Richmond Reverses Course On Rehabilitation Tax Credits For Developers
Richmond City Council voted Monday night to reestablish a tax credit program for commercial and industrial properties.
Last year, City Council voted to end Richmond’s tax abatement program that provided seven- to ten-year tax exemptions for renovating properties more than 20 years old. Only properties where 30 percent of the units were reserved for affordable housing would qualify for an abatement moving forward, City Council decided. That decision came after a VCU report found that the program was mostly being used by developers and homeowners in the city’s wealthier neighborhoods.
On Monday, though, an ordinance from Councilwoman Ellen Robertson revived the tax abatement program, but only for commercial and industrial buildings.
“With where we are post-COVID, we need to be focused on regrowing our economic base and jobs,” Robertson said. “Business growth and development are key to the future success of Richmond.”
The ordinance passed Richmond City Council unanimously, with Councilmembers Kim Gray and Mike Jones absent.
Starting January 1, 2021, any commercial or industrial building where the owner renovates 80 percent of the property will get a tax credit. That tax credit will cover 100 percent of the increase in property taxes from the renovation for five to seven years. The owner will also receive a partial tax credit for an additional two to three years. That means the city is forgoing potential tax revenue on qualifying buildings for up to ten years.
Councilman Michael Jones, who sponsored the ordinance last year to end Richmond’s tax abatement program, but was absent for Monday’s vote due to an illness, questioned the need for giving tax breaks to developers.
“How are y’all upset with the Navy Hill [proposal], but you’re not upset with this,” Jones said. “How are you upset with Dominion making money, but you’re not upset with individual developers making millions of dollars?”
The 2019 report from VCU’s Center for Urban and Regional Analysis found that tax abatements for property improvements were costing the city about $78 million. That money wouldn’t be recouped, the report said, until two to three years after the tax credit expired.
Editor's Note: An earlier version of this article incorrectly stated Councilman Jones was present; he was absent due to an illness.