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Iowa House Looking at TIF Districts
Posted By Community On @ 6:25 am In Today's Local News | Comments Disabled
Tax Increment Financing Districts were created in Iowa to allow municipalities to subsidize areas to spur redevelopment. But the House is looking at changing the rules behind Tax Increment financing, or TIF. While TIF was created to spur redevelopment and attract businesses from out of state, some cities have used it to pull businesses away from neighboring towns. One example is the moving of Von Maur from Iowa City to Coralville using TIF dollars. In his weekly newsletter, Representative Jarad Klein discussed some of the new rules lawmakers are looking at. They hope to add more oversight to these districts by requiring multiple taxing entities to agree to them.
Cities in Southeast Iowa have lower percentages of business in TIF Districts than some of Iowa’s more densely populated areas. 18 cities in Iowa have 100% of their business in TIF Districts. In Washington, only 11.1% of businesses are in TIF Districts, in Kalona, 43.6%.
On the Hill with Klein – Week 14
We are really winding down here in Des Moines and are nearing the last few days of session. Conference committees are being formed to negotiate with the Senate on the appropriations bills and we look forward to completing those soon so that we can vote on final bills.
An area of interest this year has been Tax Increment Financing (TIF) Districts and adding some oversight to the practice. For those of you that don’t know, a TIF district is a region that a municipality puts money into to subsidize the cost of redevelopment. An example of this would be where the casino stands today. TIF is a valuable tool for our communities, but it has been abused by some cities and communities over the years. A recent abuse example is the moving of Von Maur from Iowa City to Coralville, using TIF dollars. The original idea was to attract businesses from out of state, not neighboring towns. The TIF Reform bill addressed many of these problems.
As the TIF Reform bill has moved through the process, several changes to the bill have been crafted into an amendment to address some concerns. Under the amendment, the following changes would be made:
o A majority of the other taxing entities approved it
o Limit to 10 years
The “15 plus 5” concept for new TIFs would change to a flat 20 years which mirrors current law.
TIF revenues could be used for public buildings, but a majority of the other taxing entities would need to approve.
Residential TIFs could occur regardless of population, but a majority of the other taxing districts would still need to approve.
These changes are a reflection of the feedback received from all stakeholders and done so in good faith in the hopes of achieving bipartisan support for the TIF Reform bill. With 6% of all property taxes in Iowa being used for TIF, and over $2.1 billion in TIF debt with little or no oversight from the state level, this TIF reform bill is a step in the right direction. It is my hope that the changes made to this bill will gain the support of reasonable people so that we are able to pass the reform. TIF has been misused and abused too many times and this bill creates a great deal of oversight and allows the state to monitor TIF better and make sure funds are going to valuable projects. We passed our version of the TIF Reform bill in the House this week and it is my hope the Senate does the same very soon.
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