City of Decorah will develop draft plan for tax abatement program to encourage housing construction

City of Decorah officials are seriously studying a proposal to give five year-long tax abatements to developers and others who build houses or make substantial housing additions.

The proposal was discussed Monday night as a follow-up to a recent housing study that said Winneshiek County needs 300 new housing units over the next ten years--210 of those within Decorah city limits.

The plan that will now be drafted by City Administrator Chad Bird for further city council review would set up a program where any housing improvements above the existing value of a property would not be assessed higher property taxes for five years.  Since the city would be giving developers or homeowners credit on development that would not have happened if the tax abatements weren't offered, the city would have no out-of-pocket expense--compared to the investment in infrastructure it would need to make in a TIF District.

The proposal was supported Monday night by several people involved with Decorah real estate.  Realtor Mike Harman told the city committee, "There's not much (available housing) for people to buy right now."  Loan officer Mike Huinker agreed, stating "There's pressure building...I've never seen it this intense."

Bird said using tax abatements instead of TIF districts would be a low risk way of encouraging housing construction.  Such a system, he said, would open it up to market forces, letting the market determine what gets built where, rather than having the city become an active partner in creating housing developments.