City Council members approved the first reading of an ordinance March 8 that would establish incentives for development in Hutto's historic overlay district downtown.

The program includes incentives that apply to property and business owners as well as reductions for certain development fees.

For property owners who increase their property value by a minimum of 50 percent through improvements or renovations, the city is offering a 100 percent city property tax reimbursement for the first two years and an 80 percent reimbursement in years three to five for buildings 10,000 square feet or less.

Interim City Manager David Mitchell said the city also wanted to offer incentives that target business owners who might not own the property where their business operates.

New retail businesses that open in downtown that are 4,000 square feet or less are eligible for 100 percent city sales tax rebate for the first year after receiving approval for the program. The rebate encompasses those businesses that have opened in the district since October 2011.

"Most businesses fail in the first year of business," Mitchell said. "So that's kind of our thought—let's get some skin the game with them and show that we're here to support them and try and help them as much as we can in that first year to be successful."

The city also plans to reduce certain development fees by 80 percent, including plat fees; abandonment or dedication of public right of way or easement; and special use, conditional use or zone change requests and building permit fees. The fee for the development application to demolish a non-historic structure is reduced by 100 percent under this new set of rules.

Council also approved expediting the permitting process to five days for all submitted permits that meet requirements.

Businesses must qualify in order to receive the incentives.

The council must approve the resolution on second reading before it will take effect, which could happen at the March 22 meeting.