Tax abatement program approaches third year

Published 8:16 am Thursday, September 20, 2018

After the start of the housing tax abatement program, officials will be looking to address the program’s progress as it nears the end of its third year.

The housing tax abatement program started three years ago, in efforts to develop more housing options within Mower County. For individuals seeking to build new construction of single and multi-family housing in the county, they are able to file application materials and seek formal approval from appropriate local jurisdiction between Aug. 1, 2016 and Dec. 31, 2019. This means getting approval from the county, city and school district.

If eligible, the applicant would be able to receive a 100 percent tax abatement of the county’s share of increased real estate taxes as a result of building newly constructed housing for five years, provided that all criteria are met.

Email newsletter signup

Since the start of the abatement program in August 2016, Mower County received 57 applications—one was submitted on Wednesday—with one application for a multi-family unit, four for twin homes, and the remainder for single-family residences, according to Denise Barthels, administrative assistant. Two of the applications were not eligible for the tax abatement program.

Barthels mentioned that the pilot program extends through December 2019, and that the county board will be discussing the tax abatement program within the next year or by the end of the year to see if they would continue the tax abatement program.

County Coordinator Craig Oscarson shared that from first appearance, the tax abatement program was successful. Prior to the program’s start, there were eight new housing starts countywide. However, the next steps for the program would be to compare the program to similar counties in the area in regards to housing starts and seeing whether economic turnaround contributed to the success.

“The next question next year is do we want to continue the program and should we make any adjustments to this policy,” Oscarson said. “The other thing is to look at this program and see if it spurred enough growth to solve the housing deficit, and the answer is probably no. I’m sure we’re deficient depending on how many new housing units the city was targeting through their housing study.”

Two debates remain on the tax abatement program: whether to allow an addition to a renovated house be considered eligible for the abatement, and whether there should be a cap on the maximum value of a house that would be built. Oscarson stated that the county board and himself had heard criticisms regarding the eligibility.

“The criticisms I’ve heard is that if you’re a CEO, you don’t need this program,” he said. “The counter argument would be that these people are local, and are moving out of the existing home that fits the lower-income or moderate-income level of housing. The board received some criticism from members of the public. …the lower priced homes would fit and meet the deficiency of homes that Austin identified that’s needed. We would need to fine-tune our program to address the criticism. We’ve had it both ways, and there would need to be appropriate debate as whether there should be a maximum abatement value.”

‘I call it a success’

Prior to the start of the tax abatement program, three demographic studies were conducted by the Austin Public Schools District to determine what would be “holding them back.”

“The biggest thing we’ve found in the three demographic studies we’ve done since I came on board was the lack of housing,” said Superintendent David Krenz. “Taking that to heart, we felt an obligation to find a way to encourage new housing in the community. When this plan came forward, it really spoke to that issue.”

Over the last two years, APS had seen a fair number of tax abatement requests. According to Mark Stotts, finance and operations executive director, he believed that it was hard to measure the effects quantitatively, but the benefits that the district would see from the program were positive.

“Even though the requests are for higher valued homes, it frees up the existing housing stock to allow more families to move into affordable housing,” Stotts explained. “We’d like to believe (the tax abatement program) contributes to that. We wouldn’t have been able to retain families in the district had not that tax abatement program been available.”

During the course of the program, there were some misconceptions surrounding the tax abatement program. Krenz shared that though the projects apply to abate taxes, it does not mean a loss of tax revenue for the three entities involved. Krenz stated that the district saw an increase in the “quality of housing availability for families moving in,” and that no one lost any tax revenue, and are actually maintaining the same amount of revenue that the entities would have seen prior to the new housing being built.

“What we’ve seen is a huge increase in the number of new housing projects,” Krenz said. “You can’t have families and children without housing for them, and we’ve seen that increase also. …we’re not losing tax revenue and we’re not overburdened. It’s been a slow growth, and it’s not burdening to the current school district infrastructure at this point. It’s been a nice, steady and manageable growth.”

With the number of applications that the district approved over the last two years, Stotts said that there were more positives that stemmed from the tax abatement program, which in turn benefited the community as a whole.

“There were very few housing starts in the previous years leading up to the program,” he explained. “It’s really difficult for the community to grow and to retain people working in the community. They’re willing to work and live in another place, and the more folks that work in Austin and live in Austin will be better off for everyone in the city, county and school district. It has been beneficial, and I call it successful.”