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Peoria County board reviews state exemption that could let municipalities build homes and give buyers temporary tax break
Summary
County administrators explained a 2024 statute that would let municipalities build and sell homes with a reduced assessed value (50% for eight years), at Peoria Heights' request; county attorneys will review and the board may consider a Ways and Means vote next month.
Peoria County Board members spent part of their meeting reviewing a 2024 state tax-code exemption that would allow municipalities to build new homes and grant buyers a temporary reduction in assessed property value. Administrator Scott Sorrel described how the measure would operate if the county adopts it by simple majority.
"The way the program works is… the new dwelling unit needs to be owned by the municipality," Sorrel said, explaining that the municipality would construct the home, sell it to a private resident who makes it their primary residence, and that the property's assessed value would be reduced by 50% for the first eight years. He added the reduction falls to one-third in years nine and ten and ends in year 11. "It's also non-transferable," Sorrel said.
Why it matters: Member Danny Phelan brought the request from the Village of Peoria Heights, which faces geographic limits on growth and could use targeted infill tools. Sorrel said an initial GIS check found roughly 15 vacant build-capable lots in Peoria Heights that the village might target; if adopted countywide, the exemption would apply across Peoria County, not solely inside Peoria Heights.
Board members asked how this exemption would interact with other local tools, such as tax-increment financing (TIF), urban decay ordinances and rural enterprise zones. Member Terry Ruhland said he preferred that small municipalities not compete with existing rural enterprise zone incentives, and Rob Reneau asked whether municipalities could tear down dilapidated buildings and rebuild under the statute.
Sorrel said the statute "does not speak to that situation" in explicit terms but that, on its face, acquiring parcels, demolishing dilapidated structures and building new dwellings for sale may meet the statute's requirements. County attorney Jennie Cordis Boswell told the board her office had not yet reviewed the statute and offered to report back at a future meeting.
No formal county action was taken at the meeting; Sorrel said the county will circulate a draft ordinance and briefing and that the item could come to the Ways and Means committee for a vote next month. Members emphasized a need to clarify whether the exemption can be stacked with other state or local exemptions and whether municipal projects would be subject to prevailing-wage or grant-billing rules.
Next steps: County staff will provide a draft ordinance and legal review; board members were asked to submit questions to Administrator Sorrel ahead of further committee consideration.
