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Staff outlines draft affordable-housing tax abatement program; council asks for market and pro‑forma analysis
Summary
Staff proposed a Charlottesville Affordable Housing Tax Abatement Program (CATP) that would rebate a portion of future increment real-estate taxes to offset 10% ADU requirements; councilors requested a consultant market study and pro‑forma analysis before deciding on percentages, duration or geographic targeting.
Alan Pur, grants analyst in the Office of Community Solutions, presented the Charlottesville Affordable Housing Tax Abatement Program (CATP) concept as a tool to address a potential financial constraint created by the new 10% ADU requirement in the zoning ordinance. Pur described the mechanism as a two‑step process required under Virginia law: taxes on the new increment value are paid, then a performance‑based reimbursement is issued to mirror a front‑end abatement calculation.
Pur said the program would use future increment real‑estate tax revenue (not base revenue) to provide a predictable incentive and that other Virginia localities (Richmond, Albemarle County) have used similar structures. He explained the staff’s current due diligence: a consultant‑led market analysis and pro‑forma work to establish whether the ADU requirement materially impedes construction and, if so, to quantify the abatement level and duration needed to keep developers whole.
Policy alternatives Pur laid out included: 1) abate only the ADU cost so developers are made whole, 2) offer a larger abatement to spur additional construction beyond the 10% requirement, or 3) do nothing and allow market rents to dictate production. He identified open questions staff will analyze: the maximum percentage of increment to abate (examples range from 15% to 100%), abatement duration (15, 30 or longer years), whether to require above‑minimum ADU percentages to qualify, bonuses for deeper affordability (e.g., 30% AMI units), and geographic targeting where market rents vary.
Several council members emphasized the need for data before decisions: they asked staff to use consultants to test pro‑formas, estimate total fiscal exposure under different abatement formulas, and perform a cost‑benefit analysis to ensure abatements do not simply subsidize market‑rate development. Pur confirmed staff has procured consultants and will model scenarios and return with draft ordinance language and fiscal impact modeling.
No ordinance was introduced for adoption at this meeting; council recessed and staff will return with consultant findings to guide any future ordinance drafting or recommended program parameters.
