COUNCIL ACTION FORM

CITY-WIDE URBAN REVITALIZATION AREA PLAN AMENDMENTS

City Council approved an Urban Revitalization Area (URA) and Plan on April 23, 2024, to incentivize the construction of new ownership housing throughout Ames. The program is currently scheduled to run through the end of 2028. Under the existing program, homes for which building permits are issued before December 31, 2027, and that are completed before December 31, 2028, are eligible for partial property tax abatement on the first $500,000 of improvement value.

In 2026, the Iowa Legislature passed Senate File 2472 (SF 2472). This legislation places a 2% limit on the growth of a city's tax collection, with an exception for growth resulting from new valuation. Due to SF 2472, the City will not realize any qualifying “new valuation” from properties receiving the 100% first-year exemption offered by the program. As those previously exempted properties become taxable, they will count toward the 2% revenue increase limitation rather than as new valuation.

As a result, City Council directed staff on August 25, 2026, to make certain amendments to end the program one year early and the applicability of the program to all areas of the City (see attached amended URA plan for proposed amendments). Eligible homes are proposed to be required to meet the following criteria:

• Homes are located on a lot final platted by August 1, 2026,
• A permit for the home is issued by December 31, 2026,
• Construction is completed (final occupancy) by December 31, 2027, and
• They are the primary residence of the owner by January 31, 2028, and are proposed to be eligible.

These changes will help the City preserve first-year taxable valuation of new construction homes. 

As an alternative to the tax abatement program for single family homes, the Council has chosen to offer tax increment financing (TIF) and other City incentives for developers of new residential subdivisions.

Separately from the changes to eligibility criteria, staff has prepared an amendment to the URA boundaries to include a recently annexed areas, including the Greenbriar development (Borgmeyer farm), Iowa State University Research Park land along University, and JT Warehouse land along E 13th Street. Since the City has annexed the aforementioned land, an amendment to the Plan is being requested to incorporate the new lands into the URA boundaries. 

The proposed changes are included in the attachment and shown in strikeout and underline format.

PUBLIC NOTICE:

Public notice included published notice in the newspaper as required by state law. Planning staff also provided notice of the proposed changes to the Planning Division's developer email contact list.

One comment was received from Justin Dodge, representing Hunziker. Hunziker anticipates final platting the Sunset Ridge North Second and Third Additions this fall after the proposed August 1, 2026, deadline for a lot to be created in order to be eligible for the abatement. In total, the additions will create 17 lots for single-family homes. Hunziker anticipates construction will begin this fall on one to two homes. 

Subdivisions or future phases of subdivisions that would not have eligible lots based on the August 1, 2026, deadline include:

• North Sunset Ridge Future Additions
• Ansley Future Additions
• Auburn Trail
• Bluffs at Dankbar Farms Future Additions
• Domani I, 3rd Addition
• Greenbriar
• Hayden’s Preserve
• Scholl/Ontario Subdivision

Of this list, Ansley, Auburn Trail, Domani, Greenbriar, Hayden's Preserve, and Scholl/Ontario are receiving other developer incentives. The Bluffs has no pending final plats.

North Sunset Ridge is unique in that it is not receiving other developer incentives and has two pending final plats that would allow the construction of homes to begin by the end of the year. Hunziker is requesting the list of ineligible subdivisions platted after August 1, 2026, be amended to allow the homes begun through December 31, 2026 in Sunset Ridge North 2nd and 3rd Additions to qualify for the abatement. 

1. Approve a resolution amending the Urban Revitalization Area Plan, as described in the attachment, to:
   
   
   1. Amend eligibility requirements for new construction of ownership housing to transition the program to end one year early and to exclude new construction ownership housing in subdivisions approved after August 1, 2026. 
      
      
   2. Modify the Urban Revitalization Plan boundaries to include property that has been annexed to the City through September 22, 2026.
      
      
2. Approve the amendments to the Urban Revitalization Area Plan as described in Alternative No. 1, with modifications to allow homes in the Sunset Ridge North Second and Third Additions that meet all other eligibility requirements, including the amended construction timeline requirements, to qualify for the abatement. (The Hunziker Request).
   
   Note: if Council chooses this alternative, staff will amend the plan to include a list of ineligible subdivisions rather than the August 1, 2026, date. 
   
   
3. Do not amend the Urban Revitalization Area boundaries and Plan.

A review of permitting data indicates that the City-wide Ownership Housing Tax Abatement Program has not spurred additional construction. This is one of the fundamental reasons the City chose to pursue developer incentives in lieu of homeownership tax abatement. Continuing the abatement program beyond this year also prevents the City from realizing the full valuation of new construction in its first year, which impacts the ability to account for new growth and the cost of services.

The Hunziker request would have minimal impact on first year valuations given that it may allow two additional homes to take advantage of the program. Given that Sunset Ridge North subdivision will not receive other developer incentives, it is the recommendation of the City Manager that the City Council adopt Alternative #2.