The lack, and decline, of affordable housing is now being called a “crisis” in all Northern Virginia jurisdictions. It is acute in Falls Church, where a report last year indicated every one of the 754 housing units currently considered affordable are at risk of either demolition or renovation upgrades aimed at a steep hike in their rents.

While Falls Church officials were slow in the past to address the issue, they’re looking to catch up fast, and funding the study released Monday was a first step. It will be hard for the Council to reject the $2 million dedicated to the problem recommended by City Manager Wyatt Shields in its Fiscal Year 2008 budget due for final approval late this month.

Council members approved the “Northgate” project of the Hekemian Company for North Washington Street last week with an eye to affordable housing. Most members noted the positive impact of a new project with all moderately-priced rental units as an important contribution to housing diversity that will make the City a more vital place.

It was a step to reverse the recent years’ gradual trend toward a wealthy single family homeowner-dominated “gated city” that many here feared Falls Church was destined to become.

However, experts note that diversity, including housing and income diversity, is essential for an economically and fiscally viable community. In its desire for new retail and commercial activity on its commercially-zoned corridors and in its planned new city center, Falls Church has to step up to intervene on housing market trends to make the city more diverse and colorful.

Melissa Bondi, housing director for the Coalition for Smarter Growth, affirmed this in comments to Falls Church Economic Development Authority this Tuesday. She called the proposed $2 million for affordable housing in the new budget “a terrific start.”

“Affordable housing has to be seen as a valuable community benefit,” she said. “More diversity helps provide stability and sustainable economic viability over time.”

Drawing on her experience working with affordable housing initiatives in neighboring Arlington County in recent years, she outlined achievements that closely paralleled what the Jones Lang LaSalle study released Monday recommended.

When a local push to mandate a stiff affordable housing requirement from developers was rebuffed by a court ruling in 2004, she said, the county and developers agreed to a “détente,” and to set up a “roundtable process” by which both sides could arrive at mutually-beneficial new policies.

Just as the Jones study recommended, so Bondi reported that making inclusion of affordable housing an “attractive business option” for developers, through generous incentives, was the key to arriving at a workable and amicable way forward.

Important components to the deal hammered out, she said, involved the following:

1. Making the process predictable in advance to everyone.

2. Making the requirements quantifiable such that developers could budget the affordable housing component in advance.

3. Providing flexibility by giving the developer an array of options for meeting affordable housing goals, such as cash contributions, off-site affordable housing projects, and so forth.

4. Making the inclusion of the affordable housing component “market neutral” by matching the developer cost for participation with incentives that equal or exceed that cost.

She said these policies, which were crafted into a new ordinance, involve a so-called “chocolate cake” approach. She explained it as analogous to when there is only one piece of chocolate cake left to be divided among two people, it is a good policy that one person gets to cut the cake and the other one gets to pick the part he wants. That helps to guarantee fairness.

The public-private partnership approach implied by this can open up creative new alternatives as applied not only to new projects, but to renovation of existing multi-family dwelling units.

The Jones study, which concluded the existing Falls Church affordable housing ordinance is “not an effective tool,” given that it has never been utilized since its creation, urges a revisions that include making affordable dwelling components mandatory, triggered by any special exception requests.

“The developers have been clamoring for this because they want the process to be predictable,” said Carol Jackson, executive director of the Falls Church Housing Corporation, in remarks to the News-Press yesterday. “They hate going into a process that is left to negotiations. They cannot forecast the outcome that way.”

Jackson said she was pleased with the study, noting that while it said a lot of what her organization has been saying all along, having the City Council enjoy the benefit of an independent study will help them move forward.