Sarah Jarvis Team at One South Realty
at One South Realty
We recently closed on 2314 W Main Street as the future home of One South.
Sometimes known as the Richmond Kickers Building (as it was at one time the home of the soccer team and the mural on the side and front are well known), it is an 8000 SF warehouse that is being renovated into our new home.
When complete, we will have 4500 SF dedicated to office use and 5 apartments.
Answer: “About 700 apartments.”
Question: What is happening at the corner of 17th and E Broad?
The Richmond Cold Storage complex is a series of warehouses that produced ice (thus the name) as well as a few other warehouses and vacant lots that have been either converted to apartments (via Historic Tax Credits) or have become “ground-up” urban infill. When all said and done, the apartment count in within a 2 block radius of the corner will be somewhere between 700 and 800. When you include the project being developed on the entire block at Main and 21st, the count comes closer to 1,000.
That is substantial development in a relatively small area in a very compressed time frame and the good news is that they are leasing well for prices that can only be described at as pleasing to the developers that built them.
This new node of development in the northern end of “The Bottom” is an excellent trend for an area that has always struggled to sustain commercial/retail momentum. By targeting the “all inclusive” model at the Medical crowd and within walking distance to the Medical complex, the apartments seem to be creating their own momentum. The apartments are shifting population trends into eastern sections of the City and adding living options that did not exist in the area prior to just few years ago.
Cold Storage, Cedar Broad, Southland Wine Company and Raven’s Place are all part of the overall development area that will impact the City for decades to come.
The tax abatement program that was put into place in the City of Richmond in the 1990’s has been another lesson in incentivized urban renewal that has, for the most part, worked quite well.
The abatement program effectively says that improvements made to qualified properties are not taxed for a period of time — usually anywhere from 10-15 years — depending on the property type and use as well as when the property renovation was completed and put into the program.
While there are other facets to the program that govern how the abatement is actually computed, it is best understood as a program that reduces the taxable value of a property by the value of the improvements made. In other words, the net effect is that the City continues to tax the property as if it has not been improved. This credit is attached to the property, and not the individual who completed the improvement, so that if a property is sold prior to the expiration of the abatement, the remaining abatement passes to the new owner.
As an example, if a property was worth $400,000 prior to being improved and worth $800,000 after the renovation or addition, the City would issue an abatement credit of $400,000 making the net taxable real estate amount $400,000. In other words, you are paying tax on $400,000 worth of real estate when the value is $800,000.
That is pretty powerful.
The overall goal is to create a situation where someone is not ‘dis-incentivized’ to improve their property.
By creating lower costs of ownership for residents from a real estate perspective, vacant buildings become filled and blighted property becomes renovated. The additional revenues generated by having living and breathing occupants in the city means sales and meal taxes and higher values of real estate in the aggregate.
This abatement program is basically a down payment on investment in the city. In the long run, it will pay off handsomely.
The Abatement program also works hand in hand with the Historic Tax Credit Programs to increase the likelihood that abandoned structures are renovated.
One criticism of the abatement program is that it is only applicable to existing structures and not vacant land. Between HTC’s and Abatement, the overall cost of new construction compared to heavily incentivized renovation of old structures is arguably prohibitive.
The tax abatement program periodically comes under attack by the City Council members that fail to realize its impact or by the public who feels it is another way developers line their pockets. What they fail to realize is that these programs have been some of the primary drivers of redevelopment in the City and once a property’s abatement finishes, the City reaps the benefit.
I hope this program stays alive for a long time.
Chris Lester
Senior Loan Administrator
NMLS# 353830
804-307-7033
Email Southern Trust Mortgage
