DFLers move bill to make Minnesota’s sales tax joint highest in America
Two weeks ago I wrote about a proposal from some DFL legislators in St. Paul to hike Minnesota’s state sales tax, with the revenue dedicated to housing programs. Now, the…
The southeastern Minnesota town of Harmony was projected to lose residents in the 2020 census, leaving the community short of 1,000 residents. But the prognosticators evidently failed to account for a thriving incentive program that pays cash to anyone building a new home in the city limits. The program’s popularity is being credited with helping spur a surprising mini population spurt in the rural town that proved the experts wrong, according to the Post Bulletin.
The program’s past success coincides with Harmony’s population growth between the 2010 and 2020 censuses. [Economic Development Coordinator Chris] Giesen said that when the home incentive program started, Harmony was one of Southeast Minnesota’s oldest and lowest median income communities. Now, the city’s population is trending younger, and residents’ median incomes have increased.
“Every data source up to the 2020 Census was projecting us to lose 50 to 70 residents, so about 5% or so,” Giesen said of the town of 1,026. “When we got the 2020 results, we actually grew about 2.25%.”
The cash payments for new and rehabilitated housing instituted eight years ago sparked a building boom by local standards.
Since Harmony debuted its home incentive program in 2014, 19 new units have been built, adding more than $3.3 million to the city’s tax base. As home values have increased over the past decade, Giesen said the city needed to update the program to account for more expensive developments.
“Before, the biggest rebate you could get was $12,000,” Giesen said. “That was based on a $250,000 taxable value, and so if you built a $400,000 house, you’d get the $12,000, but you wouldn’t get anything extra. … So then we expanded that schedule all the way up to $500,000.”
Building on success, Harmony just increased the amount of cash payments for housing projects up to $20,000. City officials pride themselves in running a streamlined program, no red tape.
The city recently expanded its home incentive program, established in 2014, by raising its cash rebate cap to $20,000 for those building homes valued at $500,000 or higher.
“The beauty of this program is the simplicity of it,” said Kerry Kingsley, president of the Harmony Economic Development Authority. “It’s not (just) for contractors, it’s not for certain incomes. It’s wide open.”
The cash rebates range from $1,500 to $20,000, depending on the new building’s taxable value. Renovations of dilapidated homes can also qualify for a rebate. Rebates are issued to developers and homeowners when the exterior of the building is complete.
But there’s another incentive besides cash that helps attract new residents in need of housing. The increasing interest in the quality of life and ability of working virtually in rural communities like Harmony.
“You could pluck Harmony, the entire city, and put it in a neighborhood in downtown New York or Seattle, and people would pay a bazillion dollars to live in this neighborhood,” Giesen said. “But we don’t have to deal with all the big city problems here.”
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