Urban Revitalization City-wide

INTRODUCTION

In an effort to help improve existing housing and to spur construction of new housing within the City of Oskaloosa the City Council implemented a partial property tax abatement program in 1991. The initial passage of the tax abatement ordinance included a sunset provision to allow the City Council the opportunity to review the effectiveness of the program. The City Council reviewed the program in 1994 and found that it was effective in spurring improvements to the community's housing stock. After renewing the program again in 1996 the City Council decided to adopt the program without a sunset provision. The following is intended to provide information about the program and how to apply for the partial property tax abatement program.

QUESTIONS & ANSWERS

What is “tax abatement?”

It is a reduction in the property taxes which would otherwise be payable on the actual value added to a property due to qualified improvement. The reduction only applies to the additional taxes resulting from the increase in assessed value of the property due to the improvement. Under urban revitalization, the taxes relating to the assessed value of the property prior to the improvement cannot be reduced and will continue unabated.

What qualifies as an improvement?

Those improvements that qualify for tax abatement are limited to new construction of residential properties as well as rehabilitation and additions to existing residential properties.

What is the definition of “residential property?”

All properties that are residentially assessed, such as single family homes, duplexes, and condominiums, as well as commercially assessed properties consisting of 3 or more separate living units and with at least 75% of the space used for residential purposes (apartment buildings) are considered residential properties and are eligible for tax abatement.

What are the other requirements to qualify for tax abatement?

*The assessed valuation of your property must increase at least 15% after the improvements have been made.

*The improvements must conform with the City's Zoning Ordinance and all other applicable codes. A building permit should be secured for most improvements that will increase your value.

How long will the tax abatement plan last?

As explained earlier, the City Council has removed the sunset provision for this property tax abatement program. Therefore, the program will remain in effect until the City Council decides that the program is no longer serving a useful purpose and repeals or modifies the ordinance.

What is the current tax abatement schedule?

The plan calls for a five-year tax abatement schedule. Eligible improvements on residential property will receive 80% abatement the first year, 65% the second year, 50% the third year, 35% the fourth year, and 20% the fifth year. On the sixth year and every year thereafter, taxes on the full value of the property would be due.

Will the taxes accumulate and then surprise me at the end of the abatement?

No. The taxes normally due during the abatement period are forgiven in accordance with the abatement schedule; they are not postponed.

Can property taxes ever be eliminated using tax abatement?

There will always be some taxes on property. Under urban revitalization the existing assessed value of the property, and the resulting taxes prior to the improvements will continue unabated.

Is there a possibility my taxes will increase even if I qualify for tax abatement?

Yes, Remember, this is a partial (not a full) property tax abatement program. You will be partially taxed upon the improvements made to the property. Taxes may, also, go up on the property if:

*The owner makes improvements, but fails to apply for tax abatement. It is the property owner's responsibility to apply for the program. The program does not automatically kick in for qualified improvements.

*The value of the property and the resulting taxes increase due to some other reason than an improvement (i.e. a reassessment or assessment category change);

*The property acquires a special assessment for public improvements such as sidewalks, sewer, or streets; or

*The tax formula components change, such as a change in millage rates or rollback values.

APPLICATION PROCEDURE

How does one apply?

Application forms can be obtained in the City Clerk's Office at City Hall. It takes 5 to 10 minutes to fill out. The information requested on the form includes: the owner's name, address and phone number, legal description of the property, description of the improvements including cost and completion date, and signature and date.

When does one apply?

Application must be filed with the city Clerk between January 1 and February 1 of the year in which the improvements would first appear on the Assessor's rolls. If an applicant is planning to undertake a project at some future date and would like to be assured that the abatement program will apply, they may request prior approval of the City Council. However, the applicant will still be required to file an application when the improvements are completed.

 Who should make the application?

The property owner. Even if, as a lessee, you are doing the improvements and your lease agreement has you paying the taxes, have the property owner apply. The tax abatement will then be included as part of the property's tax record for the term of the tax abatement regardless of who owns or occupies the property.

How often do I need to apply?

Each year that you make qualifying improvements to the property, even though such improvements may not actually be completed during that year. If no further improvements are made, the initial application will be sufficient without the property owner having to file additional applications for succeeding years in which tax abatement is received.

If I make improvements, will the County Assessor need to see them?

Yes. The County Assessor needs to see the improvements to verify and assess them before the abatement is granted.

For more information contact: City Clerk's Office at 673-9431; or Community Development Office at 673-8361.