This spring, the City of Ames prepared an Urban Revitalization Area (URA) designation to include a plan for incentivizing construction of new housing. The Council action form stated that “expanding housing options with the community is both desirable and necessary for the economic health of the city,” and that qualified real estate could be “eligible for a partial property tax abatement incentive.”
Many of the recommendations in the report originated from a Short-Term Housing Taskforce that included community leaders and private developers, in partnership with the City of Ames. The Taskforce identified opportunities and barriers in creating new housing of all types in the Ames community at prices that are attainable for a wide demographic. The goal was to create recommendations that will serve as a catalyst to more housing starts in a short-term window of time and will assist in meeting the housing goals targeted in the Ames 2040 Plan.
Jason Jennings, a real estate agent on the Friedrich Iowa Realty team, was part of that taskforce. “New construction housing is important because it will help fill the need for the growth demands we face in Ames. Many times, our community loses residents to other communities because we do not have enough housing available.”
Tax abatement is a temporary reduction in property taxes on the portion of assessed value added by new construction or improvements to an existing structure. Programs like these are used to stimulate community revitalization, improve existing housing stock, retain and attract residents and homeowners, and reduce development costs for high-quality commercial and industrial projects.
The Ames tax abatement program is applicable to all new construction homes or townhomes that are owner occupied. The program will continue for 3.5 years and includes a 5-year, graduated scale abatement; 100% for the first year, then 80%, 60%, 40%, 20%. After the fifth year, it returns to full payment.
Jennings said, “With more available new construction, there are more options for owners to move from a smaller, usually less expensive home to a larger home. When this happens, the home the buyer is leaving becomes inventory that is at a lower cost than new construction, creating a more affordable housing option.” The costs to build a new home have increased over the years, making resale homes a more affordable option for many. “This is a win for the Ames community, and I appreciate the City of Ames recognizing this opportunity as well.”
