Historic Tax Incentive For - Dallas...Dallas’ 11 Most Endangered Properties list in 2008. – The building faces increasing pressure from: zThe development occurring in the immediate

Historic Tax Incentive For501 2nd Avenue – Hickory Street Annex

January 27, 2009Economic Development Committee

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Request

Review of a proposed historic preservation tax incentive over $50,000 for the Hickory Street Annex located at 501 2nd Avenue.

Applicant is seeking an Urban Exemption Based on Major Rehab under the historic preservation tax incentive program.

Historic Tax Incentive Program was reviewed and approved by the Dallas City Council on November 26, 2007.

Current request complies with all policy and procedures in this recently approved program.

City Council Economic Development Committee - January 20, 2009

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Overview of Historic Tax Incentives Program

Category Type Percent of DCAD Improvement

Value needed to meet the required expenditure

Amount of City of Dallas

taxes exempted

Duration of the exemption

Based on Major Rehab 75% 100% 10 years

Based on Rehab 50% Added Value 10 years

Residential / ground floor conversion

50% must be converted to residential and 65% of street

frontage must be converted to ground floor retail

100% 5 years

Based on Rehab 25% 100% 10 years

Maintenance 3% Added Value 3 years


Endangered Property 25% 100% 10 years

Non-profit Exemptions Non-profit

Be a not-for-profit with a designated historic landmark

that is open to the public100%

As long as the building

remains a not-for-profit that is

open to the public

Citywide Exemptions

Revitalizing Exemptions

Urban Exemptions

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Historic Tax Incentive Program

Urban Exemptions– The “Based on Major Rehab” exemption allows

for up to a 100% exemption of the city portion of the property taxes for up to a ten year period.

– To qualify for this exemption, the cost of rehabilitation that is completed must exceed 75 percent of the pre-rehabilitation value of the structure.

– This provides for up to 100% exemption of the city portion of the property taxes for a total of 10 years.

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Location

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Background

This is in the Hickory Street Annex Historic District that is currently in the designation process. The property is owner by Kaelson Company Properties, Inc. Applicants may apply for tax exemptions while still in pre-designation status, however they must have the designation approved by the City Council prior to the exemption being granted. The applicant has proposed to renovate the historic building forretail/office use.Required minimum expenditures have already been met; the applicant expects the project will be completed by 2010. *This application was approved by the Landmark Commission in January of 2009.

* Note: Unlike Economic Development tax abatements, these exemptions can be requested after building permits are issued.

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2008 Values

Pre-rehabilitation Improvements Value: $227,250

Pre-rehabilitation Land Value: $687,410

Total Pre-rehabilitation Value $914,660

Minimum Required Expenditures (75% of the pre-rehabilitation improvement value) :

$170,438

Estimated Total Expenditures: $500,000

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Recommendation

Approval of the application for a Certificate of Eligibility for a period of 10 years.This application meets all of the requirements of the Historic Preservation Tax Incentive Program ordinance that was approved by the City Council on November 26, 2007.

Historic Tax Incentive For507 S. Harwood – Masonic Lodge


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Request

Review of a proposed historic preservation tax incentive over $50,000 for the Masonic Lodge located at 507 S. Harwood.

Applicant is seeking an Urban Exemption Based on Major Rehab under the historic preservation tax incentive program.



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Amount of City of Dallas

taxes exempted







100% 5 years










open to the public

Citywide Exemptions


Urban Exemptions

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Urban Exemptions– The “Based on Major Rehab” exemption allows

for up to a 100% exemption of the city portion of the property taxes for a ten year period.

– To qualify for this exemption, the cost of rehabilitation must exceed 75 percent of the pre-rehabilitation value of the structure.

– This provides for up to a 100% exemption of the city portion of the property taxes for up to a total of 10 years.

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Location

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Background

This is in the Harwood Historic District (No. 48).The Masonic Temple is an Art Moderne building that was built in 1941. The property is owned by the Masonic Lodge Corporation, which is owned by five fraternal organizations that occupy and operate the building.This application was approved by the Landmark Commission in January of 2008.

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Background

These lodge organizations are considered to be non-profit fraternal organizations and are designated as a 501(c)2, which unlike a 501(c)3 does not exempt their organization from paying taxes. Because this property is a 501(c)2, it does not qualify for the exemption available to nonprofits. These lodges are focused mainly on education and annually offer about $75,000 in scholarships to the Dallas community.

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2008 Values


Pre-rehabilitation Land Value: $1,027,800

Total Pre-rehabilitation Value $1,028,800

Minimum Required Expenditures (75% of pre-habilitation improvement value) :

$750

Estimated Total Expenditures: $4,856

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Recommendation


Historic Tax Incentive For1611 McKinney Avenue – Luna Tortilla Factory


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Request

Review of a proposed historic preservation tax incentive over $50,000 for the Luna Tortilla Factory located at 1611 McKinney Avenue.

Applicant is seeking a Citywide Exemption as an Endangered Property under the historic preservation tax incentive program.



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Amount of City of Dallas taxes

exempted







100% 5 years










open to the public

Citywide Exemptions


Urban Exemptions

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Citywide Exemption– Citywide exemptions must be located outside the defined

revitalizing and urban exemption areas.– The “Endangered Property” exemption is specifically

available to properties within the citywide exemption category.

– The intent of the Endangered incentive is to encourage the rehabilitation of highly significant buildings located outside the urban core.

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Citywide Neighborhood Exemption– The “Endangered Property” exemption allows for up to a

100% exemption of the city portion of the property taxes for a ten year period

– To qualify for this exemption, the cost of rehabilitation that is completed must exceed 25 percent of the pre-rehabilitation value of the structure.

– This provides for up to a 100% exemption of the city portion of the property taxes for a total of up to 10 years

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Location

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Background

This is the Luna Tortilla Factory Historic District No. 110.The property is owned by Triton Downtown LLC.The building was built in the Spanish Eclectic-style in 1938 and is the last remaining original business in little Mexico, Dallas earliest Hispanic neighborhood. Currently, the building is vacant. The applicant has proposed to renovate the historic building for commercial use.

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Background

The Landmark Commission determined that this application should be treated as an Endangered Property because of the following reasons:

– The Luna Tortilla Factory was included on Preservation Dallas’ 11 Most Endangered Properties list in 2008.

– The building faces increasing pressure from:The development occurring in the immediate area and a sharp rise in property values. Dallas Central Appraisal District (DCAD) has appraised the land at a much higher value than the structure. The applicant has stated that it is difficult for the existing structure to generate enough revenue to pay the rising property taxes and make a reasonable profit.

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2008 Values


Pre-rehabilitation Land Value: $1,800,000

Total Pre-rehabilitation Value $1,801,000

Minimum Required Expenditures (25% of the 2007 pre-rehabilitation improvement value)*: $3,120

Estimated Total Expenditures: $750,000* The Historic Preservation Tax Incentive Program requires that the pre-rehabilitation value be the values used for the previous year, unless the most recent appraisals are lower. In this case, the 2007 pre-rehabilitation values are lower and are used to calculate the required expenditures ($3,120), however for the purposes of calculating the exemption, the 2008 values were used because they provide a more accurate picture of the projected exemption.

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Recommendation


Documents

Historic Tax Incentive For - Dallas...Dallas’ 11 Most Endangered Properties list in 2008. – The building faces increasing pressure from: zThe development occurring in the immediate