County, city OK first housing abatement

Published 10:27 am Thursday, September 8, 2016

The first housing construction project is moving forward with the help of a new community tax abatement program, but the plan still doesn’t have unanimous support.

The Austin City Council and Mower County board joined Austin Public Schools in approving a five-year tax abatement for Matt Laack, who is building a home for an estimated value of $250,000 on the 2000 block of 12th Avenue Southwest in Austin.

Laack is the first home to be built through the Austin Housing Initiative, a tax abatement plan agreed to by the city, county and school board with the hopes of sparking new construction and new housing.

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To secure the abatement, a property owner or developer must be approved after a public hearing with the city, county and school board within 30 days of the request.

“The goal really is to create new residential permits in Austin,” Austin Housing and Redevelopment Director Jon Erichson said.

While the council unanimous approved the plan without any discussion Tuesday, the county board approved the request 4-1 and brought some questions to Erichson, who was the only non-county official to speak in the county hearing Tuesday afternoon.

Commissioner Polly Glynn asked about a verbal clause where Laack said he wouldn’t be building the home if he wasn’t receiving the abatement; however, Erichson noted that most, if not all, applicants are likely to say that.

However, Commissioner Jerry Reinartz, who along with Tony Bennett voted against the original motion to support the housing initiative, argued people saying that was like saying they could afford the house but not that the taxes too.

“You’re putting a lot of emphasis on whether or not they have to pay tax or not, which makes me wonder: Would they have built a home of $250,000 if they knew they had to pay tax on it?” Reinartz asked. “Maybe they can’t afford to pay taxes on $250,000, and that’s part of a house payment. If you can’t afford the tax, you can’t afford the home.”

However, County Coordinator Craig Oscarson noted the homeowners still need to actually pay the property taxes on the home on time first in order to be rebated the abated taxes as part of the agreement, which is based on economic development statutes.

Oscarson described the plan as a government subsidy to encourage growth and development.

Erichson noted the abatement’s goal is to encourage growth in Austin and Mower County rather than neighboring communities.

“Really, it’s to encourage them to build in our area instead of looking elsewhere,” Erichson said.

To Erichson, he’s seen many people building in Olmsted County versus Mower, and this abatement aims to entice people to build in Austin or Mower County instead after only six new homes were built in Austin in 2015.

“It’s obvious that we’re losing a lot of new residential construction elsewhere,” Erichson said.

Erichson referenced the success of other counties with similar programs in boosting new contraction through abatements.

The abatement is only for the new home — the structure — on the property, not on taxes for the existing land.

Laack’s abatement will make for $2,726.75 in total property taxes — $626.28 a year for the school district, $1,041.16 for the county and $1,059.31 for the city, according to records released by the district.

Reinartz voted against the request, while Bennett, who’d also voted against the plan to support the abatement requests, voted in favor of Laack’s abatement.

“I just don’t like the current program,” Reinartz said.

People and developers building homes or apartments can apply for the abatement through Dec. 31, 2019.