Property owners, contractors, and developers with interest in Muscatine real estate have several programs available through the City of Muscatine to assist with new construction, renovations to existing buildings, or expansions to existing facilities.
Urban revitalization, or tax abatement, is one of those tools that is available to encourage economic development in the designated Urban Renewal Area of the city. Supported by provisions of Chapter 403 of the Code of Iowa, Muscatine’s Urban Renewal Plan seeks to encourage and stimulate new residential, commercial, and industrial development through the temporary reduction of property taxes on added value to properties.
Tax abatement is a tool used by local governments to stimulate investment in designated areas by temporarily reducing or eliminating property taxes on certain eligible pieces of real estate including new and renovated homes and commercial buildings.
Stimulating investment by encouraging new construction and renovation to existing homes is one of the program’s goals. Encouraging construction of energy-efficient homes and reducing the cost of living for a temporary period of time are objectives that enable the program to assist in the improvement of communities, leaving more valuable pieces of property, which means higher property tax revenue once the abatements expire.
Tax abatements are a temporary reduction of property taxes. The property owner still pays the amount owed pre-improvement, but may qualify for decreased taxes over a predetermined amount of time for improvements made to existing property.
Applications for housing and commercial tax abatement programs are available for qualified improvements that include new construction, remodeling, rehabilitation, and additions to existing property.
The Muscatine Housing Urban Revitalization Area was established by the Muscatine City Council in 2013 and updated in 2018 to include multi-residential and commercial residential housing. New revitalization districts were also added in 2018. A new commercial tax abatement program was added in 2016 for two key areas of the city – along Grandview Avenue and Park Avenue – that offer abatements on improvements that increase the assessed valuation of the property by at least 15 percent of the valuation before the improvement.
HOUSING TAX ABATEMENT
The Muscatine Housing Tax Abatement program offers eligible property owners reduced or eliminated property taxes for new construction or improvements to existing facilities in three areas including the revitalization area, blighted property sub-district, and historic property sub-district.
New residential facilities in the Revitalization Area must have an assessed valuation of at least $175,000 with 100 percent abatement on the first $75,000 of actual value added for five years.
New residential and multi-residential facilities situated in some portion of the blighted property sub-district are eligible for tax abatement if the assessed valuation is at least $80,000 with 100 percent abatement of the actual value added by the improvements for a period of five years.
Residential property located in the Historic Property sub-district are eligible to receive an exemption from taxation for a period of five years on 100 percent of the actual value added by the improvements.
All qualified real estate assessed as multi-residential or commercial residential properties consisting of three or more separate living quarters with at least 75 percent of the space used for residential purposes are eligible to receive an exemption on 100 percent of the value added by the improvements over a period of five years.
COMMERCIAL TAX ABATEMENT
Two commercial tax abatement options are available to property owners who construct new, rehabilitate, or add to existing commercial or industrial facilities.
A 10-year declining schedule offers qualified properties a reduction in property taxes on the actual value added as of the first year for which the exemption was received. The 10-year partial exemption begins with an 80 percent exemption from taxation of the actual value added in the first year with the percentage gradually decreasing during the life-span of the exemption to 20 percent in years nine and 10.
The second option is a three-year 100 percent exemption of the actual value added by the improvements.
INDUSTRIAL PROPERTY TAX ABATEMENT
A partial exemption from taxation for a period of five years is provided by Iowa Code 427B on the actual value added to industrial real estate by the new construction of industrial real estate, research-service facilities, warehouses, and distribution centers. Seventy-five percent of the property tax on the actual value added is abated during the first year and is reduced by 15 percent each year until the fifth year which is at 15 percent of the actual value added.