All right I'm going to call the meeting of the Historic and Mark Commission to order at 5 30 p.m. on March 6, 2024, would you all join me with the Pledge of Allegiance please?
I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all.
And now the Texas flag. Honor the Texas flag, I pledge allegiance to thee, Texas, one state under God, one and indivisible.
Guys. All right, we have come to the part for public, to hear from the members of the public. And look at all of them. That's right. So they are able to fill out a card before the meeting and we do not have any.
Can we move on? All right. Moving on, we are going to move to item 3 AHLC 24-010 on our agendas to consider the approval of the February 12, 2024 minutes.
Have you had a chance to look at the minutes? I actually read them online.
All right. Thank you, Lenny, in a second. All right. Thank you. And all in favor, raise your hand.
Okay, there are no oppositions. So item 4A number AHLC 24-009 on our agenda is to receive a report and hold a discussion regarding historic tax exemptions offered at the local, state and national level.
Hello, everyone. So this is in regards to the request made last month, kind of doing general education updates every meeting just to provide you all with some background knowledge about historic preservation.
And it's just some of the things that you will have jurisdiction over. So let's get started. I know this will be something that Angie and Lenny have seen in the past, but it's a good refresher.
So hopefully, and feel free to stop me as I'm going. It is a lot of information. So I want to make this informal and more of a discussion. So feel free.
So table of contents, kind of just breaking it down into, first, we're going to cover the why. Then we're going to look at local historic tax exemptions.
Then we're going to look at our state historic preservation tax credit program, followed by our federal and then do a little bit comparison of the Texas and the federal and then provide some examples of other historic tax incentives elsewhere in other cities in Texas.
Before I move on, I know a lot of people will have questions specifically about the other city's historic tax exemptions. That is going to be something that we put on an agenda for next month.
So we're not posted for that. I just wanted to start kind of seeing what you, what we have and compare it to what we're seeing elsewhere. So just wanted to give that information first so that we don't dive into a huge discussion about it.
So the why. Why are we looking at this? So first of all, like I stated, educational purpose. You all as an HLC need to be informed about not only your local jurisdiction and local tax incentives, but also what is available to the public both at the state and federal levels as well.
Promotion of the program, that's one of the huge things that we're really trying to put forward in 2024 as some of the work plan goals for not only myself, but as the Historic Landwork Commission.
So we're really trying to promote the program and one of the biggest things is tax incentives. What are the benefits that people are getting from designating their properties?
And then also looking at the why as you all as reviewers, what you have jurisdiction over. So you all have jurisdiction over designated historic sites, which is locally designated landmarks, and then historically significant sites, which I'll go a little bit more into detail, but those are not sites that are necessarily designated at the local level.
And then where you don't have jurisdiction, but you should still be informed is at the state and federal levels.
So our local historic tax exemptions.
So our designated historic site is a designated or is designated as a historically or archaeologically significant site in need of tax relief to encourage its preservation.
So what we're seeing here is the breakdown of the tax exemption. So designated properties between 1989 and 2008. This is what they were able to receive. They received 50% up to 15 years, and then no minimum cost requirement.
So we see kind of that also extended to 2009, but then in 2009, it did change. We have a 50% of historic site assessed value. The length of the exemption is the 10 year, which we're used to seeing with a cost minimum of $10,000.
From there, though, you can get a subsequent exemption, which is another 10 years, but it's still that minimum of $10,000. So prior to 2009, you did not have to spend a minimum.
You could just qualify if you were a designated property, but now there is a cost requirement that comes with it because what council wants to see is that you are continuously trying to improve or maintain your property.
So that is what we currently have at the local level. And some of the kind of the quantifying of what this looks like when we're looking at property value, we will be presenting on the April 8th date.
So I don't have the breakdown of those numbers, but April 8th will be a very important date that you all attend because we'll be able to kind of show you the breakdown and use some examples of property values and what that looks like.
So historically significant sites. These are structures, both residential and commercial that are at least 50 years of age or older that are within the boundaries of our downtown commercial district, which is highlighted here with any of our local historic districts, our historic conservation districts, which we do not have any currently.
And are deemed historic or a native preservation by city council. So this is a city council led initiative. They have to essentially say, you know, this property is significant. It's over 50 years old.
So an example of this would be actually the Fairhaven retirement homes. That is a property right now that has received historically significant site tax exemption.
So they're currently in the middle of their 10 years.
So, as you can see here, different than the designated, there's no cost requirement, but it does have an evaded any increase in the assessed value for tax purposes.
This is one we don't often see Fairhaven is currently the only property that has this.
So, the application review process, both for the designated and historically significant sites.
These I have it linked here and I'm going to share this presentation with you all afterwards, but both of the applications are linked here, which you can also find the historic preservation web page.
They undergo review by myself as a historic preservation officer, then they undergo review by the Historic Landmark Commission yourself, and then city council review in a purple.
Any questions before I move on to Texas.
Remember you saying something previously about how there are incentives for income generating properties, but not for home owners, is that correct at this local level to.
So at the local level, it can be obviously residential commercial, or this can be owner occupied, but at the state and federal, you'll see the income producing only or nonprofit.
Okay, so this at the state level we have a state tax credit that is 25% and that comes either from your Texas franchise tax for your insurance premium tax.
Kind of what we were talking about previously was that it does have to be and can produce your nonprofit nonprofit does include churches here at the state level, the building does have to have a historic designation, or it can be a recorded
Texas historic landmark state antiquities landmark which are very few that's more like the Alamo which we don't have any of those here in Denton.
They have to be contributing to another certified historic district, or they can be listed as individually or contributing to a national registered historic district.
The building, if it is eligible that nomination process can take place while the work is happening itself which is great, but it does have to be listed as one of the above before you can take that tax credit.
It does have to be returned to the prior use after rehabilitation so if it's a house, it needs to be returned to a house.
If it was a, you know, had four dwelling units and these still have the four dwelling units or more so you can't change the use after you've rehab the property.
And then, as we always keep hearing it has to meet the Secretary of Interior standards for rehabilitation. That's something that's always standard when you're looking at state and federal tax exemptions.
So what is that application process, you'll see that it looks very familiar or similar to the federal, but you have it's limited three parts it's part A part B and part C part A, it's looking at the significance of the property, whether or not you can necessarily
get to part B. If your property is not significant in any historic way, you're not going to make it to part B.
You have to pass this first before you can get to here. Part B is where you're talking about your rehabilitation. So you're putting together your construction plans, you're putting together a narrative, you're putting together basically all those construction
documents, describing what is going to happen with your rehabilitation for your building.
And then for there, it's a request for certification of completed work. So you've completed your work, you've been designated. Now you want to get your tax exemption. So that's kind of that three step process.
The process can take, you know, from what I've heard from people, it can take as little as six months, all the way to, I talked to a property owner recently and he's almost to year two.
So it can take a long time. It's best going into part A and part B, having all your information in order, and, you know, having a contractor in place and being able to move that destination process pretty quickly, but also get to remember that the state and federal
agencies are involved, and they are dealing with the statewide it's not municipal level so it's going to take a while, but it is a three step process.
So if you have any questions before I move on.
Moving on to federal.
So, this is a 20% tax credit, and this is based specifically on federal income tax.
And so if you're getting federal and state you can get up to 45% tax credit which is huge.
Because again, this is income producing is including residential rental. So, like we've talked about in the past when we're looking at state and federal, the owner occupied structures are not really benefiting from either of these tax credits.
So, buildings that are eligible, they've already been listed in the National Register they're contributing to a historic district, or they've been determined eligible for the National Register, similar to the state they have to be returned to prior use after rehabilitation.
And then once again, they have to meet the standards.
Kind of like the state, they've just changed it to numbers from letters.
But it's still the same kind of process with part one with significance part two with description of your rehabilitation work, and then part three request for certification.
So looking at the comparison.
Right here. Once again, it shows you what credits it applies to we have the federal income tax versus Texas franchise tax or insurance premium tax.
You have the 20% and the 25.
For federal it's income producing it does include the residential rental and then with Texas, it does income producing but also nonprofit, which includes churches.
And then, here's the application deadline you must apply for project completion, and then, unless buildings already listed, and then must apply for project before project completion.
So this is a great comparison chart and like I said I'm going to be sharing this PowerPoint with you all, but this is wonderful.
Seeing the comparison of the two.
It really dives deep into recapture period time limit for use of credits and everything.
So, and this is what the review process looks like.
If you look at that one part one slash a, just so that you all know, it does always go to the Texas Historical Commission when you're submitting for both but as you can see here, National Park Service has that additional review.
And then it does state for state only if you're not designated at part a resubmit part a upon destination of building.
So I think this is a really great breakdown, it does show the 30 days, obviously this is what they hope and aim to have, but it all depends on the applicant.
It depends on how the, how many reviewers they have, if they have enough agency, people at the agency to review so this is obviously their goal in terms of their time completion and times of review.
But from what I've been hearing in terms of feedback from property owners who are going through this, it is taking much longer.
So, okay. So, moving on to other types of historic tax incentives, as I stated, will definitely dive into this in another agenda item. And on April 8, but I just wanted to kind of highlight some of the stuff we're seeing in other cities in Texas.
So the first one is out of San Antonio and this is specifically for owner occupied residences, and this is residents.
If they're an owner occupied home, they can receive 20% of the exemption on their city property tax for 10 years, and it can be extended for additional five years if the owner remains in that property.
And that's for any new historic district that's created.
That's wonderful heritage properties McAllen Texas.
They have 10 years equal to 100% of any increase in the assessed value of the building or structure and land at the time of destination.
So they defined what is a heritage property. So they have at least 50 years older, but they also do have less than 50 years if it's been restored rehabilitated or preserve. We currently don't have that at the city here.
So that's something to think about as well.
Fort Worth, they just launched this two part process for their tax exemptions that does require approval by staff before the project has started or COA certificate of appropriateness has even been made a request has been made.
And then they do require the final verification by the commission and city council.
Once the project has been completed.
But their tax exemption freezes assess valuations of the land and improvements at pre renovation values, and this goes up to 10 years.
And then they said eligibility requires an amount equal to or greater than the 20% of the assessed valuation of the improvements be spent on rehabilitation.
So, that can make a difference for sure.
McKinney, they actually have improvement zones, which is a neat concept. So they've eventually essentially created these to, as I stated, encourage and support owners investment in their central district area, especially near their downtown.
They do have minimum eligibility requirements. You can't have current code violations. You do have to be owner occupied.
They have a huge list of different eligibility requirements, but when it comes to their incentives as part of those improvements, they have three different levels, which you can see here that one time 100% exemption. If you have a historic marker already rehabilitation incentive, which is up to 50%, and then preservation incentive, which is 30%.
So when you're looking at the rehabilitation incentive, that's if you're going to rehab your entire property. But if you're looking at level three, which is the preservation, you're just preserving your property as it is currently.
So, once again, to kind of just recap, you know, you as an HLC, you know, you're obviously wanting to people wanting people to take advantage of our historic tax assumptions at the local level and get designated, but you're also here to promote preservation in general and talk about why it's really important, especially in Denton.
And then, obviously, your jurisdiction, where you guys have jurisdiction and where you have review, both at the designated historic sites and historically significant, and then where you all don't have jurisdiction, but it's still good to promote both of the Texas and federal level.
That's it. Yes, question. Can you go back to I think it was McAllen.
Yes. So, is this the one that it goes.
Where's the one that it said it goes back to the value before that maybe that was.
Pre renovation values. That's it. Yeah. So my question on that one. Interesting because I've never heard about that interesting so when you do things to the inside, or a lot of times, and this may be coming for next week so I mean the next month.
But when you have a historic structure there are a lot of things sometimes that aren't saying that unless you go in and I'm thinking of some that we've done that you wouldn't see those right. So I'm wondering how they can put a value on things like that because those are things that didn't have anything to do with our property value.
Does that make sense. So that one I think is interesting to dig, maybe into more. Yeah, we can definitely also say I can do more research and on the April 8th agenda item kind of dig a little bit deeper and try and see what I can find.
Like I said, this is fairly new. I think they brought it within the last year year and a half. So I'm sure they're still kind of figuring out some of the growing pains of it, but I'm happy to do that research.
Any other questions or discussion.
We might talk about some hypotheticals and what some of this might look like when it says discussion on the agenda. So, can we. Oh, I would say discussion, but the, it was mainly primarily towards the local state and federal tax exemption so if you guys have discussed if you want to
discuss that then, but not the other examples. Yes. So, let's just say, for example, that maybe here, there's a property on the downtown square that had a fire and leaves an empty lot so if someone were to come in and try to
reconstruct something there right so the I'm trying to think of these different stages of like rehab it it's something that's like close to like the Sherman building maybe, or go for something that's a little more historically accurate, like maybe found materials like
some of the guidelines that would be available so rehab that would actually be reconstructed reconstructing right so there's nothing that I've come across that includes reconstruction that doesn't mean that we can't establish something that allows for reconstruction.
But most of the time it's rehabilitation or preservation base. So within the Secretary of Interior standards. There's kind of the three or the four main sections which is preservation, rehabilitation, reconstruction.
Restoration. Thank you.
There's one more are.
So, that'd be a reconstruction, if we brought it back.
Yeah.
Lots of things to mull over.
So yeah and so also, so this also seems to invoke districts so the status of the square has a historic status and isn't there another historic district the arts district that also stretches further out are these original Denton district.
Yes. Yes, so that is a state designated arts district arts and cultural district, which is separate from the National Register. So the square specifically does have a National Register district.
But usually, when you're dealing with the historic National Register historic district, your local commissions do not have jurisdiction, they only have jurisdiction over the individual landmarks that are National Register landmarks.
Yes.
Would you go back to what we currently have in place, just as a reminder, just so we know because we heard a lot. And so, just as a reminder what we currently have. Yes, it's the $10,000 minimum 10,000 with a max of 10 year.
And it can be up to the 50% of his assessed value correct city value. Yes.
I was just saying, Cameron, could you explain one more time. So in my apologies if I missed this but just for the benefit of the commission as well. So, you have designated historic properties January one of 89 through December 31 2008.
The first column says designated historic property January one 2009. But then the next column is after January one 2009. So what is there a distinction in that one day difference or is it trying to capture everything that was historically designated up through January one of 2009.
Anything be after that date. Um, yeah, I just hope you can offer a little bit of clarity there. That was my understanding when I had discussed it with the past HBO was that they were trying to make sure everyone was covered.
You know I can I can dive a little bit more into that history. Obviously, you know, I wasn't here in 2009. But my understanding was that they were trying to make sure that those people on January 1 were covered, if there was any destinations at that point.
And that they could get the tax exemption as well. But then moving onwards from there. It did drop. But then you were going to be able to reapply 10 years later.
And not for discussion tonight, but probably for next time. Is that $10,000? What that can be? What can that all encompass there? I'm like, so that's a whole different, a whole different.
You're referring to this right from a couple years ago? Yes. Yes. Yeah.
Chair, if you don't mind, Cameron, anything in your research that help explain why the state and federal tax exemptions are primarily associated with properties being income producing versus owner occupied.
Anything in your research that kind of justifies why those programs were set up to be focused on being income producing for nonprofit? Honestly, there has all the lectures that I've attended there hasn't really been an explanation as to why that's the case is just what is done nationwide.
Essentially, it's easier to provide the tax exemption if you're income producing because they can stick it towards specific taxes, or they feel at the local level that's something that the local municipality should be handling.
I know that's not necessarily answering the question, but it is a lot more.
There seems to be a lot of things happening behind the scenes as to why it's occurred this way.
Honestly, I was when I first got into this area of study was the nonprofit and the fact that here in Texas, we also include churches, because churches don't pay taxes. So that was interesting concept. So, I haven't seen that necessarily across the board in every single state.
So, that was something that's interesting, but also happy to kind of dig into that a little bit more and maybe send y'all a memo via email just to kind of give you some background information about that and what I can find.
But, like I said, I haven't really come across as the reasoning why income producing, but I'm assuming it's just easier to put towards these different taxes than doing at the local level.
I have one other question. I wonder when one of those I think it might have been the last one that that they have to be owner occupied.
Yes.
So owner occupied for San Antonio.
And then his son McKinney and McKinney.
I find that interesting.
Because for as many, you know that are around our city and their cities as well that are not owner occupied like some of them I think McKinney has a lot of AirBeebies, you know, or bed and breakfast and then there's of course a lot of rental properties.
So, I just, I wonder what the philosophy was behind that.
I was saying, yeah, no, I was just saying I think I'm just as intrigued as you are but I think it's kind of shown by those examples of state and federal that you know income producing properties, they have tons of tax credits at their fingertips
up to 45% which is huge, where owner occupied presidents don't have anything that's really the local that's having to really assist those owner occupied buildings.
Typically right I think a lot of times people are more inclined to take care of their home, preserve it, invest that money for themselves.
And, you know, make sense on a city level or at a local level, why they would want that especially central to downtown.
And I like that, that it can be extended for five years. Yeah, they remain there.
Thanks for doing that.
Any other questions.
Are you ready to move on for the next one or do you have more. Okay.
We will do this on item for see.
No, no, be sorry, pattern for be HLC two four dash zero zero three is to receive a report and hold the discussion and give staff direction on the Historic Landmark Commission's request for local historic designation of eligible historic properties.
Does anyone have anything to add.
Status. Currently, Mr Frost.
If it's designated or if it's designated.
It is not designated.
I would have to look on my math to see if it's eligible I would assume it is.
But staff did make a nomination to be small restaurants.
Sorry, saving places small restaurant grant.
I made a nomination last week for Mr Frost.
Just curious because I know there's been a lot of top of the family easing into retirement and trying to sniff around for potential buyers.
And so of course that leads to questions about are you going to have some type of incentives on the table to try to preserve that space or is it going to become flat.
So, yes, yes.
A little bit further.
Yeah, yeah, it's right before you get a street there so it's not it's not shown currently as being surveyed.
Thank you.
And as a reminder.
If it's not already on that map.
Is it that's part of the nomination is to say like, we want it to be included on a preservable.
So, the map currently is just showing all our properties that have been surveyed as historic, but if it is a property that's 50 years and older, that you're interested in being designated, then you would bring it forward at this time and say it's not on the map, but it's still important.
If it's 50 years and older, provide your evidence, and then that's where the vote would come in.
Okay.
So so if it's not on the map, it's not a no, it's trying to get it on the map.
So, I'll look into that I'm fairly sure it takes all those bosses boxes but I think it would be quite similar to what was going on with the African American churches right it's like the business center, interested center, but I can certainly do a little legwork on that.
Interesting though because even those businesses beside that right down from Mr Frosty qualify as well.
Well that's right because there was, what's in there, it was, it used to be an old machine shop or co-op and then had some type of business in there that didn't last.
There's a restaurant there.
That's correct. Yeah.
There's a Mexican food restaurant there as well.
There's at least two businesses, maybe three.
Yeah, some of the, I couldn't say for sure about the structure.
I mean the Mr. Frosty's I think pretty clearly falls into that window in terms of its construction.
The reason I ask is like where I'm from in Fayetteville there was a very similar type of burger drive-in joint called Mr. Burger, and it had this really unique, it was all windows around right and it had like the diner stuff inside or whatever.
And a friend of mine who's on the historic commission there, whenever that property went up for sale, they expressed like, hey, wait a minute, maybe we should, you know, try to protect it somehow or try to create some incentives.
Well, as soon as that property sold, they were like bulldozers the next day and they just took it out.
This can be maybe next month's educational aspect of HLC procedures, but the city does have opportunity to purchase properties that need to be preserved.
It would have to get city council approval, you know, it would have to go through a whole process, but there are avenues that HLC can take to preserve those kinds of properties, if it's not necessarily a destination right away.
Sure. I'm just also thinking more carrot instead.
No, I understand.
Like, hey, you know, here's, here's some possible tax things that if you hadn't thought about that could be kind of huge.
Exactly.
I think that is huge for that property for them to know, even if it does get listed for a realtor to know that.
I don't believe that Reuters know that they are selling those type of properties, that they know those type of incentives.
I think that's huge.
I really think that, you know, that pond, whatever its name is, big thing is new.
But, um, kind of remember what's right next to Mr. Parsons, then you skip over and get to the New Ranchito.
Yeah, right, right, yeah.
And then there's a building beyond that too, that's very old.
Thank you.
Thank you, Sean, that was great insight.
All right, anything else on 4B?
All right, we will move to item 4C, HLC 24-004.
Our agenda is to hold a discussion regarding the Historic Landmark Commission project matrix.
Put on my sunglasses, we're going back in the matrix.
The first two requests, the economic impact of preserving historic properties and then looking at different waste incentivizing owners and just kind of the overall benefits.
Those are both going to be presented at the April 8th HLC meeting.
Staff wasn't quite sure, we wanted to dig a little bit deeper into what we were finding.
So that will be on the April 8th.
Regarding the template and agenda for HLC members to utilize for different meetings and outreach, that's going to be the May 13th HLC meeting.
Obviously the general topic trainings, that's going to be a monthly occurrence until you guys just don't want me to talk anymore.
Now we're putting the preliminary guidelines, this has been on here for a little over a year, we're putting that on hold for right now so we can kind of focus on some of these other goals for 2024.
We do have our walking tours with the historic districts coming up.
So if you have not accepted your calendar invites, please do so so that Lacey knows who's coming to which walking tours.
So the first one's going to be this week. Obviously if it rains, we'll try and reschedule it, but looks good for right now.
But March 21st is the Bell Avenue Historic District, March 26th is that West Oak Area Historic District, and then lastly on April 1st is the Oak Hickory Historic District.
Ken, y'all are all welcome to park in my driveway on Thursday, because I will not be there, but instead of parking and crossing Sherman, if you want to park, it's a long driveway, you can park side by side.
I usually can fit 10 cars in the driveway, so y'all are more than welcome to park there.
And then lastly, just a focus group of historic property owners to talk about procedures and incentives.
That's going to be scheduled later this spring, probably looking at May for that as well.
Just because I think it's good to kind of provide you all a little bit more foundation and background on historic, what you have jurisdiction over as Historic Landmark Commission.
So I think it might be a little bit better to push that back.
But that is all that we have. We have obviously our work plan goals here, and then obviously our next meeting will be April 8th.
So is there anything you all want to add? Does this look good?
Okay.
Only if you want to add. Only if you want to add.
So if we're good, we'll be good.
All right. If there is no other business, I will now adjourn the meeting.
Meeting is adjourned at 6-10 p.m.