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Crews with Dave Schmitt Construction move dirt for the Blue Wing housing development in Audubon Park in Waterloo earlier this month.

Last week, the Waterloo City Council voted unanimously to continue the program that provides three years of property tax abatement for new one- and two-family homes.

The renewal of the City Limits Urban Revitalization Area for another five years was another pragmatic step.

The CLURA was initially adopted in 2011 as a way to encourage new housing starts in Waterloo, which was seeing an increasing number of homes being constructed in Cedar Falls and other neighboring communities.

“We have to sell Waterloo continually; Cedar Falls is easy to sell,” said real estate broker Amy Wienands. “So the tax abatement has been the biggest thing we’ve had to be able to captivate that audience.

“That tax abatement has been the biggest asset in our tool belt to keep a buyer in the market in Waterloo,” she added. “I think the success speaks for itself.”

All of that is true. Still, we’re left wondering if this will be a perpetual situation.

Initially, city planning staff recommended continuing the CLURA indefinitely without a sunset clause. However, a committee of real estate agents, developers, bankers and others recommended the five-year extension.

That was discussed at a public meeting earlier this month. “The realtors would like to create urgency for the sale; the bigger developers would like to have it not have an end date,” said former Waterloo Mayor John Rooff, a home builder who served on the committee.

“We feel that in fairness, not only to the housing industry but to the council, you have to have some sunset on it. That gives you a chance to review it again.”

We agree. We still support CLURA as a responsible strategy. Another review after another five years is another responsible strategy. For the time being, the program is making progress.

Adrienne Miller, of the city’s planning and zoning office, reported the city was averaging 37 new one- and two-family home starts annually in the five years before the CLURA.

That jumped to 73 new homes a year during the program’s first five years.

We’re certain CLURA played a large part. The incentive for a home buyer is significant. A person buying a new $200,000 home will save a projected $12,700 in property taxes over three years. Among other options, that allows buyers to invest more in their home initially when building in Waterloo.

Just like with tax incentives for big box stores and other larger development projects, these programs temporarily take away some tax revenue that would be going to public institutions such as school districts. On the other hand, Waterloo needs to broaden its tax base, and luring development, both residential and commercial, remains crucial.

It’s an interesting situation, but clearly the program is working.

The CLURA was first recommended by a committee that included developers, real estate agents, builders and others. A similar program had been used successfully by the city of Des Moines.

We originally supported the CLURA because of the simple fact Waterloo was not getting anywhere near a proportionate share of new single-family and twin homes in the area.

There are signs of chipping away at that cycle of stagnation – and for that reason, continuation of the CLURA is acceptable.

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