Virginia Beach staff recommend council consider 30-year tax-increment grants for two affordable rental projects

Ruth Hill, the city's director of housing and neighborhood programs, told the City Council on Oct. 14 that staff recommends council consider resolutions on Oct. 21 to approve Attainable Workforce Housing Performance Grants for two proposed multifamily rental developments: Grand Lakes Senior Apartments and The Silos.

The grant program, created by a council ordinance in April 2024 and a resolution of the Virginia Beach Development Authority (VBDA) in May 2024, rebates annual incremental real estate tax revenue generated by an approved project for a set grant term. Hill said the program is designed to support private development of safe, quality, affordable rental housing by addressing a financing gap in projects that are new construction and developed by for-profit entities.

Grand Lakes Senior Apartments is a proposed 172-unit senior development for households age 62 and older. Hill said the project is 100% affordable and will rely in part on low-income housing tax credits. The city's estimated completed assessed value for Grand Lakes is about $21.28 million; staff calculated the first-year incremental tax revenue and recommended allowing an annual grant equal to 100% of the incremental tax for a 30-year term. The first 15 years of the term would require a conditioned capital investment equal to $10,000 per affordable unit (the developer estimates that equals about $1.72 million for the first 15 years). Hill said the project has a funding gap of about $2.15 million and that rezoning for the site was approved Dec. 10, 2024. Construction was projected to begin in December 2025.

The Silos proposal is a 200-unit multifamily project off Princess Anne Road. Hill said it also would be 100% rental and use low-income housing tax credits. Staff estimated an assessed value at completion of about $27.00 million and an annual grant equal to 100% of the incremental real estate taxes for a 30-year term, with a conditional second 15 years tied to a capital investment requirement. The developer's estimated funding gap for The Silos is roughly $2.775 million; conditional rezoning was approved July 8 and construction start was estimated for June 2026.

Hill told council that the program requires annual verification of compliance for disbursements and that the applicants will pay a 1% administrative fee to the VBDA. She said the annual grant amount will be recomputed each year based on the property's assessed value and the real estate tax rate the council sets.

Council members questioned whether the projects had land-use approvals before applying for the grant, how the city's assessed-value estimates were developed, and how income and rent restrictions would be verified over time. Staff answered that both projects had obtained rezoning approvals before applying for the grant, that the city prepared independent assessed-value estimates, and that applicants will be required to verify compliance annually and that LIHTC oversight will also apply.

Councilors also raised concerns about potential conflicts of interest tied to the developer; staff said a Franklin Group board member resigned before VBDA consideration and did not participate in the VBDA deliberations.

No formal vote took place at the Oct. 14 meeting. Staff asked council to consider resolutions on Oct. 21 to adopt the grants; the council will vote on those resolutions at that time. The staff recommendation and the application packages show the projected grant amounts, the estimated assessed values, the targeted area median income (AMI) mixes for units, and the proposed 30-year terms with conditional capital investments for the first 15 years.

Clarifying details in the staff presentation included the AMI breakdowns for Grand Lakes (19 units at 30% AMI; 19 units at 40% AMI; 51 units at 50% AMI; 14 units at 60% AMI; 69 units at or below 80% AMI) and staff's note that The Silos had not finalized a unit-by-unit AMI breakdown but was targeting an average of about 60% AMI. Hill said the estimated first-year incremental tax revenue and the current assessed value were used to calculate the proposed annual grant amount for each project.

Staff emphasized that the program is intended to be performance-based and self-sustaining: annual grants will only be paid after verification of compliance, and the payout is tied to the incremental tax revenues generated by the completed development.

Next steps: Council may vote on resolutions regarding the VBDA-adopted grant agreements at the Oct. 21 council meeting. If approved, the grants would be administered annually per the program terms and subject to the verification and conditions described in staff's presentation.