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Archive for Monday, October 30, 2006

Fix-ups could mean savings for some homeowners

Lawrence may use state law to encourage improvements in designated neighborhoods

October 30, 2006

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So you want a break on your property taxes.

Historically, the best way to get one of those in Lawrence has been to be a big shot in the business world and decide to build a large industrial plant or add a wing onto an office building to employ a few hundred additional people.

Soon, though, the common person might have a chance to join the club. Lawrence leaders are exploring using for the first time a state law that would allow regular homeowners to receive a substantial rebate on their property taxes.

It is called the Neighborhood Revitalization Act, and it gives tax breaks to homeowners who make improvements to their property, if they live in a neighborhood that City Hall has designated as an area that needs spruced up.

"It gives people an opportunity to be rewarded for investing in an older neighborhood," said Janet Good, president of the East Lawrence Neighborhood Assn.

A rebate

Here's how the program works: Say a homeowner has a $100,000 house that badly needs repair. The homeowner pays to have the house fixed - a new roof, siding, landscaping and even a small addition. But the improvements increase the value of the property to $150,000, which in turn increases its property taxes.

Under the Neighborhood Revitalization Act, the property owners would receive a rebate on the difference between the taxes paid on the $100,000 property versus those on the $150,000 improved property.

Pam Madl helps install storm windows and put on a new coat of paint at her daughter's house in Lawrence. The city is thinking about using a state law that would make residents of designated Lawrence neighborhoods eligible for tax refunds on home improvement projects.

Pam Madl helps install storm windows and put on a new coat of paint at her daughter's house in Lawrence. The city is thinking about using a state law that would make residents of designated Lawrence neighborhoods eligible for tax refunds on home improvement projects.

City commissioners can structure the program to rebate up to 100 percent of the taxes for up to 10 years. If the program would include a rebate of taxes paid to the county and school district, those two boards also must agree to the program.

In addition to using it to fix existing homes, the program could apply to building a new home on a vacant lot, if it is in a target neighborhood.

"I think it is a great way to partner with private developers," City Commissioner David Schauner said. "I really like that it doesn't cost the taxpayers any money up front. It is like a rebate program when you buy something in a store. You send us the money and we send some of it back."

Test case

City Manager David Corliss is gathering all sorts of information in anticipation of introducing the city's first neighborhood revitalization district in the coming weeks.

Developer Bo Harris has expressed interest in using the state law as part of his redevelopment efforts near Eighth and Pennsylvania streets in East Lawrence.

Harris has proposed the city use the act as part of the project, and he in turn would use the rebate money to finance several infrastructure improvements, such as street work, stormwater projects and parking improvements needed for his development.

City commissioners have expressed interest in the idea because the infrastructure improvements total nearly $2 million, and city commissioners don't have that money designated in their 2007 budget.

But city leaders also are interested in using the act as part of the project because it could serve as a good test case.

"I think this will be the template for other plans in the future," Corliss said. "It has the potential to work for a number of different neighbors."

It likely won't work for all neighborhoods, though. The state law requires the act only be used in areas that show signs of blight or have a predominance of historical structures. That means newer neighborhoods probably wouldn't be eligible.

But Sandy Jacquot, director of law for the Kansas League of Municipalities, said the act is one of the more flexible in the state. She said city governments had broad authority to draw district lines as they saw fit.

The act also can be applied to commercial property. For example, Topeka used the act to provide a 95 percent tax rebate to the $22 million Capital Plaza Hotel project. That's an example of a project that would not be eligible to receive a traditional tax abatement under the state's law but was able to receive the equivalent of one by using the Neighborhood Revitalization Act.

Unintended consequences

Before the city starts using the law, Corliss said he wants to consider several big-picture issues. Chief among them is whether designating a neighborhood as a revitalization zone will cause property values to go up on all homes in the area. That could happen if potential homeowners view the neighborhoods as being more desirable because each home would come with the potential of a tax break.

Other Kansas cities that have used the program, however, haven't reported that problem.

Patty Gilligan, who oversees the program in Emporia, said city leaders considered that factor when they started the program about 10 years ago.

"That hasn't been a problem," Gilligan said. "Really, the only time we have had people upset is if we have to tell them that they aren't eligible for the program because they aren't in a target area."

Gilligan said the program in Emporia has spurred $7 million worth of investments since 2000.

"We definitely have a lot of neighborhoods that look better," Gilligan said. "This isn't the only thing we have done, but this has been a significant part of the success."

Good, of the East Lawrence Neighborhood Assn., said she's willing to risk that the program could have some unintended consequences.

"There's always the potential for a downside with anything," Good said. "But I know there is a definite downside to watching old homes just deteriorate."

Comments

Emily Hadley 7 years, 5 months ago

What if a tenant wants to do the physical labor that the owner can't? What if a single house now has two divided dwellings?

If this is truly for everyone, then owners should be able to fix up a property they rent out as well as the one they occupy themselves, right?

quoted: "If this is such a good idea why not implement it city wide avoiding charges of favoritism of downtown landlords or Old West Lawrence? The City should restrict this to owner occupied property with the benefit ending when the property is sold. ... Again, the key for me is to make this available to ALL of Lawrence!"

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Godot 7 years, 5 months ago

In addition to the most obvious blighted area of Lawrence, that being the area bounded by 23rd on the south, tth on the north, Mass on the west and Harper on the east, I would hope that High Chaparel, (east of Haskell, south of 24th, north of 31st, and west of Harper), would be included, along with nearly all of North Lawrence. And then there is some areas west of Kasold, south of 23rd, and east of Crossgate, that have turned nasty in the last few years......

Other than the east Lawrence area, none of the above-mentioned areas are historic, but they sure need some upkeep.

I would say that none of the properties in OWL should qualify simply because they are hot properties already. Anyone who can afford to pay twice what a property is worth just for the location should have enough cash reserve to rehabilitate the property.

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Kat Christian 7 years, 5 months ago

Even so this is a good idea at getting neighborhoods cleaned up and housing repaired and looking less like slums houses. This Neighborhood revitalization works - it worked in DC and other surrounding neighborhoods in around the Washington DC area. Yes, someone is going to make money off of it but there will be people who will financially benefit also from paying higher taxes. So it's a give and take situation. Plus you'll have neighborhoods that are worth living in and houses resellable. No one wants to buy a slummy house or buy a house living next door to a slummy house. I'm for it.

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commuter 7 years, 5 months ago

Does anyone think the schoold sitrict will be fine with this? I don't, they want all of the money they can get and then some. I really only seeing the city as the one group who will allow the rebate and then we would have to pay more taxes to the district.

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Rationalanimal 7 years, 5 months ago

"The same is true for tax abatements to industry-- but you don't seem to mind them."

There goes bozo on his bus again posting drive-by conclusions without a scintilla of supporting evidence.

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trinity 7 years, 5 months ago

hey y'all, i think it's a good thing to encourage fixing up and keeping up older homes! try living in ottawa, where they place such outrageous demands on homeowners that the average working stiff can't AFFORD to fix up their own house! ottawa's fast becoming an entire town that smacks of being a "neighborhood association".

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Andini 7 years, 5 months ago

Is this how Wal-Mart was able to remodel their store?

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Sigmund 7 years, 5 months ago

Other benefits would be to local contractors and trades people as they would naturally be selected to do much of the work. The additional spending at Home Depot, Ace Hardware, and other local suppliers would bring in additional sales taxes revenues would help offset the initial loss of property taxes revenues. Again, the key for me is to make this available to ALL of Lawrence!

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Sigmund 7 years, 5 months ago

The problem that most people see here is the City's ability to benefit some at the expense of others. If this is such a good idea why not implement it city wide avoiding charges of favoritism of downtown landlords or Old West Lawrence? The City should restrict this to owner occupied property with the benefit ending when the property is sold. The amount of the benefit could be limited to a percentage of the existing value of the home (10-30%, for instance) to keep potential for abuse at a minimum. I'd like to see all the details but I might be for this. The key for me is to make this available city wide. I am sick of this Kommission favoritism benefiting just their buddies to the expense of everyone else.

BTW, tax abatements to new or existing businesses are supposed to encourage new or expanding businesses to provide additional payrolls which in turn leads to more income and sending in the local area which leads to more tax revenues. This seems completely different purpose and not really comparable.

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Rhoen 7 years, 5 months ago

... and we'll all probably be doing the bulk of our shopping at one of the two Wal Marts anyway, not only because they're more convenient, but because they're cheaper and better-stocked. It's called "capitalism," and the "invisible hand of the market" will take control.

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Rhoen 7 years, 5 months ago

The tax benefits flowing from historic preservation are available to many people if they follow the procedures in place.

These potential economic benefits don't need to be plugged into to any more city-planning boondoggles and hyped in the newspaper, as if the people of Lawrence are nothing more than cultural dopes who can't see through ploys like these.

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Bowhunter99 7 years, 5 months ago

wait a minute..... Someone is willing to fix up a blighted area of the city and he's suddenly a crook?

I would PREFER someone made money by fixing up current neighborhoods as opposed to let them run down and simply continue to move west.

Let's fix up the current neighborhoods, and downtown will thrive. Let the current neighborhoods go down hill and we willl all be shopping at the new Wal-mart at 6th & Wakarusa because it's more convenient.

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janeb 7 years, 5 months ago

He wants to make Lawrence a steel City and remove all the charm that is left after the loss of Ter Nova, The Town Crier and others. Bo Harris is as close to the devil as it comes.

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Emily Hadley 7 years, 5 months ago

Anything to encourage people to stop letting our older homes and neighborhoods slowly waste away is great to me. Maybe it will even motivate the slumlords to do a bit more than the bare minimum it takes to rent the places (often to people who have no reason to take care of the rentals).

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lynnd 7 years, 5 months ago

janeb, Bo Harris is not a crook. He is one of the more respectable developers in this town. If you read the article you would see that he is not looking to pad his pockets with the savings, but rather use the extra money to fix the streets and other infrastructure that the city can't afford to do. How is this being a crook? I think this is being a good citizen and developer and it's certainly not something he HAS to do.

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Godot 7 years, 5 months ago

That is a very helpful article, Agnostick, thanks for the link!

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just_another_bozo_on_this_bus 7 years, 5 months ago

Attack? I merely made a remark about the subject at hand.

You are way too sensitive, Godot.

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Godot 7 years, 5 months ago

Bozo and I finally agree on something, yet he attacks anyway.

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just_another_bozo_on_this_bus 7 years, 5 months ago

"What a deal for them. Not a deal for the rest of us who will have to pay higher taxes to make up for what they are not paying."

The same is true for tax abatements to industry-- but you don't seem to mind them.

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Agnostick 7 years, 5 months ago

http://www.allthingsfrugal.com/g.improve.htm

Warning! Funky page layout--you have to scroll down a bit to find the beginning of the article.

Agnostick agnostick@excite.com

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Godot 7 years, 5 months ago

This means that owners of properties within the historic district (most of them along Mass, Vermont and New Hampshire) will be eligible to use taxpayer funds to improve their buildings, and then will not have to pay taxes on the increased value. What a deal for them. Not a deal for the rest of us who will have to pay higher taxes to make up for what they are not paying.

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monkeyhawk 7 years, 5 months ago

A few thoughts come to mind...

Will the city be acting as the general contractor on this? Will they be dictating exactly what the property owner needs to do, and make decisions as to where materials are purchased and who does the work? Is downtown going to be considered as "blighted"? Oh, they did throw in that historic designation...

Seems like a developer who is fixing up a commercial area in Topeka could also benefit from the same program in Lawrence downtown area if this plan is available to him.

It actually sounds like a good program if applied fairly. But, we should all be looking for a 10% tax reduction since housing prices have fallen that much.

Rhoen gets it... when I read about the fire traps yesterday, the word subsidy came to mind.

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janeb 7 years, 5 months ago

That should be applied to Bo Harris too.

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just_another_bozo_on_this_bus 7 years, 5 months ago

I had the same question, Godot.

I don't think it should be transferrable. This tax break should be for people who are committed to the neighorhood, and if they decide to sell the house, any profits made possible by the tax break should mean that the government subsidy ends with the sale.

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janeb 7 years, 5 months ago

You got it Rhoen. These people are sooooooooo transparent. Bo Harris is behind it so he can get some money for his East Lawrence renovation project. Cane we say CROOK.

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Rhoen 7 years, 5 months ago

Hmmm ... "Old Homes Pose Many Fire Risks" in yesterday's paper and today, "Fix-ups Could Mean Savings for Some Home Owners" ... I sense a trend in our local journalism.

Is this a free advertising campaign by the LJW publishers on behalf of some local developer-friends who are looking for ways to keep their bank accounts healthy during the coming cold months? (Especially with the recent downsizing of the plans for the new library?)

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Godot 7 years, 5 months ago

If the newly improved house is sold, does the new owner retain the tax break, or does the new owner pay taxes based on the true market value of the house?

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