MOORHEAD - Moorhead and Dilworth officials hope extension of a property tax abatement program will spur new home construction in those cities.
The state-funded program was initially offered for construction years 2009 and 2010 to address housing concerns caused by the 2009 flood.
Because flooding was also a problem in 2010, a tax bill signed by Gov. Tim Pawlenty in May extends the program to cover homes with construction that begins before December 31, 2011.
"We're glad to see that. Housing is slow right now, so we see that as a great incentive," said Ken Parke, city administrator in Dilworth.
The abatements, which are good for two years, will take some time to kick in.
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For example, if a building permit is issued this year and significant progress is made on construction in 2010, the abatement would likely start in 2012 based on property assessments made in 2011, said Ryan DeJong, Clay County assessor.
On single-family homes, the abatement applies to the first $200,000 of building value, with the property tax abatement capped at $5,212 over two years.
The program also covers construction of new apartment buildings, with the abatement applying to $20,000 worth of value per unit.
For a 24-unit complex, the two-year value of the abatement would be about $604 per unit, for a total of $14,496.
Because the state is paying the cost of the abatements, local units of government will not be out revenue, according to Lisa Vatnsdal, Moorhead neighborhood services manager.
Also, she said, the program carries no income or first-time buyer restrictions.
Moorhead Mayor Mark Voxland said extension of the tax incentive should continue to spur the city's growth by making it more affordable for first-time and "move-up" homeowners to build new homes.
In May, single-family home starts in Moorhead numbered 71, almost double the 39 home starts in May 2009.
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"Last year was not a good construction year because we lost time after the 2009 flood," Vatnsdal said. "This year, as the single-family construction stats show, we are in a better position."
In Dilworth, there were three single-family home starts in May, compared to 15 during the same month last year and 14 home starts in May 2008.
Parke said he is aware of many people who own lots and plan to start homes because of the property tax abatement.
Vatnsdal and Parke said state Rep. Paul Marquart, D-Dilworth, played a strong part in getting the tax break extended to help Moorhead and Dilworth.
"Every little bit helps," Parke said.
