City Creates Empowerment Zones To Promote Development
April 12, 2017
Steps were recently taken by the Hillsboro City Council to create neighborhood empowerment zones (NEZ).
The zones are allowed by state law to provide tools for cities to promote economic development, affordable housing and certain other programs.
That is accomplished by offering financial and development incentives to property owners and developers within the zones.
“Empowerment zones are a tool that I have seen other cities use with some success,” City Manager Frank Johnson noted. “The council agreed to put the added incentives in place in an attempt to spur additional development in the city.”
Incentive options can include a one-percent sales tax rebate on materials bought locally, and waiver of fees for such things as building permits, plat applications, board of adjustment, demolition, zoning applications, street and utility.
Property tax abatements on city taxes can be offered to owner-occupied property, investor owned single-family property, single-family development projects, multi-family development projects, commercial, industrial or community facilities or mixed-use development projects
Community Development Director Jerry Barker was charged with drafting the guidelines.
Barker explored successful NEZ programs in Fort Worth, McKinney, Corpus Christi and Marshall to come up with the guidelines.
“These incentives and abatements level the playing field, giving existing businesses an opportunity to take advantage of financial benefits that in the past may have only been offered to new businesses coming to town,” Barker pointed out.
A total of five NEZs were created through the council’s action, with Number One covering the entire city.
To qualify for incentives, a minimum of $20,000 in improvements must be made.
The city will rebate its one percent in sales tax on building materials purchased from stores in the Hillsboro city limits.
On existing property, owners are eligible for a 50 percent abatement on the value of improvements on their city taxes for five years.
On spec homes, in addition to the waiver of fees and release of city liens, a 100 percent property tax abatement on the value of the improvements is available for up to 10 years to the developer. The abatement expires if the property is sold or changes ownership for any reason. It does not transfer to a new owner.
The second zone addresses Outlets at Hillsboro and applies to existing and new stores.
For existing stores, the $20,000 in improvements must be documented on the building permit or equipment must be installed on the premises by a sales receipt.
Previous referenced fees are waived, and there is a rebate of the city’s one-percent sales tax on increased sales. The rebate will be 75 percent the first year, 50 percent in year two and 25 percent in the third year before being phased out.
For new stores coming to the outlet center, a minimum of $100,000 must be invested to qualify. All benefits remain the same as existing stores.
The third NEZ specifically addresses residential neighborhoods in West Hillsboro and the area south of Elm Street and west of Corporation
The threshold for improvements in the area is $1,000, with property owners eligible for a 50 percent abatement on the value of improvements on city taxes for five years.
Also covered is the sales tax rebate on materials, the same waived fees and release of city liens.
The central business district (CDB) is covered by the fourth NEZ.
The minimum investment goes back to $20,000 for existing businesses for improvements to the structure and/or the premises or equipment.
For new stores locating in the CBD, a minimum of $100,000 in improvements must be invested to qualify. Seventy-five percent of the one-percent city sales tax collected in the first year of operation will be rebated, followed by 50 percent in year two and 25 percent in the third year.
The same percentages are offered to existing business and will be paid on sales above the baseline established by the previous year’s sales tax collections.
The abatement on city property taxes is 50 percent for five years based on improvements, the sales tax rebate on building supplies apply, applicable fees are waived and liens released.
The final NEZ is broken down into five sections to spur construction in undeveloped, platted subdivisions in the city.
5A covers 15 lots in Country Club Estates between Clyde Street and Country Club Road, where a street was never constructed.
5B is for 14 lots in Country East addition along Alexander Street west of Cho Street, 5C covers 53 lots in the Meadow Terrace addition off of Cloverdale Street, 5D includes 68 lots in the Park Terrace addition east of Milford Road at the end of Forest Lane, 102 lots Patton Mill Road addition on Farm Road 310 in south Hillsboro are covered by 5E and 5F affects 33 lots in the Stoneridge addition at the corner of Alexander and Cho streets.
In all 5A-5F zones, improvements must be valued at $20,000. On spec homes, property taxes are rebated 100 percent to the developer on the improvements for up to 10 years on spec homes. The abatement expires if the property is sold or changes ownership for any reason. It does not transfer to a new owner.
For individuals wishing to build a home in one of the subdivision, the threshold for improvements is $20,000, with property owners eligible for a 50 percent abatement on the value of improvements on city taxes for five years.
On the material sales tax rebate, receipts must be dated prior to the expiration of the building permit or date of certificate of occupancy. Property owners have six months from that date to submit the receipts to the city for payment.
The Hill County Appraisal District will determine the increased value of the property on which the tax abatements will be based in all of the NEZs.
Barker said last week that there has already been a number of applications picked up for the program.
Applications can be obtained by contacting the community development director at the city administration building, 214 East Elm Street in Hillsboro.
