To understand the recent large scale redevelopment of the City, you just need to look at the areas that have been designated ‘Historic’ and you can see the effect on both the City and tax revenues (GREAT piece on the effect of the HTC program.)
The Historic Tax Credit program provides a rebate to developers in the form of a ‘tax credit’ to redevelop older historic structures in a manner that is consistent with the historical look of the building. These credits are in effect ‘pre-paid’ income taxes that can be ‘sold’ (in a manner of speaking) to investors to provide the cash necessary to make the projects financeable.
Structured correctly, the HTC development model allows a developer to receive approximately 35-40% of the total cost of development of the project in the form of a credit. The developer then sells the credits to an investor at a discount (usually 10-20% depending on amount, etc.) and uses that cash as equity to allow permanent financing. These programs generate tax credits for both State and Federal income taxes.
You can probably guess the areas that have historic designation but the map above shows where they are. Organized neighborhoods, architects, developers and investors all have worked together to get historic designations in many neighborhoods around Richmond. In doing so, they have allowed the program to provide a VERY powerful incentive for the developer community to take old, dilapidated and abandoned structures to be converted to living spaces (in the forms of lofts and flats) and ‘creative office’ usually in a mixed use environment.
What makes the program so effective is that it has taken buildings that had beautiful bones and incredible textures and features to be put back into the daily life of Richmond. As a city built in the late 1800’s and early 1900’s, RVA has a tremendous stock of old warehouses whose original use is no longer feasible (functional or economic obsolescence) and conversion to these new and interesting spaces was paramount.
The New Richmond is slowly becoming the New Old Richmond…..ironic, eh?