(OSCEOLA, IA – August 22, 2022)
New housing for Clarke County, Iowa is a priority. With a growing population, the need for housing has been amplified. In 2017, the Clarke County Development Corporation (CCDC) created the Osceola Building Incentive Program as a revolving fund to help developers and new homebuilders acquire land to develop into housing within the City limits of Osceola. CCDC will purchase the desired building site for qualified applicants. Financing for the project is in exchange of a tax abatement that many homeowners receive on the purchase of a new home. The captured property taxes on the new home are distributed to CCDC until the amount invested in the building site by CCDC is recovered. A few of the homes built using the program are pictured here:
The process to receive the funding for the lots is a collaboration between the city, CCDC, and the new homeowner. The City of Osceola and CCDC will put a development agreement in place allowing the property taxes to be captured until the cost of the lot is recovered. The maximum amount of time to recapture these funds is 10 years. Therefore, each project requires that the new assessed valuation to the lot after construction is enough to cover the cost of the lot. The required reasonable assessed value is determined by the Clarke County Assessor prior to the construction of the home. Below is a table showing the amount that can be given on a lot based on the predicted amount of taxes that would be collected.
Added Assessed Value Annual Increment Fund Investment Per Project
$110,000 $2,485 $24,850
$120,000 $2,711 $27,110
$130,000 $2,937 $29,370
$140,000 $3,163 $31,630
$150,000 $3,389 $33,890
The land incentive program has seen success in the last five years. As construction costs continue to increase, builders are looking for assistance to help reduce the costs to the new homeowners. The ability to purchase a lot with the incentive plan reduces the overall cost of construction. This is one of the advantages to building in Osceola versus the Des Moines Metro or other surrounding areas. Properties similar to those that go for $100,000 in the metro can often be found in Osceola for a fraction of that, sometimes around $30,000. When a builder can purchase the land using the CCDC Building Incentive Program, the price paid for the land is seen as equity in the financing of the project. Local banks have been able to use this as an equity down payment for financing.
“The beauty of this program, besides lowering the entry costs for builders, is its flexibility,” said Trickey. “Qualified candidates can build on virtually any parcel of land, anywhere within the city, if it meets certain requirements. They aren’t tied down to a specific development area or even contracted builders.”
The funding is limited, however there are funds available to assist in a few more lot purchases. The CCDC board has also considered adding to the fund to help further incentivize builders looking to develop multi-home projects. Once funds are distributed for the purchase of a property, the money that would normally go toward a tax abatement is then used to replenish the account. This will allow for additional projects in the future.
If you would like more information on the Osceola Building Incentive Program or have a project you would like considered for the fund, please contact Bill Trickey, Executive Director of the Clarke County Development Corporation, 115 E Washington St, Osceola, IA 50213, phone:6413422944, or email: [email protected]