Horace pauses tax abatement program; to reconsider in 6 months

Prior to the vote, the City Council motioned to allow homebuyers who bought a home in 2021, or received building permits in 2022, the chance to still apply for the abatement program.

Horace City Council, from left, Councilmember Sarah Veit, Council member Naomi Burkland, Mayor Kory Peterson, Council member Stephanie Landstrom and Council member Jeff Trudeau at the Jan. 24, 2023 meeting.
Wendy Reuer
We are part of The Trust Project.

HORACE — After discontinuing the city's tax abatement program on Jan. 1, the Horace City Council on Tuesday, Jan. 24, voted to go without an abatement program for six months, before considering it again in July.

Prior to the vote, the City Council motioned to allow homebuyers who bought a home in 2021, or received building permits in 2022, the chance to still apply for the abatement program.

Horace Mayor Kory Peterson said Tuesday that allowing the exceptions for those who could not finish building would be the "fair" thing to do after letting the two-year abatement program expire, taking many involved in real estate by surprise.

The City Council decides every two years whether the program, which gives buyers of new homes a two-year break on property taxes for certain new single-family residential properties, should be renewed. According to state law, the maximum exemption allowed is $150,000 of true and full valuation of improvements only and land is still taxable.

Peterson said the council did not have a particular appetite for continuing the program when the topic was brought up in the summer of 2022.


Kevin Fisher, a Realtor and former president of the Fargo Moorhead Area Association of Realtors spoke at the council's first meeting in January asking city officials to reconsider, citing the program as a deal breaker for those seeking affordable housing.

"It's a crucial component for entry-level buyers searching for affordable housing, "Fisher said Tuesday.

Fisher pointed out that all other metro cities, Fargo, West Fargo, Moorhead, with the exception of Reile's Acres have similar abatement programs.

"It can't be that bad if everyone has got it," he said.

Jace Hellman, community development director said more than 800 homes were permitted in Horace from 2019 through 2022. But residents, Realtors and builders said Tuesday that the economy is slowing and the growth Horace has seen as of late, may swiftly change.

David Reed, president of Homebuilders Association of Fargo-Moorhead and others pointed out that the current rate of inflation is rapidly changing the ability of many to buy or build new homes. A 1% change in interest rates, for example, could mean a person who could afford a $450,000 can now only afford a $350,000 home.

"It seems prudent we try to remove some of these barriers to home ownership due to the times we are in," Reed said. "We are experiencing a slowdown in the market. Obviously in 2023, we are expecting a recession."

Cole Mercier, a first time homebuyer, said he and his wife decided to build in Horace with the assumption of utilizing the savings from the abatement program on expenses like a snowblower, window blinds and materials to build their lawn.


"Had we known about the expiration, it may have influenced our decision to move here," Mercier said.

Councilwoman Naomi Burkland pointed to a $60,000 study the city of Fargo conducted on its own housing market, which recommended in February 2022 for the city to end its abatement program.

Reed and Fisher, however, noted that Fargo has not acted on the study, which was finished in 2021.

"Fargo spent 60,000 for an opinion, that does not make that opinion right," Reed said. "No action has been taken based on that study."

One Realtor pointed out that four homebuyers crossed Horace off their list on Tuesday alone. She said the the council was not looking at the bigger picture as more people building in Horace affects the overall tax rolls, supports business and brings more people to help pay for special assessments.

Councilwoman Stephanie Landstrom added that more building permits were issued in Horace than in West Fargo.

The two residents who spoke at the meeting were both in favor of keeping the program, which was in line with the roughly 60 in attendance. Council member Sarah Veit polled those sitting in, and asked those who opposed the program to raise their hand, of which only four did.

One woman said she dreamed of coming back to the area and owning her own home. She said the tax abatement program helped her build a house in Horace.


"I am not 20, this is not my first house, this is my forever home," she said. "It makes a big difference."

A second longtime Horace resident said he too, was helped by the abatement program.

"I do believe there are ways to reduce costs, I don't believe this is a way," Veit said. She offered support for reinstating the abatement program immediately but then offered a request that the council reexamine the program in the long run.

The motion failed for a lack of second.

Councilman Jeff Trudeau said the council should find a solution that "helps everybody out." He said he worries about "temporary workers" coming into the area for the diversion construction, buying homes and leaving foreclosed homes.

Suggesting a motion that the city go without an abatement for six months, Burkland said the city would then consider it again in July. The motion passed behind a 3-1 vote, with only Veit dissenting.

The mayor did not vote.

The goal of the newly unveiled West Fargo Fire Community Health Alliance is to "connect residents with the right services at the right time," an official said.

Readers can reach West Fargo editor Wendy Reuer at or 701-241-5530 . Follow her on Twitter @ForumWendy .

Related Topics: WEST FARGO
As the West Fargo editor, Wendy Reuer covers all things West Fargo for The Forum and oversees the production of the weekly Pioneer.
What To Read Next
City, police, library and school district all looking at possible building projects
The U.S. Army Corps of Engineers is increasing outflow from Baldhill Dam from 130 cubic feet per second to 275 cubic feet per second to make room for spring runoff.
West Fargo police are asking for the public's help with future investigations.
The business customizes vans for mobile offices, campers and more and will move across the Red River from Minnesota to North Dakota.