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Working group hopeful of TIF reform

Rod Boshart,  CR Gazette –

DES MOINES — A bipartisan House-Senate working group is hoping to craft reforms to the state’s tax increment financing system that can win legislative approval this session, group leaders said Monday.

Sen. Joe Bolkcom, D-Iowa City, chairman of the Senate Ways and Means Committee, said there is consensus building around efforts to bolster transparency, expand reporting requirements and curb “piracy” situations in which TIF is used by competing communities to lure development. The changes could require a net increase in jobs created, he said, or a stipulation that companies seeking public assistance in those cases would have to have facilities operating in both competing jurisdictions.

“We’re looking at some very basic ways to try to tighten it up,” said Bolkcom, noting that TIF areas have a $283.2 million impact statewide with somewhat limited state oversight. “There’s a lot of interest in trying to tighten this up while still making sure it’s a good, robust economic development tool. I think we have a great opportunity to work in a bipartisan way to put together a bill.”

A TIF freezes the property taxes on a site at predevelopment levels and diverts the increase in taxes, or increment, into a fund used by the city. Sometimes the increment goes to a developer of a project in the TIF area, or the city might use it for infrastructure work. Closer legislative examination was sparked this session by Coralville’s use of TIF to finance its Iowa River Landing commercial project, which last fall landed a Von Maur department store as its retail anchor.

Rep. Tom Sands, R-Wapello, chairman of the House Ways and Means Committee, said there have been mounting concerns that Iowa has some of the nation’s most lenient TIF provisions with less oversight than other parts of the country.

“The goal should really be to get good law passed and I believe there is a way to do that in the House and Senate, but it could be a close vote,” he said. “I do see a path. There are some days that path appears to be circular instead of in a straight line.”

Sands said there appears to be broad support for more reporting and more transparency, but that drops off when legislative discussions turn to placing limits on the length and use of TIF as a mechanism that cities and counties can use to finance public improvement projects and to fund economic, housing and residential development incentives.

“TIF has got to be addressed,” he said. “There are some that are wanting to do very little, but it’s real hard for them to defend the abuses of TIF that some cities are using right now. I think if we don’t get it under control, the abuses will continue to grow just because if it’s OK for a handful of cities to do it, then it’s probably OK for every city to do it.”

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