City eyes property improvement incentives
Tuesday, March 28, 2017
Tax abatements could lower cost of upgrades, ‘nudge’ owners to renovate, expand
By MATT MILNER
OTTUMWA — For more than a decade, Ottumwa has maintained two abatement areas to encourage improvements for commercial and industrial properties. Now the city council is being asked to expand the idea citywide.
Jody Gates, the city’s planning and development director, said the expansion offers "that little nudge" to property owners who may be considering whether to renovate or expand.
"We think this will offer some incentives that weren’t there before." Gates said. "With people making commercial investments, we think this is a nice incentive for them."
The incentives are based around tax abatements. To be eligible, a property owner mus! t make improvements adding at least 15 percent to the assessed value of a commercial, industrial or multi-family property. Abatements don’t eliminate the tax increases brought on by the improvements. But those increases are phased in. Multi-family properties get a 10-year abatement, while commercial and industrial sites qualify for a five-year abatement.
Ottumwa already offered the incentives to residential properties throughout the city if improvements added 10 percent to the value. But commercial, industrial and multi-family properties were eligible only if they were within two districts. With this change, anyone in Ottumwa could qualify.
"This will apply to redevelopment and expansion of buildings in the North Quincy area, on North Court," Gates said. That includes, in theory, sites like the former Target building.
What would an abat! ement look like? Let’s say a building was assessed at $100,0! 00. Improvements of $15,000 or more could qualify for the abatement. The first year’s abatement is 80 percent, so the building now valued at $115,000 would pay property taxes as if it was assessed at $103,000.
By the third year in the program the abatement for commercial or industrial properties falls to 45 percent. So that year’s tax bill is equivalent to assessment of $108,250. The final year’s abatement is 10 percent, which means nine-tenths of the full assessment is being used to figure the tax bill.
The abatement for multifamily properties is similar, though it is phased in over a 10-year period. So the increases are more gradual.
The changes are on the agenda for the April 4 council meeting, and Gates said she has not heard a lot about it from the public.
"We haven’t gotten a lot of feedback yet. I would hope that the feedback would be positive," she said.
! The same goes for the council. Gates believes the plan will gain council members’ support given their previous backing of economic development efforts.
"I think our council is in favor of this," she said. "We’re trying to encourage more development in Ottumwa."
Matt Milner can be reached at email@example.com and followed @mwmilner.
Category: Commercial Real Estate