HomeMy WebLinkAboutA001 - Council Action Form dated February 25, 2025ITEM #:25
DATE:02-25-25
DEPT:P&H
SUBJECT:ANNUAL TAX ABATEMENT CERTIFICATION
COUNCIL ACTION FORM
BACKGROUND:
The City Council has established Urban Revitalization Areas (URAs) which allow for the granting of
tax exemption for the increased valuation of a property for projects that meet the criteria of each URA’s
Urban Revitalization Plan. Every year, owners who have made improvements to property within the
City’s URAs during the previous year may apply for tax exemption on the incremental added value of
their properties, subject to the criteria of a URA Plan. The City Council must determine if the
completed improvements meet the criteria in the Urban Revitalization Plan for the URA in which the
property is located. If the City Council finds that the criteria are met, this approval is forwarded to
the City Assessor, who then reviews each request and determines the amount of the exemption
based on the increase in incremental valuation.
All of the applications submitted for approval for 2024 improvements are related to the City-wide
URA for ownership housing. This year is the first year that new construction of single-family
ownership housing is eligible for partial property tax abatement on the first $500,000 of value
added after April 26 as part of the citywide URA that was approved by Council earlier this year.
Eligible properties can take advantage of a 5-year sliding scale of partial abatement.
City Council initiated the City-wide URA in response the low number of housing starts in 2023,
with only 61 building permits issued for single family homes. In 2024, there were 59 housing
starts. In terms of housing starts after the effective date of the City-wide URA of April 26, there
were 47 building permits issued in 2024 compared to 53 permits issued in 2023 for the
corresponding time period.
Staff notes that the housing starts are likely lower than anticipated as inflation had moderated in 2024
compared to 2023, but mortgage rates hovered around 7% and were not substantially different than
2023. The upcoming 2025 construction season will be a telltale sign of City-wide URA's value as an
incentive after having a year of time for builders and realtors to market the program and encourage
more buyers for new home construction.
To apply for tax abatement the home must have had improvements completed after April 26, 2025.
Improvements completed before April 26 are ineligible for tax abatement. Staff mailed notice to the 18
known property owners that had not yet filed their application and may qualify for tax abatement as
ownership housing. Staff received 25 applications by the filing deadline of February 1 for this tax year.
Of the 25 applications, 15 were for partial improvements for homes started before April 26 and 10 were
for full new construction started after April 26. Attached to this report is list of address and the type
of improvements eligible for abatement.
Staff believes that 24 of the 25 can be approved, with one application needing to be filed next
year. Note that owners who did not file for abatement this year may still be eligible to file for
abatement in 2026 if it is within two years of the first tax year having an improvement value.
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Based upon values stated in the applications for both partial and full improvements, $8.5 million
of improvement value is eligible for partial abatement. The final amount will likely be less with the
final review of partial improvement value claims. The average new home value claimed was $471,000
after adjusting for the $500,000 maximum cap on value.
The most difficult evaluation of the applications has been the value of partial improvements and timing
of ownership of the housing to meet the eligibility criteria.
City Council is not determining the value of partial improvements with certification of eligibility. After
conferring with the City Assessor, the City Assessor will determine the value of improvements as is
normally the case for tax abatement eligibility. The Assessor visited buildings that were in progress
near the April 26 date of eligibility and documented the status of those homes. They will compare their
records with stated values of applications to make a determination of eligible abatement value. In any
event, the maximum abatement value is $500,000.
The second issue is the final determination related to ownership as a primary residence. A handful of
applications were submitted for improvements that received final approvals in early January and under
the ownership of the primary residence at the time they filed the application for the 2024 improvements.
Staff believes these applications can be certified as meeting the criteria because they are owner
occupied at the time of filing the application.
There is one property that was completed in November 2024 at 2011 Ada Hayden Road and is
subject to a purchase agreement for closing at the beginning of March. Staff believes that
because ownership as a primary residence has not yet occurred, Council should not determine it
complies with the criteria and direct the homebuyer to file their application in 2026 if they
complete the purchase and are the primary resident. The homebuyer would be eligible for the
same tax abatement benefit if filed next year. If Council believes that a purchase agreement is in
fact substantial compliance with the criteria it could approve the application this year.
ALTERNATIVES:
1. Approve the following:
a. Certify 24 property tax abatement applications as listed in the attachment as meeting the
eligibility requirements of the City-wide URA
b. Submit the applications to the City Assessor for a determination of improvement value
c. Direct staff to notify the purchaser of 2011 Ada Hayden to file their application in 2026
2. Approve a certification of a different number of applications by specifying those that meet the
Citywide URA eligibility requirements.
CITY MANAGER'S RECOMMENDED ACTION:
Staff has examined the applications submitted by February 1, 2025, and has found that 24 of the
25 requests for the completed projects substantially conform to criteria of the City-wide URA.
All of the applications are eligible for a 5-year sliding scale of partial property tax abatement of
Year 1-100%; Year 2-80%; Year 3-60%; Year 4-40%; Year 5- 20% based upon the final
determination of improvement value by the City Assessor. Therefore, it is the recommendation of
the City manager that the City Council approve Alternative #1A-C.
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ATTACHMENT(S):
Applications Submitted
Example Citywide Housing URA Application Form with Criteria
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ADDRESS ISSUE DATE FINALED DATE OWNER Tax Year Requested Partial or Full Improvement Value on Application Max Allowed
4532 CARTIER AVE
Ames, IA 50014 5/14/2024 8/13/2024 DEEPTHI BANGALORE MARIYANNA 2024 Full $495,000 495,000.00$
5706 ALLERTON DR
Ames, IA 50014 6/4/2024 9/13/2024 TAMIRAT MEKONNEN ESHETE 2025 Full $423,064 423,064.00$
5811 WESTFIELD DR
Ames, IA 50014 5/20/2024 9/13/2024 CHRISTIAN & JORDIN PITT 2025 Full $430,000 430,000.00$
4803 EVEREST AVE
Ames, IA 50014 6/14/2024 9/17/2024 RICHARD & JESSICA FINCHAM 2025 Full $487,145 487,145.00$
5117 ERICKSON AVE
Ames, IA 50014 7/15/2024 11/13/2024 CHRISTINE QUAM 2025 Full $629,426 500,000.00$
5331 GREENE ST
Ames, IA 50014 6/3/2024 11/15/2024 BENJAMIN FISHER 2024 Full $528,276 500,000.00$
5113 ERICKSON AVE
Ames, IA 50014 7/16/2024 11/25/2024 PETER BERGER 2025 Full $667,093 500,000.00$
5405 GREENE ST
Ames, IA 50014 6/14/2024 12/13/2024 MARGARET DRAPER 2026 Full $698,850 500,000.00$
5506 GREENE ST Ames,
IA 50014 10/22/2024 1/13/2025 TREVOR & SHELBY BAKER 2025 Full $375,581 375,581.00$
2823 GREEN HILLS DR Ames, IA
50014 8/15/2024 1/29/2025 DENNIS & ELLEN MAXWELL 2025 Full $694,002 500,000.00$
316 S WILMOTH AVE
Ames, IA 50014 3/24/2023 5/10/2024 AKM MASHUD ALAM 2024 Partial -$
507 QUAM CIR
Ames, IA 50014 8/14/2023 6/6/2024 WILLIAM & CARLA HATTEN 2024 Partial $30,821 30,821.00$
3501 ANSLEY AVE
Ames, IA 50014 11/8/2023 6/11/2024 JAMES & DEBORAH FISHER 2024 Partial $544,455 500,000.00$
320 S WILMOTH AVE
Ames, IA 50014 6/27/2023 6/12/2024 ALAASS SAAD 2024 Partial $5,500 5,500.00$
2020 AIKMAN DR
Ames, IA 50010 9/14/2023 6/13/2024 KENDRA KASISCHKE 2025 Partial $427,500 427,500.00$
2124 KETELSEN DR
Ames, IA 50010 11/28/2023 6/24/2024 DEAN & DIANNE JENSEN 2024 Partial $400,000 400,000.00$
4622 EVEREST AVE
Ames, IA 50014 1/23/2024 7/12/2024 GENE & JANET MOELLER 2025 Partial $300,000 300,000.00$
2004 AIKMAN DR
Ames, IA 50010 9/14/2023 7/18/2024 R SCOTT & JANE WHYTE 2025 Partial -$
5720 ALLERTON DR
Ames, IA 50014 4/17/2024 7/26/2024 ARACH WILSON III 2025 Partial $402,000 402,000.00$
324 S WILMOTH AVE
Ames, IA 50014 6/27/2023 8/5/2024 SHAKIL AHMED 2024 Partial $270,000 270,000.00$
4409 CARTIER AVE
Ames, IA 50014 10/4/2023 9/13/2024 WYATT DAVIS Partial $64,577 64,577.00$
4528 CARTIER AVE
Ames, IA 50014 4/4/2024 9/18/2024 JEFFREY & LAUREL JOHNSON Partial $659,497 500,000.00$
2011 ADA HAYDEN RD
Ames, IA 50010 10/24/2023 11/8/2024 GARETT & BRITNI KILEY 2024 Partial $614,229 500,000.00$
1423 ADA HAYDEN RD
Ames, IA 50010 10/31/2023 11/27/2024 CHRISTOPHER STEVENSON 2024 Partial $191,800 191,800.00$
2215 ADA HAYDEN RD
Ames, IA 50010 9/26/2023 12/4/2024 DAREN OSBORN 2025 Partial $212,500 212,500.00$
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Effective Date: April 26, 2024
Citywide Ownership Housing New Construction
Urban Revitalization Area
Application Packet
Ames City Council approved a Citywide Urban Revitalization Area (URA) designation and plan
on April 23, 2024. The URA Plan provides for a partial property tax abatement of up to $500,000
of improvement value for new construction of ownership housing, subject to specific eligibility
criteria. Note that not all of the property taxes of a home are abated with this program and to talk
with the Story County Auditor about specific tax rates.
The “Application Packet” for the Tax Abatement includes the following:
• Summary of Program;
• Application Form;
• Tax Exemption Schedule.
1. Summary of Eligibility Criteria. The URA Plan includes mandatory eligibility requirements.
• Residential Dwelling Improvements for up to a maximum $500,000 value
• Residential assessment classification only. Agricultural classification or zoning are ineligible
• Property must be owner occupied as their primary residence (e.g. Homestead Exemption)
• New construction of a dwelling only, no rehabilitation, remodel, or additions are eligible
• New construction on an existing vacant lot that did not previously have a single family
dwelling that was demolished since April 26, 2024
• Improvements completed on or after April 26, 2024
• Building permit issued prior to December 31, 2027
• Dwelling must be completed with a certificate of occupancy no later than December 31, 2028
• All improvements must be completed in conformance with City of Ames zoning and building
code standards.
• Value added must be at least 10% of the actual value of the property
2. Application Process.
• Fill out all sections completely and return to the Department of Planning & Housing. City staff
will review the information and determine eligibility based upon information provided and
through review of other City records. Additional information may be required to determine
eligibility. Contact Planning Division staff with questions about the application.
• The complete application must be received prior to February 1st of the assessment
year for which the exemption is first claimed, but no later than the year in which all
improvements included in the project are first assessed.
• Once the application is reviewed, it will be forwarded to the City Council for formal
determination of consistency with the URA criteria based upon the information provided. City
Council must determine and approve eligible properties prior to March 1st.
• If approved by the City Council, the City Clerk will forward the application to the City Assessor,
who will review the application once to determine the Actual Value of the improvements for
property tax purposes.
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Effective Date: April 26, 2024
Last Updated 5-6-2024 2
The existing property value prior to starting construction is the base value, abatement is for
improvements that increase value above the base. Only improvements completed after the URA
designation date of April 26th, 2024 are eligible for abatement. If a home started construction prior to this
date and has not yet received a final inspection, it may be eligible for abatement of some improvements.
Example 1- Construction started in 2023
Vacant lot value of ($900) January 1, 2023 (base value)
Building permit issued for basement and foundation November 1, 2023
January 1, 2024 partial improvement value assessed for lot value and improvements ($150,000)
Framing inspection February 15, 2024
Final Inspection May 10th
Final value of home with lot value $450,000.
Partial improvements after April 26th: claimed $50,000.-Eligible amount for abatement
Assessment Year Claimed-2024
Example 2- Construction started in 2024, before URA Designation
Vacant lot value of ($900) January 1, 2024 (base value)
Building permit issued for basement and foundation February 1, 2024
Framing inspection April 15, 2024
Final inspection June 1, 2024
Total value of improvements with lot value $385,000
Partial improvements after April 26th: claimed $165,000.-Eligible amount for abatement
Assessment Year Claimed-2024
Example 3- Construction started after April 26, 2024 and before December 31, 2027
Vacant lot value of ($75,000) January 1, 2024 (base value)
Building permit issued June 1, 2024
Framing inspection September 15, 2024.
Partial assessment January 1, 2025 ($300,000)
Final Inspection March 15, 2025.
Total value of improvements with lot value ($550,000)
Full assessment value January 1, 2026 ($550,000
Eligible full amount for abatement $475,000=($550,000 - $75,000)
Assessment Year Claimed? Owner may choose starting schedule with partial value in 2025 or starting
in 2026 with full improvement value. Schedule runs for five consecutive years once it is started.
2025 Partial Abatement Improvement Value Abatement Value
Year 1 100% $225,000 $225,000
Year 2 80% $475,000 $380,000
Year 3 60% $475,000 $285,000
Year 4 40% $475,000 $190,000
Year 5 20% $475,000 $95,000
2026 Full Abatement Improvement Value Abatement Value
Year 1 100% $475,000 $475,000
Year 2 80% $475,000 $380,000
Year 3 60% $475,000 $285,000
Year 4 40% $475,000 $190,000
Year 5 20% $475,000 $95,000
Example 4- Completed improvements occupancy or final inspection prior to April 26, 2024.
No eligibility
Example 5- Completed improvements occupancy or final inspection after December 1, 2028.
No eligibility
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Effective Date: April 26, 2024
Last Updated 5-6-2024 3
Citywide Ownership Housing New Construction
Urban Revitalization Program
Application Form
(This form must be filled out completely before your application will be accepted.)
1. Property Address:
2. Assessor Property Identification Number (Map ID):
3. Legal Description (attach, if lengthy):
4. Is the property the primary residence of the owner?
May require additional documentation if the property does not have a Homestead Exemption
5. Type of Improvement (must have a Residential Assessment Classification):
☐ Single Family Dwelling ☐ Two-Family Dwelling
☐ Single Family Attached Dwelling(townhome) ☐ Condominium Dwelling
☐ Accessory Dwelling Unit
New Construction starting after April 26, 2024
New Construction started before April 26, 2024 (Partial improvement eligibility)
Date building permit issued to start construction of home: ______________________
Completion date of home (Final Inspection or Certificate of Occupancy): ___________________
Assessment year for which exemption is being claimed: _______________________
Claimed Improvement Value/Cost (Actual final value of property TBD by City Assessor):__________________
Date building permit issued to start construction of home: _______________________
Describe improvements completed after April 26th, 2024. (Only improvements after 26th eligible):
Completion date of home (Final Inspection or Certificate of Occupancy):_________________________
Assessment year for which exemption is being claimed: _____________________________
Claimed Partial Improvement Value/Cost (Actual final value of property TBD by City Assessor):_____________
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Effective Date: April 26, 2024
Last Updated 5-6-2024 4
5. Property Owner(s): ____________________________________________________________
Mailing Address: _______________________________________________________________
(Street/PO Box) (City) (State) (Zip)
Telephone: ____________________________________________________________________
Email: ________________________________________________________________________
I (We) certify that I have submitted all the required information to apply for approval of the
Urban Revitalization Program and that the information is factual. I understand that I must
continue to use the property as an owner-occupied primary residence for the duration of the
tax abatement schedule or forgo the remaining years of the schedule.
Signed by: _________________________________________ Date: _________________
Property Owner(s)
_________________________________________
Print Name
Signed by: _________________________________________ Date: _________________
Property Owner(s)
_________________________________________
Print Name
(Note: No other signature may be substituted for the Property Owner’s Signature.)
Submit the completed Tax Abatement Application Packet to the:
Department of Planning and Housing
Room 214, City Hall
515 Clark Avenue
Ames, Iowa 50010
Phone: 515-239-5400
E-mail: planning@cityofames.org
Must be received by February 1st of first year claimed.
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Effective Date: April 26, 2024
Last Updated 5-6-2024 5
Urban Revitalization Program
Tax Exemption Schedule
All qualified real estate located in the designated revitalization area is eligible to receive a partial
exemption from taxation on the Actual Value added by the improvements as specified by the schedule
below.
Qualified real estate is eligible for a five-year partial property tax abatement of value on the
following schedule:
For the first year, 100%
second 80%
third 60%
fourth 40%
fifth 20%
Per requirements of state law, school related property taxes are not abated with this program. Contact
the County Auditor for more information regarding property taxes and tax rates.
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