City continues tax abatement program

For more than 20 years, the City of Newton has had an Urban Revitalization Plan in place to incentivize development through a tax abatement program. The public meeting was held and city council approved an extension of this program for an additional seven years, with a few modifications made in key areas.

The city originally adopted the abatement program in 1993 and has since made modifications in 2002, 2007 and 2013.

In the area of residential tax abatement the schedule provides for 100 percent abatement on the improvement value for the first two years and 50 percent for the next three. For new homes constructed since 2014, this abatement has been replaced by the $10,000 new home buyer grants for homes valued at more than $160,000.

The new model for abatement services will cap the program at $160,000 for new improvements, allowing tax abatement to still be provided for home additions and smaller new homes. Homes receiving the $10,000 cash incentive will not be eligible for tax abatement.

For commercial and industrial properties, owners have the option of three years of 100 percent abatement or a ten year abatement schedule starting at 80 percent and decreasing 10 percent each year with the final two years at 20 percent. Currently, there will be no change to this structure.

A change will be made in the area of multi-residential units because of a new state classification of the property last year enabling apartments to transition from commercial taxation to residential. The multi-residential class will have a 100 percent abatement for five years, in part to spur more growth in the area.

“The effectiveness of tax abatement is always difficult to gauge, since it is impossible to know exactly what would have happened without abatement,” interim city administrator Jarrod Wellik said. “For the commercial and industrial abatement, the city has specific instances where the readily-available tax abatement was a big boost to drawing business to Newton. For example, the Walter G. Anderson, now Graphic Packaging, carton company received an incentive package from the State of Iowa that required a local match. The tax abatement program fulfilled this requirement for Newton, without any need to work through a Tax Increment Financing program.”

With the incentives through the abatement process for both residential and commercial properties, the city continues to work to bring new residents and businesses to help grow the community for years into the future.

Contact Jamee A. Pierson at 641-792-3121 ext. 6534 or jpierson@newtondailynews.com