Urban revitalization or tax abatement is a tool to encourage economic development by providing incentives for new construction or for the expansion of existing facilities. An Urban Revitalization Area may include the entire city or designated areas of the city. Essentially, tax abatement is the temporary reduction of property taxes on the improvements made to an existing property. The owner would still have to pay the amount owed for taxes pre-improvement, but may qualify for decreased taxes on the improvements.
Qualified improvements may include new construction, remodeling, rehabilitation and additions to the existing property.
Tax abatement is great tool for Muscatine because it works to help businesses thrive! It cuts down barriers to entry or expansion for business owners as they either start or grow their business. In addition to commercial tax abatement, the City has industrial and housing incentives as well (see below). The City of Muscatine has several economic development initiatives designed to encourage development or redevelopment within Muscatine. Check out our economic development programs on our website.
So, what should you know about the new Commercial Tax Abatement Program?
The City has a new commercial tax abatement program in two key areas – one along Grandview Avenue and a second along Park Avenue. To quality for tax abatement, the improvement must increase the assessed valuation of the property by at least 15% of the valuation before the improvement.
You can see the maps for each of these areas here:
Commercial Tax Abatement Schedules on Qualifying Property:
10 Year Declining Schedule
- Year 1 – 80% abated
- Year 2 – 70% abated
- Year 3 – 60% abated
- Year 4 – 50% abated
- Year 5 & 6 – 40% abated
- Year 7 & 8 – 30% abated
- Year 9 & 10 – 20% abated
3 Year 100% Schedule
- Year 1 – 100% abated
- Year 2 – 100% abated
- Year 3 – 100% abated
The City of Muscatine also has two other tax abatement programs in place:
Industrial Property Tax Abatement on industrial real estate (Iowa Code 427B)
- Year 1 – 75% abated
- Year 2 – 60% abated
- Year 3 – 45% abated
- Year 4 – 30% abated
- Year 5 – 15% abated
Housing Tax Abatement
- New Construction: Minimum assessed value of $175,000, Exemption is on first $75,000 of actual value added, 100% for 5 years
- Blighted District:
- New homes: Minimum assessed value of $175,000, 5 years, 100%
- Improvements/Additions: 3 years, 100%
- Historic District:
- Historically Sensitive: 5 years, 100%
- Historic Area: 3 years, 100%
For more information about the City’s tax abatement programs, please visit our website.