July 1, 2009
Council considering 100% real estate tax exemption
City Council is considering offering a hefty tax break on the real estate taxes for new constructing in certain areas with a high number of empty lots, “including North Church Hill, Carver, and Highland Park”. With around 1500 vacant lots in the city, the possible 100% exemption on real estate tax for 5 years could be expected to lead to 200 new homes per year. [via]
16 Responses to “Council considering 100% real estate tax exemption”
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I think it’s a good, forward thinking, idea and I would encourage the passing of it.
If not than a tapering of the tax – 100% 1st year, 90% 2nd, 80% 3rd year and so on.
They have to consider the budgeting of the home owner too. Five years in a home with no real estate taxes and then a $1,200 – $3,000 tax added on to the mortgage amount each month could stretch some budgets.
You don’t want to create a situation where people are struggling to remain in their homes after 5 years.
I *think* that this is the ordinance under discussion, though I am not certain. The text of this ordinance does not describe where this would be applied.
I’ve read the ordinance: 2009-43. “…for the purpose of providing partial tax exemption in redevelopment or conservation areas or rehabilitation districts.”
The original paper provides for a 50% exemption from RE taxes for a 5 year period. Mrs. Rovbertson is proposing amendments to make it a 100% abatement, and there is language at Sec. 98-261 (c) which permits Council to extend the programmed exemptions for indefinite five year periods.
There is no prohibition on flipping the house, since the abatement travels with the real estate (Sec. 98-265 (a).) It appplies not just to new construction, but to “other improvements,” (98-261 (a).) The thrust of the ordinance is aimed at vacant lots, but 98-268 also permits property to be demolished to create the vacant lot, so long as “the structure to be demolished is (not) a Virginia registered landmark or determined by (VDHR) to contribute to the significance of a registered historic district.”
So you can come into one of a very few neighborhoods in the east end and northside and get a five year tax abatement. If you live elsewhere in the city, including some of the poorest districts of the city ion the 8th and 9th, you must pay full taxes. The five year affect on city revenues will be about 1 cent on the tax rate.
The Oregon Hill Home Improvement Council, ohhic.org, is the oldest and last neighborhood community develpment corporation that I know of that is still standing. It has plans for some new houses in Oregon Hill, but in past years the membership has voted and approved the organization to extend its area of operation to include the rest of the City. If OHHIC survives the current depression, it will hopefully be in a position to do some of its award winning work in northeast neighborhoods in the City.
This is sort of like the tax abatement for old structures. It’s a good idea, but I agree with Deanna, that maybe it should be phased in.
I’d toss in another enhancer for the City. If the property flips from the original homeowner/occupant at a threshold profit in the first five years, some of the taxes should be recaptured.
It looks like it will not apply to commercial structures. The smaller vacant lots that are zoned for business would benefit from this.
Maybe they should consider some version of it for homes that are in historic districts. For example, if Union Hill gets the O&H designation, it will put a financial burden on owners to maintain their homes in an historicaclly correct fashion, so give them a tax break to offset some of the added costs.
Please excuse my unfamiliarity with the 8th & 9th, but do they the have same problems with blighted and vacant properties as areas of CH & Northside?
Ron,
If this could be proposed for Church Hill, as a boost for development, why wouldn’t it be implemented in other districts that have a need for infill housing?
Historic and old properties already qualify for tax abatement during renovation.
A reasonable question to ask the patron of the ordinance. John, drive sometime through deep southside Richmond…or ask Council member Trammell to give you a tour. Church Hill, Fulton and the east end has some very bad spots with some very good redevelopment, spurred by 20 years of special federal/state/local funding. Virtually none of that has gone into the eighth and ninth district, and they have virtually no new development or redevelopment. These are the real underserved areas of the city.
Thanks Ron. I’ll pose the suggestion to Mrs. Robertson via email.
I see no reason why the ordinance should not be implemented in each district. It’s a win/win for all parties (builders-new home owners) and the City’s coffers in the long term.
Ron, in your opinion, why hasn’t special federal/state/local funding gone into the 8th or 9th districts?
when will the city fix the sidewalks/alleys?
Hey Bill,
I suggest that you put in a request with the city to take a look at the area(s) you want done. Become a squeaky wheel.
Go to this link: http://www.richmondgov.com/applications/citizensrequest/frmNewEntryType.asp
Sign up and create an account and enter your request. They have a specific pull down menus for sidewalk assesment & alley maintenance.
The city has taken care of every request I’ve put in within 4-10 days. Graffiti removal, street lights out in the alley, vegetation removal in the alley and so on. A nice feature is that they’ll send you an email when they close the ticket and the job is done.
it is easy to give up money for new development to attract new houses with no benefit to the present residents. maybe give up money to fix the neighborhood (sidewalks & alleys) to benefit present residents and make the neighborhood more attractive to potential come here’s. when council gives away the money, it is your money
deanna, the request has been in for a while. so are you happy with the street,sidewalk and alley conditions in your neighborhood?
Overall, yes, I am happy with the sidewalks in the neighborhood.
The alley – it took several requests from SEVERAL neighbors and a trip down town, by yours truly, to get a map from zoning to prove that the alley belonged to the city but it did get taken care of. It was a jungle of weeds and poison ivy.
If your request has been there for a while, put it in again. Encourage your neighbors to do the same. Call the Department of Public Works at 646-0999 and see what’s being done about your request. What block are you on?
Council is not giving up money with this measure – they are delaying reaping the benefits on new growth. It’s smart business, in my opinion.
Assuming an average vacant lot brings in $350 in tax revenue a year – 1500 lots = a little over $500,000.
A average home in the $160,000 price range generates $2,000 in tax revenue. Multiply that by 1,500 = $3,000,000 in tax revenue in the sixth year with their plan. That can pave a lot of sidewalks and clean up a lot of alleys.
As an investor, I could see keeping the tax on the lots in place to generate tax revenue for the city. Not collecting THAT would be giving away money that the city is already collecting and needs to keep coming in. The tax on the lot should remain in place for the full five years.
On the new growth:
First year – no tax on the house but tax the lot at 100%
Follwing years 10%, 20%, 30%, 40%, tax on the house and tax the lot at 100%
Personally, with so many people living paycheck to paycheck I’d be hesitant to jump from a 40% tax to 100% after the five year mark and would think that a 20% rise each year thereafter could work. Six years into the life of the home the owner would be paying 60%, seven years 80%, and at eight years 100% of the real estate tax.
If the city keeps the tax on the lots the city is not losing money. This encourages development and a measured growth in tax revenue from that development.