The Lampasas City Council on Monday established a proposed tax rate of 40 cents per $100 property valuation, one cent higher than the tax rate for the current fiscal year, which ends Sept. 30.

The council’s vote did not officially set the 2010-2011 tax rate, but it does prohibit the council from raising the rate to more than 40 cents when council members cast their final vote next month.

Public hearings on the tax rate will be held in Council Chambers Aug. 23 at 7 p.m. — during the City Council’s next regular meeting — and Aug. 31 at 5:30 p.m.

In other business Monday, the council approved guidelines for a tax abatement area called a “Neighborhood Empowerment Zone.”

Property owners who follow design guidelines when building or remodeling residential, commercial or community structures — or when performing historic restoration — within the NEZ may apply for certain city tax abatements and fee waivers. All projects and tax abatement agreements are subject to City Council approval.

A minimum capital investment of $200,000 is required for new construction, and a minimum capital investment of $25,000 is required for property rehabilitation.

The NEZ incorporates properties within the following boundaries: from Chestnut Street and North Avenue to North Avenue and Hackberry Street, then to Hackberry and Fourth streets, then to Fourth and Pecan streets, then to Pecan and Eighth streets, then back to Chestnut and North.

The council approved historic preservation design guidelines by a vote of 6-0, with Councilman John Cole abstaining. Although Cole said he supports the NEZ, he said he wants a larger side yard setback requirement in residential areas than the 10 feet mandated by zoning ordinances, which recently were amended.

In other business, the council:

· unanimously approved a change in a real estate donation agreement with BNSF Railway for a transfer to the city of railroad right of way near where Rex and Linda Johnson Park will be developed.

· gave unanimous approval for the Kempner Water Supply Corp. Board of Directors to reinvest a $75,000 bond the city and KWSC own as part of joint reserve funds.