Affordable Housing For Some

Henrico County library at Libby Mill

by Dick Hall-Sizemore

In the discussion over the shortage of “affordable” housing, one could point to one company that could be considered the cause of the disappearance of a lot of the affordable housing stock in the Richmond area:  Gumenick Properties.

The company has redeveloped an 80-acre tract it owned near Broad St. on the Henrico/Richmond boundary to include apartment buildings; commercial space, including restaurants and fitness centers; and a large, state-of-the-art public library (Henrico County).  As reported in today’s Richmond Times-Dispatch, the company is ready to construct its third large apartment complex on the property.  It will consist of 398 units, ranging from studios to three bedroom apartments.  The rents for its current complexes, which have a maximum of two bedrooms, range from $1,400 to $2,700.  It is reasonable to expect the three-bedroom units to exceed this maximum.

The company has been successful in leasing its apartments in this development.  The occupancy rates for the other two large complexes, comprising about 700 units, are  97 percent and 98 percent.

The article describes the company’s activities as “transforming an area that was largely undeveloped just a few years ago.”  That is not quite accurate, as described later in the article: “The tracts of land where Libbie Mill-Midtown is situated have been in the Gumenick portfolio for more than half a century. A community was originally built there in the late 1940s as a living area for returning World War II veterans. That housing was demolished by 2004 after aging past the point of recovery.”  In other words, rather than spend some money to maintain and fix up the property and continue renting to middle and lower-middle class tenants, the company decided to knock everything down and put in a shiny new, upscale community.

This is not the first time that Gumenick Properties has done this.  I first became aware of it when it began demolishing older housing stock (apartments and small houses) near Crestview Elementary School.  A large community of Vietnamese immigrants (legal) lived in that area because they could afford the rents.  After displacing the occupants of those units, the company built newer single family houses and apartments.  The rent for an apartment in this area ranges from $1,291 to $1,885 and for a townhouse, $1,623-$2,557.

There was another older apartment complex near Willow Lawn shopping center that was bulldozed and a newer and larger apartment complex put into its place.

There is nothing illegal or nefarious in all this.  The company obviously crunched the numbers and concluded that it would be more worthwhile to replace the older housing than to continue maintaining it.  In addition, rather than replace those older units with rather plain smaller houses and apartments that lower middle class tenants could afford, it would be more profitable to make the units a little bigger and then throw in some shiny appliances, a pool, and some game rooms to appeal to the “the 20-to-35 age group and young millennials in particular,” who could afford to pay about $2,000 a month.

That is how the capitalist system works.  So, when conservatives lament the lack of affordable housing, they need to remember that our economic system is partly to blame.  It is more profitable to build for folks that have ready access to money than it is to build for those who don’t have a lot of money.

Anthony Romanello, , executive director for the Henrico Economic Development Authority, obviously did not consider this when he gushed,  “We couldn’t be more excited about what’s happening at Libbie Mill.  It’s a textbook case for how you can redevelop a property and really create a great place for people to work and live.”  It was a good place for working people to live there in the past, as well.  They just can’t afford it now.


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62 responses to “Affordable Housing For Some”

  1. Turbocohen Avatar
    Turbocohen

    Affordable Housing does not equal Housing Affordability. There is a very big difference.

  2. Ronnie Chappell Avatar
    Ronnie Chappell

    I for one have no problem with developers building and renting apartments for which there is significant demand and which are of sufficient quality and size to attract renters. The market is much bigger that a handful of projects in a single area. Theoretically, demand in one area for new, spacious generally affordable apartments should drive down demand, and rents in other areas for less spacious, older, less expensive housing.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      It seems that should be the case, but, not if the older, less expensive housing is demolished to make way for the new, more expensive housing.

      1. Nancy Naive Avatar
        Nancy Naive

        The problem is that anything built in the 60s has reached life expectancy. To take an old house/apartment up to new codes is far too expensive over building new.

        Yeah, I know you can buy a $100K unit and sink another $100 into it, with 10% for unforeseen, and you’ll have a $250K unit which by the way will see a 120% tax increase.

        1. DJRippert Avatar

          Yeah, government has made renovations cost ineffective. But the same lefties who love bigger and more government will scream to high heaven about housing affordability.

      2. Turbocohen Avatar
        Turbocohen

        If the older less expensive housing is dilapidated it’s a burden on the neighboring community. Two thumbs up for Gumenick investing in the area. Nothing indicates a promising future for deteriorating Richmond shitholes like redevelopment with housing affordability in mind, not to be confused with older decrepit “affordable” housing that has one foot on a banana peel and another over the grave. Give that developer a key to the city.

  3. Teddy007 Avatar

    How would having fewer apartment units make housing cheaper in the entire region. The cheaper apartments are just somewhere else now.

  4. how_it_works Avatar
    how_it_works

    The city collects more in property taxes after redevelopment, too.

  5. Bob X from Texas Avatar
    Bob X from Texas

    Please read Thomas Sowell’s “ Basic Economics “ if you want to understand how rent control and central planning fail miserably in meeting the needs and expectations of a country. The Law of Supply and Demand doom to failure government’s pathetic attempt to regulate housing.

    1. Teddy007 Avatar

      Supply and demand are limited because the amount of land is limited, the time frame to create new housing is measured in years. Remember, with supply and demand, the curves do not have to cross.

      1. Bob X from Texas Avatar
        Bob X from Texas

        Good point on the supply and demand curves not intersecting. Because of the supply of apartments for single high school grads all costing over $100 A month in 1974, 24 of my friends and I rented a three story house for our post high school summer housing. We actually improved the rat, hooker, and dope addict infested neighborhood.
        When supply and demand are out of sync
        People will innovate.

    2. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      I am not advocating rent control nor am I advocating any kind of regulation of housing, other than what already exists, such as zoning, building permits, etc. My point is simply that a company chose to demolish existing housing that was affordable for people with low-to middle class incomes and replace it with higher end apartments and fairly expensive restaurants and shops (do we really need another Starbucks?) That made economic sense to the company, but it could have added to the social burden created by fewer housing choices for folks who cannot afford the apartments and houses being built where they used to live.

      1. LarrytheG Avatar

        How hard is it for a City to stipulate that any rezone will be more favorably considered that provides affordable housing.

        Incentives could be offered.

        The properties could be provided water/sewer for free or lowered rates.

        There could be tax incentives and fast tracking of permits.

        Mitigation for schools, roads , public facilities could be reduced.

        But many of these things will cost the city money that it will have to recoup some other way.

        1. Turbocohen Avatar
          Turbocohen

          Affordable Housing Bad. Housing Affordability Good.

          1. LarrytheG Avatar

            explain that again if you don’t mind…….

          2. Turbocohen Avatar
            Turbocohen

            Affordable housing aka Section 8 “Housing Choice Vouchers” is the largest low-income housing assistance program in the country. Landlords who participate in Section 8 benefit because as much as 100% of the rent is paid by the uh.. (you the tax payer) government. Sec 8 rent is listed at, or around, the current market rent rate. As long as the lease terms and property are maintained, rent payment is virtually guaranteed and sent to the landlord every month, often by direct deposit into the landlords bank account.

            Housing Affordability varies with market conditions, lending rates, etc. The NAR created the Housing Affordability Index which measures whether or not a borrower earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data. When incomes don’t keep up the pace with housing cost and inventories, Housing affordability varies. Low interest rates during Covid-19 strained the availability of available homes. With all that said, with more good opportunities, more people can afford a home that is typically in MUCH better condition and better located than typical section 8 aka Affordable Housing.

            With that said, there is far less incentive to maintain nice low crime neighborhoods in Sec 8 affordable housing areas and plenty of incentive to build nicer living areas that people can afford to live in.

          3. LarrytheG Avatar

            I thought Section 8 housing was means-tested. No? Also is it to build actual housing or to provide funds to people to go find affordable housing done by non-govt entities?

            How does Section 8 “affordability” differ from private-sector “affordability”. Are the income levels the same or different?

          4. Maria Paluzsay Avatar
            Maria Paluzsay

            Section 8 housing is income and family size based. It has nothing to do with housing affordability, in fact it is destroying affordability in my market (Williamsburg/York County). As a Realtor, I take issue with Section 8 and similar housing voucher programs because they destroy upward mobility and any motivation for it, while simultaneously destroying opportunity for those not in the programs.

          5. LarrytheG Avatar

            I thought Section 8 vouchers were means tested. No?

          6. Maria Paluzsay Avatar
            Maria Paluzsay

            Yes, based on family size. However, the Section 8 allotment is higher than affordable rent for a family who doesn’t qualify or doesn’t want a subsidy. The abundance of subsidized applicants with guaranteed government payment raises the rents in an area and keeps self-paying renters from being able to find a home. Simultaneously it stops the subsidized from buying (who would give up thousands in free rent, especially when one’s income is too low to utilize the mortgage interest deduction). Let me give you a real world example I’m working with right now. A house in my neighborhood typically rents for $1650. This is pushing it, but doable for a family of 4 with 2 blue collar jobs and 2 kids in school. Another neighbor is getting divorced. She could afford to assume her mortgage (at 3%) but her Sec 8 subsidy will provide $2000 in rent. At the same time, folks wanting York Co schools are moving up from Newport News and transferring their $2200 vouchers yo York. Landlord says, hmmm… family with employment based income can pay me 1650 but what if something happens and they lose an income? Divorcee can give me 2000 paid by HUD, or incoming NN family can pay 2200. Surprise! Rental value of a house in my neighborhood is now $2200, divorcee has to pull her kids from their schools and move and self paying family is probably moving to Newport News. (Can’t buy with starter homes commanding that sort of rent, because the price has gone up because of investor demand). No one wins in the long run except the investor – he’s gained $600/a month in rent and 50k in equity since his last tenant. Gotta love the social welfare system.

          7. LarrytheG Avatar

            Are Section 8 voucher readily available and abundant? You make a persuasive argument
            and I think it might be worth a blog post to lay it out for folks to see. The obvious con is
            what happens to those with the vouchers if the program goes away. Is there an alternative?

          8. Maria Paluzsay Avatar
            Maria Paluzsay

            They are hard to get here (I think Williamsburg/James City opens its waiting list about once a decade, not sure about York) but there are similar programs I suspect funded by pandemic money and kept on the books as “homeless prevention”. My neighbor just qualified so there’s a way. What I’m seeing with the few houses I manage is folks coming here from Newport News, and they’re not always renting lower end houses. The one I just filled is $2400/month, 3 bedrooms, 2 1/2 baths, would sell for almost 400k. Recent laws now prohibit tenant selection based on source of rent, so a landlord doesn’t have a say if they pass all the criteria. I’m a single mom with an ex who hasn’t held a job in over a decade (read: no child support), so I understand the need for the safety net for people who don’t have family help. But if you qualify for 30k a year in rent relief, plus EBT (I think highly of this program, it really does keep kids from living on ramen and kool aid), plus utility assistance, plus medicaid, plus refundable child and earned income credits, why would you do anything else? I could overlook that IF it didn’t keep people who work and make less than the total of the benefits from being able to find a place to rent or buy. I would really have to think through it to find an alternative because so many people are now dependent on the system.

      2. Bob X from Texas Avatar
        Bob X from Texas

        Respectfully ,I don’t believe government can do anything better than the private sector.
        If housing is too expensive for employees to live close to their job, employees will get a pay raise too continue working working at their jobs or move to a job with less expensive housing. No one is building factories in New York City , but they are building them in Suburban Texas.

      3. Bob X from Texas Avatar
        Bob X from Texas

        Are defending keeping rat infested, run down,
        Roof leaking, bug infested housing or letting the free market sort it out?
        Read Thomas Sowell’s comments on Rent Control in his “Basic Economics”

  6. The Appraisal Institute defines highest and best use as follows: the reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible and that results in the highest value.

  7. LesGabriel Avatar
    LesGabriel

    “that our economic system is partly to blame.” So to what extent is the free market system to blame for a lack of affordable housing and to what extent does it fall on the shoulders of government decision-makers? Housing costs are driven by 1) the cost of the land on which the housing sits and how much land is required for the housing unit, and 2) the size and the amenities of the housing unit itself. The cost of land, in turn, is determined by market forces (i.e. what are the alternative productive uses of the land) and by governmental zoning decisions. The size and amenities are also determined by market forces, but there is also a governmental aspect in that there are restrictions on what home builders must include in any housing units they sell (refrigerators, for example). In a true free market economy, there would be home builders to fill the demand for low-cost housing. They would obviously look to build in areas where land did not have alternative high productive uses. They would build smaller houses with fewer amenities. They would use innovative technologies to hold down costs. All of these avenues could run into roadblocks from local officials who control building and occupancy permits. Around 20 years back, I attended an open house of the first net-zero house being built in Virginia. In talking to the builder/owner I learned that all of his problems were not technological, but rather bureaucratic–zoning, permits, bank loans, insurance, etc. My suggestion is not to look for more government (taxpayer) funding of projects, but to look at what public policy impediments there exist.

    1. how_it_works Avatar
      how_it_works

      It’s not just the cost of land or the cost of the house. There’s also site development costs–clearing the lot, grading the lot, installing utilities and possibly a well and septic system.

      I’m told that Manassas City wants $15K in tap fees for connecting to sewer, and another $15K in tap fees for water. That’s $30K just for water and sewer. I wasn’t able to confirm because they don’t have that info on their website, that I’ve been able to find anyway.

  8. Nancy Naive Avatar
    Nancy Naive

    Time to recycle the millions of rotting shipping containers…

  9. James Kiser Avatar
    James Kiser

    And what kind of incentives did they offer the city to get permission to eliminate the cheap housing and build the upper class neighborhoods? Besides the increase in property taxes.

    1. Maria Paluzsay Avatar
      Maria Paluzsay

      I’ll bet that cheap housing was in an Opportunity Zone, and suspect the city officials have “invested” their capital gains there…. I’m seeing that in Williamsburg. No idea why Colonial Williamsburg land qualifies as blighted, but that’s a different discussion.

  10. Thomas Dixon Avatar
    Thomas Dixon

    In my once rural country neighborhood, the county has decided to add “affordable housing” to what was once a wheat field next to a small neighborhood. They can’t be in the city because that is too near the gated communities and the men and women on city council. I am assuming many of them will be a part of the influx of the millions of undocumented people allowed over the course of the last two years I have been seeing around here. But shame on me for being a good conservative with such antiglobalist views. Time to hone up on my gang symbol recognition and my Spanish.

    1. LarrytheG Avatar

      Immigrants seem much more able to innovate. They’ll get a house and get enough to share it at reasonable individual cost. No problemo.

      1. how_it_works Avatar
        how_it_works

        Even if they have to park in the front yard.

        1. LarrytheG Avatar

          correctamundo… and much less noticeable in an older house not in a standard subdivision.

          They do the phrase extended family – proud and make gringos look like whiners.

        2. LarrytheG Avatar

          correctamundo… and much less noticeable in an older house not in a standard subdivision.

          They do the phrase extended family – proud and make gringos look like whiners.

          1. how_it_works Avatar
            how_it_works

            I remember one of the Manassas Park City Council members positively gushing about how they have their extended family and multiple generations in the same house.

            Well, when you’re a parent at 15, assuming your offspring follows tradition, you’re a grandmother at 30, a great grandmother at 45, and a great-great grandmother at 60. And a great-great-great grandmother at 75.

            Ahh, the benefits of teen pregnancy. Allowing multiple generations to share a house!

            Meanwhile, my aunt on my mom’s side lived with her son (my cousin) and my grandmother, but that had much less to do with any family tradition and more to do with her inability to support herself. I don’t think she ever worked a day in her life.

          2. LarrytheG Avatar

            They don’t have as much of that single-parent issue, though.

          3. how_it_works Avatar
            how_it_works

            I guess that helps.

          4. LarrytheG Avatar

            and tend to be hard workers….

          5. how_it_works Avatar
            how_it_works

            Would be nice if they threw their beer cans in the trash at the 7-11 they’re hanging out at, though.

          6. LarrytheG Avatar

            that they do even on a job site.

          7. how_it_works Avatar
            how_it_works

            Yea, how do you think those beercans end up in the walls of new homes?

          8. LarrytheG Avatar

            a lot of stuff in the backfill also…

          9. how_it_works Avatar
            how_it_works

            Heard about someone who had a 4×8 area in their yard where grass wouldn’t grow.

            Sheet of plywood buried in the dirt there.

          10. LarrytheG Avatar

            😉

          11. how_it_works Avatar
            how_it_works

            I remember one of the Manassas Park City Council members positively gushing about how they have their extended family and multiple generations in the same house.

            Well, when you’re a parent at 15, assuming your offspring follows tradition, you’re a grandmother at 30, a great grandmother at 45, and a great-great grandmother at 60. And a great-great-great grandmother at 75.

            Ahh, the benefits of teen pregnancy. Allowing multiple generations to share a house!

            Meanwhile, my aunt on my mom’s side lived with her son (my cousin) and my grandmother, but that had much less to do with any family tradition and more to do with her inability to support herself. I don’t think she ever worked a day in her life.

        3. LarrytheG Avatar

          correctamundo… and much less noticeable in an older house not in a standard subdivision.

          They do the phrase extended family – proud and make gringos look like whiners.

          1. how_it_works Avatar
            how_it_works

            and cars parked on the lawn and on the street are QUITE noticeable even in older subdivisions.

  11. Stephen Haner Avatar
    Stephen Haner

    If a builder could make substantially more money building smaller, cheaper units, that is what would be built. The demand is clearly there. But it won’t be the single family, 1400 sq ft house on a yard development that you recall with fondness, Dick. Not unless they are all cookie cutter (think the opening song for the show “Weeds” about “little boxes” and “ticky-tacky.”) It will be multifamily and dense.

    Bacon and I live in a Gumenick development. My neighbor is about to list a row house for about $280 a sq ft. Not ticky tacky. There will go my taxes up again….

    1. Teddy007 Avatar

      But many of those younger white professionals are being subsidized by their parents. If they marry and have children, most of them will be moving out of the city center unless they can afford college prep private school tuition in addition to the high housing costs.

      1. LarrytheG Avatar

        Moving back from suburbs to city. It is the younger and they are educated with good jobs so can afford (and probably help from parents also).

        It’s really gentrification, which I always thought is a bit tricky because such things probably border less affluent and less safe neighborhoods…. but I guess younger folks are game for it.

        1. Teddy007 Avatar

          One of the issues with parental subsidies is that parents are much more likely to fund their daughters than their sons. That is why places like Manhattan have more female white collar workers than male white collar workers at the entry levels. The choices of women are subsidized, the choices of men are not.

          1. LarrytheG Avatar

            Did not know. Intersting.

          2. Teddy007 Avatar

            The book, “Parenting to a Degree” that includes interviews with parents of college age women, the authors noticed that parents are more willing to fund full tuition for daughters, study abroad for daughters, and helping daughter get started in their careers. It may be one of the reasons that 60% of undergraduates are female.

  12. The largest expenses in an apartment job, other than debt service, are taxes and site preparation for local, State and federal codes.

    1. LarrytheG Avatar

      The Feds don’t seem to have those problems for Section 8 apts…..

      1. how_it_works Avatar
        how_it_works

        I thought the Feds aren’t building low-income housing anymore what with the very public failure of the Cabrini-Green style developments.

        1. LarrytheG Avatar

          I dunno. I see them all over the place.

  13. LarrytheG Avatar

    So I see this in the RTD:

    https://uploads.disquscdn.com/images/31e32ffa71afb17eca67e5fa29159e96f7bb4f37f69626c8e442ff5a15ec0e70.jpg

    Totally about “affordable housing” but I suspect not what we’re talking about here..

  14. DJRippert Avatar

    80 acres? There are 640 acres in a square mile. There are 245 sq miles in Henrico County. That comes to 156,800 sq mi. That’s .05102 of 1%. 5 100th of 1 percent.

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