The officials are seeking to reduce the length of time commercial developers have in which to get tax breaks on historic property they renovate from 15 years to 10 years, says Lynne Lancaster, a deputy director in the economic development office.
Likewise, the office is recommending a change to its residential rehabilitation tax-abatement program from the current 15-year tax abatement to 10 years a seven-year full abatement plus a three-year incremental phase out.
Under the plan that will soon expire, property owners only pay property taxes based on property assessments before improvements are made. For example: Someone buys a dilapidated old home in Jackson Ward for $20,000 and renovates it. With the improvements, the home's assessed value becomes $120,000. But the owner pays taxes only on the $20,000 price for the next 10 years. The abatement diminishes incrementally during the remaining five years until the homeowner is paying the newly assessed amount.
The commercial tax abatement program works in much the same way, and applies to commercial properties including the newly constructed not historic multifamily residential project Riverside on the James on Brown's Island, that many say should not have benefited from the program. City officials are also proposing other changes to the revised program that would put tighter deadlines on the time allowed to renovate historic property. City Council will consider the new plan at its meeting March 27.
Aware of the looming changes, some developers have expressed concerns. Many credit the tax-abatement program for sparking the city's real estate renaissance. It has come to be viewed as particularly attractive when paired with the state's historic tax-credit program, says Bob Mills, a principal with Commonwealth Architects.
But critics such as Oregon Hill resident Charles Pool say some developers have taken advantage of loopholes in the city's program, loopholes that soon could close.
In his neighborhood, Pool says, a developer received the 15-year abatement on a new apartment building by attaching new construction to a wall from an old, demolished building. "While the tax abatement program is designed to encourage historic restoration," Pool says, "these loopholes actually contribute to the destruction of historic property, the degradation of historic neighborhoods, and cost the taxpayers millions in lost revenue." S
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