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 seconded to approve the revitalization-area designation so POA could meet the submission deadline; the discussion noted UVA’s current contribution is the land and that any request for direct city capital funding would be considered separately.

Finally, council reviewed revised language to reauthorize earlier public funding for the Charlottesville Redevelopment and Housing Authority’s (CRHA) South First Street Phase 2 project. Staff said the original memorandum of agreement (MOA) had lapsed because construction had not started in the originally-specified time window; the amendment does not change the amount of city funding previously approved but updates project deadlines and adds a three-step compliance mechanism (30-day cure period, possible suspension of future funding, and potential termination) and removes a prior retainage provision to comply with bonding rules. Staff recommended reauthorization; council agreed to reauthorize and to waive a second reading so the revised MOA and the ordinance could proceed on the next agenda.

What the council did not decide at this meeting was a final, up-front cash commitment beyond the 501 Cherry tax-increment grant mechanism. Councilors and staff repeatedly emphasized that the performance payments will be paid after the development is completed and taxes are collected, and that any separate CIP or direct capital request for other projects (including the POA/UVA project) would come back to council for a separate appropriation decision.

Votes at a glance

- Performance agreement for 501 Cherry Avenue (71 affordable units): motion moved and seconded; recorded vote 5-0 in favor. Outcome: approved. Key terms: 50% of incremental tax value shared for 30 years; target affordability 30%–60% AMI; CIP contribution noted $3,100,000 set aside (not yet disbursed).

- Designation of revitalization area at Tenth & Wortland (POA/UVA proposal): motion moved and seconded to approve the designation to support a LIHTC application; council approved the designation (motion and second recorded in the meeting). Outcome: approved. Key details: site includes four parcels to be conveyed by the UVA Foundation; proposed ~180 affordable units at 30%–80% AMI; estimated total project cost ~$66,000,000; LIHTC application deadline noted March 13; staff said any city capital contribution would be considered later and is not included in tonight’s action.

- Ordinance amending MOA and reauthorizing grant for CRHA South First Street Phase 2: staff summarized delays that caused the prior MOA to lapse, said the funding amount is unchanged from July 2024 authorization, described new construction start and completion dates (construction start 07/01/2025; completion 07/31/2027) and compliance language; council moved to waive second reading and reauthorize the MOA so the project can proceed. Outcome: reauthorized (waived second reading).

Why it matters

Council’s actions move multiple sizable affordable‑housing projects forward: the 501 Cherry action creates an enforceable mechanism that lets a developer capture and share tax increment to subsidize affordability; the Tenth/Wortland revitalization designation lets a LIHTC applicant meet a state deadline; and the South First MOA reauthorization keeps a CRHA redevelopment moving toward construction. All three items tie into the city’s broader affordable‑housing strategy but leave open additional funding decisions that council may face later.

Who spoke

- Chris Engel, Director, Office of Economic Development (city staff) — presented the 501 Cherry performance agreement and explained the tax-increment methodology. - City Manager (Sam Sanders) — clarified the split of the overall 501 Cherry project into residential and grocery components, discussed CIP set-aside and process implications. - Antoine Williams, Housing Program Manager, Office of Community Solutions (city staff) — presented the South First MOA amendment and summarized compliance and deadline changes. - John Settle (calling in), representative for Preservation of Affordable Housing — available to answer POA questions; staff noted his availability during discussion. - Other council members and staff participated in questioning and discussion; no outside developer spokespersons were present in the chamber to present details beyond what staff and POA provided.

Clarifying details

- 501 Cherry: 71 affordable units; affordability targeted 30%–60% AMI; payment mechanism shares 50% of post‑development incremental tax for 30 years and is paid after construction and one full year of taxes are collected; CIP line item of $3,100,000 has been allocated but not yet disbursed. - Tenth & Wortland (POA/UVA): proposal described as ~180 units, 30%–80% AMI; estimated total development cost $66,000,000 (staff said “if funding is in place”); designation requested to enable LIHTC application due March 13; UVA’s contribution described as parcel(s) of land (back parking/parcel carve‑off referenced). - South First Street Phase 2: reauthorization does not change previously approved dollar amount; construction start date revised to 07/01/2025 and completion to 07/31/2027; prior retainage language removed to comply with bonding rules; MOA had lapsed because construction did not begin within the original window.

Proper names

- Piedmont Housing Alliance (organization) - Woodard Properties (business/developer) - Preservation of Affordable Housing (organization; POA) - University of Virginia / UVA Foundation (institution) - Charlottesville Redevelopment and Housing Authority (CRHA)

Searchable tags

["affordable housing","501 Cherry","POA","LIHTC","CRHA","CIP","economic development authority","Tenth & Wortland","Charlottesville"]

Topics

- affordable_housing: justification: Council approved a tax-increment subsidy and designated land and reauthorized MOA for public funding to enable multiple affordable-housing projects. Scores — topic_relevance:0.99, depth_score:0.86, opinionatedness:0.08, controversy:0.43, civic_salience:0.92, impactfulness:0.86, geo_relevance:1.00

Discussion vs. decision

- Discussion points: funding sources, role of UVA (land vs. direct funding), whether city would or would not provide additional direct capital for POA project, EDA involvement to legally channel the tax sharing, timing and verification conditions for payments. - Directions: staff to continue conversations about grocery-store portion of 501 Cherry and to return any city capital requests to council for separate consideration; staff to proceed with paperwork to execute the performance agreement and EDA transfer mechanisms. - Decisions: council approved the 501 Cherry performance agreement (5-0), approved the revitalization-area designation for the Tenth & Wortland parcels, and reauthorized the South First MOA with updated deadlines and compliance language.