County holds out on housing incentive as Effingham, T-Town move forward

·6 min read

Sep. 22—EFFINGHAM — Members of the Effingham City Council this week passed a resolution approving a joint ordinance allowing the addition of tax incentives for residential property within the Effingham/Effingham County Enterprise Zone.

The Effingham/Effingham County Enterprise Zone Board on Aug. 30 agreed to amend the Enterprise Zone by adding property and sales tax incentives for residential property owners. Members of that board include Effingham Mayor Mike Schutzbach, Teutopolis Village President David Repking and Effingham County Board Chairman Jim Niemann.

Three key municipalities — City of Effingham, Effingham County Board and the Teutopolis Village Board — and 20-plus taxing bodies such as school districts and townships have the option to approve the proposed changes. Once the approvals are complete, an application goes to the Illinois Department of Commerce and Economic Opportunity for final approval, according to Effingham Economic Specialist Sasha Althoff.

The purpose is to provide an incentive for a residential property owner in the Enterprise Zone whose property is not in a TIF district to construct new or rehab existing residential housing. Althoff said the change in the Enterprise Zone to include residential property would help close the housing shortage gap in the Effingham area.

Members of the Effingham County Board struck down the joint ordinance during their regular meeting on Monday.

County Board members in a 3-2 decision decided to strike down the addition of residential property tax incentives in the Effingham/Effingham County Enterprise Zone. Chairman Jim Niemann did not have the opportunity to vote on Enterprise Zone changes only voting if the board has a tie-breaking decision. County board members said they would like more clarification about the Enterprise Zone changes before reconsideration.

Wednesday night, the Teutopolis Village Board unanimously approved the revisions to the Enterprise Zone. Althoff presented the changes to the Teutopolis board before the vote, while Effingham Economic Development Director Todd Hull was in attendance to answer questions.

"Local employers are in need of more employees and one of the barriers to hiring has been a lack of availabe housing in our region," Althoff said. "By adding the following incentives to the Enterprise Zone, we hope to ease the burden of cost to build single-family homes and multifamily homes."

Highlights of the proposed changes are:

—Three-year property tax abatement of taxes over the original assessed base property value for new multifamily dwellings of two units or more.

—Five-year property tax abatement of taxes over the original assessed base property value for new construction of single family homes.

—Residential housing projects in the zone would also receive a sales tax abatement on permanently affixed building materials.

—Residential rehab projects could be eligible for a building materials sales tax abatement that would apply only for projects with a total minimum cost of $50,000.

Property tax abatements and sales tax incentives would not apply to Enterprise Zone properties that also are located in a TIF district.

Effingham Mayor Mike Schutzbach started a discussion on the resolution at the Effingham City Council meeting on Tuesday with a statement.

"City staff has been working to explore all resources that could assist employers, home builders and homeowners with the housing crisis which Effingham is experiencing, along with the entire nation," he said. "The city understands the consequences of not being able to provide increased workforce housing needs. We've heard from our business and our industries. We've heard from our home builders and our house hunters.

"We want to help find a solution to this problem. Although, not the perfect solution after hours of research, many resulting in road blocks, it was discovered the Enterprise Zone can offer a municipal tool of three- and five-year tax abatement incentives for residential housing.

"Unfortunately, the County Board decided not to approve the housing incentive program. With further discussion and teamwork, we hope to encourage the County Board to agree with the premise of how this tax abatement eventually has a positive impact on all community members."

Schutzbach said many Illinois municipalities have benefited from tax incentives offered through their Enterprise Zones. He said a vacant piece of residential property in the Enterprise Zone only generates minimum property taxes every year.

The property value of a vacant lot in the Enterprise Zone would significantly increase if a new house, apartment building, duplex or residential home is built on the property.

An eligible residential property owner in the Enterprise Zone — on a property not located in a TIF district — would pay property taxes on the original assessed base value of the vacant lot abating the extra tax that would be due if a structure is built on the property and the value of that property increases. If an apartment complex was built on a vacant lot, the property owner would pay property tax on the vacant lot for three years rather than paying taxes on the actual value of the property after the apartment building was constructed.

The City of Effingham, Effingham County, Village of Teutopolis or taxing body would benefit from the additional tax revenue from the increased property value of the former vacant property that now has an apartment building after the three-year property tax abatement period expires.

"We are disappointed with the roadblock we face with the County Board, but we hope to continually work together and find a solution for our residents, our home builders and our employers," said Schutzbach. "I hope we approve this tonight and work as a team through our community to try to attempt to fix what we perceive as a housing shortage."

Commissioner Hank Stephens agreed with Schutzbach.

"I totally concur with your comments and I vouch for the fact this is something that's been important for the whole time we've been on this council and we have tried," Stephens said. "We've explored everything. Unfortunately, our toolbox is fairly limited as to what we can do. This is one thing we can do and I certainly hope that there can be a reconsideration of this because I think it is important for this to go forward. Employers of all types are feeling the shortage of people and that is a direct result of a shortage of housing. I hope the issue can be revisited and we can move forward with this."

"When FLEX-N-GATE came here about a year ago, one of their big concerns was where the workforce was going to come from," Commissioner Larry Micenheimer said. "Housing is at a crucial point. All of our places (businesses) need more bodies in here and we've got to have some housing."

"I agree with everything that has been stated and hope that we will be able to work it out," Commissioner Merv Gillenwater said.

Charles Mills can be reached at or by phone at 618-510-9226 or 217-347-7151 ext. 300126.