Cities View Homesteads as a Source of Income
Give away land to make money?
It hardly sounds like a prudent scheme. But in a bit of déjà vu, that is exactly what this small Nebraska city aims to do.
Beatrice was a starting point for the Homestead Act of 1862, the federal law that handed land to pioneering farmers. Back then, the goal was to settle the West. The goal of Beatrice’s “Homestead Act of 2010,” is, in part, to replenish city coffers.
The calculus is simple, if counterintuitive: hand out city land now to ensure property tax revenues in the future.
“There are only so many ball fields a place can build,” Tobias J. Tempelmeyer, the city attorney, said the other day as he stared out at grassy lots, planted with lonely mailboxes, that the city is working to get rid of. “It really hurts having all this stuff off the tax rolls.”
Around the nation, cities and towns facing grim budget circumstances are grasping at unlikely — some would say desperate — means to bolster their shrunken tax bases. Like Beatrice, places like Dayton, Ohio, and Grafton, Ill., are giving away land for nominal fees or for nothing in the hope that it will boost the tax rolls and cut the lawn-mowing bills.
In Boca Raton, Fla., which faces a budget gap of more than $7 million, leaders are thinking about expanding the city’s size and annexing neighborhoods as an antidote. Sure, more residents would cost more in services, but officials hope the added tax revenues will more than make up for it.
And leaders in Manchester, N.H., and Concord, Mass., are taking an approach that might have once seemed politically unthinkable. They are re-examining whether their communities’ nonprofit organizations really deserve to be tax-free.
“The stress of the past couple years is causing us to look absolutely everywhere,” said Anthony Logalbo, the finance director in Concord, where officials realized that 15 percent of the town’s property value had become tax exempt and sent letters to nonprofit groups asking whether they would consider paying something to the town.
“Private schools and nonprofit museums and community organizations benefit the town in lots of ways,” Mr. Logalbo said, “except that they don’t contribute to the cost of running the town.”
Analysts say that this year and next, city budgets will reach their most dismal points of the recession, largely because of lag time inherent in the way taxes are collected and distributed.
Despite signs of a recovery, if a slow one, in other elements of the economy, it may be years away for many municipalities. Between now and 2012, America’s cities are likely to experience shortfalls totaling $55 billion to $85 billion, according to a survey by the National League of Cities, because of slumping revenues from property taxes and sales taxes and reduced support from state governments.
And even in places like Concord and Beatrice, where officials say budget strains are not severe enough to lead to layoffs or major cuts, a slow chafing has still taken a toll.
Beatrice (pronounced bee-AT-russ), which sits about 40 miles south of Lincoln down a highway called the Homestead Expressway, is recognized as home to the first Homestead Act application nearly 150 years ago. That law ultimately granted 270 million acres of land in 30 states to nearly anyone who could survive on it and pay a minimal fee.
Daniel Freeman, who came from Ohio, is said to have filed his claim for 160 acres near Beatrice just after midnight on Jan. 1, 1863, the day the law took effect. There were others who filed claims in other places on the same day (some say they were actually first), but Mr. Freeman captured a place in history. The government paid to take back his Nebraska homestead decades later to turn it into a national monument that honors the Homestead Act and how it transformed the nation’s population.
Beatrice’s new Homestead Act is not the first to revive the land giveaway. Some tiny towns, particularly in the Great Plains, have made such offers before, mainly as a way to increase dwindling populations. But disappearing is not the fear in Beatrice, which is home to several lawn-mowing equipment manufacturers and where the population has held steady at around 12,000 for decades.
Instead, city officials are hoping to return some of the many lots the city has accumulated, because of unpaid taxes or flooding risks from the Big Blue River, and return them to the tax rolls. The city has not suffered gaping budget shortfalls or the property tax declines seen in some larger cities, but some large purchases and road reconstruction have been delayed, waiting for a return to flusher times. Click to continue »
