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HomeMy WebLinkAboutA013 - Memo from City Manager to Council revising tax abatement program Memo e City Manager's Office TO: Mayor and City Council FROM: Steven L. Schainker,City Manager er g DATE: October 6, 2006 4 SUBJECT: Revised Retrofit Sprinkler Abatement Program I On April 11, 2006, the City Council passed an ordinance that required the installation of fire sprinkler systems in dormitories,high-rise buildings, institutions, and residences for mobility impaired by October 2011,with possibilities for two extensions until October 2016, if granted by the Building Board of Appeals. During the staff presentation regarding this new ordinance,I emphasized that: 1) The program as initially recommended allowed only for renovation work directly related to the installation of a sprinkler system to qualify for the tax abatement. 2) The required sprinkler improvements probably will not raise the value of the property the necessary 5%to qualify for the tax abatement program. Realizing that the proposed tax abatement program might not help offset the construction costs associated with the installation of a sprinkler system,the City Council approved the Retrofit Sprinkler Ordinance as proposed,but requested that the staff come back to the Council with alternatives to better optimize the impact of the tax abatement program. In accordance with this direction, I met with the City Assessor to discuss the existing tax abatement program. Greg reported that, since the passage of the ordinance, he has reviewed three sprinkler retrofit projects. His experience with these projects has caused him to conclude that: 1) it is difficult to isolate the cost of the sprinkler system, as required by our current program, from other renovation work that is being accomplished at the same time, and 2)it is unlikely that sprinkler retrofitting will increase the value of property by 5% or more as required by State law to be eligible for tax abatement. As a result of this information from the City Assessor, it is my recommendation that you revise the Retrofit Sprinkler Tax Abatement Program to include in the valuation calculation any renovation work on a property that is accomplished at the same time a sprinkler system is installed. The revised language for the program will read: For existing buildings, tax abatement will be given for the installation of a sprinkler system in accordance with Section 403.2 of the 2003 International Building Code and Section 903 of the 2003 International Fire Code and for any other improvements that are made as part of the same construction project where the value has been increased by at least 5%. This revision wiII make it easier for the City Assessor to administer the program and increase the likelihood that the property will receive the benefit of a tax abatement for the installation of a sprinkler system. SPRINKLER RETROFIT TAX ABATEMENT PROGRAM (Revised) October 10, 2006 Who is eligible for the Program? Owners of properties of high-rise buildings, dormitories, institutions, and residences with occupants who have impractical evacuation capabilities will be eligible for this tax abatement program. The definitions of these categories are as follows: Existing High-Rises: Buildings having occupied floors located more than 75 feet above the lowest level of fire department vehicle access. Institutions: Buildings housing more than 16 persons on a 24-hour basis to be cared for or provided a supervised environment because of their physical or mental condition, including hospitals, nursing homes, and assisted living facilities. Mobility Impaired: Buildings with 16 or more dwelling units of which eight are occupied by one or more persons who have an impaired evacuation capability. The fire chief, or his/her designee, shall have the authority to determine whether a person is an occupant with an impaired evacuation capability as aforesaid, and to conduct a timed evacuation drill to determine the extent to which an apartment building may contain occupants with such impaired evacuation capabilities. Dormitories: A building in which sleeping accommodations are provided for more than 16 persons, who are not related by marriage or consanguinity, in one room or a series of closely associated rooms, with or without meals. What type of improvement must be accomplished? In order to qualify for the Tax Abatement Program, the property owner must install an International Building Code/International Fire Code (2003) compliant sprinkler system. How long is the abatement incentive available? In order to be considered for the tax abatement program, the installation of a Code compliant sprinkler system must be completed prior to October 1, 2011. what improvements will be eligible.for tax:abatemerit? For existing buildings, tax a<jaternent.will be given.for the installation of a spnnkler- system in accordance with Section-403.2 of the.2003,International Building'Code,and_ >; r Section 903'of th62003 international Fire•Code and for any.other'imoroVerrients that., :'are made as•part,of the same;construction projebt where-the'value has:'been increased by at.least 5%:•. j - - What tax abatement schedules are available? If the proper sprinkler system is installed prior to October 1, 2011, in one of the four property categories listed above that increases the value of the property by at least 5%, the property owner could choose from one of three tax abatement schedules: • a three-year 100% tax abatement schedule • a five-year partial abatement as is available in the other urban revitalization areas: For the first year— 100% For the second year-80% For the third year—60% For the fourth year--40% For the fifth year—20% • a ten-year partial abatement as is available in the other urban revitalization areas For the first year—80% For the second year—70% For the third year—60% For the fourth year—50% For the fifth year—40% For the sixth year--40% For the seventh year—30% For the eighth year—30% For the ninth year—20% For tenth year—20%