Economic growth in some areas of the Corridor, coupled with state rules on education spending, are causing many school districts’ property tax rates to fall.
Property owners in both the Cedar Rapids and Clear Creek Amana school districts could see significant drops to their school property taxes, according to fiscal 2019 district budgets, and Iowa City residents will see a lower-than-expected increase after approving a massive school bond.
The statutory deadline for Iowa school boards to certify district budgets is Sunday.
The Cedar Rapids school district will see the largest rate decrease in the Corridor, as its taxpayers are set to pay 31 cents less per $1,000 of taxable assessed value in fiscal year 2019, which begins July 1,
The decline is primarily due to the district’s growing property tax base, district Chief Financial Officer Steve Graham said last week at a school board meeting.
Schools in Iowa are allowed to spend only at levels authorized by the state, which lawmakers earlier this year set at a 1 percent increase. The rule means school district’s tax rates often seesaw with economic growth in the district — as a tax base grows, its tax rate will fall.
“It’s simple mathematics,” Graham said.
The growth of Cedar Rapids’ tax base is partially due to ongoing business investments and expiring tax incremental financing development deals, said Doug Neumann, executive director of the Cedar Rapids Metro Economic Alliance,
“Really our strength over the last couple of years has been because existing industry has been healthy and has been investing,” Neumann said, noting growth in the city’s manufacturing sector. “From a tax base perspective, those are really significant. There are really high values in manufacturing — when you’re adding value there, you do end up seeing the impact on a tax base.”
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To a lesser extent, Neumann said Cedar Rapids’ growth could be due to expiring tax incremental financing, or TIF, agreements. As agreements expire, the incremental taxes can be used more broadly.
“There’s some incentive upfront to make the development work, but at the back end of that, after a number of years, this is exactly what happens,” Neumann said. “Those things come on to the tax base, and taxpayers end up benefiting.”
TIFs expire in Cedar Rapids nearly every year, he added, though the number is “not as dramatic as Coral Ridge” in Coralville.
END OF TIF MEANS DROP in CLEAR CREEK AMANA
The TIF expiration of $396 million worth of property value tied to the Coral Ridge Mall is the cause of an 18 cent drop in the Clear Creek Amana district’s property tax rate next year, Superintendent Tim Kuehl said.
The expiration means $11.7 million in new tax dollars, $3 million of which go to the Clear Creek Amana district.
Kuehl and the school board were pleased to see the decline — which, like in Cedar Rapids, is ultimately due to a growing tax base.
“I’m very confident in saying it’s not going to go up,” Kuehl said. “And I’m optimistic and hopeful to see a little bit of the continued decline, if our valuations continue to increase in our district as they have.”
In the consolidated district, Clear Creek residents will pay a tax levy of $16.58 per $1,000 taxable assessed value and Amana residents will pay $16.78.
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The tax drop comes despite the approval of a property tax-backed bond measure in September.
IOWA CITY: BIG INCREASE FROM BOND ISSUE
Unlike Clear Creek Amana, the Iowa City school district does not expect to benefit from a wave of expiring TIFs, Superintendent Stephen Murley said.
But after voters in Iowa City approved a massive school bond measure in September that came with an expected 98 cent per $1,000 taxable assessed value increase to the rate, that uptick is now set to be slightly smaller at about 96 cents more.
Murley credited that to the district’s tax base.
“We’re fortunate in Iowa City because our tax base is growing so rapidly,” Murley said.
The bond is funding the completion of the district’s facilities master plan, which impacts every school in the district. Murley said projects in the plan also could be finished sooner than expected, by 2021 instead of 2014, as he and the school board look to accelerate construction.
Despite the large property tax levy rate increase, the Iowa City district’s fiscal 2019 levy rate of $14.94 per $1,000 of taxable assessed value still will be the lowest in the Corridor.
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