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City, county and school board discuss possible tax program

WORTHINGTON -- City council members met with Nobles County Commissioners and District 518 board members Tuesday to discuss the proposition of a tax abatement program for new construction on houses above $200,000 in market value.

As outlined in its strategic plan, the Worthington Economic Development Ad Hoc Committee addressed four challenges to be achieved -- one of which was housing.

The proposed program involves a five-year, 100 percent tax abatement for single family houses with an assessed market value of $200,000 or more to encourage construction of such houses.

In recent years, the city has been plagued with a housing crisis, but council members acknowledged that while there were various programs established for single-family homes up to $197,000 in value, the city lacked programs geared at homes with a starting value of $200,000.

District 518 board member Mark Shepherd expressed concern that with or without the proposed program, between three and four houses at the $200,000 mark were being constructed.

"What I am questioning is the fairness to existing taxpayers -- the shift for the first three to four houses that are built each year," Shepherd said.

Nobles County Commissioner Diane Thier echoed Shepherd's sentiments.

"If we do this five-year plan, we're all going to get killed by our constituents, because how about if someone builds a $200,000 home wherever in the county," she said. "I just think we will get crucified."

Thier said that county commissioners had a prior discussion about the possibility of a one-year abatement instead of the suggested five years.

"Let's say it's only for contractors -- they build a home so they don't pay taxes until it's sold or rented," she added.

Discussion went back and forth regarding possible strengths and weaknesses of the proposed program.

Mayor Alan Oberloh expressed concern about employees who work in Worthington but live outside the city.

"Once we lose them from being in this community, they're not coming back," he said. "I'm probably more into it because of that more than anything else."

Alderman Mike Woll said that council members, in an earlier meeting, discussed the prospect of reducing the duration to three years. He said that if the program proved feasible in that period, the three entities could opt to re-establish the tax abatement program.

"Who will benefit the most? The people who are building those houses or owning the houses -- the upper income people," said school district board member Linden Olson. "I don't think it's fair to give upper income people the tax break that is not available to anyone else."

"I will support abatement on all single family dwellings until occupied but I will not support the way it's presented here," he continued.

For council member Lyle Ten Haken, the tax abatement program "seems like a reasonable investment" he said.

"I certainly encourage us to stop sitting on our hands as we continue to wrestle with housing," he said. "How about we give it a try? Short time frame because it seems like a reasonable approach as in investment for the future."

Ten Haken suggested that each administrator evaluate the cost per household for the investment in the program.

City administrator Craig Clark encouraged each entity to discuss the issue among their members and decide on their position for the proposal.