Developers: City’s downtown effort a mistake

The city’s effort to exert more control over future development in downtown Charlottesville could backfire and deter growth, some developers say.
Charlottesville staff is seeking to decrease around downtown the number of units per acre a developer can build without getting special permission from the city. Last week the city’s Planning Commission endorsed setting new height limits on downtown buildings, in a bid to preserve the pedestrian-friendly character of the corridor.
Because of Charlottes-ville’s permissive zoning regulations, many developers have been able to go forward with their projects with minimal oversight and input from the city. Though city officials would like developers to provide more benefits — such as affordable housing and road improvements — the city has had little leverage because of the zoning rules.
By dropping the density threshold, the city can extract more concessions from developers.
“It gives the city some more latitude and control to make sure it is healthy development and is what we want to occur,” said Mike Farruggio, a planning commissioner.
However, some developers say that lowering the by-right density limit introduces more risk into the building process and could cause potential investors to shy away from downtown projects.
“If you drop the by-right you basically stop all development downtown,” said Oliver Kuttner, who previously built the Terraces in the former Woolworth’s building and the Glass Building on Second Street Southeast. “Any developer who buys property buys it strictly on by-right calculations.”
Some in the development community, however, say such fears are overblown. The greater scrutiny would ultimately produce higher-quality projects, said John Matthews, a local architect.
And the development possibilities in downtown, especially on West Main Street, mean that many investors would be willing to jump through more hoops to complete a project, Matthews added.
“I don’t think this would scare off anyone if everybody is playing by the same rules,” Matthews said. “It just means you factor that into the equation.”
Currently, developers can build 87 units per acre on and near the mall, and 64 on the south side of West Main Street. Under the new proposal, that limit would be dropped to 43 for both areas.
Yet the new regulations, if they take effect, could enable developers to have more units when all is said and done. With the permission of the City Council, buildings could have 240 units per acre, compared with 200 now.
“There are areas we believe can stand more density than is currently allowed,” said Jim Tolbert, the city’s head planner. “Dropping the by-right gives us the ability to solve access or other issues.”
When the city grants greater density it can set conditions that will benefit the community, including road improvements and public amenities.
Thanks to a new state law, the city could see more affordable housing if it changes the zoning rules. Under a bill passed by the General Assembly this year, developers seeking a rezoning or special-use permit would be granted additional density if they agree to reserve a certain number of units at affordable rates or donate a set amount of money to Charlottesville’s affordable housing fund.
“That ordinance will act as a tool for us to compel developers to provide more affordable housing,” said Cheri Lewis, a member of the Planning Commission.
Though the change in density rules could net the city more affordable units, it could have the unintended consequence of depriving the city of downtown housing for middle-class families and singles, Kuttner said.
Dropping the by-right limit might cause developers to build only high-end condo units to maximize profits.
“If the goal is more reasonably priced housing for people who want to live downtown, I’d highly recommend they leave the density alone,” Kuttner said.
Forcing developers to apply for special permits for what they can do now without city involvement could dissuade some from going forward with projects, others say. The extra cost and time could turn off potential investors, said Ivo Romenesko, president of the Appraisal Group.
“One thing that drives up the cost of real estate is regulation,” he said.
“If the time frame gets so extended and the cost meter runs at a rapid rate, in some cases it’s not going to be worth expending a great deal of resources,” he added.