Memorandum 15-013 Affordable Housing Tax Incentive

Memorandum 15-013

TO:                       Mayor Wythe and Homer City Council            

FROM:                 Advisory Economic Development Commission

THROUGH:       Marvin Yoder, City Manger

DATE:                  January 20, 2015

SUBJECT:         Affordable housing tax incentive

The purpose of this memo is to update the Council and request input on the Homer Economic Development Advisory Commission’s work to date on affordable housing, one of the directives Council established for the EDC in Resolution 12-041.

The Commission plans to propose a tax incentive to Council as an option to promote housing in Homer. The proposed incentive would consist of a tax exemption for 3-5 years for new construction in the categories of single family homes, multiple owner occupied residences (such as four-plexus), apartment buildings, and commercial buildings. Additional development in these categories will further goals of the City: water and sewer infill and a larger long-term property tax base. As a reference point, the total value of all construction in 2014 was $15,545,822, however some of that included projects that do not produce tax revenue (city and nonprofit construction, for example). There were 45 new housing units constructed last year with an estimated value of $9,858,200. The average new single family home in 2014 would generate approximately $1,000 in city of Homer property taxes. The goal of the Commission is to increase the amount of new construction in Homer with an emphasis on affordable residential construction.

The Commission will continue to work with housing professionals and city staff to refine this proposed tax incentive. However, before proceeding the Commission would like to gauge the Council’s appetite for a tax incentive on new construction and welcomes suggestions as the proposal moves forward.

The Economic Development Advisory Commission thanks you in advance for your participation and feedback.