National and regional housing policy leaders gathered recently in the nation’s quintessential “edge city,” Tysons Corner, Virginia, to discuss why it’s so important to include workforce housing in the area’s planned transformation from a sprawling, auto-dependent suburban office park to a walkable, green urban center served by four new Metrorail stations. They also discussed how to meet Fairfax County, Virginia’s requirement for 20 percent of new housing units near Metro in Tysons to be permanently designated workforce housing.

For J. Ronald Terwilliger, chairman emeritus of Trammell Crow Residential, the meeting of private- and public-sector stakeholders represented an opportunity for ULI’s Terwilliger Center for Workforce Housing to go beyond advocacy and research to become part of a nationwide effort to produce workforce housing where it is most needed. “We selected Tysons Corner as the first case for this new role for the Center,” he said, “and we hope this process will be implemented in other parts of the nation.”

Honorable Sharon Bulova, chairman of the Fairfax County Board of Supervisors, pointed out that Tysons Corner today has about 100,000 jobs but only 17,000 residents. The county’s goal is to have 100,000 residents and 200,000 jobs in place by 2050. The county’s newly amended comprehensive plan calls for 20 percent of new housing to be set aside for those who make 50 to 120 percent of the county’s median household income, which is currently of $102,700.

No one on the panel disputed the need for workforce housing in Tysons and elsewhere around the country. F. Barton Harvey III, former chairman of Enterprise Community Partners, pointed out that throughout the U.S., more than half of renters spend more than 30 percent of their income on housing, and more than 60 percent of renters qualify for workforce housing. Many people earning 60 to 120 percent of area median income (AMI) cannot find housing near where they work. Honorable Henry G. Cisneros, former Secretary of the U.S. Department of Housing and Urban Development, noted that when natural disasters and other emergencies occur in major metropolitan areas, response is often delayed because workers living in far-flung suburbs cannot reach their jobsites in a timely manner.

Many area developers, however, have publicly and privately expressed skepticism as to the financial feasibility of meeting aggressive workforce housing goals in new residential towers adjacent to transit, given the cost of constructing steel-frame high-rise structures with expensive underground parking. But developer Thomas S. Bozzuto, winner of ULI’s 2008 Lifetime Achievement Award, said he is confident that it can be done successfully and profitably.

“As someone who builds apartments for a living, I have found that the cost imposed by the requirement to include workforce housing in Tysons is exceeded by the value created in the extraordinary density allowance,” he told the summit audience. “In our pro forma, we found it would cost $325,000 per unit for a high-rise rental building in Tysons, with a return on today’s cost of about seven percent. Adding the workforce housing requirement brings you just a little short of that seven percent goal, but you can solve that problem.”

Terwilliger supported Bozzuto’s statement, saying: “Developers say that they need a higher yield and can’t assume that rents will go up enough to provide that yield. But the best project to own and finance is a high-rise in a mixed-use center next to transit in a healthy community. Therefore, the opportunities in Tysons are by far the best bets. And I expect that rents will go up meaningfully, because there is very little new construction in the pipeline to compete with projects that get started this year or next.”

It will be easier for developers to create workforce housing opportunities if employers take on a greater role than they have in the past. At least one large employer, the government contracting firm SAIC, is stepping up to the plate in hopes that others will follow its lead. Said Douglas Koelemay, SAIC’s Vice President, Community Relations: “We now offer relocation assistance and even extended stays for work teams; assisting in providing workforce housing would be a natural extension of that benefit. With over 17,000 employees in the region and normal turnover, we may hire around 2,000 people per year, so we have to be very competitive, not just with salaries but also in helping employees solve life problems. We have concluded that we can meet and even extend all the goals of the comprehensive plan amendment.”