Bill to reform TIF use headed to Iowa Senate

DES MOINES - Iowa House Republicans scaled back their tax increment financing reforms, but opponents still called them job-killers.

A bill that would limit the scope of TIF use won House approval Wednesday in a 54-43 vote with no Democratic support. Four Republicans opposed the measure.

A TIF effectively freezes the property taxes on a site at predevelopment levels and diverts the new taxes, or increment, into a fund often used for the project. Tax-collecting bodies like the city, county and school district do not get the increment during the term of the agreement.

The House bill includes several changes to the way the program works, including restricting the types of projects to which the financing vehicle could be applied. It also lets cities use TIF agreements to finance public buildings - fire stations, city halls and community centers, for example - only if a majority of the property's other taxing entities agree.

The measure now goes to the Senate, where Ways and Means Committee Chairman Joe Bolkcom, D-Iowa City, says House Republicans have done a good job of identifying problems with TIF arrangements in Iowa.

“The House has made some progress in protecting the interests of Iowa taxpayers,” Bolkcom said. He called parts of the bill “sensible TIF reform.”

Floor manager Rep. Chuck Soderberg, R-Le Mars, opened the House debate by telling his colleagues that regardless of what he's been accused of, “it's not the intent of this bill to kill TIF, but to strengthen it.”

But Rep. Chuck Isenhart, D-Dubuque, said the measure weakens TIFs, which are used by 399 Iowa cities as an economic development tool, making it “functionally impractical.”

“This is a job kill bill,” Rep. Dave Jacoby, D-Coralville, charged. Rather than “slapping local government in the face,” he said, the Legislature should be thanking cities for the economic development - and the corporate, income and sales taxes generated by TIFs.

Soderberg said he wasn't blaming local governments for using TIF arrangements, but he sees “gray areas” in Iowa law that may have led to misuse of the tool.

That might have been one area of the bill on which there was broad agreement. It has few supporters and several opponents, including the cities of Cedar Rapids, Iowa City, Coralville and Cedar Falls. The Iowa League of Cities and the Metro Coalition, which represents Iowa's 10 largest cities, also oppose it. The Iowa Association of School Boards, Urban Education Network and the Iowa Farm Bureau Federation support the measure.