ARTICLE II EXEMPTIONS

Pursuant to article 8, section 1-b(h) of the Texas Constitution, the city council hereby establishes a freeze on ad valorem (property) taxes imposed by the city on a residence homestead of an individual sixty-five (65) years of age or older or a disabled individual such that the total amount of ad valorem taxes imposed by the city on that homestead may not be increased, except as provided by section 11.261 of the Texas Tax Code, while it remains the residence homestead of that person or that person's spouse who is sixty-five (65) years of age or older or disabled and receives a residence homestead exemption on the homestead. The freeze established in this section shall be governed by section 11.261 of the Texas Tax Code and other applicable law.

§ 86-24 Freeport goods exempt from taxation.

This freeze shall become effective beginning with the 2022 tax year.

(Ordinance 04-11-78, sec. 2, adopted 11/16/04; Ordinance 07-11-62, sec. 2, adopted 11/6/07; Ordinance 11-12-58, sec. 2, adopted 12/6/11; Ordinance 15-12-90, sec. 2, adopted 12/1/15; Ordinance 16-12-104, sec. 2, adopted 12/6/16; Ordinance 2022-06-24 adopted 6/21/2022)

§ 86-22 Definitions.

The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Disabled

means the same as set forth in V.T.C.A., Tax Code sec. 11.13(m)(1), as it currently exists or may be amended.

Elderly

means an adult who is 65 years of age or older.

Residence homestead

means the same as set forth in V.T.C.A., Tax Code sec. 11.13(j)(1), as it currently exists or may be amended.

(Ordinance 04-11-78, sec. 3, adopted 11/16/04)

§ 86-23 Effective date of exemption.

This exemption shall become effective beginning with the 2005 tax year, and shall remain effective for each successive tax year until otherwise amended or repealed by the city council or other appropriate authority.

(Ordinance 04-11-78, sec. 4, adopted 11/16/04)

Definition.

The term "freeport goods" means property that under article VIII, section 1-j, of the Texas Constitution is not taxable.

Exemption.

A person or entity is entitled to an exemption from taxation of the appraised value of that portion of the person or entity's inventory or property consisting of freeport goods. The exemption provided in this section is subtracted from the market value of the inventory or property determined under the Texas Tax Code to determine the taxable value of the inventory or property.

§ 86-25 Residential homestead ad valorem (property) tax exemption.

Qualification.

Qualification and implementation of the freeport goods tax exemption shall be in accordance with the Texas Tax Code as it exists or may be amended.

(Ordinance 96-11-16, sec. 3, adopted 11/19/96)

In addition to any other exemption provided by state law or city ordinance, the owner of a residence homestead shall be entitled to an exemption from the city ad valorem taxation in an amount equal to the greater of $5,000 or 20% of the appraised value of the residence homestead, subject to the limitations set forth in state law, including section 11.13(n) of the Texas Tax Code, as it exists or may be amended.

(Ordinance 17-06-49 adopted 6/20/17; Ordinance 18-06-38 adopted 6/29/18; Ordinance 2022-06-25 adopted 6/21/2022; Ordinance 2023-06-31 adopted 6/20/2023)

DIVISION 2 HISTORIC PRESERVATION TAX INCENTIVE PROGRAM

§ 86-26 Adoption of historic preservation tax incentive program; purpose; goals.

Establishment of the program.

The city's historic preservation tax incentive program (the "program") is hereby established and shall operate as described in this division.

Purpose of the program.

To provide incentives to owner-occupied residential households in the original town residential ("OTR") zoning district who own and reside in a historic home receiving eligible property designation (as defined herein).

Goals of the program.

To encourage additional investment in the historic homes in the OTR zoning district.

To generate additional economic activity in the downtown area by attracting tourism and commercial development.

§ 86-27 Eligible property designation; levels of incentives.

To encourage homeowners to invest more of their personal resources in maintaining and restoring historically significant resources in the city.

(Ordinance 19-11-95 adopted 11/5/19)

Eligible property designation.

All properties that are listed in the appendix titled "Frisco Old Town Historic Resource Survey for the National Register of Historic Places," an appendix to the 1998 City of Frisco Historic Downtown Master Plan, shall receive upon request a certificate from the city stating they are eligible to apply for the program. The homeowner of those homes that receive a certificate of eligibility from the city may apply for a tax exemption related to the investment made for eligible preservation or restoration expenses or an historic landmark incentive as provided herein. The eligible property designation is designed:

To acknowledge incentive program eligibility.

To provide the eligibility documentation required by the county for county incentives.

Levels of incentives.

The program provides for three different types of incentives designed for homeowners who are working at various levels of restoration and preservation within the OTR zoning district: the restoration incentive, the preservation incentive and the historic landmark incentive. The maximum exemption allowed for any type of incentive, or combination of incentive types, is one hundred percent (100%) of the assessed value of the structure. Incentives may not be applied to exempt from taxation any portion of the value of the lot on which the structure is located.

Restoration incentive.

Homeowners who incur eligible expenses for restoration of the home as set forth herein may apply for the restoration incentive ("restoration incentive"). For every dollar spent on eligible expenses, the homeowner may receive an exemption equal to six dollars (a 6:1 ratio) off the assessed value of the structure, but not the lot, for city ad valorem tax purposes. The maximum exemption would be one hundred percent (100%) of the assessed value of the structure. This exemption would remain effective for up to ten (10) years, as determined by the city. The structure must remain owner-occupied and in good condition to be eligible for and remain eligible for the exemption.

Pre-approval with the city is required before eligible expenses are incurred. Formal requests for pre-approval may be submitted throughout the year.

The restoration incentive is available for homeowners investing amounts in excess of five percent (5%) of the property value (combined lot and structure) in a major rehabilitation project.

Preservation incentive.

Homeowners who have completed a minor restoration on their primary residence may submit receipts for eligible expenses every two (2) years for ongoing preservation costs, set forth herein, as eligible program expenses ("preservation incentive"). This exemption shall be calculated in the same manner as the restoration incentive except that pre-approval is not required. Homeowners are only eligible to apply for this incentive once every two (2) years. Applications must be submitted between February 1st and April 30th of each year. The preservation incentive may be used in conjunction with the restoration incentive. The structure must remain owner-occupied and in good condition to be eligible for and remain eligible for the exemption.

The preservation incentive is available for homeowners investing amounts less than five percent (5%) of the property value (combined lot and structure) in a minor rehabilitation and/or preservation project.

§ 86-28 Historic preservation tax incentive program guidelines.

Historic landmark incentive.

Homeowners who have completed major restoration work on their primary residence and wish to commit to protecting the property as a permanent historic resource for the city may receive an automatic annual fifty percent (50%) exemption off of the assessed value of the structure, but not the lot, for ad valorem tax purposes as long as the home remains owner-occupied and in good condition and complies with the standards established by the historic landmark district zoning designation of the city ("historic landmark incentive").

In order to be eligible to apply for the historic landmark incentive, the homeowner must request a historical marker for the home from the Heritage Association of Frisco and pay fees associated with requesting and receiving the marker (if applicable). Additionally, the city's grants coordinator shall approve the request based on recommendation of the ad hoc historical preservation advisory committee and other regulations set forth in this division. If the historical marker is revoked, or other conditions of approval change, the tax exemption shall be revoked.

The historic landmark incentive is designed for:

(i)

Homeowners who wish to achieve the highest level of historic preservation and to protect the historic home as an asset to the city for the future; and

(ii)

Homeowners who are willing to share their home as a community resource through the exterior restoration and historical documentation in the placement of a historic marker.

(Ordinance 19-11-95 adopted 11/5/19)

The property, qualifying expenses and construction are subject to the following conditions and guidelines:

Property eligibility.

In order for a homeowner to be eligible to apply for any of the program incentives described in section 86-27, the homeowner must meet all of the following requirements:

The homeowner must be the owner of record of the home for which tax incentive are being requested as of January 1st of the year of application.

The home for which tax incentives are being requested must be one of the 107 residential homes listed as contributing properties in the appendix titled "Frisco Old Town Historic Resource Survey for the National Register of Historic Places," an appendix to the 1998 City of Frisco Historic Downtown Master Plan. The home/structure must be the same home/structure that was on the property when the survey was completed in 1997.

The home must serve as the homeowner of record's primary residence, which shall be evidenced by an approved homestead exemption.

The total ad valorem taxes owed to the city must be current and paid on time (on or before January 31st of the year of application).

The home must retain the historic integrity as established in the city's downtown architectural design standards; OTC and OTR zoning district.

Preservation/restoration expense eligibility.

In order for an expense to be eligible for any type of tax incentive for the program, the expense must fall into at least one of the following categories:

Preservation expenses.

Applying measures to sustain the original historic form, integrity or material of a building or structure.

Restoration expenses.

Accurately recovering the form and/or details of a property and its setting as it originally appeared by removing later work or replacing/replicating earlier work; returning a property to a state of utility through repair or alteration which makes possible an efficient contemporary use while preserving those portions of the property which are significant to its historical, architectural and cultural values; or recreating a portion of the building in all new materials based on factual evidence, such as photographs.

§ 86-29 Restoration incentive and preservation incentive program process.

Expenses eligible for reimbursement.

The following preservation/restoration-related expenses are considered eligible expenses for reimbursement under the program:

Structural work. Only projects that retain or restore the historic integrity of the home through the use of proper design qualify for the program. Structural work that removes defining characteristics of a home such as porches, columns or dormers does not qualify for the incentive.

Foundation repair.

Restoration, repair, or replacement of siding and/or trim, windows and/or doors (painting included). Only projects that retain or restore the historic integrity and characteristics of the home through the use of proper materials and design qualify for the incentive. For example, replacing wood siding with aluminum or vinyl siding or the replacement of historic wood windows with vinyl or metal windows do not qualify. However, the costs of age-appropriate screen doors, shutters, fencing, and window screens and sturdy materials such as hardiplank siding which replicates the original historic look of the property may be considered as eligible expenses.

Restoration of existing historic porches and porticos, including rebuilding porches that were original on the house but have since been removed.

Plumbing and electrical repairs associated with structural work.

Labor costs. For in-kind or donated costs to be included as labor costs, the applicant must submit two written bids from reputable contractors showing estimated labor costs for the project in order to include such labor as a qualified cost. The low bid for the labor shall be used to determine the value of the in-kind or donated labor.

Applicants may use donated materials towards the qualifying costs as long as the value of all donated materials is reasonable and documented.

Design costs including architectural fees, consulting fees related to retaining the historical character of the home and construction permits for projects with eligible expenses.

Historic marker application and documented research costs.

Roof repairs associated with structural work or major rehabilitation projects. Regular replacement of shingles or other routine maintenance not related to preservation of the historic nature of the home does not qualify.

Exterior painting. Expenses for the exterior painting of historic homes qualifies so long as the expenses meet the threshold amount and comply with the downtown architectural standards; OTC and OTR. Touch up paint or unnecessary cosmetic changes do not qualify for the incentive.

Limited interior restoration may be eligible to the extent that the applicant can document that the restoration involves restoring or reconstructing original features of the home and that the modifications are age appropriate. Also, the applicant must certify that the home would be made available for heritage tours as reasonably requested by the city and/or the Heritage Association of Frisco. Pre-approval of interior restoration expenses should be received from the city prior to proceeding with the project for the expense to be eligible under the program.

(4)

Compliance with city ordinances.

All work must be completed in accordance with the requirements and standards set forth in the zoning ordinance, applicable building and fire codes and all other applicable ordinances of the city. Approved facade plans must be submitted on all exterior work in order to have such expenses considered for tax exemption under the program. If city staff determines that required permits have not been requested and/or inspections have not been conducted, then eligible expenses may be deemed ineligible for the program.

(5)

Administrative procedures.

The city manager or his/her designee may approve administrative procedures and guidelines to be used for the purposes of implementing and/or administering the program and for city staff and/or applicants to follow when making determinations hereunder. An ad hoc historical preservation advisory committee shall assist city staff with recommendations of program approvals. The city manager or his/her designee shall appoint and convene ad hoc advisory committee as necessary to review and provide recommendations of formal requests. The ad hoc committee shall be composed of the following.

(i)

Building inspection staff member;

(ii)

City planner;

(iii)

Heritage Association of Frisco designee; and

(iv)

Two (2) public designees.

The purpose of the ad hoc advisory committee is to provide coordinated technical expertise of historical nature and other architectural considerations important to the intent and application of the program.

(Ordinance 19-11-95 adopted 11/5/19)

Restoration incentive (in excess of 5% of the home value).

The restoration incentive is designed to encompass major restoration projects and significant investment to reconstruct, preserve the historical character of the home and the historic character of the downtown historic district. Projects and ongoing expenses which equal or exceed five percent (5%) of the value of the property (combined lot and structure) threshold shall be evaluated under this incentive.

Step 1:

Pre-approval shall be obtained before eligible expenses are incurred. The homeowner shall submit a formal request, and it shall be signed and sworn by the owner of the property. Information necessary for evaluation of request shall include the following.

A letter of intent outlining the proposed restoration project;

Legal description of the property proposed for certification;

Cost estimates indicating the qualified restoration, repair and rehabilitation costs equal or exceed five percent (5%) of the entire value of the property (combined lot and structure), as determined by the county appraisal district at the time of application. It shall be city staff discretion to determine reasonable costs for qualifying expenses;

A statement from the city stating taxes have been paid to date on the property as of January 31st;

Picture(s) of all sides of the property evidencing maintenance of the property's historical character and compliance with the downtown architectural standards; OTC and OTR; and

Any additional relevant information to demonstrate compliance with the program and eligibility of expenses.

Step 2:

Advisory committee recommendation and city approval of the formal request for restoration incentives. Upon receipt of a request, the city's grants coordinator will forward all information for review and recommendation of the ad hoc historical preservation advisory committee. Based on this recommendation and other staff considerations, the city's grants coordinator will review the proposed project plan and pre-determine eligible expenses. A letter will be issued by the city outlining the eligible expenses and stating the period of time in which the homeowner has to implement the project plan in order to receive a tax exemption certificate for the value of the eligible expenses.

Any changes to the plan or project during the construction must be submitted for review and approved by the Grants Coordinator prior to implementation. Failure to do so may void any prior approvals of pre-determined eligible expenses and the homeowner may not receive any historic tax exemption for the structure.

Step 3:

Completion of the project plan. At completion of the pre-approved project plan, the homeowner shall submit an application for a historic tax incentive. City staff will evaluate the project for completion and provide recommendation to the grants coordinator.

Preservation incentive (less than 5% of the property value).

The preservation Incentive is designed to encompass minor restoration projects and ongoing preservation expenses necessary for the upkeep of older homes and for homeowners who might not otherwise be able to afford major restoration projects but wish to preserve the historical character of their home and the historic character of the downtown historic district. Projects and ongoing expenses which do not meet the five percent (5%) of the value of the property (combined lot and structure) threshold shall be evaluated under this incentive.

Homeowners wishing to apply for a preservation incentive exemption under the program are not required to have a pre-approved project plan. An application shall be submitted summarizing the work completed and receipts for eligible expenses (as outlined in section 86-28) between February 1st and April 30th. Eligible expenses must not exceed a two (2) year time frame and expenses may only be submitted once every two (2) years. If a homeowner is submitting expenses that exceed 5% of the structure's value, as determined by the county appraisal district at the time of submission, over the two (2) year period, they must follow the restoration incentive pre-approval process.

Process for submitting applications for completed pre-approved restoration or preservation incentives.

Step 1:

All applications shall be submitted to:

Attn: Grants Coordinator

City of Frisco

6101 Frisco Square Blvd., 4th Floor

Frisco, Texas 75034

Step 2:

City staff will review initially the applications for a restoration or preservation incentive. Complete applications for restoration will be forward for ad hoc advisory committee recommendation.

Applications shall be reviewed on the following criteria:

(i)

Does the home for which tax exemption is being requested meet all of the eligibility tests set forth in this division and did the construction work comply with the pre-approved project plan, if applicable?

(ii)

Are the expenses for which an exemption is being requested defined as eligible expenses in this division?

(iii)

Is the required documentation attached to the submission in compliance with this division and/or any administrative procedures adopted by city staff to implement the project?

(iv)

Is the exterior of the home in compliance with the downtown architectural standards; OTC and OTR?

(v)

Are all code enforcement concerns resolved with regards to the subject property?

(vi)

Has the homeowner submitted documenting evidence of ownership, date of purchase and proof of an approved homestead exemption?

Any property that complies with and meets the requirements of the program shall have exempted from city ad valorem taxation for a period of up to ten (10) years an amount equal to six (6) times the eligible expenses of such preservation or restoration project following the completion of the project.

If a homeowner completes another qualified project (under the restoration program) or incurs additional eligible expenses (under the preservation program) during the homeowner's ten-year exemption period, the additional eligible expenses will be calculated in the same manner and will be added to the remaining portion of the original ten-year period. All tax exemptions shall remain with the property as long as the home is maintained as required by this division.

Only the assessed value of the historic residential structure shall be subject to the tax exemption. The tax exemption provided by this division may not be used as a credit towards the value of the lot. The tax exemption period shall begin on the first day of the tax year following completion of the approved project and execution of the tax exemption certificate.

Step 3:

Based on committee recommendation (restoration) and other program regulations, the grants coordinator will approve, deny or request additional information on the application for tax incentives.

If approved, city staff will prepare a tax exemption certificate documenting the dollar amount of the exemption to be granted to the structure and forward the same to the tax assessor/collector for the applicable county.

If denied, city staff will issue a letter stating reasons for denial of the application. The homeowner will then have thirty (30) days from the date of the letter to appeal the denial to the city manager, or his/her designee.

§ 86-30 Historic landmark incentive program process.

If additional information is requested, city staff will issue a letter outlining additional information that is needed in order to determine eligibility. The homeowner will have thirty (30) days from the date of the letter to provide the information to city staff, unless a longer time period is requested and approved. In most cases where additional information or clarification is needed to determine eligibility, city staff or the homeowner may request a meeting to discuss the application and/or the expenses being requested for approval under the program. If the homeowner fails to provide the additional information required by the city in the specified time period, then city staff will issue a letter denying the application.

(Ordinance 19-11-95 adopted 11/5/19)

Homeowners wishing to receive the historic landmark incentive shall submit an application and provide evidence that they have received the following:

Acknowledgement of a request for historical marker for the home from the Heritage Association of Frisco and a statement agreeing to pay fees associated with requesting and receiving the marker (if applicable).

Grants coordinator approval based on review recommendation of the advisory committee and other considerations of ordinance compliance.

§ 86-31 Parties ineligible from receiving incentives; offenses.

Based on committee recommendation and other program regulations, the grants coordinator will approve, deny or request additional information on the application for historic landmark tax incentive.

Request for the historic landmark incentive must be approved by the end of the calendar year prior to the tax year in which the first incentive would be granted.

(Ordinance 19-11-95 adopted 11/5/19)

Ineligible parties.

No employee, agent, consultant, officer or elected or appointed official of the city who exercises or has exercised any functions or responsibilities with respect to the activities assisted under this program or who is in a position to participate in a decision-making process or gain inside information with regard to such activities may obtain a tax exemption for his/her property under the program or have an interest in any contract, subcontract or agreement (or proceeds thereof) with respect to the program either for themselves or their family members related in the first degree by consanguinity or affinity, as defined in chapter 573 of the Texas Government Code, during their tenure or for (1) year thereafter. Those persons having a tax exemption under the program prior to becoming an ineligible party, as described in this paragraph, may retain the tax exemption previously received, but they may not increase the amount of their tax exemption during their tenure or for one (1) year thereafter.

Offenses established.

It shall be an offense for any person to submit false or inaccurate information to the city:

To obtain, or attempt to obtain, a tax exemption; or

§ 86-32 Alteration/destruction of the property.

To obtain, or attempt to obtain, a greater exemption than the amount eligible for.

(Ordinance 19-11-95 adopted 11/5/19)

During the tax exemption period, if the city manager or his/her designee has reason to believe that a structure receiving tax exemption under the program has been altered without proper approval, converted to a non-residential use, is no longer the homeowner's primary residence, is not maintained in good condition or is totally or partially destroyed by the willful act or negligence of the homeowner or his/her representative, then the exemption of taxes under the program shall terminate. This provision shall not apply to destruction or alterations that result from acts of God.

If the tax exemption certificate executed by the city manager is timely recorded in the deed records of the county with the approved application, the tax exemption authorized above shall constitute a covenant running with the property for the ten-year period provided in this division. Should the owner of the property ever cease to comply with the terms of the application and of this division during such ten-year period, this exemption may be revoked for the portion of the period remaining, upon the finding of such noncompliance by the city council, after giving notice to the homeowner and allowing the homeowner an opportunity to speak at the city council meeting. The city manager or his/her designee shall advise the chief appraiser of the county appraisal district of the revocation of the exemption and shall file an appropriate document in the deed records of the county revoking the tax exemption.