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292 ORDINANCE: TAX ABATEMENT FOR REHABILITATED Pd3SIDENTIAL PROPERTY Mr. Satyendra Huja, Director of Strategic Planning, explained that one of the goals of the City's Housing StrategY is to encourage middle income families to move into and stay in the City by providing tax exemptions when they renovate their homes. The proposed exemption applies to houses that are at last 25 years old, the improvements must be valued at 20% of the assessed value of the house, and the exemption will apply for 7 years. Conditions include: does not apply to detached Outdoor structures, must be a residential structure, must be owner occupied at all times, must meet all building and zoning requirements, and does not apply to demolition and reconstruction. Mr. Huja said the Real Estate Assessor will administrate the prograrn~ The City's data system will need to be modified at an unknown cost, but it is felt that will be minimal. Mr. Huja said that in other communities that have such a program, no new staff were added. Mr. Cox, referring to Mr. Huja's statement that only 12 houses last year would have met these requirements, said that seems very low, and questioned whether the recpairement fnat the house be at leaSt 25 years will exclude many middle income families. Mr. Huja noted that 90% of the City's housing stock is over 25 years old. Mr. Caravati asked why demolitions are not allowed as he feels there are several places where demolition would be a better economic choice, assuming they are not historic. Mr. Huja said it was felt at this stage that the City should focus on rehabilitation and they did not want to encourage demolitions: Mr. Caravati said he would like to encourage families in neighborhoods with small houses to construct additions as he thinks that is where results will most likely come. Mr. Huja said that additions could be included. Responding to a question from Mr. Caravati, Mr. Huja said that while stafftalked about putting a financial limit on the program, they felt we should wait and see if it becomes a problem. Ms. Richards said the purpose is to encourage reinvestment and a person who invests more will save more. She said she would not want to put a limit on the amount. Mr. Caravati asked if it would be possible to target specific areas of the City with the program, and Mr. Gouldman replied that he thinks that could be done, but there would need to be a rationale for doing so. Responding to a question from Mr. Caravati, Mr. Huja said that the ordinance sunsets in 2005. Ms. Richards noted that other cities tend to be more aggressive with their percentages and lengths of time for the abatement. Mr. Huja said that staff felt that the program should start small. Ms. Richards asked if Council could extend the years of abatement for those akeady receiving it after the ordinance is sunsetted and if it is reapproved, and Mr. Gouldman said that may be possible, though there is some concern that the program could be a huge success and very expensive. Ms. Richards said Cotmcil may want to extend the abatement to ten years as she feels seven years is very timid.