Title
Consider/Discuss/Comment on an Amendment to the Historic Neighborhood Improvement Zone Tax Exemption Program
Summary
MEETING DATE: November 7, 2013
DEPARTMENT: Planning Department
CONTACT: Guy Giersch, Historic Preservation Officer
Jennifer Arnold, Planning Manager
APPROVAL PROCESS: The Historic Preservation Advisory Board serves in an advisory capacity to the City Council and, as such, may provide written comments to the City Council prior to Council action on an amendment to Chapter 98 of the City of McKinney Code of Ordinances pertaining to the Historic Neighborhood Improvement Zone Tax Exemption Program (HNIZ Program). The minutes of this meeting will serve as the written comments and will be forwarded to the City Council at the November 19, 2013 meeting.
STAFF RECOMMENDATION: Staff recommends that the Board consider/discuss/comment on the amendment to the Historic Neighborhood Improvement Zone Tax Exemption Program.
ITEM SUMMARY:
· Amendments to the Historic Neighborhood Improvement Zone Tax Exemption Program are proposed to improve the administration of the program and expand the current Neighborhood Empowerment Zone (NEZ) program to apply to non-residential, multi-family residential and vertically-integrated mixed use development projects.
· The most significant proposed changes are:
o Increase the Annual Aggregate Cap of the HNIZ Program. Currently, an annual aggregate cap on the total amount of ad valorem taxes which can be exempted in any budget year under any or all of the exemption levels is set at $50,000. Since the original adoption of the HNIZ Program in 2007, the City has approved a total of 54 tax exemptions. With the existing 54 exemptions approved, Staff anticipates the program will reach the $50,000 annual aggregate cap beginning in 2014. As a result, Staff is proposing to increase the annual aggregate cap to $100,000.
o Modify the Term of a Level 1 Tax Exemption. Currently, residential properties that are approved for a Historic Marker may also receive a 100 percent exemption of the City's ad valorem tax for a period of 15 years. In order to ensure that the Program maintains exemption capacity over the long term, Staff proposes to modify the term of a Level 1 Tax Exemption from 15 years to 7 years. If approved, the modified term for a Level 1 Tax Exemption would become effective for all Level 1 Tax Exemptions approved on or after November 20, 2013. Level 1 Tax Exemptions that were approved prior to November 20 would remain at the 15 year term.
o Clarifying Provisions Associated with the Termination of a Tax Exemption. Staff proposes to include a clarifying provision to ensure that properties receiving a Level 1, Level 2, or Level 3 tax exemption promote the intent and philosophy of the Program. Should the Historic Preservation Officer find that a property receiving a Level 1, Level 2, or Level 3 exemption has fallen into a state of disrepair and/or is no longer meeting the intent and philosophy of the Program, the Property Owner shall be notified in writing and will have one year to remedy from the date of such written notification. If the issue is not remedied within one year, the Historic Preservation Officer will present information to the City Council for consideration of the termination of the tax exemption.
o Expand the Neighborhood Empowerment Zone overlay. As part of the 2012-2013 Impact Fee Update process, Staff is recommending to expand the NEZ program by offering a 100 percent waiver of roadway impact fees for single family residential, multi-family residential, non-residential, and vertically-integrated mixed use development projects (up to $50,000 per project). Development projects with impact fees that exceed $50,000 would require City Council approval.
BACKGROUND INFORMATION:
· Ordinance No. 2007-02-014 and as amended by Ordinance No. 2008-04-030 (known as the Historic Neighborhood Improvement Zone Tax Exemption Program) encourages the general maintenance and rehabilitation of single family homes located within the HNIZ (and the geographically coexistent NEZ) by offering financial incentives based on verified investments that meet specified criteria (Sections 98-83, 98-84 and 98-85 of the City of McKinney Code of Ordinances).
· Under Texas Local Government Code Chapter 378, a municipality can utilize a Neighborhood Empowerment Zone to waive fees related to the construction of buildings in the zone (including fees related to the inspection of buildings and impact fees) in order to promote the creation and rehabilitation of affordable housing as well as an increase in economic development in the zone.
· Currently in the NEZ, impact fees are waived only for new single family construction projects. In late 2011, City Council discussed the policy issue of roadway impact fees being a monetary disincentive to small-scale infill redevelopment in the Town Center. As a result, Staff recommended an approach for creating a targeted incentive specifically to eliminate roadway impact fees in the Town Center for non-residential and mixed use development projects by building upon the existing Neighborhood Empowerment Zone (NEZ) program. City Council discussed Staff's recommendation at the September 16, 2013 and was generally supportive of expanding the NEZ to include multi-family, non-residential, and mixed use development projects.