Houston Offering Tax Breaks to Build Housing Downtown, Create a Vibrant City

Skyline image courtesy of Urban Splatter

Houston. (Courtesy Urban Splatter)

Houston is set to double the amount of tax breaks it gives to developers for downtown apartments and condos to try to lure people to the city’s sleepy business district. The City Council unanimously agreed to expand the Downtown Living Initiative, which first launched a year and a half ago, to offer tax breaks for 5,000 residential units, up from a previous cap of 2,500.

Houston will now offer developers up to $15,000 for each residence they build in a complex of at least 10 units, provided they meet design guidelines focused on getting retail built at street level. The idea is to lessen the hurdles to developing downtown, such as high land costs, and to draw in retailers to serve the new residents and create a more vibrant street scene.

“We made a judgment that it was needed when we looked at the extra cost of construction downtown,” Andy Icken, the city’s chief development officer, told the Houston Chronicle. “Retail follows rooftops, and it’s our view that critical mass is needed. We’ve had a lack of retail in downtown. We believe that will follow and we believe this is needed to make it happen, to really continue the momentum that’s on right now.”

In the decade preceding the subsidy, only one new residential development was built. After the subsidy initiative launched, 13 new projects have been announced, including six recent proposals that could add more than 2,200 new apartments to the urban core. The momentum is hard to miss. The total cost of the tax breaks could reach $75 million.

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