$37 million in TIF debt
By Lori Lindner
North Liberty Leader
NORTH LIBERTY– As per Iowa’s Tax Increment Financing (TIF) law reforms, cities are required to file a comprehensive report each year outlining their TIF obligations, TIF revenues and how they spend them.
The City of North Liberty just filed its 2013 report, which indicates the city has $37,159,359 in outstanding TIF debt. That amount is down from the previous year, when North Liberty reported a total of $44,598,591 in outstanding TIF debt.
In fiscal year 2012-2013, North Liberty brought in $3,221,159 of TIF revenue and paid $3,220,052 in TIF expenditures.
TIF is a state-legislated funding mechanism that allows cities to capture the taxes on increased assessed values after property is improved or developed. Cities typically use the tax revenues to repay general obligation pay for infrastructure improvements, or provide financial incentives to projects that encourage economic development. In order to do so, a municipality must officially designate the project location as an urban renewal area, and provide documentation to the state’s Department of Management about how the funds are used.
When a taxing entity such as a city or county captures the taxes from projects within TIF districts, the other taxing entities that would normally receive a slice of the new property taxes generated by development lose out until the TIF agreement expires.
North Liberty reported 27 tax districts within its urban renewal area in fiscal year 2013, and 50 separate projects.
Of its 50 projects that were funded or incentivized, at least in part, by fiscal year 2013 TIF revenues, seven were direct incentives to companies that created economic development in the community, one was to fund a low-to-moderate income housing project, and one was an infrastructure project indirectly tied to a development agreement. The largest two of those economic development incentives were the 2011 development agreement with the University of Iowa Community Credit Union for its member support center, which obligates the city to rebate 100 percent of the facility’s property taxes annually for eight years, up to $5.4 million; and a development agreement with A&M Development on property adjacent to the credit union, in which the city agreed to rebate up to a total of $5 million for certain types of commercial development that occurs there in the next 10 years. Two of those economic development obligations have been completed: the Sleep Inn, which received a $60,000 tax rebate for five years, and Energy Mizer, which received $5,000 in tax rebates each year for five years.
The rest of the city’s 50 remaining TIF projects were for land acquisition, street or bridge projects, municipal facilities, trails, and parks improvements.
Outstanding obligations to be paid off, or projects slated to expire within the next five fiscal years, include: a $375,000 general obligation bond that will be paid in 2014; a $1,430,000 general obligation bond that will be repaid in 2015; an agreement that rebates and appropriates funds to Maytag that expires in 2016; a 10-year agreement with ConAgra (J.M. Swank) which expires in 2017; and a 10-year agreement with Heartland Express, set to expire in 2019.
Last week, the council also approved payments for four major economic development projects that are paid through an annual appropriation, totaling $730,500 for fiscal year 2015. (See sidebar).
To view the full report, access the Nov. 26 council meeting packet from the city’s website at www.northlibertyiowa.org. Click on Government, choose the City Council link and then click to view the City Council Agenda.