Healthy Neighborhoods Philosophy on Property Tax for New Development

Any new development done through the transformation plan should contribute to our tax rolls at or above a level the property already pays, regardless of the property owner’s tax status.

  • Healthy Neighborhoods recognizes the value of growing our local tax base in order to provide broad, reliable, local sources of revenue to fund our city services.

  • Healthy Neighborhoods advises that any private recipient of Choice, HOME, or CDBG or other federal funds for the capital construction of new housing, office buildings, and/or commercial space be required to pay property tax on those respective properties.

  • If a property being developed under these circumstances is somehow tax-exempt, Healthy Neighborhoods advises the owner be required to make a payment-in-lieu-of-tax to the city equal or greater than the property tax paid previously for the development site.

  • Where Healthy Neighborhoods is positioned to enforce such terms, we will apply this standard to our own development partners.

  • If and when the City Council chooses to apply a TIF or similar tax break for new development, it should result in a net gain in tax revenue for the development site, and the savings should be reinvested in the project.

  • For new developments such as a new food pantry, soup kitchen, or day shelter, those would not be expected to pay property tax, as they are providing free public services to the local community.

Questions and Clarifications

Who can receive funds for new development?
Both tax-exempt and for-profit organizations are eligible to receive capital funds for construction projects that meet the goals of Growing Our Tree Streets.

What types of development does this apply to?
For new housing and commercial developments, payment of property tax or payment in lieu of tax is expected. This includes retail, office, dining, and commercial service.

To what basis is the assessed value of new construction being compared?
The tax revenue generated by one or more properties before redevelopment takes place is meant to be evaluated according to what tax revenue the property is generating at the time that the new project concept is proposed and funding is requested. For example, if an owner purchases a vacant lot for development, the assessed value of the vacant lot is the basis at the time they develop their project proposal. The previous history of the lot (which may include various developments and demolitions) is not pertinent to the spirit of this policy, which is to expand our tax base relative to what we have today. A large development project that spans numerous parcels can take into account the net assessed values of all parcels included in the project.

What if a new development lowers the assessed value of a property?
Properties developed at a lower density or different use from the previous use and which therefore yield less property tax according to the assessed value are not expected to pay extra tax above the standard property tax rate on the new development. Those projects are also not advised to receive special tax relief.

What about tax breaks for homeowners?
Individual homeowners who are eligible for property tax relief through such programs as the Homestead Exemption and Veterans Exemption should not have those exemptions count against them, as they are mostly reimbursed by the state, determined on a personal basis, and are not permanent. Those properties should be analyzed for their assessed value before such personal exemptions are applied.

What types of construction projects are not included?
Capital grants and loans to improve an existing property would not require that property to change an existing exemption. For projects like a new food pantry, soup kitchen, or homeless shelter, those would not be expected to pay property tax, as they provide free public services to the city. Government property is exempt from tax by law.