District works on the revitalization tax exemption bylaw

Hopes to encourage business investment and add to job creation

District of Houston file photo

A bylaw to provide tax exemptions to light and heavy industries based on the value of improvements made has started to work its way through the District of Houston’s approval process.

First reading was given to the bylaw at council’s April 6 meeting, leading the District to issue appropriate public notices along the way to second and third readings and then adoption.

Qualifying businesses would be eligible for tax exemptions based on the value of improvements on a five-year sliding scale beginning with 100 per cent the first year and decreasing in 20 per cent portions to a final 20 per cent in the fifth year.

The bylaw would essentially mirror the intent behind existing tax exemptions available to other commercial enterprises within the District.

As such it would meet the District’s longstanding goal of encouraging and stimulating business investment, generally increase the value of assessments subject to taxation and add to job creation. It would apply only to municipal assessments and not include taxation for schools or other purposes.

And although an exemption based on improvements means the District would lose revenue temporarily, it would be regarded not as lost revenue, just revenue delayed for however many years council decided to provide the exemption.

The bylaw would apply to businesses within the District’s light industrial or heavy industrial zones.

Construction of a principal building on a vacant parcel with a total construction value greater than $250,000 would qualify as would the demolition and construction of a principal building on a parcel with a total construction value greater than $250,000 that increases the assessed value of the improvements on the parcel.

But improvements that automate or downsize operations and result in the loss of permanent full-time or part-time positions would not qualify.

Council approved of the general wording of the bylaw last year and it was sent away for a legal review leading to its introduction for first reading.

Council did clarify that exemptions will be based on the increase in the total assessed value of industrial properties as a result of development and that the amount of the exemption will be limited to the difference between the increase of the base assessment year and the following year as opposed to the base year and all future years.

That legal review resulted in strengthening of some sections and the by-law as presented provides financial protection to the District, noted corporate services director Duncan Malkinson in a memo to council.

“If significant reduction in property values results after an exemption certificate is granted, the District retains the authority to reduce the total value or an exemption or cancel and exemption,” he said.

Council is also regarding this as a pilot program, limiting it to a five-year period for now.

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