State board members back housing tax credits, eye projects in school buildings

By: - August 23, 2021 1:45 pm

Ames’ Roosevelt Elementary School, shown here in a historical photo, was later converted into The Roosevelt condo development. (Photo courtesy of city of Ames)

Iowa communities could expand workforce housing by relaxing zoning regulations and by remodeling schools and other idled buildings, economic development officials said.

The Iowa Economic Development Authority board started work Friday on rules to implement the housing tax credit portion of Senate File 619. The rules set up a competitive process and the types of information required for tax credit applications for housing projects. 

The bill raised the housing trust fund to $7 million, more than double the previous $3 million. 

Lawmakers also raised the workforce housing tax incentives pool to $40 million in fiscal year 2022, with $12 million earmarked for small communities. In fiscal year 2023, that would change to $35 million, with $17.5 million would be reserved for projects in small cities. 

That program received $25 million a year before.

New tax credits, broader initiatives eyed

At their meeting, IEDA board and staff members discussed the need for even broader efforts on workforce housing, cited routinely by business groups as one of the state’s most pressing needs

IEDA Director Debi Durham said the state worked on a project in Maquoketa to build smaller homes with virtually no yard but with a shared central green space. The city donated the land. With a variety of incentives, the houses sold in the $150,000 range, Durham said. 

On a recent trip through rural areas, Durham said she saw many abandoned schools that could be converted into housing. Closed nursing homes also could be remodeled into residences, she added.

‘I love rehab’

“We need to figure out our incentives,” Durham said. “I love rehab. You already have all the infrastructure there, and you put it back on the tax rolls. They make great projects for the community.”

State Sen. Liz Mathis, D-Hiawatha, a candidate for Congress, told the board that a Cedar Rapids school was successfully converted into housing. But the school rehabs do come with challenges, she added.

“The problem exists with some of the schools that they’re usually placed on a large amount of property,” Mathis said. “And so whoever wants  just that building and maybe retail on the bottom and market rate (housing) on the top, they still have to pay for for all that property that the school is located on.”

Mathis said the state could consider new rules that would allow the developer to sell excess land or get a property tax break.

“I think that would spur some development in some of our smaller towns and create more places to live when we don’t have anything available, and possibly save some of the counties from losing population,” said Mathis, who is running for Congress in Iowa’s 1st District against Rep. Ashley Hinson, a Republican.

‘It really helps everybody’

Board member Chris Murray, president and CEO of Denny Elwell Co. of Ankeny, said one solution would be to work with cities and counties to allow higher density in developments. “It really helps everybody. It creates more revenue. It creates more tax, and brings more people to the community,” Murray said.

It could help to consider different parking requirements in an era in which a growing, if relatively small, share of workers walk or bike to work, he added.

Durham said she would like to see more concentrated efforts, rather than piecemeal projects.

“My problem has always been with what we’ve done in the past is we do a house here and we do a house here and it’s scattered to where you don’t build up the value of the neighborhood,” Durham said. 

“It’s the same thing as Main Street. Once you have a couple of homes that redo, then it’s like this momentum,” she added.

Final action on rules for the added workforce housing tax credits will come at a later board meeting.

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Perry Beeman
Perry Beeman

Perry Beeman has nearly 40 years of experience in Iowa journalism and has won national awards for environmental and business writing. He has written for The Des Moines Register and the Business Record, where he also served as managing editor. He also is former editorial director of Grinnell College. He co-authored the recently published book, "The $80 Billion Gamble," which details the lottery-rigging case of Eddie Tipton.