Perry to eliminate property taxes for 10 years on new homes
Dallas County development has exploded in the past decade. In Waukee, new homes are going up at such a rapid pace the school district has opened six new school buildings since 2010.
But the building boom is not happening everywhere. In Perry, 30 miles north of Waukee, it has been five years since anyone has built a new home.
Now, Perry leaders want to jump-start the city's lagging home construction by offering a 10-year property tax abatement for new homes built in the town of about 8,000 residents. They hope the economic incentive will lure builders and people looking to live in a small town within commuting distance of the Des Moines metro.
"We still haven't really recovered from the recession. And there's so many other opportunities for residential development over in the metro," said Sven Peterson, Perry's city administrator. "We're losing some of our folks to Adel, Waukee, West Des Moines, those communities. So we're looking to keep residents and attract new ones."
Perry is not alone. Adel, another Dallas County town about 9 miles west of Waukee, implemented its own tax abatement program in 2011. It has seen 327 new homes built since then, compared with 82 homes in the six years prior to the program.
The city hopes to mimic Adel's success, Peterson said.
"There's been a lot of interest so far," he said. "We're really hoping this takes off."
Perry is expected to approve its urban revitalization plan Tuesday — and a developer is ready to start a 27-home subdivision on the city's north side.
Keeping up with the Waukees
According to a "windshield survey" conducted by the city last year, almost half of Perry's housing stock is more than 60 years old. And of the 2,232 residential units inspected, 32 percent were either blighted or deteriorated.
That's a problem when you want to attract new residents to town, Peterson said.
Census data show that Perry is not losing residents, but it's not gaining at a steady rate, either. The 2010 census showed it had 7,737 residents. The city estimates there are 8,108 residents today.
Compare that with the rest of Dallas County, which added 13,996 new residents since 2010. It's the fastest-growing county in the state, and has been on a steady upward trend since 1990.
"We don't have the new housing stock to attract that new family to town," Peterson said. "If somebody gets a job at one of our companies in town and they want a new home, we don’t have anything to offer right off the bat."
The revitalization plan offers the owners of newly built homes a 100 percent property tax abatement for five years, plus an additional five years of phased tax abatement. The sixth year starts at 85 percent; the 10th year ends at 15 percent.
A homeowner will save about $33,500 in property taxes over 10 years for a $200,000 house built on a $10,000 lot, Peterson said.
The city also will offer rebates for significant remodels of existing homes. Property owners are eligible for 100 percent abatement for five years if they invest at least $20,000.
Cannon Clark, owner of Clark Development, is already primed to start a new subdivision once the abatement plan is approved. He said he has interest from home builders and potential buyers looking to get more bang for their buck.
Lots in his subdivision likely will sell for $15,000 to $20,000 a piece, he said. Lots in neighboring communities, like Granger, can go for double or triple that.
Perry is attractive, too, for its proximity to the metro, Clark said. It's a 35-minute drive to Jordan Creek Town Center in West Des Moines and a 45-minute drive to downtown Des Moines.
Communities closer to Des Moines have seen new homes pop up at a steady rate. Since 2011, Grimes has added 929 new homes; Granger, 69; and Dallas Center, 56. Woodward, which is located about 10 miles east of Perry along Highway 141, has seen three new homes built since 2011.
Success elsewhere
Perry is following in the footsteps of several central Iowa towns that have put plans in place to build-up their housing stock, including Adel and Newton.
The home construction business is "strong and viable" in the Des Moines metro, said Dan Knoup, executive officer for the Home Builders Association of Des Moines. Waukee has added 1,274 new single-family homes since 2011, while 785 homes have been built since then in the Dallas County portion of West Des Moines alone.
That leaves home builders less likely to travel outside the metro to look for work.
"They need a reason to go out there," Knoup said.
"Right now, our industry is very busy. So for a contractor to go to Newton or Perry hoping they might be able to rekindle the market, when there’s so much going on in the metro, is kind of a tough sell," he said.
Adel, a community of about 4,000 people, implemented its residential tax abatement program in 2011. The city waives 100 percent of property taxes for seven years on new home construction. It recently extended the program through 2025 because of its success, City Administrator Anthony Brown said.
The program was a way for Adel to reignite its economy after the recession, when construction was slow to start, he said.
"We have a lot of folks who say they took a second look at Adel because of the abatement program, but chose to live here because of the school system and the community and the pride we have," he said.
A housing initiative in Newton that started in 2014 gives families $10,000 cash for building a new home. The home must be valued at $160,000 or more, not including the cost of land, said Craig Armstrong, Newton's development specialist.
Developer permit and inspection fees are waived as part of the home-building incentive, and interest on builders' construction loans are reimbursed for one year or until the home sells, whichever comes first, Armstrong said.
So far, 17 new homes have been built in Newton. The city's goal is to have 40 by the time funding runs out.
Armstrong estimates Newton saw three or four new homes built between 2008 and 2014.
The city's market suffered when Maytag left in 2006, taking 4,000 jobs with it. But 15 new companies have moved to town since 2008, bringing 1,800 more jobs than when Maytag was still around, Armstrong said. That encouraged the city to offer the home-building incentives as a way to keep employees in the community, rather than have them commute, he said.
"You can either continue doing nothing or you can do something and put your money where your mouth is," Armstrong said. "We're hitting pay dirt with this program. It really jump-started our new single-family home market."
Officials in Perry think they too have a community that can offer a lot for families. Census data from 2011 showed the city had 1,500 employees commuting into Perry every day for work.
The hope is to convince them and others that Perry is the place to put down roots, Peterson said.
"I think it will be really good for the town," Clark added. "We're excited about it."