A “dramatic reduction” in federal housing money will reduce by $905,000 the money available for Alexandria residents who need help with housing costs, city officials said, further shrinking the stock of affordable rental housing.

Mildrilyn Davis, Alexandria’s director of housing, said a 46 percent cut in the combined allocation for the Community Development Block Grant program and the Home Investment Partnerships Program will result in the loss of two staff positions and “the virtual elimination” of the city’s three home-purchase-assistance programs and its homeownership counseling program.

The federal cuts, which Mayor William D. Euille (D) noted that he and the U.S. Conference of Mayors fought against in Congress and at the White House, were a result of an overall reduction in the programs and new census information that said Alexandria had lower numbers for total population, persons in poverty and overcrowded households than in previous years.

During the economic downturn of the past four years, fewer construction projects have been completed, which means the city’s housing trust fund has received less from developers than in the past, Davis said.

Alexandria’s rental housing stock has been shrinking over the past decade for people who are middle income or less. In 2000, more than 18,000 units were considered affordable; this year, fewer than 6,000 units can fit into the budgets of people who make up to $63,660, which is 60 percent of the area’s median income.

Rents have been rising as well. Tenants in the Beauregard area of the city, west of Interstate 395 near the federal Mark Center, staged a demonstration Tuesday to protest rising rent and utility costs. They fear that, as in a much smaller project last year in Arlandria, they will be priced out of the neighborhood.

The pending redevelopment of the Beauregard area, which has been one of the most affordable in Northern Virginia, also alarms affordable-housing activists. Developers want to demolish or redevelop 2,450 units, to be replaced with higher-cost housing. The city has negotiated that 800 of the new units will be affordable to working people.

Last week, the state Transportation Department announced that it wants to sell Hunting Towers, high-rise apartment buildings with 530 units near the Woodrow Wilson Bridge. The 58-year-old buildings are the largest remaining complexes of market-rate affordable housing in Old Town, and their potential loss spurred the City Council to ask its staff to draft a letter to VDOT asserting that it does not support anything that will take those units out of the affordable-housing range.

The city does not have the money to buy the properties, which are assessed at $61 million, said Mark Jinks, deputy city manager, and the age and construction limitations of the buildings virtually guarantee that they will never be made top-of-the-line, Class A apartments. The apartments can’t be expanded, can’t handle individual washer-dryer units and don’t have central air conditioning, he said. But they are solid housing options.

Council member Frank H. Fannon IV (R) called the housing situation “good news and bad news about living in a prosperous community like Alexandria.”

“We can’t just go and buy apartments,” he said. “When these new projects come along like [in] Arlandria and Beauregard, what we can do is work with developers and negotiate.”

Several Democrats on the council immediately disagreed and pointed out that part of the problem is the wide disparity in incomes in the city as well as the region and nation. And Republican council member Alicia Hughes noted that 20 percent of the city’s residents are below the poverty line.

“Sitting on our hands while rents keep going up will ensure everyone gets pushed out,” said council member Rob Krupicka (D).

“What has been successful over the years is involvement by the federal government,” said Vice Mayor Kerry Donley (D), who is a banker. “Thirty or 40 years ago, these projects were financed with federal funds.” Mortgages have now been paid off, restrictions on affordability have been lifted and “now we’re trying to replace thousands of units lost. . . . We know what the problem is. The real question is, what are we going to do about it?”