In April 2025, City staff presented the concept of an affordable housing tax abatement program during a City Council work session. Council asked staff to explore whether this kind of program could help encourage more housing construction in Charlottesville, especially when considering the costs associated with planning, financing, and building homes. The City hired a consulting firm to assess the financial impact and feasibility of a tax abatement program.

Tax abatement is a temporary reduction or exemption from taxes levied by a unit of government, typically to encourage a particular activity. The purpose of the tax abatement under consideration in this study is to encourage mixed income housing developments of 10 or more units, which are subject to the City’s Affordable Dwelling Unit Ordinance. Local governments across the United States and Virginia, including the City of Richmond and Albemarle County, have used tax abatement for similar purposes

To better understand the potential impact, consultants worked closely with the community and spoke with both for-profit and not-for-profit housing developers. Their goal was to build a financial feasibility model and study how to design a program that would be effective and easy to manage.

Study Status

In December 2025, the consultants published a draft report with findings from the affordable housing tax abatement study. On January 13, 2026, the consultants and staff presented the findings to the City's Planning Commission. Recommendations will be shared with City Council Spring 2026.