most important thing is that the information we're asking for and the process to do it needs to be standardized across all these things.

Yep.

And Rory, that is kind of where I'm trying to go with this is like,

All of these things have a similar requirement, which is that either you as a homeowner or owner occupant have to verify that you are low income, or you have to verify that the tenant you're renting to is low income and that you have additional requirements to show that you're charging an affordable rent.

But just looking at the income verification for both these programs, creating a uniform system where whichever one of these benefits you're trying to access, it's the same application

income verification process is where I'm trying to go.

So you're exactly right.

And just trying to hone in on what does that look like.

Just as a note, the city of Richmond runs one of these programs, which is the districts that allow partial tax exemption for improvements in new structures.

And in that case, it is the applicant who needs to provide the verified information.

There's not another third party involved.

It's just the applicant under some criminal penalties for falsehoods.

So that's how they go about.

They're like, hey, applicant, landlord, applicant, you are free to apply, but you've got to provide us the information.

We're not going to go out and grab it.

We're not going to do our own independent verification.

You send us the required documentation.

You verify that it's true and accurate.

If we find out that you were lying, it's a class two misdemeanor.

but otherwise the obligations on the applicant to provide the information that we require.

So one thing that might be helpful

All the talk about we don't have the capacity to scale this or whatever notwithstanding, we do have about 650 people enrolled in CHAP and about 350 people enrolled in real estate tax relief now.

So presumably, Mr.

Divers, who I see is on the call in the attendees thing and is now raising his hand if we have some ability to promote him, is somehow doing that at a pretty large scale.

While we're waiting to get him connected, kind of tying into what Rory said, what are we currently doing for the tax abatement program that we were running and that this is kind of drawing from?

I mean, that was a process that was already in place.

What was that?

and I'm leaning more towards, which we have previously discussed, having the applicant have that ownership of providing their information and having them provide tax information, W-2 forms and go through that process, have the ownership on them.

So I definitely want to see multiple ways of doing this and tapping into how it's currently being done.

with some of the programs.

Do we have an answer to that, Rich?

So I don't know.

Well, there's a there's a we're we're doing because the previous

Yep.

So the partial tax exemption ordinance didn't have any income requirements.

It's just if you've rehabbed a building that was 15 years or older,

and there was a couple of other requirements, but there wasn't an income requirement.

So that's new here, but you're right.

The CHAP program and other city programs and Sunshine's work and the CRHA's work all has some form of income verification that is used.

And I think what we want to do is figure out which is the one that meets our needs most specifically.

and then apply them across all of these programs to the extent that we're allowed to by statute.

Mr. Traill, do you have free with us?

If not, Todd, I sent you an email with my invite link, so you can join with that link to get you in here.

You'll be named Rory Stolzenberg, but you can change your name from there.

Oh, I think he's joining with my list, with my link.

Ah, I see.

I know that for the four programs that I mentioned, the statute appears to be very permissive and allows the city to set up the system that they want.

At least as far as those four are concerned, I think we could have uniform standards.

There's not like another statutory provision that you have to say, and in addition, you got to do this or that.

Oh, no, no.

When my beard is completely gray, we'll have a system in place.

We're getting close.

There's Todd.

I am finally.

Let me preface this by letting you guys know that I am having terrible network issues this morning.

We had an update on something.

And in fact, it's making me dizzy looking at my self-talk about five seconds behind my lips.

So I'm going to turn my camera off.

OK. Yeah, I can answer a bunch of these.

As far as income verification and things like that,

For the CHAP program, we literally just look for FAGI.

We look for the federal adjusted gross income.

So if they give us their tax documents, we're good to go.

There's no net worth component for that.

For the elderly and disabled program, a lot of those folks don't file taxes.

And so the requirements are a little bit different.

We look at all sources of income.

So they bring in 1099s, 1099s, 1099 INTs, they bring in Social Security, some of which would probably be exempt under FAGI, but for this program it's not.

So we look at it all.

As far as net worth component,

They bring in bank statements.

They bring in everything they've got and we go through it.

And it's tedious and it's time consuming.

And in fact, it's one of the reasons, one of the things that I've put in in the budget submission this year is I'm wanting to merge those two programs and eliminate the net worth component

for the elderly and disabled program and just make this criteria similar, the same.

Same goes for the rental relief program.

We kind of do the same thing on that.

We go through, we look at all of their income.

The limit on that is $125,000 in net worth.

Frankly, most of the folks that apply for that program don't come anywhere close to that.

So we don't look too hard at net worth.

They bring a bank statement in.

There's usually not much there, so we don't spend a whole lot of time on that.

So I would like to Todd while you know while folks are thinking about potential other questions I would like to get a sense of the group whether for those people who file taxes the the previous year's tax assessment are we comfortable using that that the year before they were poor so we're gonna we're gonna say all right that's the qualification because that would obviously be pretty straightforward for those people who follow taxes I know that's not everybody

yeah but if we could if we could lock that down and say well it's it's your prior year's tax return if you don't have a tax return and we should encourage people to do that because they get the you know the low-income housing tax I mean they get the EITC but anyway and then for people who don't file a tax coming up with what do we want to see from them in terms of income you know is it is it

pay stubs from just the previous two months.

We look for 1099s.

I mean, if they got paid or W-2, you know, those are the things that we're looking for in the prior year.

And the prior year is fine.

Cause that's all you're going to get.

I mean, that's all you have access to.

Okay.

So that's, that's what we're looking for.

And, you know, we look at interest to, you know, like 1099 INT, if they got that in the mail, you know, we're gonna look at that.

You know, we look for everything.

Because, you know, a lot of people get paid off the books, you know, we least ask about it, you know, they've got, they got a renter in the basement or something like that, that's paying them rent.

will at least ask about it.

Yep.

So that's interesting.

And so then if you wanted to do, if you wanted to keep it simple, which is what we're gonna try to do when we merge the programs, we're gonna be looking for,

They're 1099.

We're gonna be looking for their federal adjusted gross income.

If they didn't file, we're going to come up with some approximation of that using the income information that they can provide and create some sort of formula that would exempt a certain proportion of social security income or things like that to try to make them as equal as we can.

I think that's reasonable.

The trick is you want to make sure you're getting household income because a lot of our CHAP applicants, for instance, if they file separately, the homeowner will bring in his tax return, but he'll forget to bring in the wife's tax return.

who lives in the same house.

And so that's not really fair.

So we want to see them all if they're there.

Yeah, I'm trying to get counsel.

I think they're going to sign off on it with this budget.

So they've got to appropriate some more money to allow us to do it.

And then we'll put it together.

I mean, I've got it kind of worked out in my head, how it's going to look and what we're going to be doing.

I'll have to obviously put it in an ordinance when the time comes later this year.

Well, I'll call on Rory and then Sunshine, but I do think it would be great, and this is back to Rory's earlier point, to try to create uniformity across these programs that as you build your ordinance for CHAP and the elderly and disabled, if your approach looks reasonable to us about income verification,

then we would just like to import that into these other programs, whether it's tax exemptions or inclusionary zoning or whatnot.

Yeah, I think that's perfectly reasonable.

I would like to be able to say, hey, I'd be happy to be the guy that processes these.

We don't have bandwidth.

We are strapped handling what we've got.

Well, I think the first order of business is just to figure out what it is.

What does it look like?

What would we be asking applicants to submit?

And if it's as straightforward as that, then

dictates what kind of staff bandwidth is needed in order to look at it and verify it, or certified, I guess is a better word to use.

Yeah, it's a good segue.

Todd, I'm just curious, in your experience so far, under the programs that you currently essentially oversee, how much staff time is effectively dedicated to the verification process?

And that's sort of a two-fold question.

The real estate for the elderly disabled program, it takes a ton of staff time because like I said, those folks don't have an income tax return to just show us.

So we've got to go through tons and tons of documents and it can take 20, 30 minutes per applicant to really do a thorough job.

Now, if they've applied in the past and we have an idea of what they're going to show us ahead of time, you know, that speeds things up, but for a new applicant,

and it's tedious and time consuming and it sucks a lot of my people's attention.

The CHAP program, it's a younger population, they file their taxes, they can just send in the return or they can even file it online with us and it doesn't take nearly as much.

We've got to audit things at the end, that takes some time.

The elderly and disabled program take a lot.

If you had to estimate how much staff, how many FTE equivalents, how would you characterize that?

So I'm trying to remember how many real estate applicants we get every year.

Yeah, I know.

okay all right so around 300 i mean it takes i've got three or four people out in my customer service area um at a time and they're doing that pretty much non-stop during the during the application period um you know which is mid-january to march 1st i'd you know three three ftes at minimum

Thanks, Corey.

Yes, actually, my question is pretty similar.

But the following I'd ask is like, so it sounds like the basic, like adjusted growth income, gross income for people who actually file is pretty easy, and possibly something you guys can scale if you have the space, but it's the the ones where you have to kind of reconstruct the income where it's difficult.

Yep.

percentage would you say, are in that second category?

And I don't know if you've read, you know, ridges materials or saw that earlier.

No, I think they'd be in the latter category, in the harder category.

I mean, so for the elderly and disabled program, if we say there's 300 applicants, almost all of them are going to have to be handheld.

I mean, we're going to have to go

and work through all the documents.

The CHAP program, almost all of them file taxes.

So today, what is our goal?

Is to discuss and to say, hey, we are all in agreement in moving forward.

This is a process that we would like for staff to see, similar to what Todd was just talking about.

And the second step is, okay, who's gonna implement this?

How's it gonna get done?

But first decide on,

Yeah, so from a policy subcommittee standpoint, there are really three steps.

Today, I want to make sure that we walk away either with an income verification plan or at least some process for developing quickly an income verification plan.

It sounds like to me what Todd has laid out is either completed tax returns or other government-issued tax information and understanding that helping people gather that kind of material is time-consuming.

But anyway, and I think if we walk out of here

with some ideas of what income verification looks like, then the next step would be to go into program elements and say, all right, we have an income verification system.

Who should be the beneficiaries of the various programs that we would like to advance to city council?

And then how would we actually implement them?

So the second step is, which of these programs do we want to advance to city council and who should be eligible for them?

And then lastly, how would we actually

implement the income verification system for the programs we've just said we would like to adopt.

Yep, so, and I, you know, I would like to hear from Joy, I saw her hand was up and then down.

Well, I know for the folks I work with in public housing, and some of the other surrounding community,

who have a hard time, because the application is very simple.

It's just getting the verification.

But what we do is we get, they don't have to send their W-2 because like you said, they don't have a W-2, but we get a year's printout from the landlord.

So are other people being told that, that they can get a printout from their landlord also?

I'm sorry, Rich.

I was just going to say we do that.

The rental relief program for elderly and disabled, that is a

It's technically a reimbursement for out of pocket rent expenses.

So we ask for a statement or in some cases, we ask for rent receipts to show what it is they exactly paid out of pocket.

And that's what goes into the formula, not the year's worth of rent.

And I appreciate the flexibility that Todd's program allows for.

Yep, and I just, if I could respond to Joy for a second.

So with rentals, there are actually two pieces of information that we need for people to qualify.

One is that the tenant themselves is low income, right?

So we need income verification of the tenant.

And then the second piece that landlords will have to provide is

and that they are renting at an affordable rate, which we, for earlier, in earlier iterations of these discussions, we said is 25% of their income as rent was our standard.

So they're going to require two pieces of information, but the first is, you know, is income verification of, in that case, the tenant.

And, and just pulling on that for a second and with Joy, not to put you on the spot, but

If we want to do income verification of the tenant, do you think that this idea that Todd is using, which is, you know, hey tenant, give us your W-2s or your 1099s or any tax document that you've received from the previous year that shows what your income is.

I think it's a mixture.

I have to agree with Lisa.

It's a mixture because I have, the elderly people keeps a lot of record.

They keep a lot of paper.

I had one lady that came in with a whole pocket book and just said, here.

And I had to go through it.

The younger folks can't find anything.

So W2s is something they easily can probably go back and find, I think.

I think all of the above of what Todd is recommending, but we just have to still keep in mind that, you know, some, like there are people at different levels, like as Lisa said.

So, and I do know that in the Rent Relief Program, our folks comes with their social security and SSI,

income verification, and we just assist them in getting the ledger from the housing authority to show how much rent they pay throughout the year.

It's a little harder though for folks who were in the section eight, right?

Well, just thinking on the income verification for a second, Joy, when public housing residents go in for recertification, what income verification techniques does that require?

Like, is that pay stubs?

It is required for you to sign off on a document that they sent to your employer.

and the employer fills it out and send it back to the housing authority.

But if the employer is very stubborn and is not willing to send it back in time in order for the client rent to get changed, then we ask them to bring in at least four check stubs.

No, go ahead.

I was gonna say what Joy is highlighting is that it's a little bit different in our context because we look at current income, not necessarily last year's income, which is what Todd is looking at.

Yep.

And so I'm wondering, this is to ask Lisa's point is whether there is, you know, there are alternative ways

that we can all accept, where if you've got your previous tax return, that's great, we're done.

If you don't, we'd like you to bring in the previous year's income statements that would have gone into your tax return had you filled one out, which would be great, because that's W-2s, that's SSI statements, that's 1099s, all those things.

If, as Joy says, people can't lay their hands on those documents that were sent to them

many months ago.

Either we need to go back and find them somehow, like re-request them, and I don't even know what that process looks like, or do we have an alternative for people who fall into that category like, well, then you need to give us your last two months or three months of pay stubs as our fallback mechanism.

Not to make it complicated, but to provide alternatives that are

that are accessible and don't deny benefits to people that actually deserve them, but takes into account the way people's lives are and the kinds of documents they keep and don't keep.

Yeah.

Well, like I said in the chat, we ask for stuff.

We don't always get it because folks don't have it.

But at the end of the day, like Joy said,

They have to sign a statement attesting to the validity of what they have provided.

You know, which doesn't say it's, it's pretty big deal.

We also have the luxury for those who do file taxes, we have access to the Department of Taxations, what they call ERM site, which we can look up tax returns.

if we need to.

We don't like to, but we can.

But that's not something that any, just any agency can do.

So that is a fallback if we need to.

Or, you know, if they've, once the thing gets established and they have applied in prior years, you know, then you know what, you know the ballpark they're going to be in, you know kind of what the cost of living increase they got from social security,

Yep.

So, you know, I mean, and I do think that ultimately, you know, having people affirm that what they provided is their, you know, is their entire, you know, story is, you know, what, you know, as ultimately what we're asking people to do,

But we would like some sort of documentation that goes along with that affirmation.

It sounds like to me that's what I'm hearing.

So easiest step is if you have a tax return, that's all we need and we're good to go.

I think I've heard from you all, but correct me if I'm wrong, that other asset information is kind of not, it's about what people are bringing in that they can use to then pay real estate taxes, for example.

And so your illiquid assets are kind of of no benefit unless we're going to make people sell their car or whatever other assets we're counting.

So it seems like we are focused on income.

And so your income tax return would be the best thing.

Tax documents that would have gone to an income tax return would be the next best thing.

But there may be this last alternative, which is give us your income statements

Paystubs, and even those are hard to get at when they're online only.

But anyway, as a third tier of documentation, but all of them would say, and I affirm that this is everything that I can think of.

And it sounds like to me, Todd, that you already do that when you can't get the documents you need, you get what you can.

And then there's an audit process at the end.

You know, if you had a little more time, you look for more things.

I wouldn't completely discount the asset component.

You know, there are without a doubt folks out there who have a big nest egg who will qualify on income.

And so you're making sort of a

a judgment call on whether or not it's worth the time and headache to verify those assets relative to being able to serve everyone else.

And that's kind of where we are in trying to combine the two programs that we have now.

For the most part, the folks that are applying for these programs that we have, the asset component never, for the vast majority of them, they never come close to

to having too much in the bank to rule them out.

Yeah, so I think this has been a useful and important conversation in terms of figuring out how to do this and how to scale it.

I like the idea of kind of relying on that attestation and just kind of getting the documents, but if we're having trouble scaling it, not necessarily having to do a rigorous check on each one and then kind of relying on the attestation and then doing spot checks if necessary, if we are very constrained by that.

But I'm going to suggest for the programs that we're talking about, some simplifications that might make this thing easier.

We have three programs we're talking about creating, right?

One is a deferral of real estate taxes that went up more than 5%.

Two is exemption for new structures and improvements.

And then three is lowering the assessed value of real property for affordable rental housing.

So for number one, if it went up more than 5%, I'm going to toss out there that maybe that shouldn't be income restricted.

Since we're getting the money back in the end, I feel like I'm not too concerned about giving that out broadly.

And you can put an interest rate on it, so it's not just a zero interest loan.

and that's gonna remove, I think, a lot of the burden.

Plus, I think there's an argument being made that, and we certainly counseled and hearing it a lot lately, even people at middle incomes might be cash strapped and struggling to deal with like double digit rise in assessment.

And again, since we're getting the money back in the end, I don't know that we need to be too concerned about exactly when we get it.

Then number two, for the new construction improvements, my guess is that people who are building new things or doing substantial renovations probably have filed income tax returns and aren't your very low income homeowners who are elderly or haven't filed, because they're putting up

Just to put one on that is it could be AHIP assisted where somebody else is making an improvement on behalf of a low-income homeowner.

Their now property is worth more.

Their income taxes, I mean, their real estate taxes have gone up.

So we do need to have some verification in there for people who are assisted with their improvements.

Yeah, no, that's actually a really good point.

And then the third one for the actual value of the assessment, my read of that statute is that it's not like a program.

It's saying that the assessor has to take that into account when they're creating assessments.

And that can be the subject for an appeal or something.

Am I right about that, Mr.

Jason and I were talking about that yesterday.

We were talking about all these, in fact.

That's just a requirement of the assessor to take certain information into account when they're making the assessment.

It's not really a program.

It would just be something that they have to do in certain instances.

If I can, the first program that was in the memo related to the, and Jason could probably speak to this if you guys are able to promote him, the deferral for a tax increase above a certain threshold, I think in the code it's at 5% or so.

I'm not, not to be the Grinch, but I'm not sure that is of a whole lot of value because the way I read that, that's for one year.

So if you're, you know, if the assessment goes up this year or next year, for instance, above the threshold, the taxpayer is going to save the difference

between, you know, let's say if it goes up seven, the difference between five and 7%, they're gonna save it for that year.

If the assessment remains the same the following year, that abatement doesn't continue, they've got to pay it next year.

And if it goes up 2% the year after that, they've got to pay it then as well.

So I'm not sure a lot of folks are gonna,

I mean, they might.

I mean, I don't know.

This year, there were a lot of increases significant.

But it appears to me at least that it's, you know, you're saving one year.

This is not, you know, I don't want you guys to have the idea that this is like in perpetuity that, you know, this gets held off and it has to be paid later with interest.

Yeah, I mean, that is a good point for sure.

I mean, I guess the advantage is that it kind of smooths out that increase.

And I mean, one other thing I note is, by my read of it, it's not just necessarily increasing its assessment.

I feel like if the tax rate goes up, which council seems to be planning this whole reconfiguration thing, that would apply too.

So it might be particularly relevant

over the next eight years or whatever as we do that because that's another 2% a year or whatever.

And I would wanna get clarification from the Attorney General's Office upon the reading of that previous year provision because other parts of the statute makes it sound like that there could possibly be multiple deferrals for a single

taxpayer, and that wouldn't make sense if it's only a one-time shot.

But you're exactly right.

That is what it says in the first paragraph.

And there are some, I'm sorry, Roy, go ahead.

Sorry, I was just going to say you can have multiple deferrals in that if it goes up, you know, if next year goes up 10%, $110, you can defer $10.

Right.

Then the following year, you still have to pay $110.

But if it goes up another 10%, you might still get some amount of deferral.

And there are some practical issues as well on this is how you administer this.

You know, whether or not the treasurer has to

go to the trouble of actually recording a lien against the property for an amount that in some cases is really not gonna be that much.

Yep, I just wanted to make sure that we were thinking about it as part of this income verification conversation, because if we did want to adopt a program, we'd still have to do the income verification, at least in my,

I mean, Rory has a different view on that, on the deferral question, right?

I was thinking similar along the lines of what you were saying.

I would like to make sure that we are, there are no other interpretations of that, the number of deferred years, if additional years can be added to that beyond the first year.

And I wouldn't take any program off the table.

because a one year could help somebody phenomenally.

Yep.

And that's why having a uniform kind of process, no matter which one you're applying for, makes that all much, much easier.

If all you need to do to defer your taxes

Even for a year is to provide your previous year's tax return.

If it is even income qualified, then that just makes life easier.

Jason, I see your hand up and you've been promoted to a panelist.

Thank you.

I think while you're looking at the deferral question that Roy brought up and Todd touched on also.

Todd and I noticed there wasn't anything specifically mentioned in that code section about

whether income restrictions could be placed on that program or whether it applies to everyone.

And we were kind of walking through that and deciding where do you set that interest rate?

If you set it too low, then lots of people might apply.

If you set it too high, it could be a deterrent to people applying.

Yeah, and I was concerned and I'm, you know, I'm not a real estate tax expert by any stretch of the imagination.

I wasn't clear whether or not other provisions of the code that requires kind of uniform assessments and uniform tax rates also apply to this section or whether we could carve it out to be a program that is income qualifying.

It just, I mean, I just don't know the answer to that.

And that would be another question.

And that's assuming that we would want to do an income qualification and, you know,

I would have to leave it up to you all at the city to say, does the cash flow matter?

If everybody was able to defer a year's worth of increases until the property were sold or transferred, yes, you're getting that money somewhere down the line.

But if I need that money now to pay salaries and benefits or whatever else, I just want to make sure that if you open it up too wide, it might actually have

some cash flow consequences, although I agree with you, the amount of money we're talking about probably is not great.

But anyway, that's why I, at least in my memo, suggested some income qualification for this so that we didn't unduly restrict the cash flow of the city that they're trying, which they're relying on, when all of a sudden everybody decides to defer.

Well, I would say there is some, you know, it does make it a little bit difficult, more difficult to kind of predict revenues.

Yeah.

Well, I see that we have a half an hour remaining

in our time together.

And I just want to close off, if you all think we're at that stage, the income verification portion of our show, which was, it sounded like where we landed was, at the end of the day, the affirmation is going to be key.

But we would, we want documentation to support that affirmation.

And so

a previous tax return, income information that would be generated for a tax return like a W-2, et cetera.

I just had one other thought about that.

There's a process question like whether a process similar to what Todd uses to qualify these people.

And it sounds like what I'm hearing that you all kind of like that idea, but then also that the income thresholds may be different than what Todd's programs are.

Because for example, if somebody is at 100% real estate relief, they're not

paying any taxes.

So if they qualified for one of these other programs, it wouldn't matter because they're already getting 100 percent tax relief.

Yeah, and so I think that that's that's, you know, once once you have a process for verifying your income,

Then as a programmatic matter, we can start saying, all right, well, this one applies for people whose income is 80% of AMI, and this one applies to people who are 50% of AMI, but at least we have a common foundation on which to determine the income against which we're applying that measure.

And I just wanted to get clear on that first, because everything else builds off of that income verification, it seems to me, across a lot of these programs.

and Uniformity and Simplicity seem to be where we're trying to go with those in terms of income verification.

Yeah, I just want to ask a clarifying question based on maybe I heard this from Mr. Vandiver.

When you guys are doing this like verification process, do you come out of the analysis of like an individual applicant with a number for their income or just a binary, yes, they're under the limit, no, they're under the limit?

We try to hit a number.

Okay, so it's not like, you know, just look hard enough to determine they're under and then you're done.

You kind of get a number out of stuff.

So it should be possible to, if different programs have different limits, just say, well, you qualified or you didn't based on

Yeah.

And Todd, Sunshine, you got your hand up.

So this may fall into the next phase of conversation, Rich.

So if it does, please let me know.

The question of staff capacity still seems relevant.

Like obviously you're currently stretched with the current programs as they are.

If we are adding programs, do you feel like that staff capacity issue is a real thing that has to be contended with?

It has to be dealt with.

We can't add anything.

I mean, if it's good.

I told Jason a couple weeks ago when this started that there was no way I was taking it because I just can't.

We just don't have the bandwidth.

So I don't even have this, even if I could, I don't have room to put the people and it'll take more people.

So it does seem like something that would probably fall

I mean, I'm not trying to speak to how city hall is organized, but would probably fall under the community solutions group like purview.

And I think they moved into city space, so they should have lots of room physically, not far from you.

But if there were new hires or was gonna move to a different department, I would think that that's where that would live.

Part of it is, and this is not where I was going next, but in terms of program implementation, if the applicant is just required to submit the documents, it doesn't mean that staff at City Hall has to help them collect those documents.

It could be folks at

Farr, or Network to Work, or just people saying, these are the documents I need to get.

Here they are.

So anyway, a lot does hinge on what is required and how many people are likely to fall into the various buckets of access to that information, like a previous tax return, tax documents, or pay stubs.

Just reiterating what we're focusing on at this point, because I think that our task at hand, it's good to consider, but our task at hand is to come up with a process and we can make recommendations, but that's still going to come down to city council.

So I don't want us to walk away making these recommendations.

I mean, let's focus on the process, get that underway.

and get any feedback from staff from that and then anything else we can focus on.

Yep.

We love the weeds.

Notice how there was an S there.

Weeds.

This may be, I may be out of line on this, but are you guys going to check?

Have you gotten confirmation, clear confirmation from the city attorney or the AG that you can even tag these things with income parameters?

I mean, when I was looking at the code sections in the memo, the only one that was clear to me that had an income component was the landlord,

Was it 3219.4?

The rest of them, I'm just not sure that that was, you know, that that's gonna fly.

I mean, you know, if nobody questions it, nobody questions it.

But that's the additional work that we're needing to do, right?

Yep.

And so, Todd, yeah, so the reason that the city attorney's office suggested that

We go with districts for those new improvements, the partial tax exemption for new structures or improvements that we go with districts rather than the age of the structure was that that is the model that Richmond pursued

without litigation to have income qualifications in those districts, in those designated zones.

And it also makes it broader so that it's not just limited to people who live in older structures.

Whether your structure is old or not, if you make a renovation to it or add a new structure and you're either a low-income homeowner or you're renting to low-income people, these provisions would apply to you.

then we would move away from the qualification of the age of the building and move more into in what districts do we want to have these things apply.

So that one, it seems to me, as you suggested, is at least as the way Richmond has interpreted it, would allow for income qualifications.

Now, it and the 15-year statute are virtually the same other than the age of the structure qualification as opposed to districts.

The deferral one, it is unclear.

It says as determined by your ordinance, so whether that can apply on an income basis or it has to apply uniformly is a question that we need to ask because it's just not addressed specifically.

And I don't know in terms of the Dillon rule,

If it says you can by ordinance do something, how much authority has that granted to that city to do those things?

And so I just think we need to find out on the deferral.

Does anyone have thoughts on deferral and whether it needs to be income qualifying?

I'm interested in it being income.

I mean, how are we going?

I mean, that's the population we want to most benefit from the program, correct?

And then like you said, there could be a domino effect on revenue for the city.

If a lot of people decide to defer their taxes,

I have another question in regards to this conversation.

So we would make a recommendation, I think.

We, the policy subcommittee or the HAC, would say we recommend these districts be created that allow for partial tax exemption for owner-occupied or for providing rentals

One of the benefits that occurred to me on doing districts for the rental partial exemption is that we could limit it to those parts of the city that aren't catering specifically or primarily to UVA students.

Because one of the challenges that we've wrestled with on this subcommittee is under fair housing laws,

A tenant could qualify as low income and be a UVA student, but those really aren't the landlords we're trying to benefit with our partial tax exemption.

But there's not a legal way to say this tenant qualifies and that one doesn't, at least not that I'm aware of.

Drawing districts, however, does perhaps allow us, not perfectly, but to say if you rent to people in this part of the city, in Belmont or wherever else,

then you do qualify and maybe you have a scattered UVA student here or there you know but primarily that's just families trying to make ends meet and so using the district determination we might be able to you know kind of fine tune where these things apply but the bottom line to your question is I think we would we would suggest districts it's all subject to city councils obviously we're just recommenders we're not

We're not the deciders and staff will weigh in, but I think it's incumbent upon us to say, here's an idea that we think would be beneficial to the city in terms of its affordable housing goals.

Here it is in all of its recommended glory.

And I ask you that question, Rich, because, you know, during the comprehensive conversation about affordable housing plan,

The consultants had designated certain areas.

And there were four, I can't remember the name, but some of them were, we were thinking were typically historically disenfranchised areas.

And they included areas that were very questionable about whether or not they qualify for it.

So when we said we were going to designate

But one that I will leave you with is Jason, to his incredible credit, brought to us this existing program that the city has for older homes and said, I'm not sure, you all look at this, but I'm not sure that this is advancing our affordable housing goals the way that it could.

And in discussing that with the city, the city said,

Yeah, there is that statute, but maybe a better way to get at what you're trying to do is do this district approach that is very similar, but similarly provides a partial tax exemption, but it's based on districts rather than age of the structure.

And I think that which should be the topic of another getting into the weeds on that, like what districts, how do we determine?

We also need to get in the weeds of

With each of these programs, who should qualify?

This is to Joy's point, if I may, you know, when we say low income, what are we talking about?

What do we mean exactly?

But it all starts with verification of income, which is why I wanted to have this discussion so we could get firm in our minds.

Like there is an income verification process that is easy for people to access.

That then opens up the possibility of having income qualified programs like the ones we're talking about that are uniform, easily accessible across multiple different realms as we further explore affordable housing opportunities in the city.

I do think it's going to require another discussion about the specifics of the programs, especially just

The districts, if we want to move away from age of structures to districts, reaffirming that the income qualifications that we came up for older buildings are the same ones we'd like to use, but now applying them to districts instead.

And I could bring those up in the last 10 minutes that we have if you all would like to at least start thinking about that.

But I want to make sure that we feel comfortable where we've left it on income qualification.

Rory, my own, just to answer your question, I feel like income qualification for a deferral makes sense unless it's prohibited by the law because of the cashflow issue and the fact that I'm trying to target these programs to the people who need them most.

Anyway, that would be my gut, but

Same here.

Okay.

So we'll find out whether or not that's even permissible and how quickly I can get that answered.

I don't know.

And I'll ask, I'll start with our own legal staff here in the city of Charlottesville.

So do you all want to,

Get nine minutes of your life back or do you want to look at what we decided?

Okay.

So now that we've got, we've, we've, we've done the thing that I wanted to do during this meeting.

I'm going to write it up and, and circulate it.

And then we're just going to have to have another meeting to hone in on, on some of the specifics of the actual programs.

But, but I think, you know, for my purposes, we've answered the questions that I have and that I believe that city staff came to us about kind of just

program implementation or what are we looking at and can we have a uniform process across these various programs that we're trying to implement in our city.

Good job Rich.

Just to add to the previous discussion,

I think it might make sense to start to coordinate with the zoning, rewrite stuff going on, and maybe even the sensitive districts.

And I know in the future land use map, the way those districts were drawn, sort of toward the last moment was talked about as like, like more of like a rough draft.

Whose map is that?

There was a last minute amendment by the Planning Commission to talk about basically refining those further as we actually get into the meat of the zoning rewrite.

So they'll probably be tweaked.

There was specific talk about adding Ridge Street.

There might be areas to remove.

and I would think that staff and the zoning consultants are all talking about that, but I don't have any visibility into that process.

And then they're also talking about like incentives for affordable housing with things like tax abatements, which sounds like exactly this program.

So I wish we could coordinate because it seems like we might be overlapping work, but I have no idea what they're doing to be totally honest.

Yep, and I think having a discussion about whether this would apply just to sensitive districts

or whether we're trying to encourage affordable housing across as much of the city as possible without promoting, you know, landlords renting to UVA students without violating any kind of fair housing law or whatnot.

But, you know, they're slightly different aims of the two programs.

But certainly coordinate, I mean, the whole idea here is to coordinate across all of the income qualifying

affordable housing programs that we're trying to implement to make sure that we've got a fair, uniform and easily accessible set of standards so that we can determine if either somebody is a low income tenant or a low income homeowner across all of these programs.

So I will write something up and circulate it.

Now you only have six minutes return to your lives.

So thank you all for your participation.

Thanks again to Jason and Jeff and Todd

for bringing this to our attention and letting us help you wrestle through how do we advance the city's goals through some of these programs.

Second.

All right.

Thank you all.

I appreciate your help.

Thanks for letting me drop in.

Hope I didn't talk too much.

You're good.

Bye.