Requiring Affordable Units Has ‘Minimal Impact’ on Developer Profits: Consultant

As Loudoun County considers expanding the requirements for residential developments to include Affordable Dwelling Units, a consultant study has found that expanding those requirements for larger developments would have “minimal impact” on project returns.

Currently, Loudoun requires residential developments to include some price-controlled Affordable Dwelling Units in projects with 24 units or more with public water and sewer, but exempts projects four stories or higher with elevators. Using building industry and public data, engineering consulting firm WSP simulated a hypothetical development to test financial returns with and without the county’s requirement to make 6.25% of new apartments ADUs, which are priced to target families making 30% to 70% of the Area Median Income. As of 2021, the Area Median income is $90,300 for a single person and $129,000 for a family of four.

The profitability of building projects with ADUs comes in well above the returns for buying existing developments.

The study also found that several projects that came in under 6.25% ADUs—BLVD Commons and BLVD Gramercy East with 2% ADUs and Heights at Goose Creek with no ADUs—would have been profitable even with the requirement.

The consultants were less clear on projects eight stories and above, which they said see a jump in construction costs and may need to be evaluated on a case-by-case basis.

The same night, members of the Board of Supervisors’ Transportation and Land Use Committee heard proposals to expand ADU requirements in other ways, as well. The latest draft of the county’s new zoning ordinance would remove an existing minimum density to trigger ADU requirements, and make the ADU requirement apply in more zoning districts.

Supervisors are also considering increasing the percentage of units that must be ADUs. In single-family homes and townhouses, that could climb from 12.5% of units to 15% of units. For apartment complexes, that could rise from 6.25% to 10%.

Developers may also apply for an increase in allowable development density if a portion of units are Unmet Housing Needs Units, a similar price-controlled program.

County staff members said they will come back with recommendations based on further research and conversations with the consultant, as Loudoun County works to update its zoning ordinance.

5 thoughts on “Requiring Affordable Units Has ‘Minimal Impact’ on Developer Profits: Consultant

  • 2022-04-21 at 12:19 pm

    How about affordable units that can be rented? How about affordable units that are either studios or one bedroom so student generation is minimized? How about auditing past formulas showing how few students are generated by a community plan against what actually happened? How about showing more numbers and less words since it is obvious who paid the consultant. 🙂

  • 2022-04-21 at 1:51 pm

    I’d like to see set-asides for affordable housing units drastically increased in Loudoun County. We have to give everyone a fighting chance to live in the Land of Love. The less-well-off shouldn’t be left in the dust. I look forward to the day when Loudoun is considered the wealthiest county in kindness & compassion. Happy Earth Day Loudoun!

  • 2022-04-21 at 6:27 pm

    How many hundreds of thousand dollars did this consultant cost the taxpayer? Sounds like doublespeak for trash the builders hence the buyers!

  • 2022-04-22 at 7:06 pm

    Any study on the impact of developers paying for new schools and first responder stations?

    • 2022-04-25 at 10:46 am

      I’m certain the builders have no problem with baking the costs of new public facilities into their budgets. It’s the operating and staffing costs (into perpetuity) that are the problem. That becomes our problem. They take the profits and run. We get saddled with higher tax bills.

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