Des Moines council overhauls tax abatement rules
KENT DARR Oct 27, 2015 | 4:00 pm
2 min read time
513 wordsAll Latest News, Government Policy and Law, Real Estate and Development
The Des Moines City Council has approved a five-year extension of the city’s tax abatement program with significant changes that promote renovation of apartments and homes across the city.
Under the new program, which will take effect Jan. 1, the city will provide a 10-year, 100 percent abatement on property taxes generated by improvements to single-family homes and apartment buildings. The move is an effort to improve the quality of the housing stock in neighborhoods.
On the other hand, the city will no longer abate taxes for most new multifamily properties that are located outside a targeted area that has been revised to include the the downtown core and transit corridors. That move is a response to neighborhood concerns about large multifamily projects.
The exemption will be for new “rowhome” projects that have no more than eight units.
In the targeted area, housing projects received a 10-year, 100 percent abatement of property taxes under the old program. That program has been changed to 10-year declining schedule that will provide a 100 percent abatement for eight years, 60 percent in the ninth year and 40 percent in the 10th.
To promote infill housing, single-family houses and duplexes that are built on lots outside the targeted area will receive a 100 percent abatement for three years, 75 percent abatement in the fourth year, 50 percent in the fifth year and 25 percent in the sixth year. Currently, those properties receive a five-year, 100 percent abatement. That program was changed essentially in the final hours of the debate and just prior to Monday’s meeting.
Both residential developers and real estate agents have lobbied hard to either preserve the existing program for single-family houses or enlarge proposals that have been presented during the tax abatement debate.
The changes had encountered resistance from residential and commercial developers as well as from proponents of affordable housing. At one point, City Councilman Chris Coleman had proposed a moratorium on all multifamily developments outside the targeted area, with the exception of projects for senior citizens. That effort was scuttled after the council was advised that such a plan would violate federal housing laws.
However, with the current tax abatement program set to expire on Dec. 31, city staff has spent several months crafting a plan. The program adopted Monday is the third proposal.
The city also has been faced with more issues than neighborhood complaints about large apartment projects. Also under consideration during the drafting of a new tax abatement program have been finding ways to improve housing stock and bolster property tax revenues as well as counter an expected decline in property tax revenues as the result of changes in state law. |
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