City, ad hoc committee see proposed abatement program as benefit

• City of Worthington

Worthington City Hall (Brian Korthals/Daily Globe)

Talk about it

WORTHINGTON — After a 16-month discussion, the Worthington Economic Development Ad Hoc Committee identified four challenges in the community that needed to be addressed — job creation, housing, quality of life and community image.

Since the committee presented its findings to the Worthington City Council in July, the proposed five-year, 100-percent abatement program for construction of houses at assessed market values of $200,000 or higher has received significant attention. The proposal includes cooperation of the city, Nobles County and Independent School District 518.

“We looked at all ends of the housing spectrum and how to alleviate the problem,” said Ad Hoc committee member Lynn Olson.

Worthington City Administrator Craig Clark said a study conducted by Community Research Partners, which identified a housing shortage, suggested two ways for the city to deal with the problem — maintain current programs for low- and moderate-income housing while encouraging construction for houses at $200,000 or more.

“We have tools in the toolbox for low to moderate income housing,” Clark said. “You can build a house for $180,000 and be eligible for programs.”

Brad Chapulis, Worthington’s director of community and economic development, added that there are a variety of city, state and federal programs that aid low- to moderate-income home ownership.

“We encourage entry-level homeownership through a workforce housing program to defray some of the cost of building a home,” he stated.

Another subsidy method the city uses for construction of lower-income rental homes is tax increment financing (TIF). A recent example, Chapulis said, is New Castle Townhomes.

Both the city and the Ad Hoc Committee view the abatement as a dual advantage program that creates a larger tax base and encourages “upward mobility” for long-standing residents who are looking to move into larger houses.

“If we can encourage people to build homes instead of waiting for one to become available, it frees up homes at lower levels,” Clark explained.

At a joint meeting among several city council members, Nobles County commissioners and the District 518 Board of Education, Alderman Lyle Ten Haken suggested each entity derive a cost estimation per person or per household for the proposed abatement.

From 2006 to 2010, the city found an average of 3.6 houses, at an assessed value of $266,175, were built each year. Assuming a house is constructed in Worthington, Nobles County and within Independent School District 518, the total tax bill for all three entities, if the abatement program is used, will be $3,687. With the city’s current population of $12,764, and 4,458 households, the abatement would cost $1.16 per person or $3.30 per household if four houses are built.

“We’re hopeful that the taxing bodies will consider the proposal,” Olson said. “Worthington is in a fairly unique situation — but in a good way.”

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