Investment company seeks higher returns at Cavalier Crossing Apartments 

Planning Commissioner calls for county to consider investing in “social housing”

The new owner of the 144-unit Cavalier Crossing in Albemarle County purchased the property in May in order to maximize returns for an “undervalued” asset. 

“Cavalier Crossing will undergo a comprehensive renovation to upgrade unit interiors, amenities, and curb appeal,” reads an announcement of the purchase. “Bonaventure will enhance the existing amenity package which already includes a swimming pool, fitness center, basketball court, and volleyball court, to deliver an upscale community in a market where demand significantly outpaces supply.”

Charlottesville Tomorrow broke the news this week that existing tenants will not have their leases renewed. Seek out their ongoing coverage to follow that story more closely.

Bonaventure Multifamily Income Trust is an Alexandria-based investment firm that sees the purchase as a way to increase stable cash flows from investors who do not want to directly own or manage multifamily units. The company’s announcement describes the company as “an integrated alternative asset manager focused on the investment, development, construction, and management of innovative lifestyle multifamily communities in the Mid-Atlantic and Southeastern regions.” 

In this case, Bonaventure will take advantage of a tax mechanism called a “1031 exchange” to postpone paying taxes on the sale of an $18 million interest in a 156-unit complex called Attain Downtown In Norfolk. 

“[Internal Revenue Code] Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange,” reads a fact-sheet on the website of the Internal Revenue Service. “Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.”

Bonaventure took the proceeds of the sale in Norfolk and used the firm Wahoo Way Investments to purchase Cavalier Crossings for $20.5 million in a deal that closed on May 10, 2024. The property last sold in September 2017 for $11,199,000. 

Bonaventure, described as a perpetual investment fund, will continue to manage the Norfolk property because it still has a majority share of that development. 

Cavalier Crossing was built in 2003 and is considered a garden apartment complex. When the first residents moved in, they were tenants of what was originally known as University Place. The 14.55 acre property is just to the south of Charlottesville’s Azalea Park but cut off by Interstate 64. 

Bonaventure’s announcement about the 1031 exchange refers to Cavalier Crossing as an example of the kind of “undervalued or mismanaged” that the company seeks to invest in. They are moving swiftly to  redevelop the property. 

The announcement states clearly the intention of the 1031 exchange is to benefit investors by increasing revenues from property. Cavalier Crossing is touted as being in a market with high occupancy rates and relatively little new housing expected in the pipeline. 

Albemarle Supervisors adopted a new housing plan in July 2021 which laid out a series of tasks to be worked on to keep people in their homes. Objective 4 in Housing Albemarle is for “Preservation of existing housing and communities” and Strategy 4F called for the “development and implementation of “an Anti-Displacement and Tenant Relocation Policy and associated guidelines.” 

The current policy adopted by Albemarle Supervisors applies only to projects where the county has provided funding or made a land use decision to enable more housing. That’s according to Communications and Public Engagement director Abbey Stumpf. 

According to a January 4, 2024 letter from Albemarle County to Joseph Hoskins of Bonaventure, the project is subject to a site development plan approved in April 2002 and that would have to be amended for any alterations. 

So far, two building permits have been issued to the new owner. 

One is for “interior renovation that includes removal of one bedroom and one bathroom from 12 apartment units as well as cosmetic interior upgrades.” This is at Building 10 and is valued at $358,554. 

The other is for renovation at Building 1 that includes unit upgrades and a wall removal. This is valued at $346,500. 

Work is underway on both units.

The topic came up at the August 27, 2024 meeting of the Albemarle Planning Commission when Rio District Commissioner Nathan Moore said the county should begin to develop its own housing projects.

“And there’s different ways to do it and different ways to go about it, but I think if we can think about how we can put county resources toward public goods which includes to me like our UVA Health wage workers being able to afford to live here, then that’s progress,” Moore said.

Albemarle County created an “Affordable Housing Investment Fund” as part of the budget for fiscal year 2019. According to the FY 25 budget, the fund is intended to “is intended to “support housing initiatives that are one-time costs and will support the County’s strategic and housing goals.”

Unlike the various community advisory committees, the Planning Commission has not had an update on the Housing Albemarle plan intended to incentivize the creation of more below-market units. Albemarle Community Development Director Jodie Filardo gave one at the August 27 meeting.

“The Board of Supervisors has actually adopted a rental incentive program [which] does exchange 20 percent of the units at 60 percent of the [area median income] for a 15 percent tax increment reduction over a ten year period over the entire project, not just the rental units,” Filardo said. “That is one program that is distinct and specific.”

Filardo said the county is open to other conversations about providing affordable housing in other ways.

Before you go: The time to write and research of this article is covered by paid subscribers to Charlottesville Community Engagement. In fact, this particular installment is from the August 29, 2024 edition of the newsletter. To ensure this research can be sustained, please consider becoming a paid subscriber or contributing monthly through Patreon.