Housing

Income tax credit; affordable rental housing tax credit. Establishes a nonrefundable tax credit for taxable years 2026 through 2030 for eligible landlords equal to $750 per affordable dwelling unit, as certified by the Department of Housing and Community Development. The bill limits the (i) total amount of such credits available to an eligible landlord to $15,000 per taxable year and (ii) aggregate amount of such credits claimed to $5 million per taxable year.

Zoning; development agreements in certain localities. Allows any locality within Planning District 23 with a population between 245,000 and 350,000 that has adopted a transfer of development rights ordinance to include provisions in its zoning ordinance that allow the governing body to enter into binding development agreements with owners of real property in the locality, so long as the property to be developed contains at least 1,000 acres or is located within (i) a receiving area of a transfer of development rights program and (ii) a tax increment financing district. Current law allows only New Kent County to include such provisions allowing for development agreements in its zoning ordinance.

Surplus real property; prioritization of disposition for affordable and middle-income housing. Requires the Department of General Services to determine whether, following an offer of surplus property to the chief administrative officer of the locality within which the surplus property is located, as well as to any economic development entity for such locality, such surplus property is suitable for the development of affordable housing, as defined by the bill. If the Department so determines, the bill provides that such property shall be offered for at least 90 days exclusively to eligible organizations, as defined by the bill, for the purpose of developing affordable housing, provided that the terms of the disposition include a recorded covenant to provide affordable housing for at least 30 years. The bill also requires the chief administrative officer of each locality to prepare and maintain an inventory of all real property within its jurisdiction to which the locality holds fee simple title and that the locality has determined to be feasible for the development of affordable and middle-income housing. If the governing body of a locality chooses to dispose of such a property, such property shall be offered for at least 90 days exclusively to public or private entities, for the purpose of developing affordable and middle-income housing, through purchase, lease, exchange, or donation in return for a recorded covenant to provide affordable housing for at least 30 years.

Virginia Residential Landlord and Tenant Act; prohibited provisions in rental agreements; landlord's maintenance responsibilities. Prohibits a rental agreement from containing any provision stating that the tenant agrees to pay (i) any fee for the maintenance of the premises, including the maintenance or provision of heating and cooling systems, pest control, trash disposal, common area utilities, and mail or package delivery; (ii) a fee for internet, cable, or any other utilities or services that amount to more than the cost paid by the landlord; or (iii) for the maintenance or security of the common areas. The bill also repeals the provision allowing the landlord and tenant to agree in writing that the tenant may perform certain duties typically assigned to the landlord and also specified repairs, maintenance tasks, alterations, and remodeling, but only if the transaction is entered into in good faith and not for the purpose of evading the obligations of the landlord and if the agreement does not diminish or affect the obligation of the landlord to other tenants in the premises.

Virginia Interagency Council on Homelessness established; use of state funds for housing and homelessness services; report. Establishes the Virginia Interagency Council on Homelessness with the purpose of establishing a coordinated, statewide framework to prevent and end homelessness by aligning state and local efforts around evidence-based strategies. The bill directs the Council to (i) implement a state plan to end homelessness; (ii) align state policies, programs, and funding to effectuate the purpose of the Council; (iii) identify and recommend removal of statutory, regulatory, and administrative barriers to housing stability; and (iv) coordinate state, federal, and private funding to maximize impact and improve outcomes. The bill requires the Council to submit by October 1 of each year a report on its activities and recommendations to the Governor, General Assembly, and Department of Housing and Community Development. The bill additionally prohibits the use of state funds to establish, operate, or support any congregate living arrangement, shelter or similar facility, or program that functions in a punitive or coercive manner, as such term is defined in the bill, with respect to individuals experiencing homelessness.

Industrial development authorities in certain localities; housing. Allows industrial development authorities in the Counties of Halifax, Henry, and Pittsylvania and the Cities of Danville and Martinsville to exercise their powers with respect to facilities used primarily for single or multifamily residences in order to promote safe and affordable housing in the Commonwealth. Under current law, such powers may be exercised only in a locality where a housing authority has not been activated. The bill also grants industrial development authorities in such localities the power to issue bonds associated with the construction of affordable housing.

Water and sewer connection fees; first-time homebuyers; affordable housing. Provides that any locality may provide for the full or partial reimbursement to a first-time homebuyer of water and sewer connection fees, capital recovery charges, and availability fees paid in connection with any new residential development conveyed to such homebuyer. The bill also permits any locality that has adopted an affordable dwelling unit ordinance pursuant to general law to provide for a waiver of such fees and charges for any development subject to the requirements of such ordinance.

Taxation provisions. Increases the standard deduction to $10,000 for single individuals, $15,000 for individuals eligible to claim head of household for federal tax purposes, and $20,000 for married individuals beginning in taxable year 2027 and indexes such deduction amount for inflation beginning in taxable year 2028. The bill also removes the aggregate amount of housing opportunity tax credits that may be claimed for qualified projects across all calendar years and exempts food purchased for human consumption and essential personal hygiene products from the local sales tax. The bill establishes two new tax brackets beginning on and after January 1, 2027, that tax income in excess of $600,000 but not in excess of $1,000,000 at a rate of eight percent and income in excess of $1,000,000 at a rate of 10 percent. Finally, the bill provides that 50 percent of revenues generated by the new tax brackets will be dedicated to localities for maintenance, operation, capital outlays, debt and interest payments, or other expenses incurred in the operation of public schools.

County manager plan of government; affordable dwelling unit ordinance. Increases local authority over affordable housing for counties that have adopted the county manager plan of government (Arlington County) by (i) potentially increasing the cash contribution to the county's affordable housing fund by developers in lieu of providing affordable dwelling units and (ii) providing that applications for a special exception approval for a change of use of an existing building from commercial to residential may be subject to an affordable housing requirement. The bill directs the governing body of such counties to appoint an advisory board to advise the governing body regarding the appropriate provisions of an ordinance to amend the cash contribution amounts to such county's affordable housing fund. Certain provisions of the bill do not become effective unless reenacted by the 2027 Session of the General Assembly.

Individual income tax; first-time homebuyer tax credit. Creates a one-time, nonrefundable individual income tax credit in taxable years 2026 through 2030 for the purchase of a principal residence by a first-time homebuyer, as such terms are defined in the bill, in an amount equal to $5,000. The bill requires that any credits be repaid if the principal residence is sold or no longer serves as the first-time homebuyer's principal residence within three years from the purchase date of such property.