Lexington is exploring starting a program that would help pay portions of property tax bills for poor, longtime homeowners in neighborhoods attracting investment and redevelopment.
Under the proposed program, longtime homeowners with little income who face a hefty increase in their property tax bill because of gentrification could get financial help from the city.
A Lexington council committee heard more details about the proposed program Tuesday.
A group that includes several city officials and Fayette County Property Valuation Administrator David O’Neill have been working for six months on the proposal, which is modeled, in part, on a similar program in Philadelphia. A final draft is expected to be presented to the council sometime in early 2018.
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Councilman James Brown proposed looking at the issue last year after seeing an increase in new development in some areas of his district, which includes the city’s east and north sides. The district has seen pockets of redevelopment in areas such as Johnson and Rand avenues and West Sixth and Jefferson streets.
“This subject has been brought up since I have been on council,” Brown said Tuesday during the council’s Budget, Finance and Economic Development Committee meeting. “The redevelopment and investment that is taking place in a lot of places … has caused the tax values to increase and create conditions where displacement can occur.”
Under the proposal, applicants would be homeowners who have lived in their property at least five to 10 years. Their income would have to be at or below 80 percent of the area median income and their property taxes would have to increase more than 12 percent from the prior year. Homeowners would have to re-apply each year.
The city would only pay for the increase in the property tax, not the entire property tax bill, Brown said. The city’s payment would be a loan that would have to be repaid when the property is sold, he said.
“As we continue to focus on redevelopment and investment in our downtown neighborhoods … there is a potential for there to be a real concern for some of our downtown homeowners,” Brown said.
Brown said the group is debating whether homeowners who participate in other property tax abatement programs, such as the homestead exemption for senior citizens, can also participate in this program. The Philadelphia program only allows homeowners to participate in one tax abatement program.
It’s not clear how much it would cost the city to implement the program.
The city’s portion of any property tax bill would be relatively small, since the city can not abate the property taxes charged by schools and other taxing districts, said David Barberie, a city lawyer.
“That’s why it’s a loan program that you would have to pay back to the city,” Barberie said.
Councilman Kevin Stinnett said the proposal is worth pursuing. A 12 percent property tax increase on a $100,000 home would likely result in a tax increase of about $150.
“If that would help keep someone in their home, then I think it’s worth it,” Stinnett said.