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COH Tax Abatement For Historic Structures/Renovations At Risk


poyea

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If you are working on any additions and renovations in the historic districts and plan to apply for the 15-year tax abatement, I suggest you listen to this City Council meeting and plan accordingly.

 

http://houstontx.swagit.com/play/12122017-1881/50/

 

Click on the dropdown and choose: "Consideration of Matters Removed From Consent Agenda"
 
Slide forward to ~ Minute 17...it carries on for 10-15 minutes before the voting begins.
 
They have a long debate on the merits of the tax savings for the homeowners and the benefit (or lack of) to the community.  Some council members outright refused to approve any of the submissions even though the rules in place were followed by the homeowners.  I was one of the submittals, and luckily it passed with 5 members voting against it.
 
So, just a word of warning if you're in the process.
 
 
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3 hours ago, Ross said:

Neither of those abatements should exist. Your "historic"(read old, but not special) property ought to be paying the same rate as my, also undistinguished, early 50's house.

The abatement for the historic districts were put in place to compensate people for the extra time, trouble and money it takes to restore a historic building versus tearing down and building new.  It has a direct relationship to the burden imposed by the ordinance.  I can see how council is raising their eyebrows because property values have shot through the roof since the ordinance passed and there is no longer an argument to be made that there needs to be an incentive to get people to restore old homes.  But for those of use who bought in when prices started with a 2 and can barely budget a very modest addition/renovation, the tax abatement is still needed.  It is only fair to keep it in place for the old timers (which in Houston time is people who moved in before 2010)  The money for luxury condos and apartments is just a pure wealth transfer.  The rest of the 380 program is even worse.  

 

As for your inability to appreciate historic architecture, you will just have to deal with that on your own.

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I appreciate "historic" or "old but not special" architecture. However, I shouldn't have to subsidize your desire to renovate your home, simply because it's old. Your house isn't special,  it isn't historic, and you do not deserve a tax abatement.  If you can't afford to do the changes you desire, you either do without or find the resources to do the job. 

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On 2/17/2018 at 2:15 PM, Ross said:

I appreciate "historic" or "old but not special" architecture. However, I shouldn't have to subsidize your desire to renovate your home, simply because it's old. Your house isn't special,  it isn't historic, and you do not deserve a tax abatement.  If you can't afford to do the changes you desire, you either do without or find the resources to do the job. 

 

You do not appreciate historic architecture.  If you did, you would want to preserve it.  That is the BS conservative argument that you can appreciate something but let free markets ravage it at the same time.  "I appreciate classical music, but we shouldn't have public radio to actually make it accessible to people"  Same logic.  I appreciate historic architecture, but so what if it all gets torn down.

 

You aren't subsidizing anything.  Your taxes are the same whether people in a historic district get a tax abatement or not.  If you live outside a historic district, you do not have the burden of getting a COA.  If you live in the district, you do and it only makes sense to give those people a very small tax benefit to offset the burdens of complying with the ordinance.    

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12 hours ago, s3mh said:

 

You do not appreciate historic architecture.  If you did, you would want to preserve it.  That is the BS conservative argument that you can appreciate something but let free markets ravage it at the same time.  "I appreciate classical music, but we shouldn't have public radio to actually make it accessible to people"  Same logic.  I appreciate historic architecture, but so what if it all gets torn down.

 

You aren't subsidizing anything.  Your taxes are the same whether people in a historic district get a tax abatement or not.  If you live outside a historic district, you do not have the burden of getting a COA.  If you live in the district, you do and it only makes sense to give those people a very small tax benefit to offset the burdens of complying with the ordinance.    

I actually appreciate architecture. I've gone to parts of town few others would go to, just to look at something architecturally cool.  I appreciate property rights more. Do what you like with your property - I'm happy, you're happy. However, your desire to prevent others from doing what they want with their property is controlling behavior at its finest. And your abatement does, in fact, cost me money, since the city will raise rates to make up for the abatements. 

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There IS a small loophole in the way the exemption is worded.

 

IF you spend more than the appraised value of the structure on restoration, and IF HCAD increases the appraised value of the structure by more than the cost of the restoration, the value of the exemption can also exceed the cost of the restoration.

 

That said, at the current city tax rate (I understand the exemption only applies to CoH, not the county, HISD, HCFCD, etc.) the exemption amounts to about a 6% subsidy to the (mostly upper middle class) people doing the restoration. Historic preservation may be a value to the city, but a discussion about whether a tax subsidy to a subset of the top few percent of taxpayers is the best way to encourage it isn't out of line.

 

 

My own opinion is that much of what is called "historic preservation" in Houston is just a roundabout way to limit density and establish exclusionary zoning without calling it zoning. (The design guidelines for the Heights establish maximum lot coverage and floor area ratio for, I think, the first time in the city. These are tools many communities use to keep the poors out.)

 

Whole problem could be avoided if we switched to a land value tax, rather than the current system, which disincentivizes improvements to structures.

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The problem with taxing just the dirt and not the improvements is that ends up really skewing things in an urban setting.  The new $1.5MM McCraftsman ends up with the same taxable value as the 1926 bungalow next door that would sell for half that (if that much), and a downtown surface lot would have the same taxable value as (name the nearby trophy building of your choice).

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41 minutes ago, mollusk said:

The problem with taxing just the dirt and not the improvements is that ends up really skewing things in an urban setting.  The new $1.5MM McCraftsman ends up with the same taxable value as the 1926 bungalow next door that would sell for half that (if that much), and a downtown surface lot would have the same taxable value as (name the nearby trophy building of your choice).

 

Feature not a bug. 

 

Would make it much less economically viable to keep a surface parking lot in a high-value area. 

 

 

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11 hours ago, Angostura said:

There IS a small loophole in the way the exemption is worded.

 

IF you spend more than the appraised value of the structure on restoration, and IF HCAD increases the appraised value of the structure by more than the cost of the restoration, the value of the exemption can also exceed the cost of the restoration.

 

That said, at the current city tax rate (I understand the exemption only applies to CoH, not the county, HISD, HCFCD, etc.) the exemption amounts to about a 6% subsidy to the (mostly upper middle class) people doing the restoration. Historic preservation may be a value to the city, but a discussion about whether a tax subsidy to a subset of the top few percent of taxpayers is the best way to encourage it isn't out of line.

 

11 hours ago, Angostura said:

True on your first point, but if the appraised value increases by more than the cost of the renovation, the "value of the exemption" is just a fraction of the restoration cost.  As you stated later, the exemption is only on the COH taxes.  I think you understand this, but for those less familiar, I wanted to clarify this point.

The historic district hurdles cost multiples more than the tax savings ever will.  The time (and therefore money) spent with architects, and then with the city (along with the architects, who are on the clock), and then going to the HAHC hearings (again with the architects who are on the clock), all add incremental costs that otherwise wouldn't be there, purely due to the historic district.  Not to mention the cost of financing and dual housing during the process.  Add in the time spent preparing all of the documents and records to support the exemption application.  

 

11 hours ago, Angostura said:

 

 

 

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14 hours ago, mollusk said:

It would also effectively subsidize the $1.5MM McCraftsman at the expense of the bungalow next door - who is already burdened by having a building line to building line pile looming over it.

 

The bungalow getting is currently getting subsidized by being underbuilt on valuable land.

 

The city is paying for upkeep on roads and sewers and water lines and storm drainage, the cost of which scales pretty directly with acreage (or street frontage). A bungalow appraised at $700k is consuming the same amount of that infrastructure as the new-build appraised at $1.5M or the 6-pack of townhouses appraised at $2.4M, and is therefore receiving a tax subsidy from its denser neighbors.

 

 

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2 hours ago, Angostura said:

 

The bungalow getting is currently getting subsidized by being underbuilt on valuable land.

 

The city is paying for upkeep on roads and sewers and water lines and storm drainage, the cost of which scales pretty directly with acreage (or street frontage). A bungalow appraised at $700k is consuming the same amount of that infrastructure as the new-build appraised at $1.5M or the 6-pack of townhouses appraised at $2.4M, and is therefore receiving a tax subsidy from its denser neighbors.

 

 

Just like how Walmart and other Katyville I-10 developments are being underbuilt on valuable land, right?  

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1 hour ago, s3mh said:

Just like how Walmart and other Katyville I-10 developments are being underbuilt on valuable land, right?  

 

Yes. The taxable value per acre of those areas is undoubtedly far less than the high-density residential neighborhoods surrounding them.

 

Big box retailers have a financial incentive to build as shitty a structure as possible. A land value tax would make big-box retail a lot less economically viable. 

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