Coralville approves 1% local-option sales tax measure for November election

CORALVILLE — The City of Coralville will put a 1 percent local-option sales tax before voters in the November general election. The ballot language was approved this week by the City Council as a way of funding property tax relief and revenue for capital projects like a new recreation center.

Under state law, 50 percent of the revenue must be put toward property tax relief. Local municipalities have discretion over how the other 50 percent is used. A simple majority vote is required to pass the tax, which would go into effect July 1, 2026.

Coralville’s ballot language reads, “50% of the tax shall be used for capital projects, including but not limited to, the recreation center project, parks, trails and other projects identified from time to time in the City’s capital improvements plan, for programs and initiatives that increase affordable housing supply and support neighborhood reinvestment projects, home improvement and home renovation grants, rental rehabilitation, and other housing projects designated by the City Council; and (ii) 50% for property tax relief.”

All local-option sales taxes are collected at the county level and then distributed to participating cities using a formula from the Iowa Department of Revenue that takes into account population and property valuations. That means the expected revenue each city can collect from the tax depends on which cities’ voters approve the tax.

City staff, using retail sales from FY24, have presented revenue scenarios that ranged from $3.6 to $7.3 million per year.

Revenue to be directed toward recreation center

Coralville is moving toward construction of a new recreation center, east of the existing facility in ST Morrison Park. The plan is estimated to cost $50 million to $55.4 million. The 109,700 square foot space would include three gymnasiums, an elevated track, a spa and three pools: a competition pool with spectator seating, a leisure pool and a recreation and community lap pool.

The Iowa City school board has expressed interest in partnering with Coralville on the new rec center, by providing as much as $14 million for the project.

The current rec center pool was built 37 years ago as a partnership between the city and the school district, and the school district’s four swim programs use the rec center pool. The district also pays about one-third the operating costs. The shared use would continue with a new rec center.

The city council has indicated in both the ballot language and through conversations at council meetings that funding the recreation center is one of the main priorities of the local-option sales tax.

“Right now, we are spending a lot of taxpayer money just to keep that place open, running efficiently, and it's just not a good way to invest in the community,” council member Hai Hyunh said of the recreation center. “And so not that we like shiny things, but we like things that work for the community. And right now, our rec center is hanging on by a thread.”

Some council members have acknowledged that an additional sales tax can be regressive in nature, meaning it will disproportionately impact those with lower incomes.

“One of the ways that we've talked about acknowledging that is by making sure that some of the revenue from the sales tax does go to offset some of the higher cost of living ... And so in Coralville’s case, the area that we've chosen to focus on with the ballot language is affordable housing,” said Coralville Mayor Meghann Foster.

Other Johnson County LOST initiatives

In Johnson County, voters in Swisher, Solon, Lone Tree and Hills passed local-option sales tax measures in the mid-2010s. Tiffin passed a local-option sales tax in fall 2023, and University Heights in fall 2024.

In 2014, due to state laws at the time, the cities of Iowa City, Coralville, North Liberty, Tiffin and University Heights voted on a local-option sales tax as one bloc. The measure was rejected by 54 percent of voters.

Both Iowa City and North Liberty residents also will vote on local-option sales tax measures this fall. Unlike in 2014, each municipality must approve its own ballot language and proposed uses as well as gain approval from voters within each city.

Comments: megan.woolard@thegazette.com

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