Senate makes changes to House’s TIF legislation

DES MOINES - A Senate panel voted Wednesday to revamp House-passed reforms to the state's tax increment financing system.

“It was our goal not to damage this tool,” Sen. Bill Dotzler, D-Waterloo, told members of the Senate Ways and Means Committee. The panel voted 11-3 to send an amended version of the bill to the full Senate. It strips a House provision that would require a portion of TIF proceeds to be returned to counties and school districts after 25 years.

Dotzler said the Senate approach establishes new yearly reporting requirements for cities, counties and rural improvement zones. It calls for a searchable database of that information to be accessible online by Dec. 1. The Legislative Services Agency also would be required to issue an annual report to the General Assembly and governor that would summarize and analyze the data provided by local entities.

Another provision would require a city to conduct a public hearing and a public vote on any amendments or modifications made to an adopted urban renewal plan. Senators also adopted an “anti-piracy” provision that would bar TIF incentives from being used for the relocation of a commercial or industrial enterprise not currently located in the municipality. That would be waived if the governing body where the business currently resides approves the relocation in writing, or if the governing board where the business plans to relocate can show written proof that the TIF would be in the best interest of the public.

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 TIF agreement.

Closer legislative examination of such agreements was sparked this session by Coralville's use of TIF for the Iowa River Landing commercial project, which last fall landed a Von Maur department store as its retail anchor.