State approves tax credits for new housing in Webster City

106 apartments, three single-family homes funded

The Iowa Economic Development Authority (IEDA) approved $39.84 million in workforce housing tax credits statewide on Tuesday, confirming the funds will support up to 2,093 new housing units in Iowa in fiscal year 2027. Two new housing projects in Webster City were awarded the highly-sought after tax credits; a 109-unit rental apartment community on west Wall Street, and three single family homes in Brewer Creek Estates. The tax credit awards are announced each year in September.

Kading Development's Wilson Estates, the apartment community on Wall Street, received the maximum tax credit allowed for a single project, $1,000,000. Kading has said it will build Wilson Estates in three phases. This suggests a first phase might total 72 apartments, with final build-out reaching as many as 218 units, the maximum authorized for its plat.

Origin Homes of West Des Moines was the recipient of a tax credit award for its planned three single-family homes in Brewer Creek Estates. We expect to have more information about Origin's plans in the near future.

Iowa allows 10% tax credits for new homes built in the state's most populous 11 counties, those near Des Moines, Cedar Rapids, Iowa City, Sioux City, Council Bluffs, Dubuque and Ames. The population of these counties is stable, or growing steadily. The largest growth in population in Iowa is centered in the Des Moines-Ames Combined Statistical Area. In some parts of this region, housing is expanding rapidly.

In the state's 88 least populous counties, including Hamilton County, tax credits of up to 20%

are possible when a demonstrated need can be confirmed by IEDA. This is effectively, a greater incentive for homebuilders to create new housing in smaller cities, where it may be more difficult to sell han in larger markets.

This year's awards were split, with 1,225 new units authorized for more populous counties, and 868 in the least populous counties. IEDA began its workforce housing tax credit awards in 2014, and has a stated objective of apportioning each year’s funds equally between urban and rural counties.

In addition to the tax credits, builders receive a full rebate on sales taxes paid on construction materials. Not only new construction is eligible for the tax credits; repairs to dilapidated homes, and so-called "upper story" housing, the apartments above retail stores in downtown districts qualify also. Every project must meet IEDA's criteria for "a demonstrated need."

In order to get the tax credits in the first place, the local government needs to come to the table, as well, pledging at least $1,000 per unit for all new homes, whether purchase or rental. Webster City has already committed up to $1,200,000 in civic improvements - roads, water, wastewater, and electric utilities to serve the new housing developments.