With action by the Adel City Council after a public hearing on Tuesday night, the tax abatement program will officially come to an end on Jan. 1, 2021. The vote was unanimous.
The current tax abatement plan of seven years at 100 percent will remain in effect through 2018 before seeing changes. In 2019 and 2020, the tax abatement will be three years, with the first year being at 75 percent, the second year being at 50 percent and the third and final year being at 25 percent for new homes built in Adel.
Councilmen Jon McAvoy and Mike Haynes, who are the only council members who were on the council when the current tax abatement plan was originally passed, said that when looking for a compromise, no one on the council got exactly what they wanted.
“At the meeting we had where we discussed this topic, everybody came to the meeting with their own preferences,” McAvoy said. “And we worked our way through it, and there’s a lot of give and take, and a lot of compromise, and no one, I think, got what they wanted. At least I didn’t.”
Despite that, McAvoy said that they were all able to get to a place where they could agree on a direction for the changes that were made on Tuesday.
Haynes echoed McAvoy’s comments about the compromise that took place among the council.
“You all know that I wanted to stop it, 100 percent completely January 1 of 2018,” Haynes said. “I think this is the best compromise we can come up with.”
Some of the developers that were in attendance stated that ending the abatement only three years from now is abrupt and that the city is “pulling the rug out from underneath them,” but Haynes said that isn’t what is happening.
The plan that was passed on Tuesday night was reviewed by legal counsel at Ahlers and Cooney and by Adel City Attorney, John Reich, who advised the city not to end the abatement completely without a few years notice to the developers.
During the public hearing before the vote, Mayor Jim Peters did something unusual. He passed the gavel over to Mayor Pro Tem McAvoy and addressed the council from the podium, as a citizen, not the mayor.
He discussed what the tax abatement has done for the city, how the city has grown since the plan was put in place and how much the city has made over that time, specifically mentioning the residents and developers, despite the abatement, still pay the city for water and sewer, infrastructure and lights and street improvements that are needed for their developments themselves.
The city has collected $900,000 in water and sewer connection fees since 2011, Peters said. He believes that the growth has been positive for Adel.
“I’ve been involved in city government for 30 years, and from a growth and financial perspective, Adel’s never been better,” Peters said.
Before the council had a chance to vote, some of the area developers made one final attempt to get the council to reconsider making the changes and ending the abatement in 2021.
Eric Grubb, who has been involved in developing land in Adel since 2011, said that they have tens of millions of dollars invested in developments in Adel and asked for the council to consider keeping the abatement in place for at least one year beyond the proposed plan.
“The decision to purchase the land, develop it, sell lots, get a completed home built and ultimately get the home sold takes many years,” Grubb said. “Sometimes plats take up to a decade. When it takes that long for new plats to come online, builders usually make multi-year commitments for lots. This is not an industry where high-risk business decisions can be altered over the course of one building season.”
After the vote was passed by the council, Peters congratulated the council on their work on the tax abatement amendment and getting to a compromise in “pretty rapid fashion.”