Virginia Beach housing grant program aims at increasing affordable options
VIRGINIA BEACH — A housing grant program the city could launch soon aims to increase Virginia Beach's affordable housing inventory by providing an incentive to developers.
The Attainable Workforce Housing Performance Grant program mirrors a Richmond initiative, which is exceeding expectations since it began more than a year ago. Funding comes from a percentage of the real estate taxes the property will generate over a given period of time, relieving the need for the city to provide money upfront to encourage construction of low-cost housing.
Local real estate developers are already chomping at the bit to apply for the grant.
'This is, in our minds, a way to do it without the community having to actually set up a fund,' said Freddie Fletcher, senior vice president for development at Franklin Group.
Fletcher is hoping the grant will be available to help fill a financing gap for Grand Lake, a 172-unit senior community the company plans to build off of Virginia Beach Boulevard.
'The cash flow allows us to get more upfront loan, which makes the deals pencil, or work, on the front end without having some significant gap,' Fletcher said.
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Under the grant program, developers will pay taxes only on the original value of the property, which helps reduce long-term operating costs and allows them to secure better financing. The duration will be 15 years, with an option to extend for an additional 15 years.
The City Council approved the grant program April 1, and the Virginia Beach Development Authority would have to adopt a resolution for it to move forward. The authority will likely vote on the matter next month.
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Criteria for the grant include new construction, for-profit entities, multifamily and a demonstrated gap in financing. The project can be fully affordable housing or mixed income. If existing housing is demolished, the new project must contain a minimum of 20% affordable housing units.
The grant would be based on a percentage of the incremental real estate tax revenue generated by the development project. The incremental real estate tax revenue is the difference in the amount of property tax generated by a property before and after the completed affordable housing development.
A housing market analysis commissioned by the city last year provided recommendations on ways the city could increase its affordable housing inventory. The study concluded that affordable, attainable housing is the city's most critical need, and the highest levels of housing insecurity are among extremely low- and very low-income renters, as well as senior householders age 75 and older.
'Additional housing dedicated to low-income households is required to stabilize households experiencing housing insecurities and to reduce periods of homelessness among Virginia Beach residents,' the analysis said.
It recommended the city's Development Authority consider potential solutions including real estate tax abatements, citing Richmond's program.
The City Council subsequently endorsed an effort to work with the city's Development Authority to fund new, large-scale mixed-use development projects with affordable rental units.
Virginia Beach currently has roughly 4,755 affordable multi-family rental units. One third of them are designated for seniors, 5% are for people who are homeless or disabled, and 61% are open to any income-qualified household, according to the city.
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To incentivize the development of affordable housing in Virginia, the General Assembly passed HB 1194 during the 2022 session. It allows local economic development authorities, in conjunction with their local governing bodies, the power to make grants associated with the construction of affordable housing.
Richmond was the first Virginia city to launch an Affordable Housing Performance Grant Program in 2023, and it's been a sweeping success, according to city officials. However, developers have pointed out that Richmond has more available land for housing projects than Virginia Beach.
To date, Richmond's City Council has approved 26 affordable housing development projects with a total of 3,266 units, which are either completed, under construction or in development, according to Sharon Ebert, Richmond's deputy chief accounting officer for planning and economic development.
Of the 3,266 units, 390 units will be affordable to households earning at or below 50% of the area median income (AMI); 2,674 are between 50% and 80% AMI; and 202 units are at market rate. AMI is the midpoint between the highest and lowest family incomes in a metro area. Every year, the U.S. Department of Housing and Urban Development calculates the AMI for each metro area.
The Richmond area AMI is $113,500 for a household of four, based on HUD's published 2025 Income Limits, Ebert said. As of fiscal year 2024, the AMI for the Virginia Beach-Norfolk-Newport News area is $100,700 for a household of four.
The Richmond program is also a structured contract between the city, its economic development authority and the developer. The annual grant payments run up to 30 years and total the incremental real estate tax revenues generated by the development projects.
Lawson Companies of Norfolk has used Richmond's program for three developments that wouldn't be possible without the rebate, said Will Sexauer, acquisitions manager.
'This is the most impactful program that we've seen in terms of really bridging the gap and making projects feasible,' Sexauer said.
He's currently looking into potential redevelopment opportunities for affordable housing in Virginia Beach.
'We're extremely excited to see Virginia Beach follow in Richmond's footsteps,' Sexauer said.
Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com
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