For the next two years, people looking to build new homes in certain low- to moderate-income areas in Sherman will be able to apply to have a percentage of their property taxes abated for 10 years.
The Sherman City Council unanimously approved a recent resolution to renew the city’s Residential Tax Abatement Program for two additional years. City Manager Robby Hefton said the renewal was mainly an administrative action as state law requires the council to reauthorize the program every other year.
“Over the life of the program, we’ve incentivized hundreds of house developers and builders, and put over $20 million back on the tax roll through this program,” Hefton said to the council. “We feel like it’s a good program and would like your approval to do it for another two years.”
Since 1998, Sherman has granted property tax abatements to around 300 properties. In documents provided to the council, city staff said 17 residential tax abatements had been granted since the beginning of 2015. Those abated approximately $4,813.38 in taxes on new construction with an estimated value of over $1.33 million, though the city did collect $1,275 in application fees.
“I just want to reiterate what a great program that is and how long we’ve been doing that, how far ahead we were of other cities and what a great program it is for those areas,” Deputy Mayor Jason Sofey said. “We’ve been able to help folks and we’ve generated long-term tax dollars for the citizens of Sherman.”
Residents approved for the program have 100 percent of their property taxes abated for the first six years of the program and then the abatement goes down 20 percent a year for each of the next four years. City staff said new construction in targeted areas utilizes existing streets, water main and sewer mains, so they don’t have to be extended to new parts of the city, and it minimizes the area city employees and emergency services must cover.
Last year, the council approved new geographic boundaries for the city’s Residential Reinvestment Zone, which was established for the residential tax abatement program. Those geographic boundary changes were designed to make the program available in certain areas on the city’s west side because of changes made by the U.S. Department of Housing and Urban Development and based on U.S. Census data. The most recent update from HUD also showed two to three areas on Sherman’s east side were no longer low- to moderate-income areas of the city.
In the documents provided to the council, city staff said Sherman’s efforts for redevelopment had a positive impact on those areas as the changes were believed to be because of community efforts to “revitalize, provide tax abatements and encourage reinvestment,” though HUD hasn’t made an official determination for the changes.
The newly recognized low- to moderate-income areas on Sherman’s west side also caused the city to add a cap of $100,000 to be eligible for the city’s abatement program last year. The program previously had no price limits because there were no houses in the low- to moderate-income areas that were comparable to the large houses on the city’s west side.
During the meeting at which it renewed the tax abatement program, the council also approved a resolution granting an abatement of ad valorem property taxes for a new single-family house to be constructed in the 400 block of East Wilson Avenue.