Tax break proposal for new housing

A five-year property tax abatement program is being proposed as a way to encourage the development of new residential construction in Tracy.
The Tracy Economic Development Authority has recommended to the city council a program that would waive the city’s portion of property taxes for five years on all new residential construction. On a new house with an assessed property value of $250,000, the estimated property tax savings to the homebuilder would be $21,200. After the five-year abatement period, the property would be subject to regular real estate taxes.
The tax abatement program would replace cash rebates of up to $12,000 that have been offered to people building new houses in recent years. Two rebates have been authorized over the past five years. The new housing rebate program was ended this summer, with the stipulation that two pending applications would be offered the choice of either the new cash rebates following the completion of the house, or the five-year tax abatement.
Tara Onken, Tracy EDA coordinator, suggested the property tax abatement incentives, in place of the cash rebates, because it would allow the EDA to better leverage its cash resources, and also offer a better incentive to prospective new housing builders.
The EDA has set new housing construction as one of its goals, because new housing increases the community’s real estate base and can attract additional people to the community.
The EDA also reviewed a proposed 10-year abatement plan, that would have begun with a 100% abatement of city taxes, and then declined 10% each remaining year until zero was reach. That plan would have offered 10-year property tax savings of $23,320, at current tax levies.
However, the EDA majority felt that from an administrative point of view, a 10-year program was too long.
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The proposed tax-abatement program has no upper limit for values.