The curtain may be closing at the Violet Crown theater in downtown Charlottesville. Its owner intends to sell the prime piece of real estate on the city’s popular pedestrian mall which has housed a movie house for nearly 30 years.
In its place, developer Jeff Levien hopes to build an 18-story apartment complex, the largest residential building the Downtown Mall has ever seen.
The impending closure marks the end of an era for Charlottesville moviegoers. Prior to the Violent Crown opening in 2015, the building at 200 W. Main St. was occupied by a Regal theater for roughly 18 years.
The closure also brings a significant test for a city that has been experiencing a self-described “housing crisis” for years.
Earlier this year, Charlottesville implemented a controversial new zoning code intended to increase housing supply throughout the city. Taller buildings with more units are now permitted citywide, and in a method known as inclusionary zoning, some of those units will necessarily be listed at below-market rates for low-income residents.
Local housing advocacy groups say the code is a critical step toward lowering housing prices by increasing housing supply. But they also say that if inclusionary zoning is going to work, the city will need to help cover the cost of it.
The project Levien is proposing at 200 W. Main St. will require that help. In what he describes as a public-private partnership, Levien says that for him to provide the city with a high-rise housing project, Charlottesville will need to amend its zoning code and institute a tax abatement program that will enable him to cover the high cost of construction. In exchange, the city would get roughly 225 apartment units, 10% of which would be reserved for lower-income residents. Replacing the Violet Crown with a large apartment building would likely bring a surge of new patrons to downtown businesses, and more tax dollars for the city.
“The calculation becomes how much real estate tax revenue does it get from just that current building versus how much it would get from a new apartment building,” said Matthew Gillikin, co-chair of urbanist advocacy group Livable CVille. “Plus, the sales tax and meals tax benefits of having hundreds more people living downtown would be pretty significant. Those people obviously would be going to restaurants and shops and spending a lot of money down there.”
That’s what Levien says he hopes to see: a revitalized Downtown Mall in a city that attracts new businesses and more development. To achieve that, however, Charlottesville may need to reexamine its recently refreshed zoning code.
“There are ways [zoning] can be a public-private partnership that works for both sides and the result is what the city wants, but we’re not there yet,” Levien told The Daily Progress.
The cinema’s lease expires regardless of whether Levien’s vision becomes a reality. Ever since the COVID pandemic, box office sales have been down for the industry nationwide, and with two other Charlottesville theaters to compete with, Violet Crown has not been selling enough tickets to remain profitable.
Last year, the Austin, Texas-based chain’s theaters were sold to Elevate Entertainment Group. As part of the deal, Elevate also agreed to operate the Charlottesville Violet Crown on a short-term lease. Citing a confidentiality clause, Violet Crown ownership declined to define “short-term,” so it is unclear how much longer the theater will be in operation. But while Elevate has operated the theater, Violet Crown’s ownership sought a buyer for its most valuable Charlottesville asset: not the theater, but the land on which it sits.
Levien has agreed to purchase that property for an undisclosed amount, but only on the condition that he is able to develop an apartment complex large enough to make the purchase worth it. If some version of his proposal doesn’t get the greenlight from the city, he’ll exit the deal, and unless another buyer swoops in, the Violet Crown is likely to sit vacant.
“The worst thing that it could be is an empty or boarded-up storefront,” City Councilor Natalie Oschrin told The Daily Progress. “If that’s the alternative we have to do what we can to avoid that.”
The new zoning code allows residential buildings up to 184 feet tall, and Levien intends to use every bit of it. But there are a few problems, the first of which is that high-rise buildings are expensive to construct. The prices of necessary building materials such as concrete are far above their prepandemic levels, a fact that’s referenced in a July 2023 report prepared for the city by consulting group RKG Associates.
“The cost differential for concrete and steel construction is prohibitively high in Charlottesville based on the likely revenue capture,” reads the zoning impact analysis.
While a 184-foot building is costly to build, it would also give a developer the space to build more floors. More floors mean more units, and more units means higher revenue for the owner. But Charlottesville’s zoning code only allows a building of that height to include 13 stories. Levien wants the city to amend the code to allow 18 stories within that 184-foot space.
But even if Levien gets his 18 floors, due to Charlottesville’s inclusionary zoning, not every unit on those floors could be rented at market value.
“The problem with [inclusionary zoning] is you’re asking a developer to build a proportion of housing at a loss, because their downstream income from income-restricted units is typically going to be lower than what it costs to build them,” said Gillikin.
According to Levien, the new zoning code creates a mathematical problem for developers. With high construction costs and the code’s affordable housing requirements, building large projects can be financially unfeasible.
He experienced that firsthand when he tried to build an apartment building across the street at 218 W. Market St. Currently a low-level shopping center housing the Artful Lodger furniture store, Livery Stable dive bar and other businesses, Levien intended to build a nine-story building on the site. His permit was approved in September 2020 and then he received preliminary site approval.
“By the time I got through the permit process and site plan approval, the talk of rezoning picked up. So like a lot of others, I paused to see if it would be all that was promised to be: more density, more height and the numbers for affordable units,” Levien said.
But as the ordinance was nearing its final draft, he concluded it would make his original proposal unviable.
“I told Council, ‘Look, the numbers don’t work for residential. They work for a hotel. And I’ve got to pivot because I have to get a return on my capital,’” he recalled.
Facing a time crunch, he opted to enter a deal to convert the property into an AC Hotel, a brand of hotel under the Marriott flag.
“I want to see residential. I worked three or four years to make the residential work,” Levien said. “The disconnect is a clear message from the city that they want housing to be built and yet the zoning doesn’t put the rules in place to make it that it can be developed downtown.”
As Gillikin put it: “Basically you can think of it in terms of what can a city do to reduce the developer’s cost for construction?”
Levien said one effective model would be a real estate tax break for developers. He views it as an investment: By limiting how much a developer must pay in taxes during the first years of a project, a developer can afford the front-end cost of construction materials. Because real estate taxes are determined by the market value of a building, and because large apartment buildings are of high value, the city could ultimately make more tax revenue from a high-rise apartment than it does from, say, a movie theater.
The RKG Associates report suggests a tax program as a way for the city to “invest in private sector projects.” Charlottesville, the report reads, can “consider tax abatements to increase the reach of the [inclusionary zoning] without greater risk of market disruption.”
In 2022 as the city was working on the zoning ordinance, housing advocacy groups such as Livable Cville wrote a letter to City Council. It argued that more incentives were needed for builders and suggested tax abatements as one possibility.
Charlottesville already has a real estate tax abatement program for economic development. And according to James Freas, deputy city manager for operations, it has been “exploring a real estate tax abatement program related to the provision of affordable housing units.”
Gillikin said while inclusionary zoning is a single tool to help address affordable housing issues, it cannot work on its own.
“It has a huge downside if it’s not done well. Like, it can mean no apartment buildings get built,” he said.
Oschrin said she wants to see hard numbers before making any decisions. But she recognizes that by mandating 10% of units be made affordable, the city has put an additional requirement on developers. She’s open to discussing a tax abatement program and amending the zoning code to allow more floors in high-rise buildings.
“It makes sense to maximize the interior of that space. If the outside is already allowed, then I would love to see as many homes in the interior as possible,” Oschrin said.
As the newest member of City Council, Oschrin didn’t begin her term until after the new zoning ordinance was adopted in December. But she believes Council effectively managed expectations for the zoning refresh and left room for improvements. The code is not chiseled in stone, she said, but it also isn’t fickle.
“Council did a good job of saying, ‘We’re not excited about changing every detail tomorrow, but we are open to making sure it works,’” she said. “It’s not that [the code] is infinitely flexible; it’s that we want it to be functional and practical.”
The fate of Levien’s proposal could be decided before it ever gets to City Council. Next Tuesday, he will present it to the Board of Architectural Review, a body of nine appointed members responsible for reviewing applications in the city’s architectural design control districts.
According to Jeff Werner, the city’s historic preservation and design planner, that preapplication conference is required for large-scale projects. No formal vote will be taken, but members will express their opinions on the proposal.
Those opinions will carry heavy weight. Even though 184-foot buildings are allowed by right, a quirk in the zoning code allows the board to “require conditions of approval,” and those conditions could include “a reduction in height or massing.”
“In districts where the BAR has authority, they have the ability to limit height in the interest of historic preservation,” Freas told The Daily Progress, adding that any BAR decision is appealable to City Council.
If the board ultimately votes to restrict Levien’s apartment building’s size, the entire project could be in jeopardy, as would the accompanying benefits some see for the Downtown Mall.
“That’s the centerpiece of our city,” Oschrin said. “Suddenly there’d be an enormous new pool of customers that are within walking distance. That brings vibrancy, that brings tax dollars, that brings economic benefits to businesses.”
Developers and housing advocates alike will be watching closely. If Levien is unable to achieve the public-private partnership he says developers need, the project will likely fall apart. More than that, it could be a sign of a flawed zoning plan, stoking fears it could worsen the very housing crisis its authors hoped to solve.
“This is the time to put your money where your mouth is. All you do is say you want residential,” Levien said. “Are we doing this or not?”
Source: www.dailyprogress.com
Be First to Comment