March 12, 1997 in Nation/World

Measure Gives Builders Break New Houses Would Be Exempt From Tax Until They’re Occupied

Betsy Z. Russell And Matt Pember S Staff writer
 

Builders would get a tax break - at the expense of everyone else - under legislation that’s headed for a final vote in the Senate this week.

The measure, HB314, would make newly built houses exempt from property taxes until they’re occupied. That means builders of speculative homes wouldn’t have to pay taxes while they wait to sell the houses.

The bill quietly has passed the House, and it cleared a Senate committee this week with opposition only from a representative of the Idaho Association of Counties.

Kootenai County Commissioner Ron Rankin, when he saw the bill this week, called it “some kind of scam by the home builders association.”

“It’s corporate welfare for developers,” Rankin thundered.

Rep. Lee Gagner, R-Idaho Falls, the bill’s sponsor, said it would treat newly built homes the same as unsold mobile homes by classifying them as business inventory. Business inventory isn’t subject to property taxes.

“This would treat all units of construction in the same manner,” said Gagner. “This will level the playing field.”

Gagner didn’t dispute that giving one group a property tax break means everyone else must pay a little more to make up the difference. But he argued that the proposal would boost building and the economy, generating more wealth overall.

“The economic movement (caused by the bill) will offset anyone else’s cost,” Gagner said. “I see it helping to cause more affordable housing.”

Kootenai County saw more than 1,000 new homes built in 1996, according to chief deputy county assessor Mike McDowell.

The first five years of the decade provided an unprecedented building boom in the county. So many new homes have been built that a record number - nearly 1,900 homes - are on the market right now, according to the Coeur d’Alene Multiple Listing Association.

McDowell said it would be hard to calculate how much impact the bill will have on Kootenai County property taxpayers, because the county doesn’t track how long newly built homes sit vacant.

“That’s a hard one because it fluctuates from year to year,” McDowell said. “For the most part, homes are completed and occupied fairly quickly.”

But builders may be holding homes longer now than they were most of last year because of changes in market conditions, McDowell said.

Boise State University political scientist Jim Weatherby said he was surprised the bill hasn’t seen more opposition.

“It could be significant in some areas,” he said. “Somebody pays that bill for the extension of services to those properties, and under this bill it would not be the owners of those newly built properties.”

Mike McCoy, a Coeur d’Alene builder who’s chairman of the Idaho Building Contractors Association’s legislative committee, said vacant homes don’t require any services.

But Weatherby noted that, even when unoccupied, they need fire and police protection.

McCoy called that “minor.”

“This particular shift merely creates a more equitable taxing system,” he said. “These are not income-producing properties. These are speculative homes. Look at it from the perspective of a business owner.”

McCoy, a custom home builder, said he didn’t think the legislation would spur more speculative construction of homes. That’s driven more by interest rates and demand than by tax incentives, he said.

The bill originally tried to make the change retroactive to Jan. 1 of this year, but it was amended in the House to become effective on Jan. 1 of 1998.

The tax exemption could last for up to one year.

The North Idaho Building Contractors Association contacted McDowell about the legislation, and he told them his office could administer it, McDowell said.

But he expressed no opinion about the legislation.

“This is an exemption that would, in fact, shift the burden to other property owners,” McDowell said. “This is a legislative matter. We follow the rules the Legislature sets.”

, DataTimes


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