Mar 9, 2023 · Written By Andy Kegley

It’s been nearly a year and a half since the Blue Star jobs announcement was made here in Wytheville. It was a big splash, complete with the governor, accompanying publicity, and dreams of all those new jobs.

The potential new jobs number — 2,500 — is staggering for our modest, rural community; however, expectations have since been tempered. Possibly beginning late this year, new job growth will be incremental, projected at 490 hires per year between 2023 and 2028. Hiring will increase as the company ramps up production of the first domestically manufactured blue nitrile gloves for personal protective equipment.

Here at HOPE, Inc., sitting at the uncomfortable edge of the housing market, where affordability and availability matter to the lower wealth, wage-earning families who are the foundation of our economy, we had already seen the big hairy audacious problem. Our area was already short hundreds of affordable housing units.

Seventeen months later I’m taking stock. Where are we? What has happened for the good of the cause? What have we learned? What steps have we taken?

For one, our friends at Mount Rogers PDC commissioned an outside firm to undertake a ‘Comprehensive Housing Analysis’ of Wythe County. Among other things, the recently released report found the need for 1,000 new housing units.

We Knew It and Said So All Along

The good news is that we now have a study confirming what we already knew 17 months ago. The report is a step in right direction as it documents the need and rationale for action. Upon hearing the Blue Star news, we issued the bold estimate that our local housing market was one thousand units short. We urged local leadership and housing sector stakeholders to get to work immediately. Meetings began with all sorts of participants, and a few bold announcements were made.

Our Own Worst Enemy

To the best of my knowledge, despite our initial call to action, there’s not yet a single new housing unit in place. Inertia and a slow mobilization of resources have characterized the local housing response so far.

As we’ shared previously, during the past year we’ve actually lost ground. Wytheville lost at least 150 units of ‘naturally occurring affordable housing’ with the closing of Otey Apartments, Walnut Inn, and the Oyo Motel. We are further behind than we initially thought.

All this leads me back to Pogo’s timeless comic strip epiphany, “We have met the enemy and he is us.” While we’re not fighting with each other, we certainly haven’t done enough to help ourselves. We’ve welcomed the forces of inertia and indecision as we’ve squandered valuable time and missed opportunities to react more quickly.

by Cartoonist Walt Kelly, Pogo first lamented this behavioral flaw in 1970

A Narrow Definition of Housing Affordability

The major shortcoming of this study though, in my humble opinion, is that it misses the mark in accurately defining affordable housing. Of the thousand units called for in Wythe County, the study identifies only 120 rental units as needing to be affordable. The rest are market rate units. That strikes me as a major disconnect from the realities of Affordable Housing 101.

Comprehensive Housing Analysis Wythe County, Virginia, January 2023, p. 83

Consider these basic facts. The bulk of new Blue Star hires will average $18 an hour, earning $37,000 gross annual income (before taxes). In general households earning 60% of area median income are considered low-moderate-income, meaning they live just on the edge of economic self-sufficiency. For a single income, three person household living in Wythe County, 60% of area median income (AMI) is $36,720. A Blue Star employee will earn, on average, $280 above that threshold.

Can Wythe County households at 60% AMI afford market rate rentals? The studies authors, S. Patz and Associates, Inc., note, “Two-bedroom units generally range from $700 to $900.” Using the range’s midpoint for monthly rent ($800), annual housing costs for our low-to-moderate income, gainfully employed, single earner household would be $9,600.

Personal finance experts such as Dave Ramsey recommend that housing costs should make up no more than 25% of annual take home pay. Taking out the employee share of FICA and Medicare payroll taxes (x 0.076) and using Business Insider’s average income tax bill of $1,936 for earners between $30,000 and $40,000, household take home pay is estimated at $32,252. By those figures an average Wythe County market rate apartment equals 30% of our LMI household’s budget. Based on Dave Ramsey’s advice, market rate rent is not really affordable.

Looking at these figures, there’s a glaring disparity between only recommending 120 new affordable units and the income level of many potential Blue Star employees. That discrepancy points to a problem with the study’s methodology.

It relies on a narrow definition of affordable housing that only includes very low-income earners, those at 30% of AMI. It may be reasonable to estimate that 120 new units are needed for this market, funded mostly through the Low Income Tax Credit (LIHTC) program. As Patz accurately notes, “most new employees at Blue Star NBR would not qualify for this type of housing.”

What we’ve shown, however, is that affordable housing also needs to address the middle — the LMI market segment. Households at 60% AMI, double Patz’s affordable housing threshold, are usually eligible for some housing assistance. For instance, many tax credit financed housing properties offer sliding scale rents indexed as a percentage of annual income. At four local tax credit properties managed by the Wytheville Redevelopment & Housing Authority (WHRA), renters at 60% area median income qualify for sliding scale rental rates.

Of course not all Blue Star workers will be single earner households, and not all will earn hourly wages at or above $18 per hour. Some will be able to afford full market rate apartments, provided new housing stock comes online. That won’t be the case, however, for others, such as many single earner households with dependents.

For this reason it is necessary to revise the study’s conclusion. Rather than say that 800 market rate apartments are needed, our local market needs a range of affordable units at different price points. In particular, we need to target LMI housing needs. I might suggest further subdividing those 800 market rate apartments into two subcategories, similar to the manner in which Patz divided affordable housing units into two categories (general occupancy and age-restricted).

Without taking a deeper look into Patz Associates’ numbers, I won’t make a high confidence recommendation. However, if I use the same baseline two-thirds (66.6%) to one-thirds (33.3%) ratio Patz used for its affordable categories, a better recommendation might suggest an approximate 530 / 270 split. In order to best meet local market needs for affordable, workforce housing, our area needs 530 new apartment units targeting the LMI market, priced somewhere between the report’s $535 monthly average for very low-income units and the low end ($700) of market rate rentals.


We Were Right x2

Well before January 2023 when the report recommended 1,000 new units to meet pent-up demand, HOPE already had two new projects in the pipeline. We already knew what the report concluded: 1) “ Wythe County’s existing housing stock does not sufficiently meet current demand” and 2) “There is strong demand for affordable housing at various income levels.”

Both projects are using affordable housing development financing tools, some that allow sliding scale rental rates targeting households at mixed income levels.

One of our projects, a three-year-old 12-bedroom development, has stalled due to increased interest rates. Subsidized financing from Virginia Housing, which used to be available at around 2%, is now higher and in great demand, meaning the lower incomes targeted by this affordable housing can’t be served. We’re aggressively pursuing other subsidy sources to make this apartment community affordable for very low income households.

Another new and larger project is on the drawing board, with land acquisition happening in the near future. We’re optimistic about the quality and design of this project. The Town of Wytheville is also working on a zoning upgrade which may allow for more density. More density is fundamental to affordability, as well as efficiency. We encourage town residents to help make these changes possible in the coming months. Our proposal is for six units reserved for households at 30% of AMI, 24 units at 60% AMI, and 10 units reserved for Permanent Supportive Housing (PSH).

What’s Next?

My intent is not to use this as a ‘told you so’ moment. The truth is that solving big hairy audacious problems like our area’s affordable housing shortage requires a humble, practical approach.

First, look to local experts already working on the issue. Find them, ask questions, listen to their counsel, and support their efforts. Many are already ahead of the game.

Second, don’t wait to act. Be bold and decisive early in the game before conditions change and the problem worsens. Otherwise, just as Pogo lamented, we are our own worst enemy.

Unfortunately, we’ve already fallen further behind. Rising interest rates, as well as the cost of labor and materials are not helping any development project, here or anywhere. This is also the reason why the shortage of housing everywhere is such a critical issue that policy and budget makers at all levels of government must address.

Of course we can’t wait for state and federal government, we’ve already waited too long, and local housing sector leaders need to engage more deeply and collaborate more effectively with housing centered community development organizations like HOPE.

This and more is the message I’m taking to the recently announced Southwest VA Regional Housing Summit, hosted by the Joint Industrial Development Authority of Wythe County. I’d love to see you there and talk in more depth. I encourage everyone to register for the April 26, 2023 summit at the Wytheville Meeting Center. If you can’t make it or want to share your thoughts now, please comment and let me know what you think!


To learn more and join HOPE, Inc.’s Housing First mission, visit www.wythehope.org.

Follow author and Executive Director Andy Kegley on Medium.

With editorial contributions from Eric Bucey, HOPE, Inc.’s Director of Marketing and Communications.

Originally published at Feathers of HOPE on medium.com.