MOORHEAD - A property tax rebate program that helped to get nearly 1,100 homes built in Moorhead between 2012 and 2019 is going to the City Council for a vote to extend it through 2022.
The vote Monday, Aug. 24, on The Make Moorhead Home Property Tax Rebate program is required or the program will end Dec. 31.
The homes built in Moorhead under the program between 2012 and 2019 have a combined value of $240 million and generate about $3.2 million in property tax revenues annually, according to documents accompanying the council resolution.
The net cost of the city’s portion of the rebate in 2021 is $62,469, the city said.
The program has been in place since 2009 and was initially funded by the state of Minnesota as a flood-recovery initiation for Moorhead and Dilworth.
When that program ended, the city of Moorhead, Clay County and the Moorhead Area Public Schools began their self-funded tax rebate program. It must be formally extended every two years.
Clay County made the program available to other cities, and Dilworth, Glyndon, Barnesville and Hawley now participate.
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In 2020, rebates were made to owners of 118 homes built in 2017 and 135 homes built in 2018, according to city records. Those homes have added about $68 million in value (above and beyond existing land value). The foregone tax revenue for Moorhead, Clay County and the school district will be about $2.1 million. But documents in the council’s agenda emphasize that the homeowners will pay full taxes of that amount or more in the future after the two-year rebate period ends..
Both Fargo and West Fargo have two-year property tax abatements for new home construction. They also offer property tax exemptions on remodeling projects and Renaissance Zone incentives.
A quick rundown of housing incentives available in the Fargo-Moorhead metro area is available on the Home Builders Association of Fargo-Moorhead website.
The HBA encourages the Moorhead council to continue the rebate to keep the city competitive in the housing marketplace and offset Minnesota's income tax differential with North Dakota.
According to the National Association of Home Builders, for every $1,000 added to the cost of a new home in the Fargo-Moorhead metro area, 118 household are priced out of the market, the HBA said.
"We believe that the program helps keep new homes affordable," the HBA's CEO Bryce Johnson and President Darrick Guthmiller said in a letter to the council. "We believe the tax rebate program is a solid approach for improving development in Moorhead, and we urge you to approve its continuation."
Keeping housing starts going and staying competitive in the marketplace are big considerations toward approving the program, particularly since Fargo and West Fargo have had similar incentives far longer than Moorhead, the city's Governmental Affairs Director Lisa Bode said Friday, Aug. 21
“It’s one of those things, if we grow the tax base, then we have those homes providing tax revenue for the community in perpetuity. It’s always a question for the policymakers as to: Would homes be built without the tax incentive? I think some (homebuyers) will and some may not. Some may build a bigger home or better home because of the incentive. Some may give Moorhead a more thorough review, if they’re new to the community,” Bode said.
“I do think it’s an important tool in Moorhead’s toolbox. It does provide a good start to people investing in our community, both move-up homeowners and people new to our area.”
The county board and school district also weigh in on the decision on Sept. 8, Bode said.