Frisco City Council members approved a 2.5% increase to its existing 12.5% ad valorem tax exemption during their June 20 meeting. The now-15% exemption will go into effect January 2024.
Diving in deeper
The tax break, known as the homestead exemption, only applies to homeowners in Frisco, not residents who live in apartments. It helps homeowners by lowering the property value used to calculate property taxes owed.
The exemption increase will cause a slight—but manageable—dip in the city’s overall revenue, said Jenny Hundt, director of budget and strategic planning for Frisco.
“An additional 2.5% exemption off the market value could have an impact on revenue of about $3 million,” Hundt said.
The rising property values across North Texas and in Frisco are helping offset the approximately $3 million loss, according to meeting documents.
If council decided to increase the exemption any more at this time, it would likely not have enough funds left over for its staff, Council Member Bill Woodard said. Some ongoing developments will generate enough revenue on their own to increase the exemption again one day, but not yet, Woodard said.
“If you had Frisco station all of the sudden build four or five buildings, and Fields West went up and had 15 buildings go up in a year, heck there’s a big increase in profit that’ll allow us to do more, but things don't quite go that way,” Woodard said.
In their own words
City officials have been gradually increasing the exemption since it was first approved in 2017 at 7.5%. The “ultimate goal” of council is to one day increase the exemption to its maximum 20%, Council Member Angelia Pelham said.
“We are bringing large businesses, we're bringing things like the PGA up here in order to take the taxes off the rooftops,” Council Member Brian Livingston said.
Council Member John Keating, acting as mayor pro tem in Mayor Jeff Cheney’s absence, stated if the mayor were here, he would also voice his approval.
“Jeff Cheney would love to be here for this,” Keating said. “This is one of his campaign promises, to establish a homestead exemption for the city of Frisco, which he had successfully done his first year as mayor.”
Stay tuned
While council has to make a decision on the homestead exemption by the end of June, it will not meet to discuss the city’s overall tax rate until August, Council Member Laura Rummel said.
“We can make an adjustment now on the homestead exemption, and then we have time to make an adjustment on the tax rate in August,” Rummel said. “We still won't have finalized numbers, but we'll have a closer idea as to what our property values will be for next year.”
The preliminary taxable value numbers from the Collin County and Denton County appraisal districts show an increase of 12%, Hundt said.
“It’s conceivable that if, when all the numbers flush out in two months, because we don't have all the data, that the voter approval rate is below our current $0.4466 that we could end up reducing the tax rate across the board,” Woodard said.
Learn more
More information about city taxes can be found here.
