Rockford issues first new home permit since approving property tax rebate program

By Kevin Haas
Rock River Current
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ROCKFORD — The city has issued its first building permit for a new home since approving a program that provides a three-year property tax rebate to the owners of newly built homes and other residential structures.

City Council members unanimously OK’d the program on Sept. 6 in hopes that the tax incentives will spur more home building, which has been largely stagnant since the housing bubble burst and the Great Recession began at the end of 2007. The Rockford School Board then approved the rebate on Sept. 19.

Construction is now underway for a two-story home that backs up to the Rockford Country Club golf course on the city’s North End. The permit for the nearly 5,200-square-foot home, which replaces a single-story residence demolished at the site, was taken out Oct. 11.

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So far, that’s the only permit taken out since the rebate and building permit fee waivers program was put in place, although there have been others that have expressed interest, said Nelson Sjostrom, the city’s construction and development services manager.

Dennis Sweeney, executive vice president of the Home Builders Association of the Greater Rockford Area, said more investors will consider building in Rockford as word of the program spreads.

The rebate, which applies to the city and the Rockford Public Schools portion of your tax bill, is for single-family, townhome, two-family, three-family or multifamily structures built before the end of 2024. The city and the school district make up the biggest portion of your property tax bill in Rockford, accounting for roughly 72% of what you pay.

“It’s a huge move by the city of Rockford and the School District 205 to try to get some infill building going on,” Sweeney said. “If the lot is already there, it means the infrastructure is already in place and the longer it sits vacant you’re just losing potential there.”

Sweeney said the program can also help with the housing shortage in the city. Local Realtors have said for several years now that a lack of availability of homes on the market — combined with very few new homes being built — has driven up prices of homes in the region.

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But the high cost of construction makes it difficult for anyone to afford to build. Sweeney said the cost of construction right now is hovering around $275 per square foot. That means a modest 1,800-square-foot ranch would go for nearly a half-million dollars.

“Rockford has been a slow market,” said Kevin Flosi of Flosi Construction. “The demand is there for construction work but COVID has interrupted with long supply-chain waits … and price increases.”

Flosi, whose company builds custom homes and has been in business for 44 years, took out the first permit under the rebate. The two-story home is being built for a client to replace a ranch on the property. The new property, with a second-floor deck and 20-foot endless pool, will add to the city tax base once the rebate period is over. The construction value on the permit is $935,000. The home on the property before had a fair market value of about $114,000.

But the real goal for the program is to help solve the housing shortage. Realtors have experienced record low numbers of homes on the market, and business leaders have said more homes are needed to meet the demand for their employees, too, Mayor Tom McNamara said.

He said some of the jobs are coming from PCI Pharma Services, which plans to hire an additional 250 people in Rockford. The city also has workers for Stellantis, which is expected to reopen the Belvidere Assembly Plant to make a new mid-sized truck. In addition to that, an electric vehicle battery plant will be built in Belvidere to employ 1,000.

“We have so much economic development taking place, and that means more jobs. More jobs will mean more people moving to this area,” McNamara said. “If it’s PCI or soon to be Stellantis, we need more housing.”

The city had a similar tax rebate that expired in 2019, a year that saw the most home construction since 2007.

“My hope is that it will turnout that we picked the right time to offer this initiative,” McNamara said. “Anything that we can do to spur new construction will help us move in the right direction.”

This article is by Kevin Haas. Email him at khaas@rockrivercurrent.com or follow him on X at @KevinMHaas or Instagram @thekevinhaas and Threads @thekevinhaas