Initiative intended to bring in new construction

By Evelyn Seffinga

After public notice, a formal hearing and a study session, the Albert Lea School Board on Monday finally voted on a tax abatement program for new construction in Albert Lea.

The board carried the motion to approve the tax relief by a 4-2 vote.

The goal of the new program is to increase the tax base for the school district.

The Albert Lea City Council promoted the tax program that will temporarily eliminate the city property taxes for the first five years on new construction or improvements to existing structures. This initiative will span from January 2017 to Dec. 31, 2019.

Superintendent Mike Funk summarized the program for the board before the vote.

“We are looking for tax abatement for new home construction within the Albert Lea school district. In the abatement scenario, we wouldn’t receive taxes for five years. Years six and forward, we receive taxes at the full rate. It is incentive for people to come and build and develope new homes here.”

By implementing this temporary reallocation of taxes, the city of Albert Lea and the Albert Lea School Board hope to attract new taxpayers, provide more housing to the workforce and allow for more flexibility in local government.

Funk explained the outcome of program with a simple example. If a home is built with a $100,000 market value in 2017, the taxes payable would total $404. The statute does not abate taxes collected by voter-approved referendum. Because of the referendum, $121 would still be collected by the district even with the new program. As a result, on a home valued at $100,000, the school district would abate $238 in tax income for five years.

To qualify for the program, candidates must meet certain requirements outlined by the board and city.

Funk said the property taxes abated by the school district cannot exceed the greater of 10 percent of the net tax capacity of the school district.

He also highlighted that:

• Construction must be in the corporate city limits of Albert Lea.
• Builders must not have received any other form of financial assistance for the new construction.
• Property taxes must be paid in full, but the program will then repay the taxes in a rebate form.
• The school board will formally approve each abatement application in school board hearings over the next three years.