Council approves 501 Cherry performance agreement, designates revitalization area for large affordable housing proposal and reauthorizes South First funding

Charlottesville City Council on March 4 approved a performance agreement that will return a portion of future tax revenue to developers to support the construction of 71 affordable housing units at 501 Cherry Avenue and took related steps to support additional affordable housing projects in the city.

The council voted 5-0 to approve the 501 Cherry performance agreement, which uses a tax-increment methodology to share 50% of the property-value increment generated by the redevelopment back to the developer for 30 years. City staff said the measure helps make the 71 units affordable and that those units will be rented to households at income levels spread between roughly 30% and 60% of area median income (AMI). The city manager and economic development staff told council the city also has $3.1 million in its capital improvement program (CIP) earmarked to support the project; the performance payment is structured so payments occur after the development is built and the new units have been verified and a full year of taxes is paid.

Council heard that Piedmont Housing Alliance and Woodard Properties are the principal developers on the 501 Cherry project and that the grant portion would flow through the local Economic Development Authority (EDA) because Virginia guidance requires the authority’s participation for this type of tax‑sharing arrangement. Staff described the arrangement as similar to a “synthetic TIF” (tax increment financing) and said the EDA will receive city transfers and then send payments to the developer when the conditions for payment are met.

Council also considered a request from Preservation of Affordable Housing (POA) and the UVA Foundation to designate four parcels at the southwest corner of Tenth and Wortland streets as a revitalization area. Staff said UVA is offering the land and POA proposes a project with up to 180 affordable units ranging from 30% AMI to 80% AMI, and an estimated total project cost of about $66 million if the full funding stack is secured. City staff and POA indicated the designation is needed for POA’s planned application to the state for Low Income Housing Tax Credit (LIHTC) funding; the LIHTC application deadline mentioned in the meeting materials was March 13. Council moved and…