Friends of WCS

Attached below is a 2006 article from the Des Moines Register that shows how Clear-Creek Amana (CCA) became the Iowa school district with largest percentage of property value tied up in TIF districts. CCA has 41.36% of its total taxable property value off limits to school budgets until 2017.

A Challenger Emerges:

However, TIF Newcomer, Walnut CSD (currently ranked 159 of 360) stands to rocket past CCA for this dubious honor if Pottawattamie County passes a proposed TIF district on the Walnut Wind Project. The percentage of property value off limits to  Walnut CSD currently stands at 2.81%, just above the state median of 2.36%.  In five years Walnut will reach #1 or #2 with between 36% and 50% off limits to taxing authorities not named “Pottawattamie County”.

When enrollment is factored into the equation, Walnut will be the undisputed champion by a country mile renewed urban mile.

Begin Des Moines Register:

Mall revenue lets city go shopping

And it decided to buy a hotel project by bottling up tax dollars until 2017

Donnelle Eller

Des Moines Register

August 13, 2006

Coralville, Ia. – Coral Ridge Mall promised more than good shopping when it opened eight years ago. The $100 million development also held the hope of spurring millions annually in new property taxes.

Today, the city has harnessed that money – now $7 million – but it’s not being used on local services.

City leaders opted to keep the new tax dollars until 2017. The money will be used to pay off long-term debt on a $60 million hotel-convention center that opens this month.

Over time, that venture could yield hundreds of new part- and full-time jobs. But the new business will also compete with others in the area – including a similar hotel-convention center in downtown Iowa City – while consuming a ready pool of public money that some say should be used to pay for immediate needs.

“We’re hurting our schools, parks and roads so the city can build” a luxury hotel, said Michelle Nagle, who ran unsuccessfully for Coralville mayor in 2003. “All taxpayers bear the brunt of it. And if it’s not successful, we’ll all pay again.”

More cities across Iowa are tapping an economic development tool called tax increment financing, or TIF, to generate local dollars for economic development. The financing allows local governments to use new property tax dollars within special economic development districts to help pay for the costs of getting projects off the ground.

Pros and cons of TIF

Proponents view TIF as one of Iowa’s best hopes for fulfilling the state’s most pressing mandates: attracting new jobs, businesses and residents. Statewide, the value of property within the hundreds of special taxing districts that now blanket many Iowa communities has tripled to $6 billion. That’s 5.6 percent of the state’s entire $107 billion tax base.

“If you take a look at what’s happened in the state of Iowa – take a look at the progress – I think you can credit a lot of it to this tool,” said Bob Josten, a Des Moines bond attorney who has counseled hundreds of cities and counties on how to use the special financing.

But more Iowans are questioning the true cost of TIF. A report released this year by two Iowa State University researchers examined TIF’s explosive use in recent years. Consider:

- The property tax dollars that cities and counties have amassed from TIF districts for development in the past decade have nearly tripled – to $192 million from $68.6 million.

“It’s a substantial amount of new growth being hoarded or sequestered in the name of economic development – often as direct payments to specific firms,” said David Swenson, an author of the ISU report.

- Many Iowa cities now use most of their new tax-base growth for economic development. Coralville, for example, has snagged about 70 percent – or $296 million – of new growth over the past decade for TIF projects; Des Moines has tapped about 62 percent – or $297 million; and West Des Moines, 26 percent – or $197.3 million.

Roughly 30 percent of new growth statewide is now used for economic development.

- Long-term debt incurred by cities and counties to pay for TIF projects grew to $1.6 billion in 2005, a 13 percent increase from 2003, the only two years in which the state has collected such information.

- Not all of the debt taken on is used to finance development that will directly create jobs or attract millions of dollars in investment.

More and more, the money is being used to pay for projects that local leaders believe improve residents’ quality of life, such as housing, libraries, aquatic centers and bike trails.

- No government agency or organization in Iowa, meanwhile, keeps track of how many new jobs that investment really creates.

Impact on schools

School districts, in particular, pay a price. This year, Iowa school districts were blocked from about $79 million in new tax revenue because cities had earmarked those property tax dollars for development. State taxes picked up a large chunk of that loss – about $32 million – through the state funding formula. Local taxpayers paid another $47 million, the ISU reports show.

Margaret Buckton, a lobbyist for the Iowa Association of School Boards, said her group wants the Legislature to slow the growth of TIF.

Buckton said tax increment financing made sense when cities first began using it to reverse urban decay. Now TIF is subsidizing projects in places where property values are already “going gangbusters,” she said.

Jim Seelman, president of the Clear Creek-Amana school board, is aware of the power cities and counties have to capture local tax dollars for economic development.

The fast-growing school district cannot tap tax dollars from nearly 60 percent of the value of area businesses and homes. No other district in the state is affected more by TIF, according to the Iowa Association of School Boards.

The state is forced to replace about half of the nearly $2 million in taxes lost annually in the school district because of TIF projects. That revenue could pay for Clear Creek-Amana’s new $25 million elementary and high schools over time, Seelman said.

Instead, voters agreed to increase their school district taxes to finance construction of the schools, which will be built next year.

With Coralville leaders deciding to continue using tax dollars from the TIF district until 2017, only the youngest of Clear Creek-Amana’s 1,425 students will benefit while they are in school from new money in the city’s expanded tax base.

“I hope I’m not dead by the time it comes on the tax rolls,” Seelman said.

The right decision?

City leaders, meanwhile, believe the area will benefit from their decision in 2002 to use new TIF tax dollars from development around the mall to build the hotel-convention center.

Coralville City Manager Kelly Hayworth said the project should attract retail and entertainment development along the Iowa River, even if the public project itself will be exempt from paying property taxes.

The center’s competition, the $30 million project in Iowa City, also is receiving $6 million in TIF dollars.

Marc Moen, developer for the Iowa City project, hopes both find their niches, although he added that the convention centers have already competed with each other for business.

Development around the hotel-convention center won’t help Clear Creek-Amana, said Seelman, the school board president. With Coralville leaders expanding the mall TIF district east along Interstate Highway 80, any new tax dollars generated by development around the convention center will benefit the Iowa City school district.

Buckton, the school lobbyist, said that’s one big problem with tax increment financing: City and school boundaries often are very different, meaning schools can lose tax revenue to TIF projects but residents in the district are unable to vote on the leaders making the decisions.

“I call that taxation without representation,” Buckton said.

Tags: Taxes, TIF, Wind Farm

From the Nonpareil:

http://southwestiowanews.com/articles/2010/10/09/council_bluffs/doc4cafd1cf6d75c308436129.txt

Contact Information for your elected Board of Supervisors:

Supervisor, At-Large Loren Knauss 227 South 6th Street, 2nd Floor Council Bluffs, IA 51501 Phone: 712-328-5644 Fax: 712-328-5770 LorenKnauss@msn.com Supervisor, At-Large Lynn Grobe 227 South 6th Street, 2nd Floor Council Bluffs, IA 51501 Phone: 712-328-5644 Fax: 712-328-5770 Supervisor, At-Large Lynn Leaders 227 South 6th Street, 2nd Floor Council Bluffs, IA 51501 Phone: 712-328-5644 Fax: 712-328-5770 LynnLeaders@gmail.com

Supervisor, At-Large Chair Pro Tempore Melvyn Houser 227 South 6th Street, 2nd Floor Council Bluffs, IA 51501 Phone: 712-328-5644 Fax: 712-328-5770 Supervisor, At-Large Chairman Roger Williams 227 South 6th Street, 2nd Floor Council Bluffs, IA 51501 Phone: 712-328-5644Fax: 712-328-5770

Tags: Taxes, TIF, Wind Farm

Two Articles related to the TIF district Issue (emphasis added):

Supervisors discuss TIF district

Money generated would be earmarked for roads

By Chad Nation, News Editor
cnation@nonpareilonline.com

The Pottawattamie County Board of Supervisors is investigating establishing a tax increment financing district around the more than 100 existing wind generators in the eastern part of the county to capture money for road improvements.

At Wednesday’s board meeting, supervisors discussed assembling the numbers for a TIF zone and speaking with area school districts that would be affected.

Board Chairman Melvyn Houser said there are still a lot of questions that need to be answered in the process.

“We are still in the exploratory stages,” he said. “Counties don’t do a lot of TIF districts, cities are certainly more familiar with the process.

“It is a new experience for us.”

The county was involved in a TIF district with the Bent Tree subdivision development in the 1990s, Houser said, but none of the current board members were involved. That TIF ended this year.

According to a map provided by Pottawattamie County Planning Director Kay Mocha, 18 of the wind generators are located in the A-H-S-T Community School District and 93 in the Walnut Community School District.Under Iowa law, the county is not able to levy property taxes on the net acquisition cost for the wind turbines the first year. In the second year, the county can tax 5 percent of the acquisition cost, a figure that increases 5 percent per year up to 30 percent of the acquisition cost in year seven, at which point the taxable value is capped through the 20th year.

Currently, Houser said the land’s tax base value is as agriculture land. If a TIF were created the county would capture any value above the base value.

Houser said it was unclear how much money would be captured, but in May, the Supervisors said that if the 5 percent estimate were to be applied, it would increase the county’s property tax base by about $16 million. If a TIF area were established, the county would capture all of the tax money from the area, above the base value and less the school district’s debt service and physical plant and equipment levies.

Houser said a majority of the money, a maximum of 80 percent, that the school districts lose would be “backfilled” by the state.

If the TIF were established, the funds would be used in an Urban Renewal district – which would also be created in the northeast portion of the county.

County Engineer John Rasmussen said he has identified $10 million in roads projects that the TIF-generated funding could be used for.

Rasmussen said the Urban Renewal area would be located east of County Road L66 and north of U.S. Highway 6.

“We have a lot of torn up roads in that area,” Rasmussen told the board. “There is probably $10 million of work there over the next five years.”

Mocha said she and Rasmussen would work on getting the numbers to the board, and Houser said the issue would then be discussed with the school districts it would affect.

“We can’t make a good decision without the numbers or without talking to the school districts,” he said. “We’ll find out what the numbers are and if we decide to proceed we’ll visit with the school districts to get their perspective.”

No decision yet on county TIF district

By Chad Nation, News Editor, cnation@nonpareilonline.com

Published: Tuesday, September 14, 2010 10:50 AM CDT

County roads could benefit from tax increment financing on wind generators in northeastern Pottawattamie
County, but the Board of Supervisors wants to see how much money local school districts would lose
before moving forward.

The wind generators are in two school districts. Eighteen are located in the A-H-S-T Community School
District, and 93 in the Walnut Community School District.

Pottawattamie County Planning Director Kay Mocha said if the board wants to move forward with a TIF
district, the decision must be made soon. The county would need to enact an ordinance by Dec. 1 to start
the TIF zone with a base year of zero percent.

Under Iowa law, the county is not able to levy property taxes on the net acquisition cost for the wind
turbines the first year. In the second year, the county can tax 5 percent of the acquisition cost, a figure
that increases 5 percent per year up to 30 percent of the acquisition cost in year seven, at which point the
taxable value is capped through the 20th year.

If the county were to enact TIF in the second year, the 5 percent figure would be used as a base, and the
school districts would capture their portion of those taxes moving forward.

Currently, board Chairman Melvyn Houser said the land’s tax base value is as agriculture land. If a TIF
were created, the county would capture any value above the base value. If a TIF area were established by Dec. 1, the county would capture all of the tax money from the area, above the base value and less the
school district’s debt service and physical plant and equipment levies.

Houser said a majority of the money, a maximum of 80 percent, that the school districts lose would be
“backfilled” by the state.

Exactly what those tax and debt service numbers are is still up in the air, but Mocha said 5 percent of the
wind generators’ acquisition would increase the county’s property tax base by more than $17 million.

If the TIF were established, the funds would be used in an Urban Renewal district – which would also be
created in the northeast portion of the county.

County Engineer John Rasmussen said he has identified $10 million in roads projects that the TIF-
generated funding could be used for.

Rasmussen said the Urban Renewal area would be located east of County Road L-66 and north of U.S.
Highway 6.

“Without a TIF, all of our roads money will be going to that corner of the county for the next 10 years,”
Rasmussen told the board.

Rasmussen identified 22 miles of roads within the possible urban renewal zone that need repairs, including
10 miles on County Road G-30, five miles on County Road M-16, 3.5 miles on County Road G-42 and 3.5
miles on County Road M-47.

“My concern is if we don’t do the TIF, where will we be? These are projects that need to be done anyway,” said Supervisor Lynn Leaders.

Supervisor Lynn Grobe seemed to agree.

“All those roads need repaired, and we don’t have the money to take care of it all,” he added.

Houser said the board would receive the tax and debt service numbers from the Pottawattamie Auditor’s
Office by Sept. 20.

Tags: Taxes, TIF, Wind Farm