Harmony ups its cash rebate incentive to $20K for building new homes in the city

HARMONY — Want to build a new house? Harmony will give you up to $20,000 to build it there.

The city recently expanded its home incentive program, established in 2014, by raising its cash rebate cap to $20,000 for those building homes valued at $500,000 or higher.

"The beauty of this program is the simplicity of it," said Kerry Kingsley, president of the Harmony Economic Development Authority. "It's not (just) for contractors, it's not for certain incomes. It's wide open."

The cash rebates range from $1,500 to $20,000, depending on the new building's taxable value. Renovations of dilapidated homes can also qualify for a rebate. Rebates are issued to developers and homeowners when the exterior of the building is complete.

"We're basically structuring it off of how much they're going to pay in city taxes over five years," said Chris Giesen, Harmony EDA coordinator.

Since Harmony debuted its home incentive program in 2014, 19 new units have been built, adding more than $3.3 million to the city's tax base. As home values have increased over the past decade, Giesen said the city needed to update the program to account for more expensive developments.

"Before, the biggest rebate you could get was $12,000," Giesen said. "That was based on a $250,000 taxable value, and so if you built a $400,000 house, you'd get the $12,000, but you wouldn't get anything extra. ... So then we expanded that schedule all the way up to $500,000."

Back in 2017, contractor Andy Bunge received the maximum cash rebate available when he started building a fourplex home along Fifth Street SW.

"Ironically, I had read about that program in Harmony sometime earlier," said Bunge, owner of Bunge Construction in Lanesboro. "I had completely forgot about it, so I went ahead and did this project without realizing that was still available. In the process, Chris (Giesen) contacted me, and he says, 'You know, you qualify for a $12,000 payment.' So that was a wonderful surprise."

The program's past success coincides with Harmony's population growth between the 2010 and 2020 censuses. Giesen said that when the home incentive program started, Harmony was one of Southeast Minnesota's oldest and lowest median income communities. Now, the city's population is trending younger, and residents' median incomes have increased.

"Every data source up to the 2020 Census was projecting us to lose 50 to 70 residents, so about 5% or so," Giesen said of the town of 1,026. "When we got the 2020 results, we actually grew about 2.25%."

Giesen credits these changes, in part, to the incentive program, but also to some Minnesotans' desire to live and work from home in a small town.

"You could pluck Harmony, the entire city, and put it in a neighborhood in downtown New York or Seattle, and people would pay a bazillion dollars to live in this neighborhood," Giesen said. "But we don't have to deal with all the big city problems here."