In the context of decades-long population loss, the Village of Peoria Heights is looking to incentivize new home construction by getting into the home-building business itself, selling the finished product, and giving the new homeowners 10 years of substantial property tax relief.
The Village could take advantage of a two-year-old state law, the Special Homestead Exemption for Certain Municipality-Built Homes (Public Act 103-0793), which passed in 2024 by a vote of 106-1 in the Illinois House and unanimously in the Illinois Senate. The Peoria County Board recently adopted the measure for all municipalities in the county at the request of Heights Mayor Matt Wigginton.
The measure authorizes a new property tax exemption to homeowners that would halve the taxable value of their homes for the first eight years of ownership, and reduce it by a third for the two years after that. It would apply to new home construction only on Village-owned property, which amounts to some 43 parcels now, with about 15 viewed as ripe for residential investment. The new owners would have to live there to receive the tax benefit, and they could not “stack” it with other tax reduction programs. If they were to turn around and sell the property themselves within that 10-year window, the tax break would not be transferrable.
“We build it, then we sell it,” with the tax break following the transfer of ownership, explained Wigginton.
This effort comes amidst concerns that the Heights could drop below 5,000 people come the next Census in 2030, which would have significant consequences including the forfeiture of local representation on regional boards such as the Airport Authority and CityLink. Meanwhile, federal tax dollars coming to the community are directly tied to Census counts.
The Village’s population has dwindled steadily since 1970, when nearly 8,000 residents called the Heights home. The primary cause of that exodus was the closure of the Pabst Brewery in the early 1980s. Exacerbating the problem is the fact that the Heights is landlocked, meaning the Village’s boundaries cannot grow and there is little land available for residential development. Finally, the Village suffers from a lack of new and family-friendly housing stock. Rental properties have jumped.
All of that has contributed to the school district’s struggle with enrollment, as well. Peoria Heights High School is down to about 200 students.
As a result, local leaders have voiced a sense of urgency about doing what they can to reverse those trends.
“It’s a tool in our tool box,” said Wigginton. “It doesn’t have to be utilized, but it gives us the option to use that arrow in our quiver.”
If there is a downside, it would be a loss of short-term tax revenue to local governments. Nonetheless, the mayor sees it as worth the risk.
“These vacant lots are creating zero in tax revenue now because we own it,” said Wigginton. “Even 50 percent is better than zero.”
Village trustees seemed generally receptive to the idea but have not taken a vote. Expect further discussion and/or action on this issue in the coming months.
“It’s not many times that Springfield gives us the opportunity to lower our taxes,” said Wigginton. “So when we’re given that opportunity, we need to grab it with both hands and take advantage of it.”