Altoona considers suspending tax abatement amid state law changes
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Altoona is considering suspending new applications to its property tax exemption program, citing financial pressure from a new state law.
Why it matters: Mayor Dean O'Connor says the move could hit first-time homebuyers hardest.
How it works: Altoona property owners can get a temporary property tax exemption on the value they add through new construction or improvements.
- For example: If someone builds a $300,000 house, Altoona's property tax abatement program will grant an exemption up to $75,000 for five years.
Yes, but: The consideration to suspend the program stems from a new state law that caps how much cities can grow their property tax revenue, O'Connor tells Axios. The new law caps cities' revenue growth at 2%, except for new construction.
- Under the new law, once a property's tax abatement ends, it will no longer be classified as new construction. That reduces cities' ability to capture the tax benefits they anticipated when the abatement was originally approved.
By the numbers: Around $45 million in tax valuation is in abatement, Altoona finance director Andrew Lent says.
What they're saying: "I like the program, I'd like to keep it, but I don't think we can at this time," O'Connor says.
- He notes that newer, fast-growing cities like Waukee and Ankeny don't have property tax abatement programs, but it's been a positive tool for Altoona and cities to the east.
Zoom out: Pleasant Hill also voted to suspend its program, citing similar financial concerns.
What's next: The City Council will hold a public hearing July 20 at Altoona City Hall on the proposed amendment.
- If approved, the amendment would suspend new applications received after Feb. 1, 2027, until the council votes to lift it.