The “toolbox” of incentives for increasing the supply of affordable housing in the City of Richmond now features a new tool that is attracting considerable attention from both for-profit and non-profit developers. This tool is so new, in fact, that you cannot find specific information about it on the City’s website quite yet.
The program, known as the Affordable Housing Performance Grant (AHPG) is akin to a tax rebate. For a period of thirty (30) years, an AHPG recipient can receive grant funds of up to one hundred percent (100%) of (i) the amount of real estate taxes levied by the City on the land and the completed affordable housing development minus (ii) the amount of real estate taxes levied on the site prior to developing the affordable housing project (the “Incremental Real Estate Tax Revenue”).
The amount of the Incremental Real Estate Tax Revenue granted back is determined by a formula: the more units and the greater the degree of affordability, the higher the project’s “performance grant percentage.” This formula takes the overall percentage of affordable units in the proposed project (which must be at or below eighty percent (80%) area median income) multiplied by the percentage of the proposed development designated for residential use. A project’s performance grant percentage has the ability to be “boosted” if twenty percent (20%) or more of the residential units are at or below fifty percent (50%) area median income – but the total performance grant percentage can never exceed one hundred percent (100%).
An interested developer can file a formal AHPG application with the City of Richmond Department of Housing and Community Development (HCD). If approved by City Council and the Board of Directors of the City’s Economic Development Authority (EDA), the special purpose entity at the helm of the proposed affordable housing development will enter into a Grant Agreement with the City and the EDA that dictates the terms of the AHPG’s administration. The 30-year grant period would begin on the January 1st of the first real estate tax year following the AHPG recipient’s completion of the project.
During the grant period, an AHPG recipient must continue to pay its property taxes to the City in full when normally due. After each timely payment of taxes, an AHPG recipient must then submit a grant payment request to the City’s Chief Administrative Officer. After each grant payment request is processed and approved, the City, through the EDA, pays the AHPG recipient their relevant performance grant percentage of the Incremental Real Estate Tax Revenue, provided that City Council has duly appropriated the corresponding grant amounts.
