HomeMy WebLinkAboutAttainable Workforce Housing Performance Grant Program UpdateAttainable Workforce Housing
Performance Grant Program Update
2.20 Explore the opportunity to further encourage the development of new attainable
workforce housing through potential efforts, such as expedited plan review and/or by reducing,
waiving, or deferring fees for qualifying projects.
Housing & Neighborhood Preservation | June 9, 2026
Staff Request of City Council
•Staff is proposing changes to current AWHP program policy to:
•Conform with requirements of new state legislation
•Align with program application document
•Set a not-to-exceed performance grant award amount for the grant period
•Changes are required to conform with new state legislation
•City Council Feedback and Guidance Sought for not-to-exceed award
amount
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Background
•May 2025: Ordinance approved to establish Virginia Beach Attainable
Workforce Housing Performance (AWHP) Grant Program
•City of Virginia Beach and City of Virginia Beach Development Authority (VBDA)
partnership
•September 2025: Program officially launched; began accepting
applications
•Provides an incentive for private development of safe, quality,affordable
multi-family rental housing.
•Self-sustaining and performance-based: Annual grants are provided to a
developer based on a percentage of the incremental real estate taxes
generated by their approved development.
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Purpose of AWHP Grant Program
•To address shortage of affordable housing and further economic
development
•To incentivize the construction of new affordable rental housing units
in Virginia Beach
•Units that are rented and affordable to households at or below 80% of Area
Median Income (AMI) ($86,150 annual income for a household of four)
•Program includes an incentive to provide units that are rented and affordable
to households with incomes at or below 50% of AMI ($53,850 annual income
for a household of four)
•Intended to make the development of affordable housing more
feasible by helping to fill funding gaps
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Recent State Legislation
•HB 352 enacted in 2026 General Assembly session: Affordable
Housing Performance Grant Programs
•Allows any locality that meets the requirements of the Act may, by
ordinance, establish an Affordable Housing Performance Grant
Program
•Indicates that the Performance Grant Program shall include
reasonable regulations and provisions that are outlined in the
legislation
•HNP staff is proposing changes to the City’s program to conform
with the requirements of this legislation
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Examples of Required Changes to Align with
Legislation
•Prior to the payment of any funds awarded, the property subject to
the grant must be encumbered with a recorded restrictive covenant
requiring the property to be used for affordable housing for the term
of the grant agreement, not to exceed 30 years.
•Other non-substantive changes to conform with the new legislation.
•Add a specific definition of affordable housing
•Must identify the local officer designated by the governing body to accept
applications
•Change to the timeline for the commencement of the grants: July 1st to
January 1st of the year following completion of construction.
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Additional Changes Proposed by Staff
•Information contained in the current program application will be
added to the policy such as:
•Requirements for land use approvals
•Definition of multi-family rental housing
•Description of the occupancy, rent and utility allowance standards
•Description of how compliance monitoring will be accomplished
•Grant Award Changes
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Current Policy: Grant Award
•Performance Grant is capped at 100% of the amount of the
incremental new real estate taxes to be levied and collected for
improvements on the Project Site.
•The amount is adjusted based on:
•The percentage of residential square footage in the development; and
•The percentage of units that are affordable in the development
•A grant amount of two times the Performance Grant Percentage, up
to 100% of the incremental value, is available to a qualified property if
20% or more of the residential units are affordable at or below 50% of
the AMI.
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Proposed Changes: Grant Award
•Set a not-to -exceed performance grant award amount for the grant
period
•Amount based on:
•Comparable Assessed Values of current affordable multi-family developments
•Current real estate tax rate
•Annual increase in assessed value of 3% per year over the grant period. This is
based on standard underwriting assumptions for Virginia Housing lending and
tax credit programs.
•Annual tax amount reduced by base tax amount before improvements
•Documented in Grant Agreement
•Annual grant determined by actual assessment growth
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Grant Award Example under Proposed
Changes
•175 units: 100% affordable development and 100% Residential
•Estimated assessed value at completion of $124,000/unit, or
$21,700,000 based on recent assessed values of recently constructed
affordable housing developments.
•Current tax rate of $.97/$100 of assessed value = $210,490 taxes in
year 1
•3% annual escalation of assessed value
•Base amount of real estate taxes before improvement: $17,897
•Not-to-Exceed amount of $9,477,254
•Average Performance Grant Per Unit/Year: $1,805
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Grant Award Example: Policy Comparisons
Using 175-unit development example from previous slide
Not-to-exceed amount = $9,477,254
Actual assessed value increased
5% annually at same tax rate
30-Year Total Grant:
Current Policy
30-Year Total Grant:
Proposed New Policy
$13,447,818 $9,477,254
If City pays the full amount of the
incremental taxes each year, the owner
would receive the maximum grant amount
at year 25 and could not request additional
grant funds for the remaining grant term.
Actual assessed value increased
2% annually at same tax rate
30-Year Total Grant:
Current Policy
30-Year Total Grant:
Proposed New Policy
$8,002,280 $8,002,280
No impact of the new policy on the
owner.
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Summary & Potential Next Steps
Staff recommending proposed changes to current AWHP program
policy to:
•Conform with requirements of new state legislation
•Align with the program application document
•Set a not-to-exceed performance grant award amount for the grant period
City Council Guidance Sought:
•Should City staff move forward with not-to-exceed award amount changes?
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Thank You!
Questions?
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