Council to Set Aside $500,000 from NSF Tax Revenue for Affordable Housing

Alexandria City Council moved Saturday to dedicate $500,000 of the tax revenue generated from the construction of the National Science Foundation's new office toward the city’s affordable housing fund in a move that split members, once again, on the practice of set-aside tax revenue. 

In order to secure the lowest lease-rate offer in a very competitive process to land the NSF in a landmark deal, Alexandria gave Hoffman Development a $23 million tax abatement. As part of the unprecedented incentive package, the city also waived a $750,000 contribution to an Eisenhower Avenue improvement fund and a $1.04 million contribution to the city’s affordable housing fund.

The waiver of the affordable housing money particularly irked Planning Commissioner Derek Hyra, who called it  “a blemish” on a grand slam deal for the city.

The housing fund aims to combat the decline in committed and market affordable rental units in the city for low-income families as real estate prices continue to rise.

Hyra persuaded the planning commission to offer a recommendation to council to earmark $1 million in real estate land tax on the NSF property for the city’s housing trust fund.

Councilman John Chapman, who had complimented the creativity of the recommendation, suggested a $500,000 set-aside after surveying his colleagues. 

“I think it says something if we don’t make sure this [waiver] isn’t included,” he said. “I think this says something about where we are when it comes to affordable housing. We have made this a priority.”

Councilman Justin Wilson, who agreed that affordable housing is a priority, took issue with the dedication, saying it walls off funds and doesn’t weigh them against other issues in the budget process, including schools, public safety and human services. 

“The challenge here is we’re now taking money out of the general fund before we know where it needs to go in that particular year,” he said.

Councilman Paul Smedberg agreed with Wilson and suggested the planning commission “overreached” its charge in making a recommendation on what to do with tax dollers.

Smedberg said he wants to achieve the city’s affordable housing goals in a manner that is financially sustainable. 

“We all recognize the need for affordable housing, as well as a whole host of other things,” he said. “But to dedicate dollars from revenue we haven’t realized yet, I just think is a terrible practice.”

When its office is completed in 2017, the NSF will bring its 2,400 employees and a contractor tail of another 2,200 to the city. The institute is also expected to generate even more tax revenue by generating 90,000 hotel room nights per year and spur the construction of new hotels, residences, eateries and other retail along Eisenhower. 

“The reality is without this incentive package, we’d have nothing,” Wilson said. “With this package, we’re going to have considerable additional money for a lot of services in this city, including affordable housing.”