(The Center Square) – Virginia lawmakers approved $20 million for a rental assistance pilot program as part of the state budget and passed several bills aimed at expanding affordable housing.
The program aims to support low-income families struggling with housing costs. Set to begin in 2025, the program will cap rent payments for all eligible households at 30% of their monthly adjusted income or the state’s payment standards, whichever is lower. Lawmakers have also passed several housing bills designed to expand and preserve affordable housing across the commonwealth.
However, the financial impact on taxpayers and local governments remains uncertain.
Virginia is currently facing a shortage of 183,843 affordable rental homes for low-income families, according to the National low income Housing Coalition.
The first measure, House Bill 2245, changes how affordable housing properties are taxed by requiring assessments to be based on actual rental income rather than market value, which supporters of the bill say will lower costs for affordable housing developers and encourages more construction. However, state documents indicate local governments could see reduced property tax revenue, which may affect funding for schools, infrastructure, and other public services.
House Bill 1973 focuses on preserving affordable housing by allowing local governments to fine property owners up to $5,000 for failing to comply with affordability requirements.
A fiscal impact statement found that the Department of Housing and Community Development can enforce the law within its existing budget, meaning no additional state funding will be needed.
Local governments may still face administrative and legal costs to enforce compliance. While fines could help offset these costs, it’s unclear if they will fully cover enforcement expenses.
The third measure, Senate Bill 1313, expands the inclusionary zoning, giving local governments more authority to require developers to include affordable housing units in new projects. This could increase the availability of affordable housing without requiring state funding.
These new requirements may lead to higher construction costs, which market-rate renters and homebuyers may feel. The bill’s delayed effective date of July 1, 2026, gives localities enough time to plan implementation.
The Housing Opportunity Tax Credit was also extended, allowing tax incentives for private developers to build affordable housing.
As previously reported by The Center Square, Gov. Glenn Youngkin announced more than $139 million in affordable housing and special needs housing loans, funding 41 projects aimed at creating and preserving nearly 3,000 housing units across the commonwealth.
The long-term effect of these measures depends on how local governments implement them and whether they increase housing availability without significantly affecting state and local budgets.
The governor is expected to review the bills and take action by March 24.
