Newton’s housing initiative program extended to 2023

An incentive program designed to increase housing construction by giving new homebuyers a $10,000 check has been extended for another two years, but the city council also approved changes that increase the minimum valuation needed to be eligible.

On Aug. 2, the Newton City Council voted unanimously in favor of continuing the program until the end of 2023, as recommended by city staff.

Established in 2014, the Newton Housing Initiative was “an attempt to aggressively jump start home construction in the community,” which had dwindled significantly three years before when no new homes were built. As part of the program’s extension, council also allowed amendments to the program.

Originally, those who opted into the program and purchased a newly built single-family home valued above $160,000 were given $10,000 cash in lieu of tax abatement. Now, only homes valued at $190,000 or above may be eligible for the $10,000 cash incentive.

Previously, the city allowed a $5,000 cash incentive for modestly priced homes valued between $100,000 and just under $190,000.

According to city documents, the $5,000 initiative “has not been utilized” and was proposed by staff to be eliminated. However, new home projects valued under $190,000 and have already obtained building permits or have the $5,000 incentive identified in an agreement with the city will still receive their check.

If the existing funding for the program is exhausted before Dec. 31, 2023, then the city council will decide whether additional money will be provided to the program, whether tax abatement is provided to new home construction instead or whether no incentives are provided at all.

The rules for the updated housing initiative are as follows:

• The incentive is provided at the time and place of closing on the permanent financing of the home.

• The value of the improvements (exclusive of land value) must be evidenced by an appraisal or assessment.

• The construction of the home must be fully complete — as evidenced by the issuance of a certificate of occupancy by the City of Newton — and a radon remediation system shall be installed in the new home.

• Rental properties are not eligible for the Home Buyer Incentive.

• New single-family, owner occupied as primary residence, home construction with value under $190,000 may be eligible for tax abatement in accordance with the current city-wide urban revitalization plan. Please refer to the most recently adopted city-wide urban revitalization plan to determine tax abatement availability.

Before council voted on the resolution, Jon Dunwell, of Newton, asked about the development of single-family homes in the city in the past few years.

“I’m just kind of curious to see how it’s working,” he said.

Newton Community Development Director Erin Chambers explained in the early 2010s the city had no single-family homes built and staff realized something needed to be done to jumpstart construction. Chambers estimated 50 new homes have been built since the initiative was adopted by council in 2014.

“We continue to evaluate the program’s effectiveness,” she said. “Each time we’ve extended it we’ve made small changes. I think it has been really successful. Successful enough that other communities are copying us. Marshalltown for example has just rolled out a program nearly identical to ours.”

Trevor Babcock of the Times-Republican reported in June that the City of Marshalltown — located more than 30 miles north of Newton — launched its “Make Marshalltown Home” program, which offers $10,000 to homebuyers looking for a new residence in town valued at or above $180,000.

Newton Councilperson Evelyn George admitted she was skeptical of the initiative at first, noting Newton has a lot of competition. The important thing for residents to know about additional housing in Newton is it adds to the city’s property tax base, she said.

“Which is very important to all of us — to the school system, to the county, as well as to the city and a few other group. And we immediately get those property tax payments rather than delaying.”

Newton Mayor Mike Hansen recalled attending an Iowa League of Cities meeting before the pandemic where he sat in on a presentation about the housing initiative program. Afterward, a number of communities, he said, contacted the city and wanted to know the results of the program.

“It does work,” Hansen said. “They’re paying property taxes as soon as it goes online and so there are advantages to that. Frankly, we’ve seen lots of activity and about 54 percent of the homes that are sold here under that program are new people coming in to Newton. So that’s another plus.”

Contact Christopher Braunschweig at 641-792-3121 ext. 6560 or cbraunschweig@newtondailynews.com