Two more homes in Beaver Creek will be built with the benefits of the city’s tax abatement on new housing construction.
At their Feb. 12 meeting, Beaver Creek City Council members conducted a public forum for two building permit requests with subsequent tax abatement requests.
One was for Tom and Heidi Freese for a new home to be built on two lots at 600 and 602 2nd Avenue in the Spring Brook Addition.
The other was for Tyson Metzger for a new home at 202 Ridgeview Road in the Spring Brook Addition.
Both homes will be built as single-family dwellings with estimated construction values over $474,000, and both will benefit from five-year tax abatements through the city of Beaver Creek (and Rock County and Hills-Beaver Creek School District, if applications are also made to the school and county).
The Freeses are building their home with an extra suite to accommodate her mother. They are both schoolteachers in Sioux Falls.
Metzger is a 2003 graduate of Hills-Beaver Creek High School and is a fifth-grade teacher in Brandon.
He and his wife, Jenna, are moving from Sioux Falls to Beaver Creek with their three children, ages 5, 3 and six months.
Chris and Eric Harnack, who are starting their own construction business, are building the Metzger home.
At Wednesday night’s meeting, the council took action on approving the building permits, and a public hearing will be scheduled to act on the tax abatement requests.
The county and school district will need to take similar action once the builders request abatements through those government entities.
The new homeowners will continue to pay taxes on the full value of the improved properties, and then the city, county and school reimburse them the difference between the original and improved values.
The Freeses and Metzgers join a growing pool of homeowners constructing new houses that will benefit from the city’s tax abatement program.
In December, the council approved a tax abatement for planned construction at 805 Ridgeview Road in the Spring Brook Addition.
The couple, Elbert and Dianne West, currently live and work in Sioux Falls and said they were looking for a place to build a new home when they heard about Beaver Creek’s incentive for homebuilders.
They told the council the lot was more spacious and more affordable than what they could find in Sioux Falls, and they said they like what they saw and learned about Beaver Creek.
The first homeowners to be approved for the new incentive were Chad and Tammy Rauk, who are also building a new home near the golf course.
Background
Rock County officials approved a countywide housing tax abatement on Sept. 3, 2019, and Beaver Creek followed suit on Sept. 18.
“It’s for economic growth,” Mayor Josh Teune said last fall. “We’re hoping to bring more people to town and to the school district.”
The new housing tax abatement program is for anyone building a new house in Rock County, and it lasts five years, commencing with occupancy.
Abatement applications will be accepted until 2024.
The amount of tax savings varies, depending on the value of construction and the taxing entities involved.
In Beaver Creek where the tax rate is comparably high, the savings is significant for new homebuilders.
To illustrate, using rough figures based on 2019 tax rates, homeowners building a $500,000 home in Beaver Creek’s Spring Brook Addition could save nearly $20,000 over a five-year period.
This includes county, city and school district tax abatements on improvements to a $35,000 lot.
With the abatement program, homeowners pay property taxes for five years based on the original $35,000 assessment before improvements.
After that, they pay full taxes on the improved value of the property.