The Des Moines city manager’s office begins a series of public meetings Tuesday on residential tax abatements, hoping to hear what citizens think should be done with the existing set of rules. They expire in three years, and the City Council is weighing the options of extending, altering or ending the program.

“The developers are very concerned,” said Andrea Hauer, a city economic development coordinator. “They’re always trying to plan ahead, and we’re trying to give them a clear road map of where we’ll be going after 2008.”

Anyone who asks Mark Miller’s opinion will hear a clear “keep it” message. Miller is the city administrator of Norwalk, and said that suburb has experienced a strong correlation between residential tax abatement and growth.

“We eliminated tax abatement in 1996 after having it for three years,” Miller said. “There was a local taxpayers group that thought it was bad program, got people elected to the council and ended it. Starting in 2002 and into 2003, we didn’t have tax abatement, and during that period, building permits averaged about 20 or 30 a year. We were really starting to hurt.”

That year, Norwalk’s council implemented a revised form of tax abatement, guided by a change in state law. “Since we put that in place, in 2003 we did just short of 70 building permits, last year around 100, and we’re on track to exceed 100 this year,” Miller said.

In his opinion, there’s a direct link between the return of tax abatements and the burst in construction.

On the other hand, Ankeny is booming without offering residential tax abatement. “We never have, except in one small part of the old downtown,” said Community Development Director John Peterson.

Ankeny had recorded 971 housing starts for 2005 as of the end of September, following 1,200 for the entire year of 2004 and about 1,000 in 2003.

Des Moines has offered residential tax abatements since 1979. The program began with a 10-year, 100 percent abatement for new homes downtown and in a surrounding ring, with a goal of replacing an aging housing stock and filling in vacant lots. Following action by the Legislature in 1987, the city added a five-year, 100 percent abatement program covering much of the rest of the city.

During the years following 1979, “we were in the era of 15 percent and 18 percent mortgages,” noted Hauer. “There was not a whole lot of housing being built anywhere.”

Des Moines officials saw the 1987 law change as a chance to “jump-start” new housing, and it worked, Hauer said. “The late ‘80s and ‘90s provided a much-needed start for housing in Des Moines that we weren’t getting,” she said.

After seeing 300 to 400 annual housing starts in that period, the city now experiences “200 to 300 new starts a year and an equal amount of major improvement projects,” Hauer said.

The council has studied the issue in five workshops during the past 14 months. “There are three basic approaches,” Hauer said. The city could the tax abatement program expire after Dec. 31, 2008; let it continue as is; or change the time or percentage provisions.

“For the 10-year program, they’re looking at changing the downtown area to five years at 100 percent in 2009, or having the percentage change each year over the 10 years,” Hauer said.

Hauer has found no consensus on the issue among other Midwestern cities. “I’ve looked at other municipalities within 200 miles of Des Moines, and there are many variations,” she said. For example, “in Kansas City, they offer 100 percent abatement for 15 years downtown, but it’s almost on a building-by-building basis. They could have 10 different tax schedules within a small area. Our state law says you can’t tailor it that way.”

Another Des Moines suburb, Altoona, also is preparing to study the tax abatement issue. Its program is set to expire in December 2006.

“There is talk about reviewing what we have and making a decision whether to let it sunset or extend it or possibly make some changes to it,” said City Administrator Jeff Mark. “The council will have a work session in November and then give me and the staff some direction.

“We have to review the original goal for tax abatement. Altoona didn’t have much retail shopping 10 years ago, and research said we had to get rooftops up to attract retail shopping. Tax abatement was adopted, and housing starts increased. But the beltway also opened up, so it’s hard to say what the cause was,” he said.

Mark said no strong public opinion has surfaced on the issue. “From the general public, I get comments both ways. Some want to see it continue, and others feel it gives an unfair break,” he said. “Developers, builders and real estate people certainly would want us to keep the tax abatement.”