Posted by:
Steve Dubb
City subsidy for gentrification in Richmond, Virginia?
Gentrification may be viewed as a purely market-driven process, but often, as an article in a local weekly paper from Richmond, Virginia shows, city government lends a helping hand
An April 2007 article by Scott Bass and Chris Dovi in Style, a Richmond, Virginia, weekly, tells an interesting, if all-too-common, tale of gentrification abetted by government policy. As the authors explain, to spur inner city reinvestment, Richmond has given property owners tax breaks to improve any building that is at least 15 years old. You spend money and fix up a house, add an addition, etc., but are exempt from tax on the increased value of your home for a specified period of time. While such programs are common, Richmond’s is widely considered the most generous in Virginia — from 1995 until last year, participating residents were exempt from the increased taxes for 15 years. (In 2006, the abatement period was reduced to 10 years). The result, according to former Richmond City Assessor Richie McKeithen, is “tax inequity.”
Since 1995, the program has averaged 600 to 1,200 applications every year. Today the value of abated real estate exceeds $1.1 billion, which results in $14.6 million a year in uncollected real estate taxes. This shortfall is paid for by the rising rates faced by those who fail to (or cannot afford to) upgrade the properties. For many, it’s meant the loss of their homes.
Elsewhere, cities have worked to counter the problem with inclusionary zoning laws that require large-scale developments to include a specific percentage of subsidized affordable units. An even better option for Richmond would have been to establish a community land trust — harder to do now that property values have risen. But to date Richmond has chosen neither inclusionary zoning nor a land trust – with predictable results in terms of both class and race, as middle class whites increasingly replace longtime black residents.