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Lyon County Board approves tax abatement policy for new housing

Photo by Deb Gau Lyon County Commissioner Paul Graupmann, right, joined the discussion of a proposed county tax abatement program, during the commissioners’ Tuesday meeting.

MARSHALL — Housing needs in Lyon County have been put into the spotlight recently, and on Tuesday, Lyon County commissioners approved their own plan to encourage new housing construction.

Commissioners passed a new policy creating a tax abatement program for owner-occupied or rental housing in Lyon County. There are still some details that will need to be worked out, like what kind of application fee to set for the abatement. However, commissioners hope the policy will help serve as an incentive to build new housing in the area.

On Tuesday, county commissioners went over a draft of the tax abatement policy, which was also discussed at a May 30 county planning session.

Minnesota statutes give political subdivisions — like counties — the ability to abate property taxes. Under the Lyon County draft policy, people who build new single family homes, duplexes, or multi-family housing with 12 or fewer units could apply for a four-year abatement on the county’s share of increased property taxes created by the building. If an application is approved by the county, the county tax abatement on the property would be 80 percent the first year, 60 percent the second year, 40 percent the third year and 20 percent the fourth year. According to the draft policy, the abatement would transfer with the sale of the property during that four-year period.

The abatement would coordinate with other local government tax abatement programs. However, in order to be eligible for a tax abatement, applicants can’t receive other local public financial assistance, like Tax Increment Financing or Small Cities Development Program funding. Applicants would have to get approval to be in the program before starting construction, the draft said.

The draft policy said the tax abatement would be offered to applicants between July 1, 2018, and Dec. 31, 2022. However, County Administrator Loren Stomberg said commissioners had discussed extending the eligibility period back to a date earlier this year.

Commissioner Gary Crowley said he thought that would be the right thing to do.

“We’re already well into the season for building,” Crowley said. “A lot of people have already started making their plans for building.”

Lyon County Planning and Zoning Administrator John Biren said some housing construction projects were already starting up in the county.

“There’s two for sure that I know of,” Biren said.

Biren and commissioners also said the draft should be changed to allow either individuals or companies to apply for the tax abatement. For an apartment complex, “It may be an LLC instead of a person (applying),” said Commissioner Charlie Sanow.

County Attorney Rick Maes pointed out that state laws would require the county to post a notice and hold a public hearing on any abatement applications.

“You’d have to have some discussion about how this is going to take place,” Maes said. “You can’t give the approval until after a public hearing.”

Commissioners approved the abatement policy, with a couple of amendments: that individuals or entities be eligible to apply for the tax abatement, and that the period where projects are eligible for the abatement start on Jan. 1 instead of July 1.

Commissioners talked about charging an application fee to possibly help cover the cost of notices for abatement hearings. However, they didn’t decide on an amount. The matter will come back before the board at a future meeting.

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