As the City of Richmond reviews an important real estate rehabilitation tax abatement program, local developers are getting organized.
Several of Richmond’s most active apartment developers have joined the fledgling multifamily council of the Home Building Association of Richmond, a move designed to band the competitors together and gain sway in raising concerns about development in the City of Richmond.
“We really need to be involved and unified as a group,” said Tom Dickey, a principal at Monument Companies. “We need a group that’s out there speaking for us that can help keep everybody organized.”
The show of solidarity took shape at a meeting last week at Plant Zero, an apartment complex in Manchester owned by Fountainhead Properties. In attendance were between 30 and 40 people who, according to one developer who was there, represented at least 80 percent of downtown Richmond’s ongoing multifamily development. Local developers individually have been members of the group in the past, but the full-scale alliance is new in Richmond.
The developers’ meeting took place a day after the Richmond City Council approved an ordinance to amend part of the city’s longstanding tax abatement program, which prevents taxes on a renovated property from increasing based on the consequent rise in the property’s assessed value.
The ordinance, approved at the Oct. 28 city council meeting, added a condition that states a residential rehabilitation may not exceed the total square footage of its original structure by more than 100 percent to qualify for abatement.
The program has been under fire after developer Louis Salomonsky was denied the tax exemption on a new 131-unit complex in Shockoe Bottom. Salomonsky relocated an old 220-square-foot home to the site in an attempt to qualify for the exemption program, which currently requires improvement on an at least 20-year-old structure.
Under the current abatement program, developers do not pay real estate taxes on a property’s improved value for the first seven years after redevelopment. In the eighth year, the property owner is on the hook for 25 percent of the difference between the current assessment and the pre-rehab assessment. That number increases 25 percent in each successive year until the full improvement value becomes taxable beginning 11 years after the original development.
Now sweeping changes could be in store for the program that developers have said is as important to redevelopment in the city as the state and federal historic tax credits system.
A task force made up of City Assessor James Hester, Assistant City Attorney Tabrica Rentz and council members Kathy Graziano and Parker Agelasto is reviewing the abatement program.
Rehabilitation tax abatements “aren’t going away,” Hester said in a September interview, but the committee will be making some changes.
In an Oct. 21 Facebook post, Agelasto said the team had a “comprehensive re-write” of the abatement program in the works.
“That’s something that we believe we’d like to understand better and have a voice in,” said Robin Miller, a principal with Miller and Associates. “We want to have a paid professional, meaning the [HBAR], who has a paid staff monitor that so if it bubbled up we would know about it in time to go to the hearings and comment.”
While at the meeting, developers also voiced concerns about the city’s building permit process and employee turnover within the planning department. Messages left for the planning department, city assessor’s office, Agelasto and Planning Director Mark Olinger were not returned by press time.
Developers complained of what they call a staff shortage at city hall that has made it difficult to get inspections performed and permits issued in a timely fashion.
This isn’t a new problem, Dickey said. Developers have been paying higher permit fees over the past decade with the idea that they’d get better service from the inspection department.
Now, Dickey is worried that the city isn’t holding up its end of the deal.
“By the time we get through the permits, we’re spending $30,000 or $40,000,” he said. “They just don’t have enough staff. The people that work at the city do a good job. They do the best they can with the resources they’re given, but they don’t decide what their budget is.”
Tom Papa of Fountainhead Properties said about a third of those in attendance signed on to the Home Building Association at the Plant Zero meeting.
The multifamily council was launched in January, said Bruce Milam, a broker with Colliers International, but has just begun a concentrated membership drive this month.
“The builders see an opportunity, I think, to have a voice together, a focal point that they can address issues with the city,” Milam said. “Instead of 30 or 40 voices squawking about a problem, there will be once voice squawking about it, a little bit louder.”