City of Alexandria, Virginia
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MEMORANDUM
DATE: MAY 7, 2024
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
THROUGH: JAMES F. PARAJON, CITY MANAGER /s/
FROM: HELEN S. MCILVAINE, DIRECTOR, OFFICE OF HOUSING
DOCKET TITLE:
TITLE
Consideration of a Request from the Alexandria Redevelopment Housing Authority to Establish an Independent Non-Profit Entity, Premier Housing.
BODY
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ISSUE: Alexandria Redevelopment and Housing Authority (ARHA) request City Council’s approval to form an independent nonprofit entity, Premier Housing.
RECOMMENDATION: That City Council:
1. Approve ARHA’s request to establish Premier Housing subject to the City Manager’s satisfaction that safeguards described herein regarding Premier Housing’s activities, operations and reporting obligations to the ARHA Board and to the City are incorporated in the nonprofit’s governing documents, including its articles of incorporation, operating agreement, and bylaws, as appropriate; and
2. Authorize the City Manager to conduct reviews of changes to Premier Housing’s organizational documents and/or reports regarding its activities to ensure the nonprofit is performing in ways consistent with the mission of ARHA and subject to the safeguards established herein.
BACKGROUND: ARHA has requested that it be allowed to establish an independent nonprofit entity to support its activities as an affordable housing developer which are currently limited by the U.S. Department of Housing and Urban Development (HUD) regulations related to ARHA’s role as a public housing authority (Attachment 1). The practice of public housing authorities establishing separate nonprofit entities has become common, including in Virginia, especially among local housing authorities pursuing development activities and/or offering development and other fee consulting services. It is noted that Premier Housing is proposed to be entirely separate from the Virginia Housing Development, LLC (VHDLLC), another ARHA-created development entity, approved by City Council, which is fully subordinate to ARHA.
In response to a request from the City-ARHA Redevelopment Work Group at its June 2023 meeting, legal counsel for ARHA provided a memorandum describing how the creation of Premier Housing as a 501(c)(3) (nonprofit) organization will advance ARHA’s mission and its aspirations to develop, manage, and operate affordable housing successfully, as well as how it can additionally supplement ARHA’s role by participating in tax credit partnerships to leverage resources and fees not otherwise available to ARHA due to its role as a housing authority (Attachment 2).
Among other things, Premier Housing would be used by ARHA to carry out activities consistent with the agency’s repositioning strategy which is proposed to improve the quality of its housing portfolio and ensure the organization’s long term sustainability by converting public housing properties now operated through HUD contract payments to various project based voucher programs that will increase rent subsidies to approximate fair market rents based on the zip code/submarket in which the property is located. Activities that might be conducted by Premier Housing could include applying for grants available to eligible 501(c)(3) organizations and not otherwise accessible to ARHA, acting as a developer of affordable housing and forming single-purpose entities (SPEs) to manage and control affordable housing development owners, and sharing in financial benefits resulting from development in which ARHA’s participation is currently not permitted based on its status as a housing authority.
ARHA has proposed that Premier Housing - which is required to be independent of the housing authority - be structured to be governed by a board that is comprised of ARHA senior staff (e.g., the Chief Executive Officer and the Chief Financial Officer) along with three affordable housing professionals or subject matter experts, who are not on ARHA’s Board of Commissioners. ARHA proposes that Premier’s organizational documents state that its purpose is to support and further ARHA’s mission, purposes, and development activities; that ARHA provide initial capital funding to operationalize the nonprofit; and that ARHA record restrictions requiring long term affordability for any development which Premier Housing undertakes on ARHA’s account.
DISCUSSION: Housing staff have consulted the City Attorney in reviewing ARHA’s request. Staff are generally supportive of approaches that enhance ARHA’s mission to increase and preserve affordable housing within Alexandria; however, staff believe that some safeguards should be adopted to bound the authority, reach and potential liability of the organization in order to be consistent with the City Charter mandate which requires that the ARHA Board of Commissioners be appointed by, and subject to, City Council’s oversight, as well as the statutory requirement of Virginia Code Section 36-19(12) that City Council approve ARHA-created organizations.
To ensure ARHA’s proposed extension of its operations to Premier Housing align with these guidelines, City staff recommend the organizational documents of Premier Housing specifically incorporate the following provisions:
• That Premier Housing be created for affordable housing purposes only, including advancing ARHA’s mission and vision;
• That Premier Housing’s development activities be limited to the geographic boundaries of the City of Alexandria;
• That only senior executive staff who are permanent employees of ARHA serve on Premier Housing’s board and help select other directors;
• That City Council receive the names and credentials of the affordable housing professionals proposed to be appointed to Premier Housing’s board thirty days in advance of their appointments;
• That Premier Housing, through ARHA, provide the names of all projects, developments, and activities in which it is participating and or consulting in any capacity through updates at City-ARHA Redevelopment Work Group monthly meetings;
• That Premier Housing comply with all federal, state, and local laws, as well as public reporting requirements, typical of nonprofit organizations; and
• That Premier Housing, through ARHA, provide an annual report regarding its work to City Council, within thirty days of the fiscal year end, including a listing of Premier Housing staff and directors throughout the fiscal year.
In addition to the above, staff recommend that the City have the right to review and approve future proposed amendments to the organizational documents of Premier Housing and any sub-entities created, with 30 days’ advance notice of proposed changes. Authority for this review will be delegated to the City Manager and his designees.
FISCAL IMPACT: None for the City. ARHA proposes to provide initial capitalization to set up the nonprofit.
ATTACHMENTS:
1. Memorandum from ARHA CEO Requesting City Approval to Establish Premier Housing
2. Memorandum from Ballard Spahr (ARHA’s legal counsel) regarding Premier Housing’s role
STAFF:
Emily A. Baker, Deputy City Manager
Christina Zechman Brown, Deputy City Attorney
Eric Keeler, Deputy Director, Office of Housing
Kimberly V. Cadena, Housing Analyst