Under an updated urban renewal plan approved this week, the City of Des Moines will extend tax incentives to housing options that typically cost less for residents while incrementally adding density to neighborhoods and supporting the city’s tax base.
The plan creates a new declining tax abatement schedule for 8 years (9 years for properties with enhanced sustainability features) for “missing middle” housing that contains between 2 and 12 dwelling units. It also enhances tax incentives available for accessory housing units.
Missing middle housing describes a range of building types including smaller apartment buildings or townhouse developments that used to be common in neighborhoods but are rarer in today’s environment of large suburban single family homes and apartment complexes.
Photos: Missing middle housing can take many different formats as these examples from the Pacific Northwest show. Options range from a duplex to small apartment buildings, townhomes, and more. Images via the Sightline Institute, licensed via Creative Commons.
The more modest floor plans missing middle housing provides can make it a lower cost housing choice. The scale of missing middle housing fits nicely within predominantly single family neighborhoods, where neighbors expect new development to match the existing building style.
The tax incentives included in the City’s plan will help incentivize housing that is well-positioned to be more affordable for households with incomes under $75,000/year who are looking to buy.
This will expand housing choices for people whose wages make attaining homeownership difficult in today’s market. In fact, Des Moines cited the workforce housing study Here We Grow is based upon as part of its rationale for the new policy.
Deputy director of development services Michael Ludwig said Des Moines’ action follows years of discussion about seeking ways to add more housing that matches the style of a neighborhood.
“We know we need a greater variety of housing options and housing types in the city to have a strong housing market - a market that has a range of prices in it so that hopefully people can move up within the city without moving out,” Ludwig said.
In addition, local housing advocates like the Polk County Housing Trust Fund have long endorsed missing middle housing as an option to provide more housing at lower costs.
The plan also enhances tax incentives available to accessory housing units (AHUs) that allow homeowners to construct a second housing unit on their property. Housing choices within neighborhoods play an important role as people seek to remain in communities they love through different phases of their lives. Accessory housing units seek to address that challenge, said Brad Anderson, state director of the AARP in Iowa.
During the pandemic, he saw a spike in families interested in providing an independent living for aging loved ones adjacent to their family’s homes.
“AHUs are quickly becoming a popular affordable housing option for families who want to stay close to loved ones or provide alternative options for long-term care,” Anderson said.
AARP has prepared a resource guide for local homeowners interested in AHUs. Anderson noted that AHUs also bolster the city’s supply of more affordable housing and can be an income source for homeowners who add a rental unit to their properties.
Ludwig says for cities, supporting these new housing units also makes sense because it allows more housing value to be added in a community with less land, ultimately supporting sustainable funding for city services.
“Land is a primary cost and infrastructure is a primary cost that goes into housing affordability, and if you can get two units on a property with existing infrastructure, there are economies of scale in adding that density incrementally to an existing neighborhood,” Ludwig said.
Note: AHUs are also often called Accessory Dwelling Units or ADUs. This blog post follows the lead of the policy Des Moines passed, which uses the AHU name.
On Sept. 21, the Iowa Economic Development Authority (IEDA) awarded $29.8 million in workforce housing tax incentives to 49 projects across Iowa. Iowa’s Workforce Housing Tax Credit encourages development and rehabilitation of housing in Iowa, especially focusing on rehabilitation of vacant or underused property.
In Polk County, 6 projects were awarded a combined $3.1 million in tax credits. Those projects will support new construction of 173 new rental housing units and rehabilitation of an additional 150 rental units.
Five are located in Des Moines, while the sixth (Junction Development Catalyst, LLC) is a project in West Des Moines. Two received the maximum credit award of $1 million.
IEDA reported it received applications for nearly triple the incentives available in this funding round. The agency says projects were “scored competitively based on readiness, financing, need and local support and participation.”
Receipt of the tax credit does not require that future residents of the property will need to meet income guidelines; however, to qualify, project costs cannot exceed $200,000 (or $250,000 for historic rehabilitation) per unit.
Polk County projects funded
Project Title | Type | Number of Units | Credit Amount |
---|---|---|---|
Tree House | Rehabilitation | 93 | $1,000,000 |
Urban Campus Apartments LLLP | New Construction | 42 | $235,392 |
Dogtown Project | New Construction | 120 | $1,000,000 |
Concord Building | Rehabilitation | 43 | $426,500 |
Junction Development Catalyst, LLC | New Construction | 11 | $215,010 |
3524 6th Ave. Historic Rehabilitation | Rehabilitation | 14 | $209,486 |
Total | | 323 | $3,086,388 |
Source: Iowa Economic Development Authority
Here We Grow now provides an interactive map highlighting local data from around the metro. Using the map, you can view several data layers that offer insights looking at the whole region, or your own neighborhood.
Here's some of what you can find.
Development Nodes: These views help us recognize areas in the community that are important cultural and commercial centers that are suited for a variety of housing and business development.
Tomorrow Plan Nodes: The Tomorrow Plan defined “nodes” as the “economic and cultural focal points of a region” that are economically important and “should include a wider range of housing types than are typically available in conventional residential areas.” The plan identified nodes that function on a neighborhood, community, and regional level, as well as downtown.
PlanDSM Nodes: These areas are recognized by the City of Des Moines comprehensive plan, PlanDSM, as places where Des Moines can create “increased housing and transportation choices, reduced infrastructure and maintenance expenditures, and the creation of vibrant places to serve neighborhoods and the city as a whole.” They are also identified on the neighborhood, community and regional level.
Work and home areas by income: We provide four views showing where our area's low income and hourly workforces live and work. These views are based on LEHD Origin-Destination Employment Statistics from the US Census Bureau. The maps give you a chance to visualize where people live and work in your community, in this case using two income ranges:
Earning $1,250 or less each month equates to incomes up to $15,000 annually.
Earning $1,251 to $3,333 monthly equates to incomes of $15,000 to $40,000 annually.
DART Transit Routes: Transit is an important way for workers to navigate between homes and jobs; bus routes tend to operate on some of the regions’ most important commercial corridors. DART’s fixed bus routes are shown, current as of June 2021.
Median year housing built: Uses data from the 5-Year 2019 American Community Survey to show the median year housing structures were built, summarized by decade. This view provides some insight into the region’s historic development patterns.
Mapping social and economic opportunity: These two views provide a related sense of where economic and social opportunity are located in our region. They use different underlying methodologies, but interestingly they tell a consistent story about where opportunity is located in our region. Here We Grow’s equity priority encourages us to take action so that families are not sorted into high and low opportunity areas merely based on their income.
Des Moines MPO Environmental Justice Areas (2020): The Des Moines Area MPO publishes environmental justice maps. MPO analyses 7 “degrees of disadvantage” that may apply to a given area; areas with multiple degrees of disadvantage may be said to require special attention to ensure environmental justice and equity goals are upheld.
Iowa Finance Authority Opportunity Areas: The Iowa Finance Authority identifies these areas using a US Department of Housing and Urban Development methodology. Areas identified score highly on a variety of factors measuring economic and social opportunity, including poverty measures, labor market engagement, job access, mobility, school proficiency, and community health.
Housing wage by zip code: This measure is created by the National Low Income Housing Coalition as part of its annual Out of Reach assessment of the hourly wage a person needs to earn to afford a modest two bedroom apartment. In this map, areas of higher housing cost are highlighted in red, and users can select a zip code to view a variety of data, including the wage a person would need to earn, labeled as the “housing wage”, to afford a one or two bedroom apartment in that zip code.
Finally, our interactive map also allows users to display municipal boundaries as well as the outline of the planning area used to create the Tomorrow Plan.