Rockford looks to extend program that provides tax incentives for building new homes

By Kevin Haas
Rock River Current
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ROCKFORD — The city is preparing to extend a tax incentive program credited with spurring the most homebuilding in Rockford since the Great Recession.

Aldermen on the City Council’s Finance and Personnel Committee on Monday approved an intergovernmental agreement that calls for the city and Rockford Public Schools to rebate property taxes for three years for single-family and multifamily structures built in the city this year. All other local taxing bodies have also been invited to participate.

“It’s yet to be determined what the final outcome will be on which taxing bodies will participate,” City Administrator Todd Cagnoni said. “Last year it was Rockford Public Schools 205, city of Rockford, library and Rockford Township. We believe all those taxing bodies at a minimum will participate in the program again this year. That generally represents approximately 75% of the property tax bill.”

The Rockford airport board will also consider the rebate. Four Rivers Sanitation Authority has chosen not to offer the rebate, Cagnoni said.

The committee also approved waiving fees for building plan review, building permits, inspection and water connection for new residential construction. Both matters were approved unanimously and move to the full City Council for a vote next week.

The city previously approved a three-year property tax rebate and building permit waiver in 2023, but the measure expired at the end of last year.

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City officials, homebuilders and local Realtors say the programs helped spur activity in what had been stagnant home construction in Rockford.

Last year, there were 131 new residential construction permits pulled, including 71 single-family homes. That’s the most since 2007, the year before the housing bubble burst and the Great Recession deepened.

Building new homes has been difficult because of supply chain issues that drove up material costs after the pandemic.

Realtors say demand from homebuyers has been strong, including Rockford being named the hottest real estate market in the country by Realtor.com, but there has been record low inventory of homes on the market to choose from. The low inventory, lack of homebuilding and high demand has sent prices skyrocketing to records highs.

Homes sold in Boone, Winnebago and Ogle counties for an average price of $215,666 throughout 2024, according to the Northwest Illinois Alliance of Realtors. That’s a 12% increase from the previous high annual average of $192,431 in 2023.

Realtors say adding more inventory, including new construction, will help buyers and tame the price growth that has made owning a home difficult for many would-be first-time buyers.

Aside from 71 single-family homes, construction permits were also taken for eight duplexes with 16 total units and 12 multifamily buildings with 44 units in the city last year.

Alderman Tim Durkee recommended the city explore a similar tax rebate program in the future for those who make extensive fixes to distressed properties.

“You’d have to put a percent. If you remodeled 70% of the value of the home to bring it up to spec,” Durkee said as an example.

Alderwoman Gina Meeks said she supported Durkee’s recommendation.

“I think that this was such a successful program the first time, and I would love to see us be able to scale this for other opportunities to increase the housing in this community,” Meeks said.

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