MOUNT VERNON – By approving legislation to create a citywide community reinvestment area, the Mount Vernon City Council has attracted the attention of developers who needed a way to offset costs to consider housing development in the city.
The city established a Community Reinvestment Area (CRA) that creates a financial incentive for homeowners to make improvements on their residences by granting a reduction in the property tax. For a single family home, it's up to 75%, depending on the low- to moderate-income-level city block the homeowner lives in.
“But that could be an abatement on the improvements given a minimum investment, a tax break on the improvements for up to 15 years. And if you're in a historic district, or an historic home, that could go up to 20 years,” Mayor Matt Starr told the Mount Vernon News.
“When I meet with employers, their first question is, ‘How is housing coming?’ And now we're starting to see some, I think we're gonna see a lot of activity on that front over the next three years,” he said.
The city has started to get inquiries about the CRA to determine how the program is working. Starr said he’s met with a few developers who have begun to crunch numbers on how to use the opportunity.
The CRA stays with the house, which gives home flippers another selling point after they add square footage to the home through a mother-in-law suite, a new office or something similar.
“It has to be more than just a fresh coat of paint and new cabinetry. That's not going to qualify. But if it meets that minimum investment level, then it stays with a house,” Starr said.
The city hopes the CRA will attract developers of multi-family homes, for which the property tax abatement could go up to 100%, excluding the emergency school levy funds which still will be charged. The schools still get their levy funds, “but it’s still a heck of a tax break,” he said.
Developers from Mount Vernon and outside of the city are looking into opportunities with the CRA, he said.
He hopes this will be a tool to help keep Knox County workers inside the county. The city found out through the housing study done in partnership with the Area Development Foundation and partners at Kenyon College that a little more than 6,000 people come to Knox County daily to work.
“But we have about almost 12,000 leaving Knox County to work outside of the county and then the remainder live and work here. So we really want to keep more people in the county working. It just supports our tax base a lot a lot better,” he said.
The city and county have the capacity to provide the industry for those jobs for homeowners’ wages, Starr said.
The report revealed an annual need for 520 new residential units for the next 10 years. The county currently has a shortage of 387 residential units, he said.
Developers were waiting on the CRA to see how much it was an offset to their costs. At the same time, construction costs have been going up. The cost of a home has gone up 20 to 29%, he said. Lot prices also have risen.
The average home in Mount Vernon was built in 1973. As it approaches 50 years, maintenance and upgrade needs are apparent. The CRA can be the ticket to improve the properties.
“This initiative isn't only about getting additional housing here. It is improving the current housing stock that we have. And we have all kinds of housing stock and housing stock needs,” he said.
The city needs starter family homes and traditional family homes as well as rentals including high end rentals. Single-family homes in the $200,000 to $250,000 range and homes up to $400,000 are needed, Starr said.
Mount Vernon has completed other work that can help improve homeowners’ expenses. Starr said now that the city has made stormwater retention fixes, curb and gutter and catch basin installations in addition to the Kokosing River Restoration Project, a floodplain study will be conducted. This floodplain study over the next year or two should pull 653 homes out of floodplain.
“That is a game changer because it will not require that they carry very expensive flood insurance. And that will probably equate to at least two, maybe more, mortgage payments a year,” he said.
Those funds could be reinvested back into the home, and the CRA could help cut those cost through property tax abatements also.
The homeowners can still get flood insurance if they want to, it just wouldn’t be required.
