North Iowa Reporter

The Algona City Council is continuing discussions on updating the City's urban revitalization plan and tax abatement programs.

During its March 6 meeting, the council discussed the current urban revitalization plan. There have been a significant number of amendments to the original plan that was created in the 1980s, and City staff is looking for the council to help create a new overall plan so that the old one does not have to be continuously updated. The council has been slowly working through sections of the old plan to come up with a new one.

The council also addressed a tax abatement program as an incentive for developers and builders.

Current tax abatement outlines have two options for commercial properties: three years at 100% or a sliding tenure that starts at 80% and goes down 10% each year. Residential is at five years: 100% with no cap for residential improvement. City administrator Jacob Tjaden noted that City staff and advisors are comfortable with leaving the commercial rate as it is. The residential rate could be increased to as much as 100% for ten years—but that is not recommended, especially with the residential tax rollbacks.

Tjaden suggested that the council could make separate rates for single-family- and multifamily residential properties. A second suggestion was an alternative to residential tax abatement: give a sum upfront for home development and have property owners pay taxes right away. That would prevent confusion between property owners and banks for rates and payments over the years.

"I think the kind of one thing that's a little bit frustrating about the tax abatements and when we updated our ordinance back in 2018, those homes that were built then, they're still not on the tax rolls," Tjaden said in the meeting. "So if it was only a three-year instead of a five-year or that was a way to kind of based on the challenges of the lot or if it was instead of 100%, it's a declining scale. So that’s obviously our cost to maintain and provide services, but at the same time, it is in our interest to see new housing go up. We don't want to just take away all our incentives, because the reason we adopted that aggressive schedule back in 2018 was because in 2017 we had zero new housing starts."

The council was interested in changing the current structure. Some members were interested in an upfront option, saying that Newton saw a huge uptick in developers wanting to build in the area after making a similar change. Other members were unsure if that would work for some of the residential areas and preferred just reworking the tax abatement rates.

The council did not make any decisions for the plan yet, but they wanted to see some possible numbers for areas of the city and drafts with separate abatement/incentives for commercial, single-family residential and multifamily residential properties.