2018-135 Historic Properties Tax AbatementDate: September 21, 2018 Report No. 2018-135
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
An amendment to Section 10-131 of the City of Denton’s Code of Ordinances regarding tax
exemptions for historically significant commercial sites
BACKGROUND:
In 1998, the Denton City Council adopted Ordinance No. 98-116, which amended Chapter 10 of
the Code of Ordinances to enable the City to exempt from taxation part or all of the assessed
value of certain historically significant commercial sites within the Downtown Commercial
District in need of tax relief to encourage their preservation. The Council intended the ordinance
“to provide economic incentive to develop projects in historic buildings worthy of preservation.”
The ordinance specified designation of historically significant sites; eligibility; the application,
certification, and verification process; and property appearance guidelines, among other items.
Properties must be at least 50 years old to apply, and the application is subject to
recommendation by the Historic Landmark Commission and approval by City Council. If
approved, a property would receive a 100% abatement on the incremental increase in value for
10 years.
The incentive has been used five times since 1998, with the most recent exemption being granted
in 2005.
In 2014, the Council adopted Ordinance No. 2014-125 with the intent to expand the original
ordinance to also make eligible “commercial buildings within historic districts, historic
conservation districts, or any commercial building that the City Council deems historic or in
need of preservation.”
DISCUSSION:
In 2018, City staff was approached regarding the possible use of the exemption related to
preservation and redevelopment of the Fairhaven Retirement Home on Bell Avenue.
Since the exemption had not been used in many years, staff requested a review of the ordinances
by the City’s Legal Department to determine that the underlying basis in state law was still
viable and to check for any other potential updates that needed to be made.
While the underlying basis in state law was indeed still viable, Legal found that though
Ordinance No. 2014-125 was adopted by Council, the City’s Code of Ordinances was not
Date: September 21, 2018 Report No. 2018-135
updated to include the additional eligible types/locations of buildings specified in Ordinance No.
2014-125. As such, the ordinance still only applies to commercial buildings in Downtown.
To correct that issue, Legal staff drafted a new ordinance that directs the City Secretary to record
and publish the ordinance amendment in the City’s Code of Ordinances.
The Historic Landmark Commission reviewed the new ordinance on Sept. 10, 2018, and
recommends approval by City Council (6-0).
Staff will place this item on City Council’s October 16, 2018, agenda.
CONCLUSION:
This proposed amendment is simply a correction to Ordinance No. 2014-125, which sought to
expand the eligibility of commercial properties beyond the downtown area, which was the
limitation under the original 1998 ordinance.
The problem with Ordinance No. 2014-125 is that it did not actually amend the Code of
Ordinances, so technically still only buildings in downtown are eligible to apply.
Council’s approval of the proposed amendment will make this preservation incentive tool more
widely available to historic commercial properties throughout Denton.
ATTACHMENT(S):
Attachment 1 – Draft 2018 Ordinance
Attachment 2 – Application
Attachment 3 – Ordinance No. 98-116 (original)
Attachment 4 – Ordinance No. 2014-125 (current)
STAFF CONTACT:
Caroline Booth, Director of Economic Development
Caroline.Booth@cityofdenton.com
940.349.7751
ORDINANCE NO. _________
AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AMENDING THE CODE OF
ORDINANCES, RELATED TO CHAPTER 10, TITLED “FINANCE AND TAXATION,”
ARTICLE VII, TITLED “TAX EXEMPTION FOR HISTORICALLY SIGNIFICANT
SITES,” SECTION 10-131, TITLED “DESIGNATION OF HISTORICALLY
SIGNIFICANT SITES” TO EXPAND ELIGIBILITY FOR A TAX EXEMPTION FOR
HISTORICALLY SIGNIFICANT SITES; PROVIDING FINDINGS OF FACT;
PROVIDING SEVERABILITY; PROVIDING CODIFICATION; CONFIRMING PROPER
NOTICE AND MEETING; AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, Article 8, Section 1-F of the Texas Constitution and Section 11.24 of the
Texas Property Tax Code enable the City of Denton to exempt from taxation part or all of the
assessed value of certain historically significant sites in need of tax relief to encourage their
preservation; and
WHEREAS, the City Council of the City of Denton finds such tax relief is needed to
encourage the preservation of historic structures and sites within the Downtown Commercial
District, commercial buildings within historic districts, historic conservation districts, or any
commercial building that the City Council deems historic or in need of preservation; and
WHEREAS, the City Council previously adopted Ordinance No. 2014-125, which
amended the tax exemption application procedure to allow certain commercial buildings to file
applications for tax exemptions, but did not amend Section 10-131 of the Code of Ordinances to
authorize the designation of such properties as historically significant sites; and
WHEREAS, the City Council also finds that such tax relief will provide economic incentive
to develop projects in historic buildings worthy of preservation; and
WHEREAS, the City Council finds the amendment of the Code of ordinances reasonable,
necessary, and consistent with the intent of the City Council; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. FINDINGS OF FACT. The foregoing recitals are incorporated into this
Ordinance by reference as findings of fact as if expressly set forth herein.
SECTION 2. AMENDMENT. The Code of the City of Denton, Texas, is hereby
amended by amending Chapter 10, Article VII, Section 10-131, which section shall read in its
entirety as follows:
“Sec. 10-131. - Designation of historically significant sites.
For the purpose of this article, the city council may designate any structure fifty (50) years old
or older as a historically significant site in need of tax relief to encourage its preservation if the
structure is a:
(1) Commercial or residential building within the boundaries of the downtown commercial
district as indicated on Ord. No. 98-116,
(2) Commercial building within a historic district,
(3) Commercial building within a historic conservation district, or
(4) Commercial building that the city council deems a historically significant site or in need of
preservation. An application for designation as a historically significant site can be filed
concurrently with the application for a historically significant site tax exemption, and the
city council is authorized to make a historically significant site designation during the
application and certification procedure as set forth below.”
SECTION 3. SEVERABILITY. Should any of the clauses, sentences, paragraphs,
sections, or parts of this Ordinance be deemed invalid, unconstitutional, or unenforceable by a court
of law or administrative agency with jurisdiction over the matter, such action shall not be construed
to affect any other valid portion of this Ordinance.
SECTION 4. CODIFICATION. The City Secretary is hereby directed to record and
publish the ordinance amendment in the City’s Code of Ordinances as authorized by Section 52.001
of the Texas Local Government Code.
SECTION 5. PROPER NOTICE & MEETING. It is hereby officially found and
determined that the meeting at which this Ordinance was passed was open to the public, and that
public notice of the time, place, and purpose of said meeting was given as required by the Open
Meetings Act, Texas Government Code, Chapter 551. Notice was also provided as required by
Chapter 52 of the Texas Local Government Code.
SECTION 6. EFFECTIVE DATE. This ordinance shall become effective immediately
upon its passage and approval.
The motion to approve this ordinance was made by __________________________ and
seconded by _________________________________, the ordinance was passed and approved by
the following vote [___ - ___]:
Aye Nay Abstain Absent
Chris Watts, Mayor: ______ ______ ______ ______
Gerard Hudspeth, District 1: ______ ______ ______ ______
Keely G. Briggs, District 2: ______ ______ ______ ______
Don Duff, District 3: ______ ______ ______ ______
John Ryan, District 4: ______ ______ ______ ______
Deb Armintor, At Large Place 5: ______ ______ ______ ______
Paul Meltzer, At Large Place 6: ______ ______ ______ ______
PASSED AND APPROVED this the _________ day of ___________________, 2018.
__________________________________
CHRIS WATTS, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY: __________________________________
APPROVED AS TO LEGAL FORM:
AARON LEAL, CITY ATTORNEY
BY: __________________________________
Application for Historic Structure Property Tax Abatement
From the City of Denton, Texas
Please attach additional documents as necessary.
Property Address____________________________________________________________________________________
Legal Description___________________________________________________________________________________
Owner(s)__________________________________________________________________________________________
Mailing Address____________________________________________________________________________________
Phone_____________________________________________________________________________________________
Date of original construction of building_________________________________________________________________
Tax Valuation (effective prior to start date of rehabilitation project)____________________________________________
Start date of rehabilitation_____________________________________________________________________________
Estimated completion date____________________________________________________________________________
I certify that I am the legal owner of the aforementioned property.
I attest that the information listed above is true and complete to the best of my knowledge.
I attest that this property meets the eligibility requirements for an abatement of taxes as provided for by the City of Denton
Ordinance 98-116, as follows:
1. The property is located within the boundaries of the Downtown Main Street Commercial District, a historic district,
historic conservation district or any commercial building that the City Council deems historic or in need of preservation.
2. The property is at least 50 years old;
3. The estimated cost of the rehabilitation project will equal or exceed 25% of the most recent assessed ad valorem tax
valuation of the structure or $20,000, whichever is less. Roof repair or replacement may comprise no more than 50% of
the minimum threshold amount necessary to qualify for tax abatement;
4. A tax certificate showing that all taxes due upon the property have been paid is attached to this application;
5. A proposal listing all aspects of the planned rehabilitation will be submitted to the Historic Preservation Officer for
review by Denton Historic Landmark Commission for compatibility with the Property Appearance Guidelines. I will
submit an agreement for a Certificate of Appropriateness for any exterior modifications to the property for the duration
of the period during which the tax abatement is in effect;
6. I authorize the City Manager or designee, Historic Landmark Commissioners and elected officials to visit and inspect the
property as needed to complete this application and certification process as set forth in the ordinance.
Signature of property owner(s)_________________________________________________________________________
__________________________________________________________________________________________________
Date______________________________________________________________________________________________
Notarized By_______________________________________________________________________________________
AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AMENDING CHAPTER I0
FINANCE AND TAXATION'' OF THE CODE OF ORDINANCES OF THE CITY OF
DENTON BY ADDING ARTICLE VII TO PROVIDE FOR ABATING OF THE INCREASE
IN THE ASSESSED VALUE OF HISTORICALLY SIGNIFICANT SITES FOR TAX
PURPOSES WHICH RESULT FROM APPROPRIATE REPAIRS AND RENOVATION TO
HISTORIC BUILDINGS IN THE DOWNTOWN COMMERCIAL DISTRICT OF THE CITY
OF DENTON, PROVIDING A SEVERABILITY CLAUSE, PROVIDING A SAVINGS
CLAUSE AND PROVIDING FOR AN EFFECTIVE DATE
WHEREAS, Article 8, Section 1-F of the Texas Constitution and Section 11 24 of the
Texas Property Tax Code enable the City of Denton to exempt from taxation part or all of the
assessed value of certmn historically significant sites in need of tax relief to encourage their
preservation, and
WHEREAS, the C,ty Council of the City of Denton finds such tax relief is needed to
encourage the preservation of historic structures and sites within the Downtown Commercial
District of the City of Denton, and
WHEREAS, the City Council also finds that such tax rehef will provide economic
mcenUve to develop proJects m historic buildings worthy of preservation, NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON, TEXAS, HEREBY ORDAINS
SECTION I That the "Finance and Taxation" Chapter of the Code of Ordinances of the
City of Denton, Texas, be and the same is hereby amended by the addition of a new Article VII
entitled "Tax Exemption for Historically Slgmficant Sites," so that hereafter said article shall be
and read as follows
ARTICLE VII, TAX EXEMPTION FOR HISTORICALLY SIGNIFICANT SITES
Sec 10-130 GRANTING OF PARTIAL EXEMPTION
Any property which is designated as a "historically significant site" pursuant to the terms
ofthis article and which is substantially rehabilitated as provided herein shall have abated
any increase in the assessed value for ad valorem tax purposes in excess of the assessed
value of the property for the tax year immediately prior to the renovation, for a period of
ten (10) years following the completion of the renovation Only the historic structure and
the land reasonably necessary for access to, and use of, the structure shall be subject to
the tax abatement The abatement period shall begin on the first day of the tax year
following completion of the rehabilitation project
sec 10-131 DESIGNATION OF HISTORICALLY SIGNIFICANT SITES
For the purpose ofthis article, all structures, residential and commercial, 50 years old or
older which are within the boundaries ofthe Downtown Commercial District as indicated
on Attachment "A", which is attached hereto and made a part hereof for all purposes, are
designated as historically significant sites in need of tax relief to encourage their
preservation
Sec 10-132 ELIGIBILITY
To be eligible for a property tax abatement, a property must meet the following
requirements
1 The property must meet the requirements for designation as a Mstoncally
significant site in need of tax rehefas defined in Sec 10-131 oftMs article
2 The property must meet all reqmrements for application, certification and
verification as set forth below
Sec 10-133 APPLICATION PROCESS
Applications for a historically significant site tax exemption pursuant to this article are to
be filed with the Preservation Officer (or such other city official designated by the Cay
Manager) of the City of Denton, who shall be the agent for the C~ty of Denton for the
purposes of administering this article Each application must be signed by the owner of
the property, be acknowledged before a notary pubhc and shall
A State the legal description of the property proposed for Cemfication,
B Include an affidavit by the owner stating the structure is 50 years old or older and
is located within the Downtown Commercial District,
C Include detailed plans and/or descriptions of the proposed work demonstrating
rehabilitation is in accordance with the current Property Appearance Guidelines
adopted by ordinance ofthe City Council,
D Include cost estimates indicating the repair or rehabilitation of the exterior of the
building will equal or exceed 25% of the most recent assessed ad valorem tax
valuation of the structure or $20,000, wMchever is less Roof repair or
replacement may comprise no more than 50% of the minimum threshold amount
necessary to qualify for tax abatement,
E Include a projection of the estimated construction time and predicted completion
date ofthe Mstonc repair or rehabilitation,
F Authorize the members of the Historic Landmark Commission, the City Manager
or designee, and elected officials to visit and respect the property proposed for
Certification to verify that it is in need of substantial repair or rehabilitation and to
verify repair or rehabilitation,
PAGE 2
G Sign an agreement to submit an apphcatlon for a Certificate of Appropriateness
to determine compliance with Property Appearance Gmdehnes for any exterior
modifications to the property for the duration of the period dunng which the tax
abatement Is m effect,
H Include a tax certificate showing all taxes due upon the property have been paid,
and
I Provide any additional information to the Historic Landmark Commission which
the owner or Committee deems relevant or useful, such as the history of the
structure, access to the structure by the public, or any proposed changes in use of
the structure
Each application shall contain sufficient documentation confirming or supporting the
information submitted therein
Sec 10-134 CERTIFICATION PROCESS
Upon receipt of the sworn application, the Preservation Officer shall forward the
apphcatlon to the Historic Landmark Commission for review The Historic Landmark
Commission shall review the proposed rehabilitation for conformance with the current
version of the Property Appearance Gmdehnes The Historic Landmark Commission
shall recommend to the City Council whether the structure shall be eligible for the tax
exemption The Commission may recommend approval of the application as submitted,
approval with conditions, or denial The Historic Landmark Commission shall review the
application within forty-five (45) days of its submittal to the Preservation Officer The
written recommendation of the Historic Landmark Commission shall be delivered to the
City Manager no more than ten (10) days after the Commission's decision is rendered If
the decision of the Commission is for approval with conditions, and the applicant concurs
with such conditions, the above ten (10) days for delivery will not commence until the
application is amended to comply with the conditions approved by the Commission
Upon receipt of the recommendation of the Historic Landmark Commission, the City
Manager shall, within a reasonable time, place the matter upon the City Council Agenda
for determination of eligibility In determining eligibility, the City Council shall first
determine that all the requirements of this article have been met and that only the historic
structure and the land reasonably necessary for access to, and use thereof, is to be
provided favorable tax relief as provided in Section 10-130 of this article If ehgibihty is
determined, the Council shall authorize the City Manager to execute a tax exemption
certificate upon verification of completion of repairs or renovation If required by the
Denton County Appraisal District, the City Manager or designee shall provide annually a
hat of structures ehglble for tax exemption under this article
Sec 10-135 VERIFICATION PROCESS
Upon completion of the repair or rehablhtatlon, the Certified applicant shall submit to the
Preservation Officer a sworn statement of completion acknowledging that the structure
has been substantially repaired or rehabilitated in accordance with the plan approved by
PAGE 3
the C~ty Councd Applicant must also present documentation verifying that the cost of
repmr or rehabd~tat~on meets or exceeds the amounts estabhshed ~n Sec 10-133 of th~s
article The Preservation Officer or designee, upon receipt of the sworn statement of
completton, but no later than thirty (30) days thereat~er, shall make an investigation of the
property and shall approve or d~sapprove the fact that the property has been completed as
reqmred for Certification If the repatr or renovation deviates m any way from the
construction plan approved by Council, the H~stonc Landmark Commission shall
determine whether or not the modifications are m accordance w~th the Property
A~ppearance Guidelines If verification of completion shall be deemed unfavorable, the
Certtfied Apphcant shall be reqmred to complete or correct the repmr or rehabditat~on ~n
order to obt~un the tax exemption prowded by this article or appeal the Commtss~on's
decision to the C~ty Councd When the verification of completion receives a favorable
rewew by the Preservation Officer, or the Commiss~on or the Council, whichever is
apphcable, the Preservation Officer shall notify the C~ty Manager ~n writing of
compliance Thereat~er, the City Manager shall execute a tax exemption certificate and
forward same to the Denton County Appraisal D~stnct
Sec 10-136 PROPERTY APPEARANCE GUIDELINES
The Property Appearance Guidelines on file in the office of the Preservation Officer,
the Planning and Commumty Development Department and such other office as the City
Manager may designate, are hereby approved and incorporated herein and made a part
hereof for all purposes The Property Appearance Guidelines shall be periodically
reviewed by the Historical Landmark Commission and desired changes by the
Commissmn to such guidelines shall be recommended to the C~ty Council Any changes
tO the Property Appearance Guidehnes shall not be effective until such changes are
approved by the City Councd The City Council may d~rect the City Manager or the
Preservation Officer to propose certmn changes to the Property Appearance Guidelines
but such changes shall not be adopted by C~ty Council without a recommendation from
the Historic Landmark Commission
Sec 10-137 ALTERATION OR DESTRUCTION
A) During the exemption period, if the Preservation Officer or a member of the
H~stonc Landmark Comm~ssion has reason to believe that an exempted structure has
been altered or totally or partmlly destroyed by the willful act or neghgence of the owner
or h~s representative, the Preservation Officer shall immediately cause the matter to be
scheduled for the earliest possible consideration by the City Council If, at~er ~wng
ngttce and hearing to the owner, the C~ty Council determines that the exempted structure
has been totally or partially destroyed or altered by the willful act or negligence of the
owner or hts representatwe, the owner shall immediately repay to the C~ty all of the tax
revenues that were not paid because of the exemption plus interest calculated at an annual
rate of seven percent (7%)
PAGE4
B) Where an exempted structure xs totally or partxally destroyed or altered by other
than the willful act or neghgence of the owner or tus representative, the owner shall,
whenever feasible, request a budding permit to reconstruct the historically slgmficant site
an accordance w~th plans and spec~ficaUons (plans) that comply w~th the Property
Appearance Guidelines and budding and development codes of the City of Denton The
cost of RenovaUon xs hereby deemed feasible when destructxon or alteration ~s fifty
percent (50%) or less of the assessed ad valorem tax value of the budding wxthout
deduction for the abatement hereunder The plans for the structure must be approved by
the Preservation Officer or designee If there ~s any quesuon that the plans do not comply
w~th the Property Appearance Gmdelines the Hxstonc Landmark Commxsslon shall
determine ~f such plans are m comphance with such gu~dehnes A dec~slon by the
Commission, denying the issuance of the budding permit for failure of the plans to
comply w~th the Property Appearance Gmdehnes, may be appealed by the owner to the
C~ty Council If rebuilding actxvmes are not completed wxthm one (1) year of the damage
to the structure, the repayment of the tax revenues not pond because of the exemption
shall be required as set forth ~n subsection (a) above, unless C~ty Council grants an
extension for such permits
C) If the owner of a damaged h~stonc structure exempted under thxs Article apphes
for a demolmon permit, the building official shall follow the regulations contained m
Sec 35-220 (Demolmon or removal of h~stonc landmarks) of the Zoning Chapter, as
amended, ~n processing such permit In cases where a demolition permit is issued by the
C~ty because renovation is not feasible, repayment of tax revenue ~s not required
D) If the owner of a h~stonc structure whxch is damaged by a willful or neghgent act
of the owner or h~s representative has such structure demolished or such structure ~s not
reponred w~th~n one (1) year of the damage, such owner will not be ehg~ble for future
abatement unless a rewsed apphcat~on for such structure is approved by the City Council
Sec 10-138 TRANSFERABILITY TO FUTURE OWNER(S)
If the tax exempUon cemficate executed by the City Manager per Sec 10-135 is umely
recorded by the Owner of the structure m the Deed Records of Denton County with the
approved apphcat~on, the tax exemption authorized above shall constitute a covenant
running w~th the land for the ten (10) year period provided m th~s article Should the
owner of the structure ever cease to comply with the terms of the apphcat~on and of this
article dunng such ten (10) year period, th~s abatement may be revoked for the years
remaining wxth~n such ten (10) year period, upon the finding of such mcomphance by the
Cxty Courted, after g~wng notice and hearing to the owner The C~ty Manager or h~s
designee shall advise the Chxef Appraiser of the Denton County Appronsal D~stnct of the
revocation of the abatement and shall file an appropriate document ~n the Deed Records
ofDenton County revoking the tax exempuon
PAGE 5
Sec 10-139 AUTHORITY OF CHIEF APPRAISER
The chief appraiser for the county appraisal district shall determine that portion of land
which is reasonably necessary for access to and use of Nstonc structures for which
applications for exemptions are granted and shall assess for taxation all such excess land
m the same equal and uniform manner as all other taxable properties in the City It shall
be m the &screuon of the cNef appraiser as to whether or not owners of historically
s~gmficant structures under th~s article must file an apphcatlon with such appraiser's
office annually to obtain the exemption granted above or if one application can be
executed by the owner of the h~stoncally slgmficant structure to obtain the ten (10) year
h~stonc exemptmn
Sec 10-140 USE IN CONJUCTION WITH OTHER TAX INCENTIVES
At the &scretion of City Council, the tax abatement prowded m this article may be used
m conjunction with tax abatements for I-hstonc Landmark zomng as provided m Article
VI Chapter 10 of the Denton C~ty Code The apphcant must meet all reqmrements for
each tax abatement separately m order to be considered for both abatements
This tax abatement may be used m conjunction with other types of abatements that may
be developed m the future, unless otherwise prohlNted by statute or by ordinance
Sec 10-141 DEFINITIONS
Should the exact meamng of terms contained in this article be ~n d~spute, the meaning of
such terms as utilized in the lnterpretauon or definmon of such terms m Amcle V
Historic Landmark Preservation and Historic D~stncts' of Chapter 35 (Zoning) of the
C~ty Code, as amended, or m this Chapter shall comrol
SECTION II That if any section, subsectton, paragraph, sentence, clause, phrase or
word xn this ordinance, or application thereof to any person or c~rcumstances ~s held invalid by
any court of competent jurisdiction, such holding shall not affect the validity of the remaining
portions of this ordinance, and the C~ty Council of the Cay of Denton, Texas hereby declares it
would have enacted such remaining portxons despite any such invalidity
SECTION III That save and except as amended hereby, all the provisions, sections,
subsections, paragraphs, sentences, clauses, and phrases of Chapter 10 ofthe Code of Ordinances
shall remain m full force and effect
ETI.~_C~_O_~_~ That this ordinance shall become effective fourteen (14) days fi.om the
date of tts passage, and the C~ty Secretary is hereby directed to cause the caption of this
ordinance to be pubhshed twice ~n the Denton Record-Chronicle, a daily newspaper published in
the City of Denton, Texas, within ten (10) days of the date of~ts passage
PAGE6