Proposed changes to Des Moines tax abatement programs generated the kind of response Community Development Director Phil Delafield anticipated.

Homebuilders are against the changes, at least one neighborhood group opposes them in part, and the state’s largest real estate company says the city is missing an opportunity to draw single-family development from high-priced suburbs.

“About what I expected,” Delafield said after the changes were presented today during a City Council workshop.

The proposed changes are the product of the city’s legal, community development and economic development departments. The tax abatement program expires on Dec. 31 and several members of the City Council have asked for a review to address the potential for declining property tax revenues under a two-year-old state law. Some of the abatements have not lived up to expectations and some consideration is being given to enlarge an area that offers the most lucrative incentives.

First enacted in 1987, tax abatements are available for rehabilitating neighborhood homes, building and renovating apartment buildings, and creating incentives for commercial and industrial development.

A change in state law could result in lower property tax collections. That law requires a gradual decline in the taxable value of apartment buildings. Originally taxed at 100 percent of value, multifamily buildings will be taxed at about 60 percent of value by 2021. The following year, they will be taxed at the residential rate.

The city estimates that the property taxes on a $1.5 million building will drop from $59,513 this year to $43,988 in 2021.

If that building is covered by the 10-year, 100 percent abatement that is available for buildings in and near downtown, that means it could be taxed at about half of its value when it comes on the tax rolls.

Still, it is clear that abatements are popular.

“Doing away with tax abatements in the city of Des Moines will be very detrimental to your housing stock,” said Ted Grob, founder of Savannah Homes.

Creighton Cox told the council that both the Home Builders Association of Greater Des Moines and the Developers Council oppose any changes.

Carole Jones, president of the Pioneer Park Neighborhood Association, wants to preserve abatements in neighborhoods and opposes a proposed extension on the expiration of some incentives that are used by developers who are active downtown.

“Do you want to keep developers happy, or do you want to keep your residents happy?” she asked.

Brennan Buckley, general manager of Iowa Realty Co. Inc., cautioned that the city could be missing an opportunity to capture the market for lower-priced new homes, given the escalating costs of homeownership in areas of Greater Des Moines.

By proposing changes, the city appears ready to “run from that opportunity in exactly the wrong direction,” Buckley said.

He echoed homebuilders in saying that the tax abatements are an important marketing tool when trying to sell a house in Des Moines.

Here are the proposed changes:

• Reduce the five-year, 100 percent abatement on single-family construction and rehabilitation to a five-year declining schedule that would drop to 20 percent in the final year.

• In what is called the “targeted area,” a sprawling area that includes Sherman Hill, drop the 10-year, 100 percent abatement in favor of a five-year, 100 percent abatement, followed by a five-year declining schedule. Eligibility for the new program would be extended to Jan. 1, 2017.

• Apartment buildings that are renovated in the targeted area currently qualify for a 10-year, 100 percent abatement. In all other parts of the city, they are eligible for a five-year, 100 percent abatement. The abatement in the targeted area would be retained, while for all other parts of the city it would drop to a five-year declining schedule.

• A five-year, 100 percent abatement on new multifamily construction outside of the targeted area would be eliminated.

• The 10-year, 100 percent abatement of property taxes on new multifamily construction in the targeted area would be reduced a five-year, 100 percent abatement, followed by a five-year sliding scale. Current projects would have a one-year extension on the change, to Jan. 1, 2017.

• Abatements for commercial projects and single-family residential renovations would not be changed.

Another meeting to discuss the changes is planned for 6 p.m. Aug. 19 at the Polk County River Place Building, Room 1, at 2309 Euclid Ave. (Please note that the location has changed since the original publication of this story.)