Apartments are currently taxed as commercial property, but the property tax reform bills under consideration would re-classify apartments as residential property, essentially cutting the taxes in half. Cedar Rapids Mayor Ron Corbett calls it a “special interest” tax break for landlords.
“There is no — zero — job creation by reclassifying apartments from commercial down to residential. Zero!” Corbett told reporters on a conference call late this morning.
Iowa City Mayor Matt Hayak said there’s no guarantee landlords will pass that savings onto renters.
“We think rents are market-driven,” Hayak said. “Certainly, the occupancy rates here in Iowa City in these kinds of facilities are far too high to suggest that there will be any significant savings to renters.”
The Cedar Rapids mayor said apartments should pay higher property taxes because they are not like stand-alone houses.
“Apartment complexes are dense areas where a lot of people live and it requires more city services,” Corbett said.
Iowa City’s mayor said the budget for his college town would be reduced by up to 10 percent if this change is made. Tom Hanafan, the mayor of Council Bluffs, said property tax collections in his city would decline by up to 17 percent if apartments are taxed like homes rather than as commercial property — and cities statewide will be hit hard.
“There’s $100 million dollar loss to the cities in Iowa and there isn’t one job created,” Hanafan said.
AUDIO of conference call with Hanafan, Corbett and Hayak.
The mayors of Ames, Cedar Rapids, Council Bluffs, Davenport, Des Moines, Dubuque, Iowa City, Sioux City, Waterloo and West Des Moines are part of The Metropolitan Group.
Republican Representative Chip Baltimore, a lawyer from Boone, spoke last night during House debate of the property tax reform plan and he made this argument for reducing the tax on apartments: “The landlords that are out there — and I’ve talked to a lot of them in my district and they are hurting right now because they are paying commercial property rates on property taxes for the same essential type of property as residential families are and it’s killing them. If we want to encourage people to invest in rental properties in this state so that we, in turn, can provide affordable housing to working-class families, this is the very first step in the way to do it.”
The prospects for any kind of a property tax reform bill are dimming. At least one Senate Democrat opposes the plan his fellow Democrats have devised. And House Republicans say the bill that cleared the House Monday night is their final offer on the issue.