decorahnews.com editorial: The city's residential tax abatement program has strayed from its original purpose
Posted: Sun, Dec 2, 2018 3:14 PM
(The following is an editorial by decorahnews.com's Paul Scott):
When the Decorah City Council in the fall of 2014 first discussed offering five-year tax abatements to people building new houses or substantially expanding existing houses in Decorah, the concept was sold as a way to create more affordable housing in the community.
There may be some discussion about the meaning of the phrase "affordable housing," and we discussed that in an article last year (https://www.decorahnews.com/archived-stories/2017/11/17918.html
), but I think we can all agree that housing costing more than $300,000 is not housing being bought by people on modest incomes.
The theory behind offering residential property tax abatements--this time quoting a decorahnews.com story from June 2nd of last year--was "people would move out of $100,000 houses into $200,000 houses, opening the lower-priced homes to be bought by people who needed more affordable housing. What has happened instead is that people have built $300,000 homes instead of buying existing $250,000 homes."
That's good for contractors, realtors and bankers, but it doesn't do anything to create affordable housing in Decorah.
The situation has gotten more pronounced during 2018 after the Decorah City Council removed the $400,000 limit on property valuations getting the property tax abatements. Now even a $1 million home will get five years of tax breaks.
Recently I went knocking on doors in Decorah's 2nd Ward and was struck by the number of houses which were unoccupied because they are being "flipped"--renovated into more expensive housing in order to make a profit from the bigger price tag. There are a number of modest homes in the 2nd Ward, but it appears many of them are disappearing--in part because of a Decorah City Council decision that was supposed to make affordable housing more common, not less common.
The city council meets Monday night to discuss the tax abatements. The time seems right to go back to having a cap on the property tax abatements--say of $250,000 or $300,000. Right now the program is not helping Decorah's average families--it's largely a tax break for the rich.