Mike Menenhall, Newton Daily News, Iowa –
In the past decade, the City of Newton has been a heavy proponent of Tax Increment Financing to fund revitalization projects and spur economic growth.
One of the most visible examples of a TIF at work in Newton is the Iowa Speedway. The speedway project in its entirety has an assessed value of more than $44 million, according to an overview of Newton’s nine TIF districts provided by Newton Community Development Director Bryan Friedman. TIF bonds equaling $19.1 million were issued by the city to assist in the racetrack’s infrastructure costs. The debt is being repaid by a combination of property taxes and a $1 admission ticket surcharge by Iowa Speedway. Racetrack operators also received two years of TIF rebates for fiscal year 2011-12 and 2012-13.
Projects of this scope require years of planning, legal analysis, planning and zoning and city council open hearings to make sure the public financing is well allocated and taxpayers know what they’re buying. In 2012, some state legislators thought with the possibility of municipal negligence in TIF funded projects, more transparency was needed.
House File 2460, which was signed into law by Gov. Terry Branstad on May 25, requires cities to increase the detail in reporting of TIF projects authorized under Iowa’s Urban Renewal Law. The bill states that cities must now submit all physical and legal information for each TIF district including maps, duration of TIF rebates and payments, expiration dates and a copy of the infrastructure plans to the State Department of Management. The state is also asking for names of the TIF rebate benefactors, total amount of debt, taxable valuations of properties in the TIF districts and information on all TIF improvements related to housing. Iowa municipalities also are being asked to report the number of jobs created with each project and the amount of non-city investment.
The new reporting became effective July 1, encompassing all information for projects active within the last fiscal year. But Friedman said Iowa cities are still waiting to see the new TIF reporting forms from the DOM. Friedman indicated that the city currently files a report to the state at the end of every year containing an overview off all TIF projects in Newton.
“In terms of being transparent, we’re already doing that,” Friedman said. “There were already pretty stringent reporting requirements. The city is audited each year and TIF is part of the overall city audits. There may be a few additional things to report in a more consolidated way, but it will be additional work for cities and counties to comply with the new regulations.”
The cost for the additional reporting to Newton and other Iowa entities that use TIF remains to be seen. But Friedman said he is concerned the new regulations will create a lack of “nimbleness” to respond to projects needing immediate action and could benefit from TIF. HF 2460 gives the school districts and counties resolution or “veto” power in TIF projects since city, school and county valuations are captured by the TIF districts. This will give TIF-seeking governmental bodies an additional hoop to jump through.
Jasper County Rep. Dan Kelley voted for the reform. He said the state has to support local economic development while increasing transparency to prevent abuse of TIF.
“There are 99 counties in Iowa and 99 different TIF structures,” he said. “The best economic development decisions are made locally. When local governments are empowered, positive results are expected.”
Currently, Newton has no public plans for new TIF districts or projects, but Friedman said the city is constantly looking for opportunities to use the funding option where warranted.
“We’re always looking for areas that could use the economic development — anywhere that’s characterized by rundown properties and anywhere there are opportunities for industrial and economic growth,” he said.