to support the presentation. You should have two handouts in front of you. Um, one is the staff memo that was presented at the commission meeting on April 21st and then the other is a primer I've put together since then um to kind of
explain base value versus increment value. But anyway, uh, good afternoon. pack members. Um, and while I've attended all of your meetings in the last year, I haven't had the opportunity to address you. Um, I'm Alan Pure with the Office of Community Solutions. Uh,
last month on April 21st, I gave a presentation which I should pull up here. Just share the screen. Excuse me for a moment. I uh gave a presentation to uh city council on uh the topic of
creating an affordable housing tax abatement uh for the city of Charlottesville. Uh at that meeting, council expressed interest in the idea so that our office was charged with taking a deeper dive into this concept and bringing back ideas and a recommendation to council later this
year uh about a tax abatement. As part of that process, we're launching our community engagement with this presentation uh and discussion uh here with hack. And I know last month you all took a brief look at the uh memo that
was presented. Um but I know that most of your energy at that meeting was talking about the land bank ordinance. And so uh we wanted to return and have a little bit more of a comprehensive discussion with you uh about the tax abatement. Don't have this on PowerPoint. I have it
on an Adobe. So, D tax abatement in this program would be a reduction in the real estate tax to serve as a financial incentive to building affordable dwelling units or ADUs. Um, at this
point, the staff is calling this CAT, the Charlottesville Affordable Housing Tax Abatement Program, but that's simply because it's a name we came up with. uh no one is wedded to that concept. On this slide, you can see the core components uh that I'll be highlighting over the next few minutes uh as we talk
about uh affordable housing uh tax abatement. Why are we looking at a tax incentive for affordable housing? Well, because the new zoning ordinance includes the 10% ADU building requirement and this creates a new financial constraint to the ongoing
operating revenue of rental housing. That constraint can be quantified as the difference in revenue between the market rate rents and the affordable rate rents for the required uh 10% ADUs. And there's a concern that this uh financial
constraint may be a material impediment uh to rental housing construction. So a tax abatement can potentially provide uh the necessary incentive uh to uh address this potential uh financial constraint. What are the options, the tools that
city government could use to address this constraint? Well, there are grant programs of course like calf and hops. And these programs, these grants could be increased. Uh but grant funds first of all cannot be given to for-profit developers. Uh and grant funds come from
current city revenue or obligate bonding capacity. Uh basically committing current funds for ADUs that aren't delivered in the future. um and also current budget and bonding capacity may be needed for other city government priorities like education, public
safety, etc. On the other hand, a tax abatement program uses future real estate tax revenue that will come from the new added increment value of future development. existing base revenue, the tax on the base property value is not
abaded and that revenue continues to fully support and go into general fund uh for ongoing government services. And so that's what's meant by base versus increment. You protect base revenue that government services depend upon and you
commit a portion of the added increment revenue for new priorities, in this case for affordable housing projects. And this may be an optimal way to make funding for affordable housing more sustainable for city government going forward. In particular, uh should the
goal be to continue uh the current level of funding that I know was addressed in last month's affordable housing plan. So, let's look at an example to help explain base value versus increment value. And I have this um for people in
the room, I have this uh document in front of you that I put together. Unfortunately, I can't put it up on the screen because of a a lack of syncing up of the various uh uh city cloud programs. But um if you take a look at this chart
um base value uh in the first column, an existing uh property uh that doesn't look like it's situated in Charlottesville, but it made for a nice picture. So, this existing uh home has a
assessed value of $100,000 and kicks out $100 of tax revenue. So, a developer decides that they're going to build a certain number of units and create new housing. So on on the next
picture, in the next column, we have that new housing project that now is valued at $250,000 and kicks out $250 of annual real estate tax. So what we have here then is the base, which is the $100 $100,000 value
and the $100 tax. And then the increment is the difference between the new development minus the base. So that the increment of this project is $150,000 of value and $150 of real estate tax. So
essentially what a tax abatement po proposes to do is to dedicate some percentage of that increment that new additional $150 of revenue in this example and invest that percentage in affordable housing. the base real estate
tax continues to flow into general fund and support all of the existing city services as the city council appropriates every year. Um and of course if the abatement turns out to be something less than 100% then some that remaining percent of the
increment real estate tax will also go into the general fund to continue to support uh city services other than affordable housing. So that's the one of the values of the idea of creating a tax abatement is you're committing future
revenue that wouldn't exist except for development goes into that uh that lesser developed parcel and then you're allocating some amount of that new revenue to uh affordable housing. >> Can I just uh interrupt for one second just to say
>> please ask questions. I want this to be more of a dialogue than me just >> Yeah. Just to highlight uh we pioneered this at Kindlewood phase 1 and are doing so at Kindlewood phase 2. So this even though this would be a far more structured and predictable approach, >> right, >> there is precedent already in the city
for it. >> Any have you found any problems with that process? >> Other than the current form requires a lot of paperwork and legal ease and everything else. No. >> Right. So um
well actually let me let me add one one last thing >> which is there are um so pro property tax abatement depending how it and I'm curious to hear where this goes because the current way it's structured right now is that that
property tax um increment comes back to the property after we've paid it. >> Correct. So we pay it in the front on on on the front end and it comes back essentially and then the way we've leveraged those that that value is by
getting a third-party loan and they're taking that revenue that comes back as payment for the loan. So it allowed us to get more debt on the front end of the property so we could develop it and close a gap. >> But do you only pay it when the project
is completed? So you uh yes you only well usually >> is looking over my shoulder and reading my exact notes here. >> I'll be quiet. You can keep going and then we can >> No, you're hitting all the high points and this is important to understand >> but then to talk about the reality very
nice to have both parts of information for us to digest. So I'll I'll just say quickly. So the construction during the construction period that is a different sort of financing structure that doesn't rely on that permanent source in the long run. It only transitions when you
get to permanent debt and then that permanent debt then you know adds adds this as another source to to fund that debt. One of the nuances is that it comes after the first year of
completion. So there is about a year delay >> in the in when the first property tax abatement payment comes in or the tax increment payment comes in. >> So we have to we that has to be calculated for and accounted for in the process but once it's flowing it's
predictable and everything else. >> So not to get into the weeds on that but I'm going to go into the weeds. So would your lender treat the abatement rather the rebatement the abatement that's a rebate the rebate >> the abatement yes >> the baitment I don't know
>> a refund >> right um are they treating that as they treat that as an income factor or do they treat that as an offset >> so they treat it as an income because you're getting more debt you're so
essenti so so this has gone through iteration so in kindwood phase one the iteration that we use there is we have a primary mortgage on the primary property. >> The money that comes out of the tax increment is actually funding a diff a
loan that sits on top of that or below that but by the same lending institution. So the the primary mortgage and that debt are two separate debt structures even though they're interlin, >> right? But in but that's not how we're doing it in phase two because that's
more complicated. And so what happened after phase one then Richmond which we were talking about before saw what we did and they created their own program which simplified and then Virginia Housing as the primary lender said do that instead at least in terms of a
structure. So now it's more integrated into the into a the single stack and it comes in as a revenue source just like just like the rental income and everything else to cover the debt in the long term. >> So the revenue is actually but it's revenue that's coming in but it's
calculated against the full price as a cost the full tax. So we are still accounting in the operational pro proforma. We are still accounting for >> the the full taxes but then it comes out >> right. So it's not an offset. It is an
income stream. Yes. Yeah. All right. Uh I wonder if there's more there's a way to do that and call it a true offset. >> I mean I know there's a delay but >> let's all right. Yep. Yep. All right. That's uh >> can I just confirm? So in Kindlewood you
did 50% of the increment. >> Yeah. >> 100 in Kindlewood phase one we did 100% of of the increments. So similar to what was just lied, you know, so I can't remember what the amounts were specifically for phase one, but the base
tax rate that existed there previously still applied and we're only we're capturing 100% of the in but the way city council structured it at the time, there was also a cap on the total amount of tax increment payments. I think we
cap that at $6 million or something over the over a 30-year period, but it worked out given interest rates and everything else to cover the debt, additional debt that we we did in phase two. Uh it is less than 100%. I don't remember where
we landed on in the end negotiation but it's like 50% or 60% or 70% of the increment something like that but for 30 years because that's the other factor is you can do an increment like and there has
been some negotiation between us and the EDA because the way that this has to work in Virginia has to be a relationship between the economic development authority the city itself and the private developer. I know I'm covering your whole presentation. Sorry. >> I'm deciding where to put the axis. I
don't >> um and so the EDA has to play a role. So the negotiation primary negotiations with the EDA um uh I lost my train of thought. So um >> so they the one one of the options that that Chris Angel put in front of us.
Well, what about the idea of 100% increment for 12 years versus 50% increment for 30 years? Um the ch it the challenge like in order for it to be co-erminous with the primary mortgage, we typically have to do the 30-year structure.
>> Uh otherwise, we have to then find a separate lending instrument to do the 10-year piece, and that may it we found that to be problematic. >> Well, Mr. Chair, if I could note, one of your members just came in and has joined your meeting. Ah, >> so your record can reflect that you now
have another member >> and >> thank you. So yes, thank you sunshine. You you you did cover a lot of things very thoroughly. Um clearly you have a lot of experience and it's good to know to hear about the precedent of a very similar program that's already taking
place in Charlottesville. Um but uh kind of wrapping up that base versus increment discussion. So two of the values of tax abatement is one it's committing future revenue not current revenue which means it no longer is competing with the other priorities of
city services. And number two, the developer can monetize that abatement uh in order to arrange their financing today as uh Sunshine did just a great job explaining how he's done that. Um, can I can I can I point out one other thing? And this this was just a a a
discussion slash painpoint debate within city council when it came to this discussion was if you and this is when there was a different city city council in place when we first were doing a phase one. politically it was a little bit
different. But anyway, the one of the debates that was ongoing was, well, is it better to give $3 million upfront right now out of general funds, meaning that there's no and and so that there's no interest payment being covered in this process.
And so, it's a more quote unquote efficient use of resources or but that impacts the current budget and other and and is compromised by other priorities. or alternatively use it as a this longer term investment
that not all of it will go directly into the project. A lot of it will go towards interest payments. So it's a less efficient use of resources but it doesn't compete with current priorities. And so there was a real healthy debate around which is the right approach. Um and anyway, so I'm just throwing that
out there. That's a political com commentary in this case. >> What was the right approach? In this in this case, the city already had committed all their resources and so having the tax abatement was a way of providing additional support for the project without compromising current
priorities. >> Correct. So the discussion has been had that this might be a more sustainable option to in order to continue uh the level of city investments in affordable housing. >> That's right. Um so to to provide sort of the legal background um as uh
Sunshine started where this uh in uh 2022 the Virginia General Assembly approved uh and codified within the industrial development and revenue bond act which is why economic development authorities are involved in this. uh
they codified a provision to allow local governments working with EDAs to reimburse a defined amount of real estate tax on the new incremental value of new affordable housing projects. So the amount of reimbursement So so it's
kind of an abatement at the front end with a refund on the back end. So, um, we're at this point calling it an an abatement versus a, uh, uh, Richmond actually calls theirs a performance grant program. We're trying to focus on
the abatement side just in order for to distinguish it from the grant programs that we currently have in effect. So, the process will be an abatement calculation on the front end. And then as uh Sunshine was saying, how it would work is as soon as the project is
completed and the new assessed value uh is added and the first tax bill is received and paid, then the project would receive a refund from the economic or working with EDA and city uh finance
in order to reimburse whatever percentage of that uh tax bill uh has been abated. ated by the formula. So that's it's done that way simply because that's where Virginia uh code codified it. Uh and uh local governments are not
allowed to abate taxes. And so instead what they do is they charge it. They have an abatement uh formula to say it's going to be this much, but in order to actually acrue that benefit, you have to pay and get a refund. So that's the
reason why it is an abatement refund two-step process because the way Virginia sets up the law. So I'm going to skip ahead because sunshine just we got covered all that. So does everybody kind of understand that abatement refund
concept and you understand the base and the increment value? So we're all on the same page. So now where we are at this point in time is doing our due diligence. Uh we are going to be um bringing on a consultant to help us do a
thorough market analysis um here in Charlottesville uh first of all so that we um find my place again here. So we're hoping to start an analysis in June uh with the with this consultant.
The goal being clearly in a first of all do a thorough market study of what are the current costs of construction and affordable housing. Let's be able to distinguish between the costs of uh labor uh building materials financing
and the 10% ADU requirement so that we know exactly what is costing what and in particular being able to break out what is that ADU cost what because that is the impediment the potential financial impediment that the whole program is intended to try to address. So our goal
of this uh study will be uh to clearly and objectively establish if we need an abatement program. Are the uh costs of construction so high that we do need to do something to incentivize development? If so, quantify the need and help us
devise a tax abatement formula uh that keeps the developer whole from the ADU requirement so that the program is effective in incentivizing housing construction. And finally, this analysis may help guide consideration of uh
different bonus options like whether to target different abatement levels to different geographic areas of the city. Uh perhaps perhaps a tax incentive should be higher where market rate rents are lower or an abatement should be higher where the market rate rents. uh I
might have mixed that up, but essentially help us identify if we should have differential uh abatement levels based on where the construction is taking place based upon market rate rents. >> And is it built in, excuse me, is it built in to have that assessment done on
a regular basis since it's such a fluid, one would think it's fluid in terms of those numbers >> in terms of those costs? At this point, we haven't crossed that bridge. Uh, but that's an excellent question about how often we might want to update our numbers to make sure that we're truly
addressing and some of that will depend on the policy options that city council may be interested in looking at, which I'm going to talk about in a little bit. So, as we're presenting it here, if we're just meeting the 10%, the idea would be one of the options on the table is if you're meeting the 10% ADU
requirement if you're at 10 or more, or I suppose if you're meeting it anyway and you're at less than 10 units, um the entire increment, the increment is for the gross improvements, affordable or otherwise. We're not parsing down to percentage of this that's actually affordable,
>> right? >> It depends. I mean, th those are the questions we have to talk about. Otherwise, we have a 10 20 unit building. Two of the units are uh meeting the requirements. Do we rebate for just the equivalent value of those two units or for all of
the improvements? And then presumably, if we wanted to say, well, the 10% requirement is our requirement. You get the rebate of X for that. But if you're over it, presumably, as you said on your previous slide, if you're 15% or
20%, perhaps that is a greater percentage. I mean, all of those are on the table, right? >> Correct. And that's um and now Phil is doing the great job anticipating the next two pages of the presentation. >> So at 50, let's say, you know, you get a
50% rebate on the equip on the increment at 10%. Mhm. >> But you know, we might say, but hey, if you go to 20%, we'll give you 80% rebate. >> Correct. >> Or it might not be about number of units. It might be about depth of there's another matrix for depth of
affordability. >> He'll he'll get to that in a minute with a spreadsheet. >> Yeah. >> So yes, that that is where we once we have the due diligence completed with the consultant study and kind of have a basic framework. >> Yeah. and what's really going on in
Charlottesville, costs, subm markets, etc. Then we also need to begin to address what are the policy options for structuring this. And a first highle one would be should the tax abatement simply be intended to close that gap of that
10% cost. So do we want to say our job is to find out what that 10% cost is on this project, abate that amount, and we're good. Second policy option could be do we want to be a little bit more generous and say you know we really want to kickstart affordable housing so we
want to plug that 10% and maybe be a little bit more generous so that we make uh uh we get things kickarted that would be a second policy option that we need to consider and of course policy option three you always have to have the do nothing option perhaps the study
indicates that uh the ADU requirement is not sufficient enough that it's worth doing I know city of Austin uh came to that conclusion after they did their study. They thought we don't need an abatement. The impediments are about labor costs, financing costs, etc. It's not about the ADUs. So that would be
another option. Then drilling down a little bit more uh from that higher level framework, we need to look at things like eligibility requirements. For example, uh in order to be eligible for a tax abatement, should 10% be sufficient? Or should we
say, you know, to get an abatement, we want you to stretch a little higher. So therefore, you need to build 15% ADUs or 20% ADUs. Um, so we need to look at those eligibility amounts. Then we have to and by the way the um county
government Albam Marl County actually has a uh a tax abatement program where they limit it to 15% as long as their eligibility requirement is simply building the 20% required and you're eligible for 15% tax abatement. Um and
the Richmond model which we're going to drill down in a couple of minutes uh uh is a little bit more elegant. It's got a little bit more options and bonus options. So, another policy option would be at how much is the maximum we're
willing to abate. The county says 15%. Uh, Richmond actually will go as high as 100% if you dive into their bonuses. Do we where do we want to be in that sort of spectrum? And then for how many years? Sunshine gave us a little peak at the concept of 30 years being a standard
amount because that's usually the loan term of a loan and he's trying to monetize the abatement to his loan terms. So Richmond has it 15 years at the front and then you're eligible for for a 15-year renewal. Um maybe it
should be 99 years because that's the term of affordability. So those are kind of the ele the um some of the variables we have to work through. And I would also I would add that uh you know as a nonprofit moni monetizing it and co-
terminus with the the primary debt structure makes sense for us but I can also imagine that a for-profit entity they actually would ra rather have that more of that money up front and maybe they would want 10 years at 100% versus 30 years at 20%.
>> Right? even if the same equivalent value from the city's perspective, >> they actually may want that money up front. So having having that as another dial and the last dial and I don't think I see it here but that I think is worth considering as a question is the number
of units total in a project before it uh the threshold number before it triggers as an option. So for example, right now we're talking about you know 10% 10 units 10 plus units because that's where the ADU ordinance kicks in. But what about a forplex and one of them or two
of them are affordable? Is that a viable path in this context >> given the sort of procedural and transactional and legal elements that have to be put in place for each time and that like and I would say that the current structure we've been using in kindwood phase 2 the answer is
absolutely not because it's just too burdensome for that for such a small project but I would love for there to be a way that we can structure this where it can be applicable to smaller project sizes. >> Fill out these forms verify this data we're done. Yeah, the other matter here
might be as you were saying about Kindle uh a new hope was um a dollar cap which might make the making the determination of the term if you factor in some sort of total dollar cap
and you make the term sort of adjustable for that. >> So there's lots of ways you could play with that to either satisfy a lender or a developer's return. say, "Well, you know, it's it's a it's a total of $5 million. If you do, you know, if you can
figure out a way with the assessments to get all of that rebated in 15 years, great. For a lesser amount, 30 for your loan, some combination thereof, right? >> Sounds like a case by case basis. >> Well, if it's a you'd have to come up with a formula and policy that you could apply to each significant project.
>> So, come up with the scenario and then the option. >> Yeah. Well, you'd have a sort of a general set of rules. Well, you'll see. You'll see in a moment when he brings up the Richmond spreadsheet. >> That spreadsheet doesn't contemplate some of the questions we're talking about, but I think you could put it in there and make a more sophisticated
spreadsheet that would allow for some dial turning, >> right? >> You know, to meet the needs of a particular as long as you're getting to the same end, >> right, >> and the same policy agreements >> to be for we needed to be formulaic. We needed to be predictable. We needed uh
it to be equitably applied. Um and uh actually um Sunshine, your idea of graduating the amount of the payments either start at 100% maybe back your way down um is something that I have already thought about. It's the way we manage
tax increment finance in Montana uh which was u one of my experiences on uh this area. And then terms of the unit size, we also have that discussion as well. So um so we pretty much have addressed
all of those. Yes. >> Just a followup question for sunshine. Sunshine in terms of smaller number of you what do you have in mind that's minimum threshold? >> I don't know. I I would I would want to see ultimately if there's if it can be automated like
we're talking about a spreadsheet formula that can be easily plugged in. That's one step in the process. The other step in the process is how predictably can the sort of documents that the EDA has to generate and then city count because it requires legal review and
everything else can those be templates that are generated once >> right >> so we really don't have any additional legal um costs are associated with that because I think it would be ideal to have it be workable in an um an RB or RA
lot where you can get four units And if one of those can be affordable or two of those can be affordable, it would be ideal if this could be applicable in that context. >> So clearly there's a lot of things we need to contemplate. The study will help
us shake out the realities we've got. Um looking at these kinds of options in terms of eligibility, uh in terms of how rich do we want to make this benefit, how many years does it need to be? Do we want to incentivize deeper affordability by making the
abatement richer if you build at maybe 30% AMI or below or 30 to 50 etc. So those are all the kind of policy options that we need to look at. Um as well as other jurisdictions and what I put up in front of you now is uh the Richmond
model. Um this is their for this is the formula that they have for how they determine a tax abatement. Um, >> and how long have they had this been used? >> They just launched it a year ago. Of course, the it the whole concept was
just approved by the legislature in 2022 >> and Richmond rolled this out in I think late 2023 and I don't know that they haven't had any projects yet. The last time I checked, they hadn't had any. But but my goal will be to generate something like this that factors in all
of those policy ideas that we just discussed. And so for example, let's see what a project would uh turn out to uh be abated at enrichment. So um sunshine, how about if we play the game we did? Sure. It was just you and me. Let's talk about cherry. Everybody knows the cherry
501 cherry project. So >> yeah. So let let's uh so that's roughly 71 70,000 square feet. >> So that's 70,000 square feet of gross residential use. >> Yeah. um how much >> and roughly 13,000
non-residential >> 13,000 non-residential. So what this formula has done is they're basically backing out the non-residential use. So the uh 83,000 square ft is the total project, 70,000 of that is residential.
So you're 84% of that project is meeting the goals of the abatement building housing. Now we have to determine how much of that housing is affordable. 71 units total. >> 71 units between 50 and 80.
>> Yeah. Uh I'm just going to use the numbers we used before. They're not precise, but 40 >> 40 >> and 31 >> and 31. So what these are that I just put in are so we uh Sunshine's project is 71 housing units. 40 are between 50
and 80% AMI and 31 are below 50%. So what they're building in is they're building in a bonus by Sunshine building deeper affordability units. He's going to get a bonus on his abatement. So how we uh read this then is um 44% of his
units are at the deeper affordability. Um 100% of his units are affordable. And that would mean that his tax abatement they call it the performance grant percentage. Again for now we're calling it abatement. to distinguish between the
grant programs. So that's his basic abatement percentage is 84. But wait, there's more. Because of this 44% uh at the deeper affordability exceeds their 20% goal of deeper affordability,
they've now doubled this up to 100%. So Cherry Avenue in Richmond would be getting a 100% abatement. So on our example of the $150 of new increment tax that's due, they would get all 150 of
that dollars back after they've paid it. So let's play this game for a second. If we were not involved, it were just 70 units and it was watered continuing forward just to see what that looks like. So make that seven and make that zero.
And I I Yeah, I'm just making numbers up with here a little bit, but that would give >> that would give them an 8% abatement, >> right? Which then Okay, I see. >> Because they get no bonus. They so they're their bonus number down here is zero. So they're um they're they're
building their minimum to actually I think we require a roundup. So let's make that eight. So they would build eight units of affordable out of a 71 unit project. So their um abatement would be 10%. >> And what if zero and eight reverse? What
if the all eight units were below 50? >> 10%. Because >> because you haven't hit the 20% threshold. >> So that's their policy framework. We would obviously impose our own policy goals and alignments that would kick out
a different percentage based on >> Exactly. And so that's our goal going forward is to complete a market analysis, have these policy discussions, and ultimately build a model like this that allow that will add in our
eligibility requirements, our bonus options, and then turn out a number at the bottom. And then of course, can I pause for one second? So I have to head out for meeting with uh Sandmy and other folks. Heather and I are going to head out. Who can chair at this point? Who's the chair at this point? I know we
still have quorum. >> Nicole, >> good one. >> Nicole, you are now dubbed as chair, >> right? >> Uh or for this meeting in any case. Um and one thing I wanted to point out, well, I'll I'll send out by email
afterwards. Uh there's a separate thing. Yeah, that's fine. Thank you all. Sorry, I have to leave. >> Bye. >> Thank you, Sunshine, for your experience. and um >> extra you were able to add to this discussion. >> So again,
>> there were a couple bonuses like let's say they had two extra affordable >> so >> units >> up at the 50 to 80% level or down? >> Yeah, I'm just curious like how much of a difference does it make per unit?
>> Their magic number is 20% of the 20% of the residential units >> right down there. >> Well, no. Well, we don't have a bonus system at all. What they're saying is if you get the minimum, >> you get your automatic, >> you get your performance grant performance. If you're at this higher
threshold of 20%. >> Okay. Gotcha. >> And you get this additional bonus threat, you know, up to doubling everything. >> Okay. >> When was the program passed? Do you know that >> in Richmond? >> Yeah. >> 23 >> 2023. >> Yeah. >> So, they they have to Yeah. You can
actually find >> no projects. You can find this if you Google performance grant Richmond, you can find this spreadsheet. Um, they actually make it part of the application. So, if you're a developer, you can plug in these numbers and play the game and say, "How much abatement do
I need to make a pencil?" Um, and let me see how I can make this work. And, you know, ways to change it obviously are the number of affordable units in the two different categories, 50 to 80 versus below 50. You can also increase the amount of uh space that's going
towards residential instead of commercial. So again, I made more of it residential space and less of a commercial and it increased my abatement from 10% to 14%. So our goal is to devise just this type
of document um when we get at the end. And then the other piece that I would want to add to it, however, is to be able to also put in a column that shows how much your taxes are, you know, so that assuming you're de going to contemplating developing a parcel, you
know, you can do what we just did here on the dollar value of what is what is considered a form. >> That's a good idea. >> Yes. Put in the actual amounts. Obviously, it's going to take a projection for what you project the post construction value will be. Um but uh if
we can plug that in then it will give the the developer an opportunity to then that's the number they would be able to monetize with their financing is say based on this document I should be getting an annual tax abatement of 200,000 so let's monetize that into my
financing >> and I assume we know who's going to do the feasibility study since it's June you said but what is the time frame for its completion >> of the study >> of our study >> um hopefully in August Okay, >> we're on track to try to be going back to council uh late this year, early next
year. >> So, one thing it occurs me what are the taking to money these waters is the metrics used for assessing >> commercial space versus residential space >> and how you value that it's not necessarily linear.
>> Correct. Uh so that can buddy the water particular I mean if you have >> the city >> I mean in either direction, right? you could have really sexy class AAA commercial development there that would be that would cause for fairly high assessment per square foot or whatever
versus the residential that would be lower and you could skew these numbers or skew them the other way which is oh it's warehouse flex space that's you know with space heaters in it uh therefore you might be shooting yourself in the foot by having I don't know I
mean it could you could you could you go either direct that I mean and I just That's something to look at the larger metric because it might skew the real numbers you get at the end. >> I don't think it's going to be much of an issue though because most of we don't
>> I mean you know downtown mall makes you sure basically everywhere else not that much but >> one thing one thing that has come up is doing like an Airbnb which would be considered commercial like a hotel use.
>> Yeah. and then that being sitting considered commercial and then some portion be residential. So that >> So you're saying you do it as an inn, not as an Airbnb because we don't allow 180 days use of an Airbnb. >> Okay, cool. >> We have to call it or bed and breakfast.
Yeah. >> Yeah. No. So that would be an interesting how that would play into something like this because that would be housing and but it would be considered commercial under this I guess
>> weird condo tell. All right. I I know what you're trying to say. Yeah. I think I think that we could get into the >> but this is Yeah. Again, I think there's going to be a lot of weed rumaging when we when we actually have data that we can actually start >> really fighting to see. I mean and it
may be I don't think we know what questions to ask intelligently in that at this point. >> No. And and frankly a lot of it is going to be policy calls and um no >> uh in terms of you know how rich do we want to make this benefit again the
number of years the bonuses etc. So there's a lot of things to uh to me not to mention the practicality of it. I mean, >> you know, one way to look at it, well, if this from a developer's point of view is this needs to move my needle to actually incentivize me to do this as
opposed to >> So that's what I'm wondering if this has been going on in Richmond, been allowed for, let's say, two years, been approved and Richmond is way bigger than we are, and no one's taking advantage of this opportunity, then maybe we need to um
make it more innovative And don't thoroughly quote me on that nobody's taken. It's been a few months since I checked back in with Richmond um to ask them if they had some. >> But it's good that they did this before us because then we could see >> it's nice to be the
Richmond for inclusionary zone. What's the base >> that it's outside my wheelhouse that I don't know. >> Yeah, it would be interesting to see how many how many development projects >> Oh, good point. have been pushed have been have you know have been tried to
pencil using that and said >> actually Mike's question is important for us to contemplate in all the other places we look >> could you repeat that >> is what's the context of the ADU issues the challenges >> we don't know what debates >> not to mention the costs because you
know when I I reflected earlier part of the reason for us doing the due diligence with a consultant study was when we learned that Boston decided to not do an abatement because they realized that the ADU requirement in their inclusionary zoning was not the obstacle.
Um, we have to make sure that we we we find out what are the obstacles here. So, comparing us to Boston though, I'm sure Boston's labor costs are higher, material costs might be higher. So, we we've got to be careful when we're comparing ourselves to other jurisdictions to see what's going on in
our area. What's our inclusionary zoning is unique to us. our land costs are unique to us etc. So that's why there's the importance of that uh uh that market analysis and study. >> Yeah. I mean my instinct would would say if you've got your 10% units and you're
jumping in you get a significant benefit automatically. >> Yeah. automatically because it would seem because from what I've heard particularly in the upmarket areas is you know my math just cannot math
says the developer for these affordable units without X. There's got to be an X whatever it is. >> Maybe this is maybe this is the X because they just can't make it the gun. >> Yeah. So, all right, committee. That's all
I've got unless there's any other questions. >> So, you said you had experience with this in some >> Montana. I was a tax administrator uh and tax policy at the state level in Montana. And so, some of my background uh so I've
had experience in this kind of area with tax increment finance at the state level and also in the city of Hannah. >> Good. So at this point are we are you looking for hack to
provide recommendations or thoughts on the policy levers? Should we just kind or is this just an update? >> At this point it's an update and that's exactly where I want to close. Nicole, you guys are just really good at anticipating this outline. >> We all saw your slides beforehand.
>> You did. >> I'm joking. I'm joking. the um what what I would propo what I would propose if it would be the committee's pleasure is that when we get the um the study completed that we would come back
and make a presentation to you of that uh and we can have a a deeper discussion once we have a little bit more specific data and uh by then we will have uh fleshed out um some specific policy options to consider like what would
happen if we did this what would it uh you know creating kind of a document like this that includes the policy options that we've discussed. So if it would be the committee's pleasure, we could come back in perhaps at your September meeting, pencil it in. Hopefully we could meet that deadline,
maybe push it to needed to. But >> um so that would be the next step for us >> with you would be uh fall when we have more data, more information than we've had a chance to dive into. And by then we should also um we're convening a a
staff work group to talk about the logistics of how to handle this efficiently. Sunshine made the point of making sure that this is an efficient process from the developers point of view. So we're going to start talking about it internally because there's a lot of moving parts. We've got the assessor's office, the treasurer's
office, the revenue office, uses, the EDA, etc. So there's a lot of levers that have to make sure we get this to be smooth and efficient from the applicant's point of view. >> Yeah. I mean I I'd love to see the data back so that we can then start tearing
up this and rewriting it for our own budget. >> So cadre the Charlottville area developer round table thing is meeting >> I'm actually going back and forth with Ashley right now to pick a date. >> Yeah. >> Uh to meet here with >> sent out a doodle poll. Yeah.
>> Right. Um, so they're supposed to be meeting like the end of June. >> Oh, good. >> We're looking at June 26, June 30th, something like that. >> To get their input up front. That's the >> Yeah. >> And the I I think the plan would be it
would be very similar to what we've done here and then hear their perspective. And um and thank you to Brenda who's in the back helping me take notes so that I can uh not have to walk and shoot down at the same time. And so she's taking down all the important points you folks
have made so that we can work that in. And so yes, we're going to do the same presentation with Cadre um in June and then uh and then if it's your pleasure um maybe the September meeting. >> Okay. And then so then and then it'll go
to council you think the end by the end of the year early next >> you know all the dominoes fall in place. We hope to be ready to, you know, send it to the city manager's office for all the things that they do and uh and perhaps by the end of the year, early
first quarter of next year should you know there's always option three however that that is that we don't do one. So >> true. >> I'm curious because I feel like that's a really important question for the study to not not take it for granted that
>> this actually will serve a useful function. Correct. The data may show like it did in Boston that the impediment is all these other things that are unrelated because the worst the worst tax abatement policy in the world is you abate taxes for a project that
would have happened anyway. >> That's nobody wins. Well, nobody wins. >> Not the right people. >> Yes. So that's that's the sweet spot is to try to find an abatement that is needed and that fought for the abatement that project wouldn't have occurred
because you don't want to abate something that would have occurred anyway and then you've just um you know given away again those are the kinds of policy discussions we had on fan as well. >> Yeah. Yeah. I mean I think that the whole modeling thing is going to become very important as to what does this
really move the needle right >> and what point do we want to be able to turn that dial so that it really moves the needle at the right point. And the answer may be whatever that point is is something city can't do,
right? >> Well, maybe it doesn't matter. So the city doesn't do it. Yeah. >> Correct. And again, all of that circles back to why we're making sure we do a detailed market analysis. Um I know that there was one done during the inclusionary zoning uh discussion that
helped inform the decision- making. Um but it was a different type of study and things have changed marketkedly since then and so we need to update that so that we can make that call as to whether and and we owe staff owes the due
diligence to the council um to make sure that uh everything's understood before uh things are brought forward. Who's the consultant that you're using? >> Um, we've got three of them that we're we're >> Oh, you haven't picked yet. >> No, we're we're we're looking for some
bids. We're hopefully to know by the end of next week. >> So, okay. Unless there's anything else, Madam Chair, I think that's it for me. >> Yeah. No, that was awesome. >> Thank you very much. >> Yes. Thank you. >> I guess informative
>> public comment if there's anybody on. There wasn't at the beginning of the meeting. I don't know if there is >> we're without ch our normal chairs. We're without Antoine. >> We still just have Austin.
>> Okay. So, I mean that's really it. So, our next meeting is June 18th. >> June. Yeah. >> Unless anybody has anything else. No. >> I believe. >> Okay. Let's do it. Let's adjourn. Thank
you. >> Thanks. Thank you.