24-Residential Tax Abatement Program for City of ParisMemo�andum
To: c��y co���l
John Godwin, City Manager
FROM: Kent McIlyar, City Attorney
SUBJECT: Residential Tax Abatement Program for City of Paris
DATE: May 8, 2013
BACKGROLIND: The City Council and staff have been discussing the development of a
Residential Tax Abatement Program for owners of existing single family structures as a way to
encourage remodeling, rehabilitation, or modernization of existing residential structures. City
may also incentivize new home construction by making residential tax abatements available to
owners of single-family lots throughout the City.
This program would be similar to the tax incentives that the City offers to persons that
rehabilitate or remodel historic homes located inside the designated Historic districts, but would
not require the property to be historically designated in order to be eligible for tax abatement.
STATUS OF ISSUE:
POLICIES TO BE ESTABLISHED BY PARIS CITY COUNICL:
1. Reinvestment Zone — City Council must identify those areas of the City of Paris for
Residential Tax Abatement incentives. The City Council could start with older parts of the
City that are in greater need of economic incentives to spur rehabilitation and remodeling
of existing housing stock and construction of in-fill housing. The Reinvestment Zone will
be identified by City map and must be adopted by formal ordinance or resolution.
2. Minimum Investment — The City Council must determine the financial parameters of
the Residential Tax Abatement Program, specifically, what is the minimum investment a
person must make in a single-family structure to be eligible for a tax abatement. This
could be a fixed dollar amount such as $5,000, $10,000 or $15,000 or you could make it a
percentage of the appraised value of the property.
For example, if the lot andlor structure was appraised at $20,000 by the Lamar County
Appraisal District, and the City Council required a minimum investment of twenty percent
(20%) of the appraised value to be eligible for a tax abatement, then the owner or builder
would have to put up a minimum of $4,000 to be eligible for tax abatement.
3. Term of Tax Abatement — Ten (10) years is the maximum term for a residential tax
abatement program under state law. The City Council can establish a program that abates
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taxes for 3 years, 5 years, 7 years or 10 years, or any combination in between. But the term
of the residential tax abatement program shall be uniform for all participants.
4. Percentage of Abatement — City may abate any percentage of the taxes (zero — 100%)
over the term of the tax abatement agreement (10-year maximum). Alternatively, the City
Council could create a program where the percentage of tax abatement decreases over
time, such as the example below:
Year 1 — 100% abatement
Year 2 - 100%
Year 3 — 100%
Year 4 - 80%
Year 5 - 60%
Year 6 - 40%
Year 7 - 20% (final year)
5. Eligibility — The City Council must decide whether the Residential Tax Abatement
Program applies only to single-family houses or whether duplexes, triplexes, quadplexes
and multi-family structures (apartment buildings) are also eligible for this residential tax
abatement program.
BUDGET: This program will have an impact on ad valorem taxes that are abated on new
improvements to residential structures, but only for the term of the tax abatement agreement.
RECOMMENDATION: Establish Policies and Procedures for a Residential Tax Abatement
Program for the City of Paris, Texas.
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