Closing the gap
Rockford looking to offer 3-year tax rebate to people who build homes
In an effort to jump start new residential construction, Rockford Mayor Tom McNamara’s administration is proposing a three-year property tax rebate in exchange for building new homes.
Before the subprime mortgage crisis collapsed the housing market in 2008 and sent home prices spiraling, homebuilders were often averaging 225 new single-family homes and duplexes each year. Last year, there were fewer than 20, Rockford City Administrator Todd Cagnoni said.
Meanwhile, the city has over the past decade demolished an estimated 1,000 dilapidated homes. Home prices have hit a record high as housing stock has dwindled.
“Our hope is that we can close the gap for homebuilders, developers and purchasers of residential structures to try to meet the demand that is out there,” Cagnoni said. “We know from talking with industry and business leaders that employees need housing.”
Under the proposal, property taxes would rebated for three years for newly constructed single-family homes, duplexes and multifamily buildings occupied before Dec. 31, 2025. They must be located inside the boundaries of the city of Rockford, Rockford Public Schools and Winnebago County.
Buildings that already benefit from other tax incentives would not be eligible, and single-family homes would have to be owner-occupied.
Leaders of all three organizations and the Rockford Park District are set to consider participation in the program, representing an estimated 85% of a homeowner’s property tax bills.
In addition to the property tax rebate, Rockford would waive permitting fees for new construction projects.
Rockford City Council could vote on the proposal Monday night.
Rising interest rates, inflation on material and labor costs and excessive regulation have made building homes more expensive and put them out of reach of first-time homebuyers, said Dennis Sweeney, executive director of the Homebuilders Association of the Greater Rockford Area.
Sweeney views the tax rebate program as local government doing the best it can after being “dealt a bad hand” by market forces and federal regulations.
A similar program that included new construction and foreclosures had limited success a few years ago, said Conor Brown, CEO of NorthWest Illinois Alliance of Realtors.
There was concern it would open a “floodgate” of new construction, but that did not materialize. Brown said this revamped program is a step in the right direction.
He said there are about 300 available housing units on the market in a three-county area including Winnebago, Boone and Ogle counties. A healthy and balanced housing market would have five times that amount of available housing stock, Brown said.
“It’s great to see they are looking to revamp it, expand it and make it more robust,” Brown said. “I think it’s needed especially at this time where there isn’t a lot of building permits pulled, not because of a lack of interest but because of all the extreme product costs that are associated with new construction whether it be materials or labor.”
The program, if approved, could save new Habitat for Humanity homeowners about $10,000 over their
Executive Director Keri Asevedo said Rockford Area Habitat for Humanity is working with the Region 1 Planning Council and Northern Illinois Land Bank to build 25 new houses in the longdormant Emerson Estates Subdivision in the 600 block of Chisholm Trail.
The program, if approved, could save Habitat tens of thousands in fees, and save new residents about $10,000.
“Those first couple years are the most expensive years for them, just getting the things they need for their new home,” Asevedo said. “This will be significantly beneficial to them.”