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Des Moines Eyes Adjustment to City Tax Abatement Program

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DES MOINES, Iowa - After 28 years, the city of Des Moines' tax abatement program will expire at the end of 2015. Wednesday night, city staff and officials will look over suggestions for changing the program as well as hear input from the public.

Right now, new construction for single-family and multi-family housing in targeted areas of town - like downtown, where the city has wanted to see more growth - receive a 10-year, 100 percent tax abatement. Citywide, single-family and multi-family projects get a five-year abatement. Proposed changes to this include reducing the city-wide single-family abatement from 100 percent to a declining-scale system, where home-owners pay 100 to 20 percent of the total tax value over five years.

For multi-family homes across the city, city staff propose eliminating the abatement altogether. For targeted areas of town, single-family and multi-family projects would get a five-year abatement at 100 percent, then another five years on the declining-scale system.

City staff say Des Moines' tax abatement program is one of the most lucrative in the state, but while it's helped multi-family apartment housing in areas like downtown, it hasn't really proven to have helped spur growth in single-family homes over the years. In the last five years, Des Moines saw a significantly-less amount of single-family homes sold compared to suburb cities like Ankeny and West Des Moines, where no or limited abatement programs exist.

"And the single-family program has had some challenges," said Community Development Director for the city, Phil Delafield. "We're not seeing the housing starts that our suburban counterparts are seeing, and those are in the light of the existing program. So, we have to ask ourselves, is the existing program meeting the goals of the city? Is it incentivizing those programs where we want them, how we want them?"

But some developers are worried any changes to the abatement program could slow Des Moines' growth to a halt - especially on the single-family home front.

"In many of our developments, we are just beginning to see momentum building on the single-family side," said Hubbell Realty CEO, Rick Tollakson. "It has been very, very difficult. Des Moines has been one of the last community's to really come out of the recession. And we're just starting to see some activity. Tax abatement is key to turning this around."

Tollakson says he's worried Hubbell would have to pull out of Des Moines altogether if the single-family tax abatement was reduced or eliminated. Wednesday night's meeting is held at Polk County River Place in Room 1 from 6-8 p.m.

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