Owen asks city for TIF with an end
by Gregory R. Norfleet · News · October 04, 2013
A school board member on Monday asked the city to end its tax-increment financing district in favor of one with a limited lifetime.
Board member Mike Owen, who is also director of the Iowa Policy Project, said West Branch’s TIF district, an economic development tool to attract businesses to the industrial park, ought to be updated under a newer state law that limits districts to 20 years.
At an urban renewal consultation meeting — a new state-mandated meeting where the city must explain upcoming TIF projects to other affected taxing districts — Owen pointed out that all of the projects inside the district are done.
“At some point you’ve got to turn the page and start over,” he said.
West Branch Community Schools does not lose any money under TIF districts, Mayor Mark Worrell said, because the state reimburses any local tax dollars diverted from schools. Superintendent Kevin Hatfield said that amounts to $2.93 per student, or about $2,300 per year.
“You’re lucky to get the small hit that you do,” he said, referring to the school district.
West Branch created its TIF district in 1993, so any company that wants to build a new warehouse, factory, etc. can approach the city and negotiate a plan to use taxes they would pay to the city toward their project.
The company pays the full amount of property taxes each year, but the difference between the value of the land on Jan. 1, 1993 and today, 20 years later, gets sent back to them. The company then uses that money on their building project.
Worrell defended the city’s TIF, saying the bigger the difference in the value of the property between 1993 and today, the more money is sent back to the company, and, thus, the faster the company can pay off its project. That means the city gets them back on the property tax rolls faster.
School Board President Kathy Knoop said the school would benefit from a newer TIF because it would mean a larger tax base.
“Can’t we close that window a little bit?” she asked.
Worrell said the TIF “has done a lot up there,” referring to the industrial park.
“We’re starting to see that come back,” he said. Once a TIF agreement with a company runs out, the property taxes return to present-day levels. However, if a company wants to do another project within the TIF district, they can negotiate a new TIF agreement with those 1993 property tax values.
Owen said the school district should not have to keep adjusting its tax levy to help improve the industrial park.
“At what point does the school stop paying for roads?” he said. “It’s not the school’s job to build roads.”
“It’s not?” Worrell said, noting that the school district benefits from the eventual increased property taxes, and any workers drawn here to take jobs at the growing industrial park companies may enroll children at the school.
School districts’ state revenues are largely based on enrollment figures. More pupils means more state funding.
“Schools are all about kids,” the school superintendent said. “We live or die on (enrollment).”
Owen said TIF districts should eventually come to an end.
“It shouldn’t be this perpetual cash cow,” he said.
Worrell said the TIF district will end “when that place is full.”
“If they don’t bring 100 jobs, we don’t want them” in the industrial park, the mayor said.
Knoop noted that while today’s city council seems to approach the TIF responsibly, future councils may not be so careful.
“There’s got to be some way to amend for a limit,” she said.
City Attorney Kevin Olson said the current city council could set a limit, but a future council could just as easily abolish it.
“You can’t bind future councils,” he said.
The city council will meet Oct. 21 to add projects to the list of work they wish to do inside the TIF district.