Green, green, green, Texans often associate the City of Austin with being the “greenest city” in the state of Texas. While Austin certainly has an impressive portfolio of green project types, it does not hold a monopoly on Green Infrastructure (GI) practices. Unbeknownst to many developers, the City of Houston actively encourages the implementation of GI practices throughout the city. Through resiliency initiatives and sustainable development programs, the City continues to promote these solutions. One only needs to look around to see more parks being constructed, channels and bayous being restored to a more natural appearance, and incentives being offered to private developers to implement these practices rather than face the regulatory hurdles many developers have come to expect.
Recognizing the stress and uncertainty associated with implementing new designs or unfamiliar practices, the City has created several programs to assist the land development community in adopting Green Infrastructure. One of the most significant is the Green Infrastructure Tax Abatement Program, which can provide up to a 100% property tax abatement for as long as 10 years.
The Process
When a developer wants to implement Green Infrastructure, the Houston requires the following information to be submitted to the City’s Economic Development Department:
- Current property value
- Estimated construction cost using traditional development methods
- Proposed Green Infrastructure items and BMPs to be implemented
- Additional construction costs associated with the Green Infrastructure BMPs
- Estimated property value after construction
- Estimated cost to maintain the Green Infrastructure improvements for five years
Historically, Green Infrastructure practices have been viewed as carrying additional upfront costs. As a result, the current tax incentive structure is written with the assumption that Green Infrastructure construction will cost more than traditional development. The City evaluates the current property assessment, the estimated post-construction property value, the cost difference between traditional and Green Infrastructure development, and the anticipated maintenance costs associated with the GI improvements.
The Tax Abatement Benefit
If the property value increases by a qualifying amount, the City will evaluate the cost difference between traditional development and Green Infrastructure development. Based on that difference, the developer may receive a reduction in City service costs through a property tax abatement.
Because property taxes fund City services, a tax abatement effectively allows the developer to pay significantly reduced rates for those services. In some cases, the Green Infrastructure tax abatement can provide up to a 100% reduction in City property taxes on the property improvements for up to 10 years, or until the developer recoups the cost of their Green Infrastructure investment. While the developer will still pay land taxes & personal property, the improvement taxes are what is being discounted.
Other Noteworthy Tax Abatement Programs Within the City of Houston
- Economic Development (Sec. 44-127) – Provides a 50–90% abatement on building improvements and eligible personal property to incentivize job creation, retention, and business investment.
- Brownfield Development (Sec. 44-129) – Provides a graduated tax abatement schedule over a five-year term that mirrors state statute.
- LEED (Sec. 44-131) – Provides a 5–15% abatement intended to offset costs associated with obtaining LEED certification.
- Deteriorated/Demolished Property (Sec. 44-133) – Provides up to a 50% or 90% abatement on improvements and eligible personal property to offset demolition costs associated with existing buildings and structures on the property.
- See More about each program here
Additional Green Infrastructure Benefits
While participating in the Green Infrastructure Tax Abatement Program, a developer will likely also be in the permitting process or preparing to enter permitting. During this phase, the developer or their civil engineer can coordinate with the City of Houston Engineering Department Stormwater Quality Permitting Group, ideally before the first plan submittal.
As an additional incentive for Green Infrastructure development, the City has implemented detention reduction opportunities for qualifying projects. Engineers may demonstrate, using common drainage calculation methods such as the Rational Method and the Modified Malcolm’s Watershed Method, that a project qualifies for a detention reduction of up to 0.15 ac-ft per acre when Green Infrastructure practices are incorporated into the design.
For more detailed information, check out the City’s Guide to Developing and Maintaining LID Techniques in Houston.
