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Charlottesville study: tax abatements could help but won’t instantly reverse constrained housing market
Summary
A 3TP Ventures feasibility model presented to Charlottesville City Council shows a constrained rental market; standard abatements targeted only at affordable units rarely fully offset inclusionary zoning costs, while a rent-gap rebate merits further consideration though it has administrative unknowns.
A consultant told Charlottesville City Council on Feb. 17 that a tax-abatement program could help narrow the financing gap for new rental housing but is unlikely, on its own, to trigger broad immediate development.
Jeremy Goldstein of 3TP Ventures presented a pro-forma feasibility tool and a final report that evaluate market feasibility across building types and submarket tiers. "There's really limited development feasibility across project types," Goldstein said, summarizing the team's findings that the city's rental market is currently constrained and that inclusionary zoning makes projects harder to 'pencil.'
The presentation tested two abatement styles. Goldstein said a traditional, value-based abatement — which reduces taxes tied to the value of new improvements — offers modest gains when applied only to required affordable units. Using a mid-rise example, he showed that a…
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