The City Council voted 6-0 Monday allowing owners of buildings more than 30 years old to apply for a tax break on any improvements made to their property. Hotels and motels will have to be at least 35 years old.
The measure will take effect after a second vote today.
“If you [improve] the look of buildings, it just bodes well for Manassas. This is one of the few tools, one of the few abilities, the state allows us to try to encourage property owners to do this,” said Commissioner of the Revenue John Grzejka.
In the long run, improvements to buildings will increase real estate values, Grzejka said.
“Ultimately, it will create additional revenues for the city,” he said.
Since 1978, owners of buildings more than 60 years old have been able to apply for tax breaks. But more than 24 percent of the city’s commercial and residential property now lies in the 30- to 60-year-old range.
Under the new changes, owners of qualifying commercial buildings and homes will not have to pay any taxes for five years on any additional real estate value created by improvements. Other commercial buildings would be eligible for partial tax breaks.
After the first five years, the city would phase out the tax breaks for an additional five years.
Other substantial changes are included in the new rehabilitation program:
— A homeowner will only have to increase the value of a house by 30 percent in order to qualify, a lower increase than the previous 50 percent limit;
— The value of commercial real estate will only have to go up 30 percent, rather than the previous 60 percent limit;
— Tax breaks will apply to houses that increase in size by as much as 30 percent, double the present 15 percent limit;
— Businesses, which before were not able to qualify if more than doubling in size, will no longer have an actual limit, with a complete tax break applying to the first 100 percent increase and lower decreases applying to additional expansion; and
— A homeowner will receive a tax break for 10 years, rather than the present five years.
The reworked rehabilitation program is essentially the same as what the city’s land use committee was proposing back in June.
Since then, a sentence mentioning the importance of preserving buildings in Old Town has been added. There are also new fees for applying — $125 for homeowners and $250 for owners of commercial, industrial and apartment properties.
The new tax incentives will hopefully spur further economic growth in the community, said Stephen Nelson, head of the Manassas Business Council.
“One of the biggest features we’re focusing on in the city, particularly in Old Town, is lack of available land. Anything we can do to encourage expansion and renovation of property, while preserving the historic value of the area, will be a positive development,” he said.