Hollowed Out Henrico

Photo credit: Richmond Times-Dispatch

Henrico County has a huge problem with encroaching slums that it has only recently begun to acknowledge and deal with. According to county data published in the Richmond Times-Dispatch today, 57,000 properties — about 54% of all parcels in the county — will be eligible to apply for a tax abatement program designed to combat blight.

The previous tax-abatement program applied only to property owners with homes assessed for less than $250,000 and older than fifty years. In a vote yesterday, the Board of Supervisors expanded the tax abatements, lifting property taxes on improvements for 10 years, up from seven, for certain residential properties, and making it easier for commercial and industrial properties to participate.

“We’re trying to boost up incentives for people to reinvest in their homes and build up neighborhoods,” said Director of Finance Ned Smither. “In general, we are seeing more commercial and residential properties that need to be more dressed up.”

Unfortunately, the cure may be worse than the disease.

As a Henrico County resident, I find it appalling that more than half the properties in the country are deemed blighted or at risk of being blighted. But I’m not surprised. For more than two decades I have been predicting the spread of decay from the City of Richmond into Henrico and Chesterfield Counties as the urban core gentrifies and pushes poor people into neighboring suburbs. Poverty in the Richmond metropolitan area, as with most metros across Virginia and the United States, is increasingly a suburban phenomenon, driven by the fact that poor people are migrating from neighborhoods with rising property values (compared to the metropolitan average) in the urban core into neighborhoods with declining property values, primarily ’50s- and ’60s-era suburban tract housing that has lost its appeal.

In the past, I’ve thought of tax abatement programs like Henrico’s as a useful tool for encouraging reinvestment in declining neighborhoods. But I’m re-assessing my thinking now.

First, the old tax-abatement program, as generous as it was, had so few takers. According to Smither, only 145 residential properties had been granted exemptions, amounting to a total of $85,000 annually in tax savings. That implies a grand total of about $1 million in renovations, a paltry sum for a county as populous as Henrico. The numbers tell me that the program was not having the hoped-for effect. Will more extensive tax breaks be any different? I’m dubious.

Second, if the program against all odds worked out as hoped, it would create a new problem. By extending tax rebates to more than half of its real estate parcels, the county risks hollowing out its tax base.

We need to think differently. What if it were possible to revitalize decaying neighborhoods and commercial districts without any tax abatements at all? How cool would that be?

Well, there might be a way, at least in selected areas: Re-zone properties to allow mixed-use development at higher densities. There is little market demand for small, aging ranch houses in cul de sac subdivisions in unwalkable neighborhoods. Nobody wants to live in such places anymore. They do so for one reason only: because housing is cheap. Granting tax abatements in the City of Richmond makes sense because it encourages property owners to invest in historic properties in walkable neighborhoods where people do want to live. Incentivizing investment in decaying, unwalkable neighborhoods flies in the face of market realities. The prospect of saving a few hundred dollars a year in property taxes will not induce property owners to plow money into declining neighborhoods where they have no hope of recouping their investment.

No one is applying to convert decaying neighborhoods into mixed-use projects because getting exemptions from Henrico’s antiquated zoning code is such a god-awful nightmare. Henrico is in the process of redesigning its zoning code, however. Hopefully, the new code will loosen restrictions that inhibit the recycling of aging and obsolete land use patterns into the kinds of places where people want to work, live and play.

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26 responses to “Hollowed Out Henrico

  1. Denser housing in walkable, mixed use neighborhoods. Fine, we need that. But what about all those people already displaced from the gentrifying City? Are you simply proposing to gentrify the Counties also? Make the low income element move even further out?

    No, I know you’re not saying that; but where do they go? Or if there’s low income housing mixed in, doesn’t that have to be part of the zoning process? Or do you envision low income units scattered throughout, and what mechanism is going to achieve that? And public transportation– is Henrico planning to gamble on Uber or does Henrico plan to provide e.g. dedicated bus lanes and a real network integrated with Richmond’s?

    In short I agree they need a revised zoning ordinance but what’s the vision behind the changes?

    • Acbar, any county “vision,” if not flawed from its inception due to blinkered thinking, will become flawed as the economy grows, consumer preferences change, land uses evolve, and new transportation technologies are introduced. My “vision” is to loosen up zoning codes so that developers operating in a (relatively) free market can adapt to these changes and pioneer innovate solutions. Developers will adapt far more quickly than county zoning codes.

  2. An interesting topic that raises many questions. A big one is how good a job is done by Henrico enforcing its building and health codes? That’s what keeps low-cost housing from turning into slums, a word I think you used incorrectly.

    The key to those neighborhoods’s futures as always is the real and perceived quality of their schools, not any tax program. That’s why people move out of the city and to Henrico or Chesterfield or Hanover, not to get tax breaks. That is where the county needs to focus. The capital will flow like water to develop housing of all kinds around great schools.

    • Yes, on one level, these problems are simple to define. Absent strong and positive market forces creating heretofore unmet demand, these places, like tired subdivisions without strong safe schools and safe neighborhoods, will spiral downward no matter how much money and abstract policy you throw at the problems. Jim is right. A TOTAL revamp of zoning regulations is one essential key to turning these places around, so as to open up wealth creating opportunities where they are none.

      One central problem that deserves far more study, including the study of the history of places, is how do we bust up these failing places, and recreate them, before the downward spiral totally devastates a place. It’s like war. People die in these unfixed places. And here apparently we are perhaps at the beginning of the downward cycle in many of these dying suburban places.

  3. In terms of potentials. The market will respond to demand and nothing keeps any developer from making a rezoning proposal and just want to say – it happens where I live – all the time.

    We’ve had countless low-density residential land rezones to higher densities in response to developers who said that there was demand for the higher density housing and their intent was to build and provide it.

    However.. when you build denser – you bring more cars – no matter the theory – the reality is – people drive and transit schedules, frequency and extent is increasingly less compatible with the people’s personal mobility wants and desires and if those folks are low income with kids – you’re going to need more schools that will be primarily funded by those who own higher dollar properties.

    I’d be curious to know what the average real estate tax bill in Henrico is but I bet it is no where close to the 10,000 per child cost of education.

    My bet is that denser lower-income housing in Henrico will cost Jim B more money than low-density low income housing…

    And of course – this issue is juxtaposed with the “affordable housing” issue associated with companies like Amazon and Facebook moving in with their higher paid workers – displacing existing lower income folks.

    A key question – is – can Government “fix” these issues with land-use policies? Like I said – nothing prevents a developer from buying a tract of land and proposing to convert it to a higher density use. If you’re going to give incentives – why not to developers of higher-density housing?

    • “Nothing prevents a developer from buying a tract of land and proposing to convert it to a higher density use.”

      Nothing, that is, except zoning codes, which require developers to file for special use permits at considerable expense and risk.

      • Jim makes another very important point. I would take it a step further. Nothing stands more in the way of good, vibrant, wealth and health creating real estate development and redevelopment than obsolete and ill-conceived zoning laws. Undermanned, weak and unsupported local governments in many places in Virginia have doubled down on these long term problems in many places. The waste, harm, and lost opportunities driven by these factors are beyond calculation. It has harmed most all our places, rich and poor. Look at Northern Virginia. Think about what Northern Virginia have been with good zoning laws and strong and consolidated and, yes, honest government.

        • Reed,
          You often refer to dishonest or corrupt government. Can you give me some examples of this rampant dishonest, corrupt government that you have in mind? Incompetent government is not necessarily corrupt or government that makes decisions you don’t like are not dishonest or corrupt, per se.

          • Reed Fawell 3rd

            Dick, I and others have been going over this subject for nearly 8 years on this blog in great detail. I am not going to repeat it here for you. Perhaps, ToManyTaxes would like to fill you in on the history lesson.

      • As to Jim’s particular point on the subject, namely:

        Larry says, “Nothing prevents a developer from buying a tract of land and proposing to convert it to a higher density use.”

        Jim replies, “Nothing, that is, except zoning codes, which require developers to file for special use permits at considerable expense and risk.”

        Under best of circumstances real estate development is a very risky business. No first rate developer is going to buy into a zoning code and/or local government that increases the developer’s risk, and throttles his opportunity and creative vision by an obsolete zoning code, and its weak and unreliable enforcement by an incompetent local government. That developer instead will simply go somewhere else. This happens all the time. Amazon with NYC is only latest high profile example.

        • “No first rate developer is going to buy into a zoning code and/or local government that…throttles his opportunity and creative vision by an obsolete zoning code…”

          If this is true, then Jim’s contention that Henrico has an antiquated zoning code must not be correct, because Henrico has exploded in the last ten years. The area around Short Pump is vastly more developed, both commercially and residentially that it was ten years ago.

          • Reed Fawell 3rd


            Why then is the other half of the county spiraling down into a series of failed communities, according to Jim? How can this be? The success of the Short Pump, I explain with the words “Absent strong and positive market forces creating heretofore unmet demand…” Now you need to explain the rest of the problem in Henrico in a way different from mine.

      • No risk and damn little expense in Prince William County, unless you factor in those campaign contributions to the Supervisors who approve every high density, poorly located, sham of a mixed use development plan that mysteriously has waivers for all or most of the commercial/office component.

  4. I’d say again and it happens all the time in Spotsylvania and Fredericksburg. Nothing prevents a developer from signing a contingency contract on a parcel of land and then proposed a zoning change. And nothing prevents approval of it – and there have been LOTs of approvals but in order to gain approval, the developer must satisfy that they are proposing a “good” project that mitigates impacts.

    It works that way for special use as well as re-zonings and it’s pro forma for most localities to permit the underlying land use and then entertain proposals.

    I’m betting that’s exactly one is going on with the Amazon proposal and it’s what happens with a LOT of proposals – including the Solar proposal in Spotsylvania.

    They’re not used to restrict development. They’re used to assure that the development is actually in the best interests of neighbors and taxpayers when it comes to mitigation of impacts as well as fiscal performance.

    The basic premise that zoning is what prevents denser development is totally bogus… and really just flat wrong. Any developer is free to make any proposal – and in Va law – the proposal MUST BE CONSIDERED by the county – they cannot dismiss it without consideration.

    It’s just wrong to claim that “restrictive” policies keep denser development from occurring… that option is ALWAYS available.

  5. This is a day that will live in famy (the opposite of infamy). Today is the day Jim Bacon realized that Robert E Simon was right.

    • What? I always thought Simon was right!

      • Lol. Maybe you did. The genius of Simon was to go out to what was the “middle of nowhere” and buy more than 6,000 acres betting that the suburbs would eventually get to his holdings. He then bet that his planned community would be the envy of the metropolitan area once the tide of suburban sprawl washed past Reston. He was right on both counts.

        Henrico needs a Reston.

      • Reston is a cautionary tale. Financially, for its developers over decades, it failed several times. In part, it failed land planning and use wise, market wise, and financial planning and execution wise, before hitting its home runs. It also had the built in advantages and disadvantages of drawing mostly the vision of a genius on an empty slate. Simon was the prophet who stepped out over a gorge of his own making on his custom built tight rope and tried mightily to walk his walk over it, and he failed. But what a grand vision and failure it was that for decades now Virginia is all the much the better for. With all the tools and histories we have at hand now, we likely can do things in a more controlled and surgical, objective and precise way, if we can overcome the tough parts, likely political, legal, and cultural problems.

        • I worked right in the middle of Reston for 12 years. I go there at least weekly now. I don’t see the failure. Maybe there were financial issues but the place is a booming, walkable, mixed use community with considerable affordable housing. What am I missing?

  6. In Virginia, the Dillion Rule protects property rights and it requires localities to consider rezoning proposals – and act on them within one year and they cannot arbitrarily reject such proposals – they must show that the proposal fails to comply with the code – and the code itself cannot violate Virginia law.

    There can be “restrictions” and required mitigation especially if a rezoning will increase densities that will, in turn, affect publically provided infrastructure and facilities like roads and schools.

    • The US Constitution protects property rights in Virginia and everywhere else in America. Virginia’s strict adherence to Dillon’s Rule lets hayseed legislators from Hooterville who are in the pockets of special interests meddle in land use issues in places like Arlington County. In fairness, it also allows Yuppie, self proclaimed urban sophisticates meddle in agricultural matters in Lee county.

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