More Housing Help
GRAND RAPIDS — In an attempt to fill some vacant houses in the city and provide financial assistance to potential low-income homebuyers, commissioners agreed to adopt a new policy last week that gives a property-tax break to purchasers of homes that are sold by nonprofit housing organizations.
“If they’re not selling houses, they’re not going to be specing out more,” said Mayor George Heartwell of the nonprofits.
The new policy will exempt certain nonprofit-owned single-family houses and duplexes from property taxes for up to two years or until a title is transferred, whichever happens first. Public Act 612 of 2006 gives the Commission the authority to exempt the taxes.
“Property taxes can be a significant carrying cost, particularly in a slow real estate market. Under the Act, residential property owned by a nonprofit housing organization may be taken off the property tax roll for up to two years,” said Haris Alibasic, an administrative analyst with the city.
“Eventually, the Act may lead to increased property tax revenue when the new owners begin paying taxes on the improved home,” he added.
The new property-tax policy marks the second time in the last few months the city has tried to help nonprofit housing organizations and low-income buyers. Last November, commissioners tripled the down payment from $5,000 to $14,999 for qualified first-time buyers of 13 houses in older neighborhoods that are owned by three nonprofit housing groups.
That assistance is in the form of a zero-interest loan. But if a buyer lives in the house for at least five years, then the loan is forgiven. A buyer has to be pre-approved for a mortgage to qualify.
The new nonprofit property-tax exemption can’t be combined with another abatement, such as having a house located in a Renaissance Zone or in a Neighborhood Enterprise Zone. Nor does it apply to vacant parcels. Alibasic said there are from 10 to 12 houses in the city owned by nonprofits that could benefit from the two-year exemption.
“The policy will really help nonprofit housing developers,” he said.
The State Equalized Value of a home can increase from 10 percent to 72 percent after a nonprofit developer has renovated the structure, and that means more property tax revenue for the city when the work is completed.
“This policy is very critical to them,” said Connie Bohatch, community development director for the city, of nonprofit developers. “This is a good opportunity to further our work with nonprofit developers.”