Coralville, UI deal sets poor precedent

While there is nothing secret or illegal surrounding a payment agreement between the University of Iowa and the city of Coralville, its details raise public policy questions.

Last year, as part of a new annual 'payment in lieu of property taxes” agreement, the UI gave Coralville slightly more than $1 million. The PILOT agreement provides city services - primarily police, fire and street maintenance - for the 150,000-square-foot UI Health Care Clinic in Iowa River Landing.

The agreement is one of the most lucrative in the nation, and the City of Coralville isn't interested in sharing.

For comparison, during the past fiscal year, Iowa City received $1.76 million from the UI for providing fire service to 16.8 million square feet of campus.

The Coralville-UI agreement was based on the clinic's exterior value, estimated at $28 million. Then the full property tax rate - not just the city's portion - was applied.

But unlike property taxes, these PILOT funds are not being shared by all entities providing services. Instead, and with a nod to the tax increment financing district it put in place, Coralville is keeping the entire pie.

This effectively means the state is paying twice.

The UI, a part of state government, effectively is paying the full tax rate, which would normally include about $387,000 earmarked for the local school district. Because of the TIF district in which the UI clinic is located, the state also is backfilling at least a portion of the property tax funds due to the school district.

As for the county and the $190,000 it would receive from a property tax bill this size? Nada.

While Coralville and the UI may have no qualms tapping the state coffers twice or devaluing county services, residents deserve more than collaborative lip service.

If the PILOT deal cannot be rewritten to include only Coralville's tax portion, the city should share. Also, a multi-jurisdiction task force should be established to ensure regional PILOT fairness and collaboration.

When everybody wins ... well, everybody wins.

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