The Lampasas City Council is considering a proposal from Vision Downtown Lampasas! to create a Neighborhood Empowerment Zone east of Key Avenue to provide tax incentives for development.

Julie Johncox, president of JP Solutions and a consultant for VDL!, and Maryann Severn, VDL! chairman, met last week with the City Council in a workshop session to suggest property tax abatements and city fee waivers for property owners who follow design guidelines set by a NEZ committee.

Proposed boundaries for the NEZ stretch from an alley behind the east side of Key Avenue and proceeding east toward Creek and College streets. The proposal also called for the zone to extend from Avenue B south to Riverview Drive.

Several City Council members, however, suggested beginning the NEZ at Chestnut Street, rather than directly behind Key Avenue, as they said Key Avenue already is developed substantially.

"This whole [proposed NEZ] ordinance works on the assumption that downtown is not getting as much development as other areas of town, like Key Avenue and U.S. 190," City Manager Michael Stoldt said. "We're trying to encourage people to look more closely and put more money into downtown."

Ms. Johncox said moving the boundary farther from Key Avenue would make the NEZ more effective in encouraging downtown development.

"It's not our intent to control anything that touches Key Avenue," she said.

Participation in the NEZ would be voluntary and would allow property owners to save money on city taxes and certain fees for qualified projects -- which would include multi-family housing, commercial enterprises, community facilities and mixed-used buildings that include living space, offices and retail.

Stoldt said he does not want to apply tax abatements and fee waivers to single-family housing within the zone, because the city needs to increase the downtown area's population density to bring shoppers to retail stores in the area.

"Single-family [housing] does not do that," he said. "It does not create a dense population that provides immediate support for those merchants."

The city manager also said Lampasas has ample singlefamily housing but needs to encourage the development of more rental properties.

To receive five-year tax abatements, developers would have to spend at least $200,000 on new developments. Property rehabilitations would qualify if the work totaled either $75,000 or 30 percent of the property's base value, whichever is greater. The NEZ proposal calls for 10- year tax abatements for historic preservation.

Property owners also could be eligible for waivers of the Board of Adjustments application fee and demolition, structure moving and zoning application fees. In addition, NEZ participants could receive as much as a 50 percent waiver of all fees related to building permits.

Abatements would be "added value," Stoldt said, meaning they would apply only to the increased value of property being improved. Taxes assessed on the property when the NEZ is created would remain in effect.

Based on the current tax rate, a property owner who does $75,000 worth of work would be eligible for a waiver of $292.50 in taxes annually. Savings would total $1,462 over the course of five years. A developer or remodeler doing $200,000 worth of work would save $3,900 in taxes during a five-year period.

"What we're trying to do is the right thing," Mayor Pro Tem John Cole said, "but I don't think the incentive is there if you're going to spend $150,000 and you're going to save [only] $400 or $500."

Property owners might save more than the figures Ms. Johncox presented, Mayor Judy Hetherly said, if the county agrees to abate some or all of the taxes it assesses.

Stoldt recommended waiving taxes on all qualifying properties for 10 years, rather than five years, if the city votes to establish a NEZ.

Councilman Robert McCauley said he will not vote to create a NEZ because he does not want to continue charging city fees in some parts of Lampasas while abating them only for downtown property owners.

"The [tax] abatements I don't have a problem with," McCauley said. "The fee waivers I do."

If it approved a NEZ, the City Council would appoint a design review committee of seven members who would serve fiveyear terms. The committee would create design guidelines for NEZ participants to follow to ensure their work enhances the aesthetic appeal of the downtown area, Ms. Johncox said.

Cities with neighborhood empowerment zones, such as the North Texas city of Grapevine, have established criteria for such elements as fences, paint, masonry, windows, awnings and exterior lighting.

Obtaining City Council and Design Review Committee approval for a project would take 45- 60 days, Ms. Johncox said.

Councilman Evan Stubbs said he would support a NEZ if the application process could be simplified.

"This looks awfully complicated to me for what it's worth," he said. "If you look at somebody who can invest $200,000, their time is worth more to them than the money they'd save by going through all that paperwork."

Stubbs also suggested reducing the investment requirement to qualify for tax abatements.

The council will consider the matter again at a future meeting.