Des Moines council debates phasing out tax abatement to free property-tax revenue for other housing incentives
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Summary
Development services staff proposed shortening tax-abatement schedules and phasing changes over two years to free property-tax revenue; staff cited state law changes and Polk County data showing $46.5 million already committed and a $146 million potential city revenue exposure. Councilors asked for roundtables with developers and lenders before taking action.
City development staff told the Des Moines City Council on Nov. 17 that changes to the city—s urban revitalization (tax abatement) plan could free property-tax revenue for other housing incentives and programs.
Cody Christiansen, development services director, framed the proposals as a way "to free up property tax revenue to make it available for other incentive options," and said recent state code changes and the city—s housing strategy prompted the review. Christiansen told the council that, based on Polk County assessor data, the city had committed about $46.5 million in city property-tax revenue to existing abatement schedules as of Jan. 1, 2025, and that continuing the current plan could commit an additional $146,000,000 in potential city property-tax revenue over the next decade under current assumptions.
Staff outlined the mechanics of current schedules (10-year 100% abatements, declining schedules in targeted —spider map— areas, missing-middle schedules for 2—12-unit structures, and commercial options) and explained a new constraint in state law: as of July 1, 2024, school-district levies are excluded from residential abatement, which staff said reduces the homeowner benefit by roughly one-third because those levies account for about a third of a typical residential property tax bill in the Des Moines area.
Council members raised practical concerns about how proposed changes would affect builders, buyers and lenders. Multiple members urged staff to convene roundtables with developers, builders and lenders to get real cost data (for example, the cost premium to shift 2x4 exterior walls to 2x6 and the actual upfront cost of EV-ready wiring) and to define development goals before reducing abatements. One councilor said he would not vote to approve changes without a clearer set of replacement incentives: "I'm not gonna vote on something that...say, oh, well, we're gonna work on that," the councilor said.
Councilors also noted a public hearing-setting item on the evening agenda to set a Dec. 8 hearing date on abatement changes and debated whether to pause or delay that step to allow stakeholder engagement. A councilor moved to remove or pause the abatement item so staff can convene further conversations; the work session concluded with agreement to pursue additional developer outreach and roundtable discussions before any final action.
Staff emphasized the proposals are intended to be phased over two years and that alternatives under consideration include rebates, forgivable loans, down-payment assistance and targeted nonprofit grants alongside or instead of abatement reductions. Christiansen said the next step would be to refine recommendations after stakeholder roundtables and return to council with specifics.
