Strategies to Minimize Displacement: Tax Abatement
Brownfields—or properties with environmental contamination or potentially contaminated land—are disproportionately located in or near communities of color and low-income communities. Residents near these properties may face heightened health hazards and economic disinvestment until the site undergoes assessment and cleanup, which can be a costly and lengthy process.
Safely reusing a brownfield site is an opportunity to improve community health and bring in new amenities. However, brownfield redevelopment can also exacerbate affordability and displacement concerns. As costs rise and it becomes more expensive to live in a community, lower income residents and small businesses are often displaced. Strong, early community engagement in the brownfields reuse process presents an opportunity for the community to have a meaningful role and input on how to minimize displacement through the cleanup and reuse process. Community leaders, stakeholders, and practitioners can be proactive and put strategies in place to minimize the risk of displacement. These strategies take time, resources, and political will to implement, and they are most effective if put into place before displacement is already occurring.
Tool: Tax abatement
Tax abatements are financial programs designed to ease property taxes for developers and low- and moderate-income homebuyers, particularly in locations that are experiencing increasing property taxes due to rising property values. Abatement programs lower taxes for property owners or developers for construction of new homes or rehabilitation projects on existing homes over a certain number of years.
For long-time residents in areas which have seen significant growth and development, increased property taxes and increased monthly costs may present a major barrier to staying in a family home. In order to qualify for a tax abatement, applicants
to the program must fit at a certain income threshold, which is determined by the jurisdiction. Tax abatement programs are administered at the town, city, or county level and vary in the tax percent reduction or abatement time depending on the jurisdiction that oversees the program.
For tax abatement policies that encourage the rehabilitation of existing homes, homeowners can receive a 100% reduction of tax from undergoing the rehabilitation project (meaning they only pay the taxed amount of the value of the home pre-restoration), while other policies reduce this cost by 50% for a certain number of years. For new construction, the property owner would receive a tax deduction based on the payment made to acquire the property.