CEDAR RAPIDS — Properties receiving public subsidies in downtown, the NewBo District and Kingston Village areas along the Cedar River would not be exempt under a plan to raise taxes to help pay for flood protection, a Cedar Rapids City Council member said Monday.
Many high-profile new and renovated buildings in the downtown core receive tax incentives through the city’s economic development tool known as tax increment financing or TIF, in which developers receive a 10-year rebate on the taxes they pay on increased property value created from their investment.
One of the top concerns council member Tyler Olson hears, as illustrated by an email he received, is that it “doesn’t seem quite fair, a lot of those properties are close to the river, and they’re going to receive maybe a disproportionate benefit.”
However, that is not the case, said Olson, who was speaking during a presentation about flood protection at the downtown Rotary meeting on Monday.
“We’re increasing the debt service levy rate, not the general service levy rate,” said Olson, who as chairman of the city’s flood control committee played a key role in crafting the flood control financing plan. “The debt service levy rate applies to all properties, whether or not they have been TIF’d. So all of those properties are going to pay the increase on their full assessed value, not the TIF rate, which I think is important.”
The city has proposed a 10-year, $264 million bonding plan, which could increase property taxes 22 cents per $1,000 in value per year for 10 years, assuming property values climb 2.5 percent per year. This would help pay for a 7½-mile flood control system protecting the east and west sides of the river through downtown.
The cost is estimated at $750 million when factoring in inflation over 20 years.
The property tax rate is expected to be one of the most significant aspects of the fiscal 2020 budget, which would be approved in March and take effect on July 1, 2019. Olson and his colleagues will be briefed on the city’s plan for its fiscal 2020 budget during public meetings Tuesday night and Wednesday beginning at 5:30 p.m. on the third floor of City Hall, 101 First St. SE.
ARTICLE CONTINUES BELOW ADVERTISEMENT
It would be the first increase to the city’s property tax rate in 10 years. The tax increase would show up on Sept. 19, 2019, and March 20, 2020, tax bills.
The Cedar Rapids property tax rate is $15.22, which is the fifth lowest rate among Iowa’s 11 largest communities. Even with the increase, assuming nothing else changes, Cedar Rapids would hold its position. After 10 years, if Cedar Rapids increased its tax rate at 22 cents per year or $2.20 after 10 years, assuming nothing else changes, Cedar Rapids would be ranked No. 3 for highest property taxes among Iowa’s largest communities.
Olson noted city officials are working on ways to lessen the impact, including finding cost savings in the flood control system, speeding up construction to cut back on inflationary increases estimated at 3.5 percent per year, and lobbying the state to extend the bond payback limit from 20 years to 30 years,
This would spread out payback and could allow the city to decrease the tax increases from 22 cents per year to 15 cents, he said.
“This project is going to be around for 100 years, so it seems a little bit unfair to us that the residents of Cedar Rapids right now or for the next 15 or 20 years, pay the whole freight because it’s such a long-lasting infrastructure project,” Olson said. “We think we should be able to spread it out longer than that.”
l Comments: (319) 398-8310; firstname.lastname@example.org