City Council discusses tax abatement

MARENGO — Though the Marengo city council members don’t think tax abatement is the panacea that former resident and realtor Rick Wannamaker thinks it is, the council is willing to make the abatement more favorable to residents.

Wannamaker encouraged the council last month to consider giving 100% tax abatement for five to seven years on new construction. The move would grow Marengo substantially, he said.

Councilman John Hinshaw doesn’t think tax abatement will make a big difference in bringing people to Marengo. “We have to make Marengo a place where people actually want to live,” he said. That means having amenities people want, such as trails.

Hinshaw doesn’t have a problem with increasing the abatements, he said, but that won’t solve Marengo’s growth problems.

“You’ve got to have a heck of an incentive to build [some places],” said Councilman Travis Schlabach. He wants to see an increase in infill housing — building on vacant lots in town rather than creating new developments on the outskirts.

Schlabach isn’t sure tax abatements will do that. “I don’t feel in five years you’re going to get three people to do this,” he said.

The city council looked at several tax abatement plans during its May 8 meeting.

A property improvement that increases the assessment by $100,000, with the 46% rollback and a city tax rate of $15.77, would increase taxes by $731, according to a table provided to the city council.

If the city gives a $75,000 abatement, the property owner would pay only $183 more.

The city could increase the abatement to $100,000 or $150,000, in which case the property owner would pay no additional taxes for the improvements.

The savings to property owners over five years would amount to $2,700-$3,650, depending on the amount of the abatement given by the city.

New construction of $300,000 assessed value would pay $2,192 in city taxes. Abating $75,000 would lower the tax bill to $1,644.

If the city gave an abatement on $100,000 of the assessed value, the property owner would pay only $1,462, and with an abatement of $150,000, the taxes would be only $1,096.

The abatement over five years could amount to a savings of $2,700-$5,400 for the property owner.

The city council talked about offering tax abatements only in certain areas of town to encourage infill construction. “If we make this citywide, people won’t build on lots in town, said Schlabach.

City Attorney Gage Kensler noted that infill lots are usually less expensive than new lots.

That would give buyers the incentive to build in town, said Schlabach. “I don’t think it’s going to get used a lot.

“We don’t have the housing lots available that are going to bring people in,” said Schlabach.

Tax abatements would apply to any property in town, said City Administrator Karla Marck, because the entire town is in the revitalization zone.