A key catalyst in Richmond's residential renaissance — the real estate tax-abatement program — is about to start kicking back millions of dollars into city coffers.
Heralded as a key economic driver in the mid- to late-'90s, the abatement program that sparked widespread home improvements soon will see its first wave of properties coming back onto the tax rolls during the next few years.
The program allows homeowners and developers to make improvements to their properties and avoid paying taxes on increased assessments. It was expanded in 1995, allowing for 15 years of lower tax bills. In 2010, $4.9 million in formerly abated property came back online, representing only about $60,000 in tax revenue. This year $24 million is coming back, representing $289,000 in tax revenue. While the numbers are still small, by 2016 the big money starts rolling in, or about $1.2 million in actual tax revenue on $101 million in previously abated property assessments.
Jim Hester, the city's real estate assessor, says City Council members recently began inquiring about the coming tax infusion, chomping at the bit. "They see that as a windfall coming back," he says.
Laura Lafayette, chief executive of the Richmond Association of Realtors, advocates that the money be set aside for affordable housing instead of simply funneling it back into the general fund. But it must be done now, she says, "before there's a whole lot of money to fight over."
"I can appreciate that it's tough to say we've lived without it for 15 years," she says. "But it's worthy of discussion: Do we take the opportunity to make these funds meaningful?"
Lafayette has been pushing for the money to be earmarked for the city's affordable housing fund, or put aside for community revitalization, but isn't holding her breath. "We've been talking about if for a couple of years and it hasn't happened," she says.
The amount of formerly abated property peaks in 2020, representing about $4.1 million in tax revenue, but it's still small when compared with the nontaxable real estate in the city at large, which includes property owned by Virginia Commonwealth University, the state and federal governments — all exempt from real estate taxes.
The entire city land book in 2011 — which includes all real estate — is valued at $26.4 billion, of which $5.89 billion is tax-exempt.