Housing Policy Implementation Toolkit: A Guide to New Local Housing Authority from Virginia’s 2026 General Assembly Session Prepared for Regional Housing Policy Convening of Local Governments September 16, 2026
Table of Contents How to use this Toolkit................................................................................................................3 About PHA.......................................................................................................................................3 Five New Tools for Local Housing Policy .............................................................................4 Expanded Inclusionary Housing Authority for Localities ...............................................5 Right of First Refusal for Local Governments in the Sale of Publicly Supported Rental Properties ......................................................................................................................... 7 Property Tax Exemption for Nonprofit-Controlled Affordable Housing.....................9 Administrative Approval for Qualifying Housing Developments................................ 11 Economic Development Authority Tools for Affordable Housing.................................13 Decision Making Tools................................................................................................................ 15 Notes..................................................................................................................................................17
02 | POLICY TOOLKIT
H ow to use this T oolkit Each policy section explains the new state authority, identifies decisions localities must make, outlines implementation requirements, and provides examples and resources. Use decision-making tools to determine which policies best match your locality’s housing needs and capacity. This toolkit provides general policy guidance and does not constitute legal advice. Localities should consult legal counsel before adopting an ordinance or program.
A bout PHA The Partnership for Housing Affordability serves as the Richmond region’s housing policy, research, and collaboration backbone. We bring together local governments, housing providers, community organizations, philanthropy, and private-sector partners to advance practical, data-informed solutions to the region’s housing challenges. PHA developed this toolkit to help localities translate new state authority into locally appropriate policies and measurable housing outcomes.
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F ive N ew T ools for L ocal H ousing P olicy The 2026 General Assembly Session saw some of the most impactful housing bills adopted in many years, giving localities across the Commonwealth new opportunities to increase their supply of affordable housing.
HB 867 & SB 74: Expanded inclusionary housing authority for localities Establish affordable dwelling unit programs using density incentives, development flexibility, financial tools, and other locally adopted measures
HB 4: Tools to Preserve Affordable Rental Housing Require notice of expiring affordability and establish a right of first refusal during the sale of affordable rental housing nearing expiration.
HB 854: Property tax relief for nonprofit-controlled affordable housing Allow full or partial property tax exemptions for qualifying nonprofitcontrolled affordable housing
HB 594: Administrative approval for qualifying housing developments Create an administrative approval process for qualifying affordable housing developments that meet locally adopted standards.
HB 352 & HB 806: Enhanced abilities for local Economic Development Authorities to support affordable housing Expand the use of economic development authority performance grants, loans, and bond financing for affordable housing. These new laws give localities the choice to pursue several housing strategies that work best for their specific housing needs and local conditions. This Policy Toolkit aims to help local governments understand these new laws and outlines steps toward implementation, with policy considerations, implementation steps, examples of successful programs, and additional resources. 04 | POLICY TOOLKIT
POLICY 1
E xpanding I nclusionary H ousing A uthority for L ocalities HB 867 & SB 74 | § 15.2-2304 Code of Virginia | Effective July 1, 2027 Lead Department: Planning and Housing | Implementation Difficulty: Medium Virginia Law Authorizes: • Localities to create policies that provide housing developers with incentives in exchange for inclusion of affordable housing units Virginia Law Requires: • Creation of an advisory committee that actively seeks input from residents and key stakeholder groups prior to adoption Potential Benefits: • Increased affordable housing production • Mixed-income housing • Lowered cost of development for affordable housing • Additional participation of for-profit developers in affordable housing Key Decisions: • Available incentives • Qualifying development types • Minimum project size • Housing type: rental, homeownership, or both • Target income levels
• • • •
Percentage of affordable units Affordability restriction period On-site, off-site, and in-lieu options Monitoring and enforcement
Important Considerations: • Developer interest Will developers utilize these incentives? Do the incentives offset the cost of affordable units? • Cost to the locality Do any of these incentives have budgetary implications? • Administrative complexity How will staff administer the program and monitor participating developments? • Impact on development pipeline How will these inclusionary housing programs impact other developments?
NOTE: Inclusionary housing policies can also be called “inclusionary zoning”, “incentive zoning”, “affordable dwelling units”, or other terms. These all refer to programs that provide development incentives in exchange for some contribution of affordable housing.
Implementation Steps: 1: Assess & Consult • Introduce legislation to create an advisory committee and process to explore inclusionary housing policies • Consult with residents, the development community, and other housing stakeholders specified in the legislation through committee and public engagement 2: Test Feasibility • Test the effectiveness and feasibility of incentives and the development of maximum affordable housing units 3: Establish Standards & Draft Ordinance • Design an efficient application process and procedures for providing incentives to qualifying developments • Draft ordinance to include incentives offered, qualifying developments, and affordability restrictions 4: Adopt & Prepare Procedures • Implement internal compliance and monitoring systems to confirm affordability and program requirements for participating developments 5: Launch, Monitor, & Refine • Publish application process and monitor properties for compliance at regular intervals • Continue to refine and adopt policy specifications depending on program utilization, community needs, and developer interest Example in Practice: Fairfax County Fairfax County’s program requires large developments in high density areas to include between 5 to 12.5% of units as affordable. In exchange, the development receives density bonuses of up to 20% corresponding to the number of affordable units. Fairfax’s program, which dates back to the 1990s, has created over 1,200 affordable rental units and 1,400 affordable homeownership units. Critically, the program includes an ADU Task Force, a group of stakeholders charged with monitoring the program and suggesting reforms as necessary. Scan QR code to read the bill language and explore additional resources
POLICY 2
E XPANDED T OOLS TO P RESERVE P UBLICLY s uPPorted r eNtAl P roPerties HB 4 | § 36-176 Code of Virginia | Effective July 1, 2026 Lead Department: Housing | Implementation Difficulty: Medium to High
Virginia Law Authorizes: • Localities to require owners of qualifying properties to provide notice to their tenants and the locality of expiring rent restrictions up to two years in advance, including any plans to continue affordability • Localities may establish a right of first refusal (ROFR) during the sale of any publicly supported (defined as properties with an affordability restriction that have received any state or federal investments specified in legislation) multifamily rental housing of 10 units or more within the 2 years before expiration and the 2 years after. • Localities can assign the ROFR to a qualified designee, which could be a housing provider, public housing authority, or tenants association Potential Benefits: • Improved data, tracking, and transparency of affordability restrictions • Preservation of existing affordable housing Key Decisions: • Qualifying property inventory process • Form and delivery of required notices • Qualified designee criteria and assignment procedure • Plans for expedited acquisition process
• Displacement prevention and neighborhood stability • Continuation of public investments in housing
• • • •
Standards for affordability preservation Capital sources Tenant communication and coordination Enforcement procedures
Important Considerations: • Partner capacity Does the locality have a network of potential qualified designees (partners interested in using the ROFR) or does a network need to be cultivated? • Locality capacity What capacity is necessary to monitor notice requirements and track expirations? What is necessary to effectively execute or transfer a ROFR? • Financial capacity and prioritization Are there funds that can be set aside for expidited acquisition through the ROFR? What criteria will be used to determine priority properties when funds are limited? NOTE: Another new law (HB375) from the 2026 General Assembly gives residents and localities the first right of refusal in the sale of manufactured housing communities. This right does not require adoption of an ordinance but may be considered in the development of a ROFR policy for publicly supported housing. PARTNERSHIP FOR HOUSING AFFORDABILITY | 07
Implementation Steps: 1: Design process and adopt ordinance to require notice of expiring affordability 2: Adopt ordinance to enable the ROFR and determine exemptions and enforcement 3: Establish and execute a process for determining qualified designees 4: Assess all qualifying properties and choose which will be subject to the ROFR by filing a notice, including the qualified designee if identified in official land records 5: Plan for and explore capital sources so that the ROFR entity is as prepared as possible to execute when a third-party offer is accepted by the owner of a subject property
Right of First Refusal Action Timeline:
ROFR 30-Day Readiness Checklist: Affordability-expiration dates tracked Qualifying properties identified ROFR recorded in land records Notice forms prepared Qualified designees prequalified
Tenant communication protocol established Acquisition decision authority established Purchase and preservation capital identified Transaction counsel available
Example in Practice: Prince George’s County, Maryland Prince George’s County adopted a Right of First Refusal policy in 2013 that gives the county the option to match offers for all multifamily rental properties (market rate and affordable) consisting of 20 or more residential units. Since 2020, the County has preserved 2,691 housing units. The County supports their ROFR policy with a ROFR Preservation Fund that has been funded with $25m over the course of the past 5 years. Finally, the County maintains a list of developers with an interest and the demonstrated capacity to assume acquisition rights, increasing capacity to preserve units through the ROFR.
Scan QR code to read the bill language and explore additional resources
POLICY 3
P roperty T ax E xemption of N onprofit C ontrolled A ffordable H ousing HB 854 | § 58.1-3603 and 58.1-3651 Code of Virginia | Effective July 1, 2026 Lead Department: Housing and Real Estate Assessment | Implementation Difficulty: Low Virginia Law Authorizes: • Localities to grant full or partial real estate tax exemption to nonprofit-owned affordable housing, if they decide such use qualifies as “charitable” or “benevolent” • The exemption may consider affordable housing to be "nonprofit-owned" when one or more nonprofits have controlling interest in the managing member of the ownership entity Potential Benefits: • Reduced operational costs for affordable housing • Improved maintenance, expanded resident services, and more stable rents • Expanded access to capital during financing for new development or rehabilitation • Option to support affordable housing apart from large, one-time grants Key Decisions: • Classification or designation of qualifying properties • Eligible housing types • Income limits • Full or partial exemption • Exemption duration
• • • • •
Treatment of mixed-use properties Application requirements Annual certification process Change-of-control procedures Termination or recapture for noncompliance
Important Considerations: • Local fiscal impact What would be the loss of revenue and how would it impact the budget? • Predictability and clarity How can we ensure these exemptions are long-term and predictable enough to be considered in the underwriting process?
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Implementation Steps: 1: Assess financial capacity to offer partial or full tax exemptions for qualifying properties and adopt ordinance 2: Create application process for qualifying properties and outline formula to calculate exemption amount 3: Draft contracts to ensure compliance with affordability requirements and outline processes to provide exemptions 4: Set up compliance and monitoring systems for participating properties
Example in Practice: Atlanta Private Enterprise Agreement The Private Enterprise Agreement program is operated by the Atlanta Urban Development Corporation (AUDC), a quasi-governmental entity, and provides property tax incentives to affordable and workforce housing up to 140% AMI. The AUDC maintains an ownership stake in the development through a ground lease, (importantly, HB854 does not require localities to have an ownership stake). In exchange for a full property tax exemption, developments are required to reserve 20% of units at 50% AMI, 10% of units at 80% AMI, and the remainder cannot exceed 140% AMI. Note, Georgia law may allow for different capabilities than authorized in HB854 and Virginia state code.
Tax Exemption Ordinance Drafting Checklist: Specification of qualifying housing providers Formula for calculating exemption amount Target income levels Process for certifying exemption with assessor’s office Compliance requirements Penalties for noncompliance
Scan QR code to read the bill language and explore additional resources
POLICY 4
A dministrative A pproval for Q ualify ing H ousing D evelopments HB 594 | § 15.2-2292.3 Code of Virginia | Effective July 1, 2026 Lead Department: Planning | Implementation Difficulty: Medium
Virginia Law Authorizes: • Localities to administratively approve rezoning applications for affordable housing developments Virginia Law Requires: • Developments qualifying for administratively approved rezonings must: Have at least 75% of units qualify as affordable housing (100% AMI or below) Comply with Virginia Fair Housing Law Connect to public or community water supply or sewage system Be within or adjacent to an area identified as one that could support increased density development and provide access to services • The ordinance for administrative approval of affordable units must include provisions specifying: Minimum number of units per acre Maximum lot-size requirements Height requirements • Annual reporting to the state DHCD for priority consideration for certain grants or loans
Potential Benefits: • Reduced timelines for building affordable housing • Cost savings for affordable housing developers
Key Decisions: • How to identify eligible areas • Minimum number of units per acre • Maximum lot size • Height requirements • Affordability terms
• Application requirements and procedures • Administrative approval process and timeframe • Appeals and enforcement
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Important Considerations: • Qualifying development size What is the minimum density, maximum lot size, and height requirement for qualifying developments? • Identification of eligible areas How are “areas that could support increased density” identified? • Community sentiments How will community members respond to rezoning processes conducted administratively? Implementation Steps: 1: Identify potential eligible areas 2: Evaluate infrastructure and access to services 3: Establish objective development standards 4: Draft the ordinance, application, and review checklist 5: Complete statutory requirements to advertise the proposed ordinance twice 28 days before vote 6: Train review departments 7: Publish standards, maps showing eligible areas, and application materials 8: Report annually to the governing body and DHCD as applicable Administrative Approval Flowchart:
Example in Practice: California SB 35 - Streamlined Approval for Infill Multifamily Affordable Housing Senate Bill 35 was passed in 2017 in California, allowing qualified multifamily infill projects to go through a simplified and expedited approval process in jurisdictions that are not on track to meet their housing production goals, as set by state mandates in CA. In exchange, developments were required to set aside a certain number of units as affordable. After five years, the process had facilitated the creation of over 18,000 new proposed housing units across the state, with most in 100% affordable developments.
Scan QR code to read the bill language and explore additional resources
POLICY 5
E conomic D evelopment A uthority T ools for A ffordable H ousing HB 352: Affordable Housing Performance Grant Programs § 15.2-958.4:1 Code of Virginia | Effective July 1, 2026 Lead Department: Economic Development | Implementation Difficulty: Low HB 806: Bond Issuance and Lending for Affordable Housing § 15.2-4901 Code of Virginia | Effective July 1, 2026 Lead Department: Economic Development | Implementation Difficulty: Medium Virginia Law Authorizes: • HB 352: Affordable Housing Performance Grant Programs Allows local Economic Development Authorities (EDAs) to establish affordable housing performance grant programs by ordinance and administratively approve applications • HB 806: Bond Issuance and Lending for Affordable Housing Confirms the abilities of EDAs to provide loans and issue bonds for the development of affordable housing, and extends this ability to EDAs in localities that have public housing authorities
Potential Benefits: • Increased coordination between economic development and affordable housing • Additional financial tools for affordable housing developers Key Decisions: • Housing product types served • Eligible applicants and projects • Target income levels and affordability periods • Funding sources • Subsidy calculations
• • • •
Process for approving grants, loans, or bonds Loan underwriting duties Compliance and monitoring responsibilities Default and recapture guardrails
Important Considerations: • Financial capacity Can the locality and its EDA adequately fund and support additional programs or financing? • Cross-departmental collaboration Do the EDA and other relevant departments have shared processes and knowledge to administer these programs?
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Implementation Steps: 1: Assess financial capacity for bond issuance, lending, and performance grant 2: Consult with affordable developers to understand financial and programmatic needs 3: Coordinate with housing department staff to outline program qualifications and compliance processes 4: Draft legal documentation and application materials (if applicable) 5: Adopt ordinances as necessary to implement programs
Examples in Practice: Richmond Affordable Housing Performance Grant (AHPG) Program Richmond’s performance grant program provides full or partial real estate tax abatements for qualifying housing developments. The value of the tax abatement is calculated based on the percentage of units in the development which are affordable to households earning 50% AMI or 80% AMI. Since its inception in 2023, the AHPG has facilitated the creation of over 3,200 affordable housing units across 25 developments. Henrico County EDA Support for the Glenwood Farms Redevelopment Henrico County has utilized its EDA to issue bonds and provide an $11 million loan for the redevelopment of Glenwood Farms, a 294-unit apartment complex which had faced persistent neglect from previous owners. The financing from the EDA will enable a phased redevelopment of the property into 913 homes in a mix of townhomes, apartments, and age-restricted units.
NOTE: Conduit bond financing allows an EDA to facilitate a transaction without making the locality responsible for repayment, provided the financing is structured and documented appropriately.
Scan QR code to read the bill language and explore additional resources
14 | POLICY TOOKIT
Score each policy from 1 (least favorable) to 5 (most favorable) for every criterion. A policy should not advance if a critical legal, fiscal, staffing, or compliance prerequisite remains unresolved, regardless of its total score.
Use this matrix to better understand the overall feasibility and impact of the policies outlined in this toolkit.
Policy Scoring Matrix
D ecision M aking T ools
R = Responsible | A = Accountable | C = Consulted | I = Informed
Use this matrix to outline which departments would be involved in implementing and administering these new policies. For each policy, identify the department that is responsible, accountable, consulted, or informed.
Cross-Departmental Requirements Matrix
D ecision M aking T ools
N otes :
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18 | POLICY TOOLKIT
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Partnership for Housing Affordability
8975 Three Chopt Rd., Richmond, VA 23229 www.pharva.com
Jovan Burton
Executive Director jburton@pharva.com 804.422.5057
Woody Rogers
Policy Director wrogers@pharva.com 804.422.5067