Downtown Houston could look different soon if businesses take up a District of Houston incentive program. (Houston Today photo)

Tax exemption program being revived

Applies to new construction and renovations

The District of Houston is reviving a bylaw offering property tax exemptions for businesses either constructing new buildings or making renovations.

And this time it is increasing the exemption percentage amounts that were in a lapsed similar bylaw in hopes of encouraging more businesses to make investments.

“This is intended to supplement the district’s infrastructure upgrades and incentivize private sector upgrades in the downtown and along Hwy. 16,” said district chief administrative officer Gerald Pinchbeck.

The previous bylaw, passed in 2012, lapsed the end of 2017 with five projects being provided exemptions.

Exemptions are to be granted based on the net value of improvements from construction or renovations.

For construction, for example, at least $50,000 has to be spent on a building on vacant land or on demolition or reconstruction of a principal building.

In return, based on the increase in assessed value, a business can qualify for a 100 per cent exemption in the first two years, a 50 per cent exemption in for the next three years and a 25 per cent exemption for the next five years.

At least $10,000 has to be spent on renovations with exemption amounts increasing as the amount spent increases.

For renovations of between $10,000 and $50,000 a 30 per exemption will be granted on a Class 6 property for one year. From $50,001 to $100,000, the exemption is also 30 per cent, but is for two years. From $100,001 to $200,000 the exemption is also 30 per cent but for three years. And for renovations greater than $200,000, the exemption percentage increases to 40 per cent for three years.

In each case, 10 per cent was added to the exemption amounts contained in the old bylaw so that a 20 per cent exemption previously, for example, will now be 30 per cent.

The area where exemptions could be applied has also been expanded compared to the old bylaw to include most properties with the downtown commercial zone and highway service commercial zone.

“Council at the time felt the program was too restrictive and did not provide a substantial incentive for businesses to invest in upgrading buildings,” explained District chief administrative office Gerald Pinchbeck of the previous exemption program.

“The former program was based on increases in the assessed value of improvements on a property, making it difficult to demolish and rebuild or even renovate and receive the tax exemption.”

This time council also included Class 1 improvements for new construction so that residential units constructed above the first floor of a building would be eligible.

“The development bylaw allows for residential units above the first floor of a commercial building, and adding in Class 1 residential assessments as part of the exemption amount further’s the District’s objectives for a more liveable and sustainable community, in addition to the added economic benefits of new housing,” Pinchbeck said.

And improvements aimed at increased accessibility, better signage and outdoor seating as part of renovations are also eligible.

The intent of the bylaw follows the District’s Official Community Plan for the downtown commercial which states the key objective: promote infill of vacant downtown commercial lots with additional mixed use commercial and residential development as well as public and institutional development.”

The new planned bylaw, given first reading last month, is now being reviewed by District’s legal advisors after which there’ll be an opportunity for public comment leading to adoption.

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