Published: August 29, 2008 11:35 am         

New owners of train depot want to keep tax breaks on track

Hospital board taps brakes on request, questioning reason for property’s perpetual tax-exempt status

By Libby Cluett
lcluett@mineralwellsindex.com

If the request for a property tax exemption on the historic Weatherford, Mineral Wells and Northwestern Railroad Depot were a ball in a soccer game, it would be passed up field towards its goal, from one entity to another, without much opposition - that is until reaching the Palo Pinto General Hospital trustees.

On Tuesday, they pulled out a figurative “yellow card” - used by soccer referees as a warning. PPGH board members asked several questions and expressed concerns before moving to table any decision to grant an exemption.

According to PPGH Administrator and CEO Harris Brooks, one lingering question remained, “Why should the depot's exemption be perpetually granted, because the owners are not reinvesting the saved tax in the building.”

The request for a continued tax exemption arose when the building's new owners, Wendell and Jane Privitt on behalf of Privitt and Adams Investments, asked taxing entities “that the property remain under a tax-exempt status, since the property is still registered as a historical place.”

The historic depot at 403 S. Oak Ave. gained status as a Recorded Texas Historic Landmark and received a historical marker in 1985. In 1984, the 1903 Romanesque Revival-style building was designated on the National Historic Registry. This all came after owner O'Neal Distributing Company Inc. completed restoration.

Chapter 11.24 of the Texas Tax Code allows governing bodies of taxing entities to grant a historical tax exemption on part or all of the assessed value of a structure and its land if the structure is:

o Designated as a Recorded Texas Historic Landmark.

o Designated as a historically or archeologically significant site in need of tax relief to encourage its preservation pursuant to an ordinance or other law adopted by the governing body of the unit.

When the Privitt's request for continued exemption on property taxes reached county commissioners, they approved carrying on the initial exemption from the 1980s, which stated, “At the request of [former owner] Don O'Neal on April 25, 1988, the Commissioners Court granted tax exempt status for … 'The Depot' for the year 1988 and succeeding years unless notified in writing, due to the property being a recognized historic site.”

The recently approved commissioners court resolution grants “tax-exempt status for the current year and succeeding years … to continue with the property to subsequent owners without further application and until affirmative action in writing...”

“We looked at the decision made when the exemption was granted in 1988; it was granted by commissioners until further action,” explained Palo Pinto County Judge Mike Smiddy. “We saw this as permanent and not needing approval.”

“I know there was a lot of money put into this building when it became a historic site,” said Smiddy. “It was virtually a condemned building. I don't think it was necessary for us to do anything; the court in 1988 declared it exempt based on the restoration of the property.”

“Historic site exemptions are allowed as a local option,” said Jim Prichart from the Tarrant County Tax Office. “The governing body decides what percentage that will be.” He added that historical exemptions are granted by taxing entities, similar to homesteads, and are not binding among entities.

Brad Patterson of the Texas Historical Commission's Department of Architecture echoed that decisions are made at the local level and can vary based on a city or town's preservation ordinance. He said these regulations sometimes resemble abatements or partial abatements and are frequently overseen by a local landmark review board.

While some cities make a more powerful, short-term tax incentive to get buildings rehabilitated and inhabited by commercial businesses before implementing taxes, Patterson said others provide exemptions for the permanent preservation of a building.

While county commissioners unanimously confirmed the 1980s resolution on the depot with a 2008 resolution, Mineral Wells City Council took no action. By doing this, the original exemption remains in effect according to City Clerk Juanita Formby.

At the proposed 2008 tax rates, the depot, valued on the tax roll at valued at $382,490, could bring in as much as $8,529 without any exemptions.

***

The referee whistle blew when the request was brought to the table at PPGH. Brooks expressed surprise that the exemption request was “rubber-stamped” by other entities without much discussion.

“The question all taxing entities should ask is, 'What good is that money doing, is it being reinvested in the building or fleecing your pocket?'” he said.

Brooks said the owners should bring sound reasoning why and burden of proof of how the tax monies would be reinvested by the private owners, not just because the law exists.

“The magic question should be 'Why? - Why do you deserve a tax break,'” said Brooks, who said he supports the Baker Hotel project to both restore a historic building and boost the economy.

Other questions raised at the PPGH board meeting included:

• By what criteria does PPGH allow tax exemptions?

• Are the owners planning rehabilitation? The answer from Privitt was “No.”

• Is the partnership for profit or will it make a profit on the building? To this the Privitts eventually said, “Yes.”

• “What makes your building more exempt from taxes than the Crazy Water Hotel or the Baker Hotel?” asked Chief Financial Officer Dee Waldow. This discussion led to the concern that allowing this could open the tax exemption door to many other commercial businesses housed in historical buildings.

According to Patterson, when cities like Austin changed their ordinance, they grandfathered previously restored buildings, which had exemptions in place. He said that cities like Mineral Wells “have a fascinating history and buildings are a big part of it.”

Other Palo Pinto County buildings on the National Register of Historical Places include the Baker Hotel, First Presbyterian Church in Mineral Wells, Palo Pinto County Courthouse, Palo Pinto County Jail, and the U.S. Highway 281 Bridge at the Brazos River. Of these, the Baker Hotel is owned by a private investment corporation and paid 2007 taxes of $9,804 on the hotel and its adjacent garage.

In addition, there are many Mineral Wells and Palo Pinto County buildings bestowed with Recorded Texas Historic Landmark status, including those housing commercial businesses. The Famous Water Company is one of these and pays property taxes to each entity.

“The intention is not to say, 'You make money and don't deserve an exemption.' It's, 'Why do you deserve it? Why do you need it? Prove to us you are using for some good - for the betterment of the community.' At some point there should be a cap or term limit,” said Brooks.