Richmond Mayor Levar Stoney’s administration is pitching the Richmond City Council on a tax break for a prominent South Richmond development, months after the council loosened zoning restrictions for the property the deal centers on and its value more than doubled.
The tax break, for what the Stoney administration says would bring a “catalytic” project, is the source of some skepticism for some members of the council, and raises questions about whether an incentive is warranted in what is one of the most sought-after markets in the city.
Pursuing the $50 million mixed-use project is Lynx Ventures, a new firm led by veteran developer Richard Gregory, his son, John, and Bernard Harkless. The developers are planning a building with more than 200 apartments, 40,000 square feet of office and commercial space and a parking deck with about 270 spaces.
A proposed agreement between 400 Hull Street LLC — an entity tied to Lynx — and the city’s Economic Development Authority would allow the developers to recoup 80 percent of the real estate taxes they pay on the development when it is completed. The sum is equivalent to roughly $485,000 annually over the next decade. The tax break would last until the city forgoes $4.5 million in real estate tax revenue it would have collected if the project moved forward without the incentive.
Under the agreement, the city would collect 20 percent of the new tax real estate revenue, projected to be about $115,000 a year, as well as whatever meals, sales and business license taxes the development generates. The owner of the property would owe full property taxes, projected at about $600,000 annually, only after the deal expires.
The proposal comes on the heels of the council rezoning 11 parcels east of Hull Street at the request of Lynx and Fountainhead earlier this year. Among those properties was the 2.2-acre lot at 400 Hull St. the agreement centers on.
The rezoning cleared the way for the developers to erect taller buildings with fewer parking requirements, making it more attractive to build an apartment complex.
It also sent the value of the land soaring, said Richie McKeithen, the city assessor.
The lot’s assessment more than doubled in the last year, going from $1.13 million to $2.43 million, property records show.
Other undeveloped lots in the area have surged in value, too, McKeithen said. Given that, the tax break on the table raises a more fundamental question, the city assessor said.
“Why do you need to incentivize somewhere that’s so hot?” McKeithen said.
Council members have questions, too — about the deal’s origin, how the Stoney administration chose the Lynx project for the tax break and the city’s return if they ultimately sign off on the agreement, which could happen as early as this month.
“As a city, when we get a developer who comes to us, how do we pick and choose, and what metrics do we use?” asked Kristen Larson, the 4th District councilwoman, during a July meeting of the council’s Finance and Economic Development committee, when the administration first shared the proposed agreement.
Matt Welch, a senior policy adviser in the city’s department of economic development, said he was “not aware of a specific policy in place” for vetting pitches. Instead, he said, the administration makes a “case-by-case determination” when weighing prospective projects.
By the time the council committee first heard from the administration about it, the Lynx agreement had been in the works for several months.
Welch sought Chief Administrative Officer Selena Cuffee-Glenn’s approval for the agreement’s language in an email dated June 1, obtained by the Richmond Times-Dispatch through a Freedom of Information Act request.
“The developer has expressed that it is very important to the project that the ordinance be introduced by the June 25 Council meeting so that it can be adopted in July (instead of having to wait for adoption in September due to Council’s August break),” Welch wrote.
Lynx said earlier it wanted to begin construction at the site, bounded by Hull, Decatur, East Fourth and Fifth streets, as early as this fall. The administration introduced the agreement on Lynx’s preferred timeline, at the council’s June 25 meeting.
Also at issue during the council committee meeting was the benefit to the city for providing the tax break. The agreement did not stipulate a requirement for Lynx to include in its development any affordable units, reserved for people making less than the area median income. The omission was a nonstarter for 5th District Councilman Parker Agelasto, who said he would not support the deal without one.
Brian K. Jackson, a land use lawyer representing Lynx Ventures who addressed the council at the meeting, said the Gregorys’ track record in the realm of affordable housing was well-established. They have built 197 units of workforce housing in Manchester and planned to break ground on another project with 104 affordable units next year, Jackson said.
The developers didn’t want to “saturate” the area with affordable housing, Jackson told the council committee.
Backing up Jackson were two of the council’s most vocal advocates for affordable housing: Vice President and 7th District Councilwoman Cynthia Newbille and 6th District Councilwoman Ellen Robertson, who represents the area.
Robertson, during her last re-election campaign in 2016, received $5,000 from Fountainhead Properties, Inc., the development firm from which Lynx co-founder Richard Gregory split earlier this year. Jackson donated to her campaign, as well.
Calls to Lynx’s office, as well as the cellphone of John Gregory, were not returned over the past two weeks. Jackson, the developers’ lawyer, did not return multiple requests for comment for this story. The Stoney administration did not respond to a request for an interview on the agreement or talks with the developers.
Instead, Welch said in a written statement that the Stoney administration believed the agreement would benefit the neighborhood by adding office space and storefronts to complement the spate of apartments. Ninety parking spaces will be made publicly available if the council approves the deal, as well, he added.
“Potential amenities that would provide significant improvement to the quality of life for citizens living in the area, such as a potential grocery store, are hampered by a lack of parking and a lack of daytime activity,” Welch said in the statement.
The developer has also agreed to bury the power lines, provide 50 electric car charging stations, and include in the development a 4,400-square-foot outdoor space that is “generally open” to the public if the council approves the arrangement. Under the agreement, the development would also have to support at least 100 permanent jobs.
After the objections from the council, Welch said the administration is working to revise the agreement to stipulate the developer must set aside a percentage of affordable units in the project. It’s unclear when that amendment may be introduced.
The council’s Finance and Economic Development Committee is scheduled to weigh the deal at its meeting on Sept. 20.