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Zero-Cost Development offers community benefits

Published: Wednesday, Feb. 8, 2017 11:27 a.m. CDT • Updated: Wednesday, Feb. 8, 2017 2:50 p.m. CDT
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(Contributed photo)
Under the agreement, construction would have to be completed within 12 months.

When Marne started giving away free lots for building homes, they were looking for bodies to help pay the bills.

“Here, it’s about trying to keep the street lights on,” said Marne Mayor Randy Baxter.

The “small town” label is aptly applied to the community of just under 150 people. Despite the differences in size and incentive program details, Marne and Osceola have similar goals. By investing in new housing, both towns hope to attract new people and new revenue, increasing opportunities for everyone.

In Osceola’s case, it shouldn’t be that hard.

“We have over 4,000 non-farm jobs. We have a lot of people who come to work here every day who don’t live here,” said Bill Trickey, executive director of the Clarke County Development Corporation (CCDC).

After talking with commuters, it was clear a lack of adequate housing was driving people away. The CCDC started to look at types of incentives available to builders. Two years of research lead to a unique solution.

Zero-Cost Development

Currently, the city provides homebuyers with a tax abatement – 100 percent for three years or a reduced tax rate for five years. In order to shift that abatement to developers, the corporation would need to be involved.

“If the city tries to start giving lots away they run into a problem with all kinds of other issues,” said Trickey, but as a 501(c)(6), the CCDC has more options available.

Enter the Zero-Cost Development initiative announced in December. If a qualified builder comes up with a plan for developing a lot, has it approved by the City Council and obtains permits and financing, the CCDC will purchase the lot for the project. The corporation will provide it to the builder and pay up to 12 months’ worth of interest on construction loans for the property.

“When the house is completed and sold, the new buyer will not get the tax abatement,” said Trickey. “Instead, the city will capture the taxes and funnel them back to us until we have our money back. With each transaction we will enter into a development agreement with the city on a lot by lot basis.”

If a house isn’t completed within 12 months, ownership of the land reverts back to the CCDC.

For the majority of lots within Osceola, this effectively transfers the tax abatement currently available to homeowners to home builders, where the corporation hopes it will have a bigger impact on the community. There is one noteworthy exception.

Arbor Valley Lake

“The lot giveaway program was not really developed with Arbor Valley in mind,” said City Administrator, Ty Wheeler.

There are several lots nearer to the schools and downtown available. While, at present, lots at Arbor Valley Lake are eligible, there’s little incentive for developers to take advantage of them once all things are considered.

“You can’t double or triple commit the same tax dollars,” said Wheeler. “If those tax dollars are used to buy a lot or abate the taxes for the property owners, then they aren’t available for a road.”

Homeowners currently investing in Arbor Valley Lake are counting on those tax dollars to pave the way to the city — literally. The development is located on Idaho Place, off 205th Street. Both are gravel.

The Clarke County Development Corporation

“The Clarke County Development Corporation was formed in 1969 with the purpose of attracting new business,” said Trickey, “so we see trying to make sure people have a place to live when they come here as part of economic development.”

Unfortunately, while word spread quickly about the CCDC’s “free land” initiative, no agreements are yet in place.

“They’re just so busy around here,” said Jay Iverson, the executive director of the Home Builders Association of Iowa, based in Des Moines.

There-in lies the need for incentives. People want new homes to buy, but builders have little reason to build in a small town when business in the Metro is booming.

The not-for-profit corporation invests in many areas of Osceola, from schools to the hospital and opportunities for recreation for the whole town.

“We are not quasi-government. We are not government,” said Trickey. “We have a membership in excess of 100 people and companies, and the board is elected by those members.”

The CCDC meets 9 a.m. on the second Wednesday of the month, and all members of the public are welcome to attend.

The Zero-Cost Development initiative is somewhat complicated, but the goal is simple: improve opportunities in Osceola.

Buyer and builder incentives are an investment a community makes in its future. The pay-off is not immediate, but over time, these programs help bring in new businesses, create new services and, ultimately, keep the lights on.

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