Developers will soon have a much smaller area of downtown Chilliwack to build while getting a tax holiday.

City council introduced a bylaw at Tuesday's meeting that shrinks the tax exemption area to the core of downtown.

The move follows up on a recommendation by the Downtown Core Task Force in its final report from August 2011.

The bylaw was given introduction and three readings at Tuesday's city council meeting, but it was not discussed.

Since 2004, developers of 38 properties have used the provision of the bylaw, according to a staff report. The total assessed value of improvements on the 38 properties was approximately $103 million and the city exempted $544,000 in taxes in 2012.

The current area of tax exemption covered in the bylaw goes as far south as Railway Avenue, as far west as Corbould Street, as far north as Reece Avenue as far east as Victor Street.

The bylaw tightens that area to a few city blocks bordered by Yale Road, Patten Avenue, Mary Street, Victoria Avenue, Victor Street and Princess Avenue.

Recommendation nine in the Downtown Core Task Force report stated: "That the city revise the boundaries (and some conditions) of the Revitalization Tax Exemption Area to match the Downtown Core study area."

The report concluded that "the area is too expansive to have an immediate impact on the core."

The new area was reviewed by the Downtown Plan Implementation Committee, which suggested a one-year phase-in period to allow developers to complete current projects, the staff report to council said.

The bylaw still needs final adoption but will become effective Jan. 1, 2014.

phenderson@chilliwacktimes.com