A new analysis from VCU shows Richmond’s tax abatement program is concentrated in high-income areas with strong housing markets.
The report released Monday by VCU's Center for Urban and Regional Analysis found that more than 60 percent of the abatements are issued to multi-family apartments or houses in the West End. Richmond's Rehabilitation Tax Abatement Program provides property owners with a tax exemption on increasing property value if they make renovations that increase the building's value by 20 percent. The program was created in the 1990s and was originally intended to spur investment in renovating Richmond's historic properties, but it's now creating concerns about equity.
Richmond Council Member Michael Jones says part of the reason the program has mostly benefitted the wealthy is that lower-income families can’t afford to make the large investment required by the program.
“So we have rewarded one part of our city, individuals who are to afford to do this type of development, and ensure that their neighborhoods will look differently in the coming years," Jones said.
Jones, along with Council Member Ellen Robertson, also suggested that decreasing the requirement that the renovation increase the property value by 20 percent could allow lower-income families to access the program. Richie McKeithen, the city's property assessor, said doing so would cause a surge in new permit applications and would require additional staff to administer the program.
The city granted more than $78 million in abatements between 2009 and 2016. The VCU report said all of the lost revenue will be made back by the city three years after the abatements expire. Properties receive a tax abatement for 7 to 10 years under the program.
People with properties in the program will also be partially shielded from the property tax increase being proposed by Mayor Levar Stoney. Participants would only pay the increased rate on the value of their home before it was rehabilitated.
In a presentation to Richmond City Council on Monday, researchers recommended the city increase the length of the tax abatement in low-income areas and for affordable housing developments.
You can read the full VCU report on the tax abatement program here.