Charlottesville Planning Commission briefed on tax abatement, student housing review

A big theme for the Charlottesville City Council in 2026 will be continuing to tweak land use policies as the impact of the Cville Plans Together initiative continues to be measured.

To recap, the city hired the firm Rhodeside & Harwell in late 2019 to oversee a holistic reform of the rules for building. This included an affordable housing plan adopted in March 2021, a Comprehensive Plan adopted that November, and a new Development Code in December 2023.

There are two overarching questions.

• What can the city do to incentivize developers to build units that are required by the new zoning code?
• Should the City Council further adjust policies related to the placement of student housing complexes as well as increase the fees developers pay to avoid building those affordable units.

Let’s take the first first.

Resources:

• April 2025 staff report on Charlottesville Affordable Housing Tax Abatement Program
• 3TP report on the tax abatement program
• Presentation from the January 13, 2026 Planning Commission meeting

In April 2025, Council got an initial presentation on a potential tool to be called the Charlottesville Affordable Housing Tax Abatement Program. Under such a program, developers who build affordable units would be reimbursed through a payment based on the additional tax revenue generated by the building.

A policy known as “inclusionary zoning” requires one in ten units to be designated as affordable to households below certain income thresholds for a period of 99 years.

“According to some claims and implications for particular sub-markets/areas of the City, this requirement is being deeply reviewed for any measurable financial constraints to developers, particularly in the rental market, where the gap between market rents and capped affordable rents impacts operational revenue and project feasibility,” reads the staff report for the April meeting.

The city hired the firm 3TP Ventures in June 2025 to model the tool and conduct further study of whether it would make a difference in getting the units built.

The firm’s Jeremy Goldstein told the Planning Commission on January 13 that the development community is having a hard time seeing a profit in any developments, let alone one that would require affordable units.

“If you’re hearing from the local development community that it’s difficult to make projects work right now, this data concurs with that,” Goldstein said.

Goldstein said the abatement study is not intended to be a definitive answer but is part of an effort to better understand the costs of constructing places for people to live. Developers seeking funding from the government have to share their financial documents, but those seeking to build market-rate units do not.

“The more that private sector math is understood by those making public sector decisions, I think the better off we’re all going to be,” Goldstein said.

Under an abatement scheme, a property owner would pay the full property tax but could account for some of that revenue coming back in the form of a reimbursement.

Goldstein said the creation of a tool would allow for different variables to be updated as market conditions change.

“The cost of wood changes quickly,” Goldstein said. “The cost of steel changes quickly. Sometimes consultant fees change quickly. Time changes quickly.”

Other variables include the size of a unit as well as labor costs. Goldstein said inputs came from several in the community but there was not agreement on all of them.

“While we were able to sort of reach a reasonable consensus on construction costs, there just wasn’t a real consensus on land costs. I expect these numbers are very likely to change over time,” Goldstein said.

The tool also projects revenues to be collected by the project to cover costs. When everything is put together, this tool would allow staff to model different levels of abatement.

“Mostly what this thing is doing is it is giving users an opportunity to make selections about the development type in the sub-market, how many affordable units you’re supposed to have at various [Area Median Income] bands if you want, what kind of policies do you want to test,” Goldstein said.

Goldstein said tax abatement can work to help developers recoup their costs but won’t do so entirely even at 100 percent. And if the abatement rate for a project is 100 percent, that means the city would bring in no revenue to cover the cost of providing services.

Ross Harness, a new Planning Commissioner appointed on January 12, said he appreciated having the analysis tool.

“I think it’s not necessarily the point of the study, but having this accessible can really help some people that may not understand how these work and be able to build themselves a model this way can really get in here,” Harness said.

Immediately after the 3TP presentation, Neighborhood Development Services Director Kellie Brown took the Planning Commission through the current scope of work for a proposed study on student housing.

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