City of Alexandria, Virginia
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MEMORANDUM
DATE: NOVEMBER 4, 2026
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
THROUGH: JAMES F. PARAJON, CITY MANAGER
FROM: ASPASIA XYPOLIA, DIRECTOR, OFFICE OF HOUSING
DOCKET TITLE:
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Introduction and First Reading. Consideration. Passage on First Reading of an Ordinance to Partially Exempt by Designation from Real Estate Taxes the Property of Community Lodgings, Inc. located at 3910 Elbert Avenue Due to Operation as Affordable Housing. For 2026, the assessed value of real property is $5,290,000 and the property taxes assessed for the property are $60,041.50.
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ISSUE: Consideration of a 30-year partial real estate tax exemption on the incremental increase of the total assessed property value due to the new construction at 3910 Elbert Avenue. The exemption will close the remaining funding gap for Community Lodgings, Inc.’s (CLI) redevelopment of a 28-unit 1940s building into 91 committed affordable homes at or below 60% of Area Median Income (AMI).
RECOMMENDATION: That City Council:
1. Approve on First Reading and schedule for Public Hearing and Second Reading, and Final Passage on Saturday, November 14, 2026 an ordinance to provide partial exemption from real estate taxes for the property located at 3910 Elbert Avenue (Attachment 2).
2. Authorize the City Manager to execute a performance agreement, with content not substantially different from that which is outlined in the ordinance and Term Sheet (Attachment 3), in order to preserve and expand the number of committed affordable homes at 3910 Elbert Avenue.
BACKGROUND: Elbert Avenue Apartments, at 3910 Elbert Avenue in the Arlandria-Chirilagua neighborhood, is a three-story garden-style building constructed in the 1940s. It contains 28 apartments and a management office and has housed low-income Alexandria households for decades. CLI, a Virginia nonprofit and 501(c)(3) organization, owns the property and has selected Wesley Housing as its co-developer.
CLI proposes to demolish the existing building and construct a six-story building with 91 apartments, all affordable at or below 60% AMI for 40 years. The unit mix is 20% one-bedroom, 60% two-bedroom, and 20% three-bedroom. The weighted average affordability is approximately 51% AMI.
The project has advanced as follows:
• Resident move-outs began in summer 2026 and are complete. The project is subject to the City’s Anti-Displacement Policy for the Arlandria-Chirilagua Plan Area, and current residents have priority to return.
• Low-Income Housing Tax Credit (LIHTC) equity has been identified.
• Financing will combine a Freddie Mac loan with approximately $16 million in tax-exempt bonds to be issued by the Alexandria Redevelopment and Housing Authority (ARHA) in December 2026.
• The City has approved a $3.475 million loan to the project.
• Construction is anticipated to begin in April 2027.
The total development budget is approximately $58.8 million. A gap remains after all other sources, and CLI has requested a tax abatement to close it.
The 2026 General Assembly amended Va. Code § 58.1-3651 (HB 854, effective July 1, 2026). The amendment clarifies that a locality may exempt, by designation, real property owned by a LIHTC ownership entity in which a nonprofit holds the controlling interest. The proposed ordinance relies on that authority and would establish the exemption as new Section 3-2-195 of the City Code.
DISCUSSION: The project directly advances the goals of the Housing 2040 Master Plan (Plan), and it uses tax relief, the Plan’s leading preservation tool, as the Plan intends.
The project advances the following six Housing 2040 goals:
• Goal 1 - Expand supply: The project increases the site from 28 to 91 homes, a net gain of 63 committed affordable units.
• Goal 2 - Preserve: All 28 existing units are replaced one-for-one, and current residents have priority to return.
• Goal 3 - Minimize displacement: The project is subject to the City’s Anti-Displacement Policy for the Arlandria-Chirilagua Plan Area.
• Goal 4 - Rental housing up to 60% AMI: Every unit is affordable at or below 60% AMI for 40 years. This includes 24 units at 30-40% AMI, and the weighted average is approximately 51% AMI.
• Goal 8 - Housing quality: New construction replaces an aging 1940s building with modern homes, predominantly two- and three-bedroom units for families.
• Goal 9 - Stability and mobility: On-site resident services will include financial literacy, youth education and after-school programs, workforce development, and family support.
The Plan identifies tax relief as a leading tool for preserving affordable housing, and Alexandria Housing Affordability Advisory Committee (AHAAC) has championed its use. The 2026 amendment to Va. Code § 58.1-3651 now allows the City to apply this tool to LIHTC projects controlled by a nonprofit. The proposed abatement follows the City’s framework:
• It is used only to close a funding gap that remains after all other sources.
• It was sized based on the project’s levels of affordability, the amount of other City funding provided, and the developer’s success in using City funds and tools to attract other public and private resources.
The abatement applies only to the increase in assessed value above the January 1, 2026 assessment: 100% of that increase in years 1-15 and 60% in years 16-30.
Va. Code Section § 58.1-3651(B) requires that Council consider responses to specific questions related to the organization and project. Attachment 4 provides information from CLI related to the questions about the organization. The revenue impact question is addressed above.
FISCAL IMPACT: The abatement has no effect on current real estate tax revenue from the property. The January 1, 2026 assessed value remains fully taxable for the life of the exemption, and only the new value created by the project is abated. For 2026, the assessed value of real property is $5,290,000 and the property taxes assessed for the property are $60,041.50. Over 30 years, forgone revenue on that new value is estimated at approximately $4.0 million, or $2.3 million in present value.
ATTACHMENTS:
Attachment 1. Cover
Attachment 2. Ordinance
Attachment 3. Term Sheet
Attachment 4. CLI Letter
Attachment 5. Presentation
STAFF:
Emily Baker, Deputy City Manager
Julian J. Gonsalves, Director, Strategic Projects and Public-Private Partnerships
Kevin C. Greenlief, Director, Department of Finance
Bryan Page, Assistant Director, Department of Finance
Tamara Jovovic, Acting Division Chief, Housing Development, Office of Housing
Christina Zechman Brown, Deputy City Attorney