Higher-density “missing middle” development is back on the table in Arlington following a ruling this week by the Virginia Court of Appeals.
The June 24 ruling reverses an October Circuit Court decision that declared Arlington’s Expanded Housing Option (EHO) zoning ordinance void and effectively cancelled any permits issued under it.
The previous court decision was applauded by opponents of the ordinance, but it left many developers and builders who had already broken ground on EHO projects in limbo.
“This almost completely financially broke me and bankrupted me,” says Alex Wilson, a local developer who appealed the October ruling, precipitating the latest court decision. His company, Wilson’s Ventures, had already broken ground on two EHO projects when the October motion brought them to a halt, he says. One of the projects—a duplex on 25th Street South in Claremont—was nearly complete, while the other, on North Quincy Street, was under construction.
“I had to sell things that I’ve held since I was 20 years old, properties that I’ve had forever,” Wilson says. “I had to liquidate a lot of stuff. I had to ask for money from my family. I had to put a second mortgage on my house. I mean, I was very close to losing everything.” Saddled with properties he couldn’t finish or sell, he was also paying $25,000 a month in interest.
Arlington’s dwindling supply of moderately priced homes for middle-class buyers is what prompted the contentious countywide debate that culminated in the adoption of the EHO plan in 2023.
However, this week’s appeals court ruling does not address the density disputes surrounding the ordinance, nor the lawsuit that was filed by opponents in its wake. It merely states that developers who received EHO permits should have been included in prior court proceedings, and it sends the case back to the lower court for further review.
Local builders see the ruling as a welcome turn of events, but remain wary.
“It was baffling to me that we could both be denied a right to intervene in the in the case, and that we weren’t [viewed as] a necessary party to the case,” says David Tracy, president of Classic Cottages, a custom homebuilder that constructs up to 40 homes a year in Arlington. “There were these conditions imposed on property that we owned, and none of that property was part of the lawsuit that was going on. So that was really bizarre.”
As written, Arlington’s EHO ordinance allows for the construction of townhouses, duplexes and multifamily buildings of up to six units anywhere in the county, including in neighborhoods that have historically been limited to single-family homes.
From the time the missing middle ordinance was adopted on July 1, 2023 to the court ruling that froze it last fall, Arlington County approved 45 permits for EHO housing projects.
Wilson says he was the first builder to receive EHO permits and the farthest along in developing his projects when the moratorium was issued. Other developers with bigger crews were able to pivot and convert multifamily projects back into single-family homes, he says, but his Claremont building was fully built with the walls up, kitchens done and countertops in. His second property, on North Quincy Street in Ballston, had been subdivided into three lots. He says reverting it to a single-family lot would have cost approximately $300,000 before building could even start.
In October, Wilson appeared before Circuit Court Judge David Schell to plead his case. At that point the court ruled that Wilson’s Ventures’ claims were not germane to the case, that it wasn’t a necessary party, and that his company had filed its notice of appeal too late—more than 30 days “after the order denying intervention.”
The Court of Appeals this week disagreed with that assessment, determining that Wilson’s appeal was timely, and sent it back to the lower court.
Tracy, whose company is much larger, says Classic Cottages had more EHO permits than any other developer (seven in total) at the time of the October ruling. Two of those permits were for three-unit townhomes; several others were six-unit condo buildings. He says Classic Cottages was also seeking permits for seven additional EHO projects.
“It was detrimental in a significant way,” Tracy says. “We [builders] had all invested money, time and resources and obtained permits—and done so while it was all lawful at the time.”
When the EHO ordinance hit pause, Tracy says, property developers were left carrying the cost of real estate taxes and insurance, plus payroll. He says Classic Cottages converted all of its EHO properties that did not yet have permits into single-family dwellings, along with three that did have EHO permits.
For its remaining four properties with EHO permits, the company pursued legal action to obtain vested rights. Vested rights protect property owners from regulatory changes by entitling them to stay the course on projects that are already approved, even if the zoning laws are later changed. A May court decision granted Classic Cottages vested rights, which means the company can still build EHO projects on those four sites.
Missing middle proponents continue to maintain that higher-density housing options are desperately needed in a county where single-family homes are unaffordable for most first-time and middle-class homebuyers. They contend that an increase in multifamily housing will add much-needed inventory, reduce housing prices and make Arlington more economically and culturally diverse.
Wilson says he understands why some county residents may be opposed to denser housing.
“I agree with the plaintiffs on some portion of it. I wouldn’t want to be living in a single-family house up in North Arlington that I paid $2.8 million for and you put a six-unit apartment building right next to it. I don’t think anyone would like that,” he says, “but the county is in dire need of more housing in between the high rise apartments and the $2 million-plus single family home products.”
Not all EHO opponents are unilaterally opposed to higher density development. Some argue the county should have limited the larger multifamily buildings (e.g., those containing 4-6 units) to areas closer to public transportation, such as Metro corridors.
Wilson agrees. The issue for developers, he says, is that building costs in Arlington are astronomical. By the time a developer pays $1 million for a lot and $60,000-$80,000 in permits, the profit margin is slim.
“I would need to build a $2.8 million single-family house to make it worth it,” he says. Few buyers can afford that price, while dividing the property into smaller housing units opens it up to a larger pool of prospective buyers.
With this green light, Wilson says he plans to resume work on the projects that were stalled. He intends to sell the Claremont units, which he has been renting out, as soon as possible.
“There’s very little product, especially any new product, that is under $2 million,” Wilson says. “So, yes, $1.2 million sounds like a lot for a townhouse. But to be honest, that is a very attainable number for [some] buyers, versus a $2.8 million single family house.”
More housing choices at lower prices is exactly what Missing Middle advocates want.
YIMBYS (Yes in My Backyard) of Northern Virginia, a group dedicated to combating the housing affordability crisis, has noted that renters—who make up approximately half of Arlington residents—overwhelmingly supported the EHO zoning change.
Jason Schwartz, a spokesman for the group, says affordable housing advocates welcome the recent ruling. “I am excited about the court decision and hope that a final resolution to the legal proceedings comes soon. I can’t wait to welcome all the new neighbors moving into these homes in our community.”
Opponents of the EHO plan say the latest court ruling may not make much of a difference in the long run.
“The Virginia Court of Appeals cited a technical procedural error and sent the whole case back to the trial judge to correct it,” Peter Rousselot, a founding member of the opposition group Arlingtonians for Our Sustainable Future, said in a prepared statement. “ASF believes it is highly unlikely that today’s ruling, if it is not further altered by the Virginia Court of Appeals or the Virginia Supreme court, will lead the trial judge to change his current reading of the substantive Virginia law regarding the failures of the County government.”
Arlington County officials, meanwhile, released a statement saying the board will “consider its next steps and how to best resume the EHO permitting process, including how to inform previous applicants who were either in the process or had their approved permits voided last fall.”