From the Desk of Majority Leader Linda Upmeyer, April 13, 2012:
As I stated in my opening day remarks for the 2012 legislative session, Iowans expect their representatives to be accountable and do what is best for our great state. When there is a problem, we address it.
This week the House passed legislation related to Iowa’s Tax Increment Financing law, most commonly referred to as TIF. Tax increment financing is a mechanism that was introduced in Iowa during the 1950’s to help cities redevelop certain areas by capturing the taxes collected on property valuation growth (tax increments) within a specified district. These captured tax dollars are intended to be used for one or more of the following:
· Bond payments used to prepare the district for development
· Tax rebates to developers
· Infrastructure to develop an area
· Tax refunds to qualifying developments
According to a report published by the Public Interest Institute, Iowa has one of the most generous TIF statutes in the United States.
Over the past several weeks, Republicans and Democrats in both legislative chambers have been working together to address some concerns raised regarding the misuse of TIF dollars. For example, you may be aware of one of the most recent cases to highlight the misuse of TIF dollars, which occurred when TIF money was used to relocate a business less than five miles from Iowa City to Coralville. Over $16 million of taxpayer dollars were used to accomplish this particular move and this took place with a vote…that few people were aware of. This type of “economic development” was never the intent of the program. The true intent of TIF is to draw new businesses to the state and expand existing businesses.
In examining this issue, we realized that the Iowa Code does not clearly define the proper use of TIF. We understand that instead of pointing fingers, it is our duty to clarify the appropriate use of this program. We have a responsibility to the taxpayers of Iowa to do so. We found that while many cities have used TIF dollars in a successful and appropriate manner, there have been numerous instances where the money has been misused.
The objective of HF 2460 is to remove some of the gray area in the law and better define the proper use of TIF. These measures will ensure the program can continue to be a strong economic development tool for many years to come, while protecting the taxpayer.
HF 2460 does NOT eliminate the TIF program. The bill does provide more openness, more transparency, and more accountability for the program. New reporting and auditing measures have been included to help protect the taxpayer. The legislation requires all major taxing authorities to better communicate about the proper of use of TIF dollars. The bill also includes an anti-piracy provision that restricts the use of TIF dollars to move a business from a nearby city or county.
The taxpayers of Iowa elected us to look out for their best interest. State law establishes the TIF program and sets its parameters, and therefore it is our duty as state elected officials to address the misuse of taxpayer dollars in any state program and make changes when necessary. HF 2460 ensures the TIF program can move forward as a viable economic development option for our cities and provides more protection for the hard working taxpayers of Iowa.
As we near the end of the 2012 session, we will continue to look for opportunities to benefit Iowa taxpayers. We are hopeful the Senate will bring up the House property tax relief proposal- the only plan that benefits all classes of property taxpayers. Before the legislature adjourns for the year, we must take up a bill that prevents a looming $2.3 billion property tax increase over the next ten years. Now is the time for action, not talk on property tax reform.
As always, I appreciate hearing your thoughts and concerns. If you have any feedback, please don’t hesitate to contact me at linda.upmeyer@legis.state.ia.us or 515-281-4618.
