SOLON– Suddenly, everyone has a lot of questions about a practice that has been around since the 1970s.
This week, Coralville city officials will have to provide some answers.
Tax Increment Financing (TIF) law has drawn a lot of attention in recent months since the City of Coralville offered an estimated $16 million worth of incentives to the Von Maur retail corporation to move its department store from Sycamore Mall in Iowa City to the Iowa River Landing. The deal will be managed through Coralville’s partnership with California-based OliverMcMillan development company. The city’s obligation will be repaid with TIF revenues, a financing method available to cities and counties to fund major projects such as infrastructure and economic development. TIF law allows cities to freeze the property tax base at its pre-development level for outside taxing entities like schools, community colleges and the county, then collect all the tax revenues on the increased property value in the project area for a set number of years and use the revenues to repay its investment.
Criticism of the deal has traveled all the way to Des Moines, prompting Iowa’s House Oversight Committee to request an official hearing with Coralville representatives, to ask questions about the city’s process and decisions surrounding the agreement.
However, the hearing will be just part of what has become a much broader discussion about TIF practices, and the information gathered this week is expected to provide a springboard for a newly-formed legislative subcommittee charged with reviewing Iowa’s TIF law.
Rep. Jeff Kaufmann (R-Wilton), a member of the House Ways and Means Committee, is one of the legislators who will sit on the five-member subcommittee appointed to review TIF. Kaufmann conducted a number of community forums on Saturday, Jan. 21, including a stop in Solon, where about 20 people came to hear Kaufmann’s updates and question him on legislative issues, including his position on TIF and the scheduled Oversight Committee hearing with Coralville.
Kaufmann said he and his fellow legislators will be listening carefully at the session, to be held this Thursday, Jan. 26, in Des Moines.
“I know as a member of the TIF subcommittee, I want this oversight committee to have [this opportunity}, because we are going to be working on TIF generally, in what is probably a long-overdue review of the laws that surround TIF,” said Kaufmann.
The 14-member House Oversight Committee is a standing committee in the legislature, unique in that it consists of both Republicans and Democrats from both the House and Senate chambers, and is co-chaired by Rep. Chris Hagenow (R-Windsor Heights) and Sen. Tom Courtney (D-Burlington). In order for the entire committee to convene, the co-chairs must agree that the subject is worthy of a full inquiry. If a request for a hearing is made and both co-chairs do not agree on the viability of a topic, separate hearings may be held in the House and/or the Senate.
In this case, Hagenow and Courtney agreed to bring Coralville officials to the table.
“Obviously, it is a much stronger hearing, and a more credible hearing, when both co-chairs decide this is an appropriate topic,” Kaufmann said.
Once the hearing is complete, the Oversight Committee can choose to make a recommendation for legislative action, or, if satisfied that no illegalities occurred, choose to do nothing beyond the initial fact-finding.
Kaufmann said while he is comfortable operating under the premise that there was no illegality in the Von Maur deal, he remains doubtful the matter can be covered thoroughly in a single 90-minute session.
“At this point, Coralville has been tied up in this discussion, and if one of the goals is to not allow over-extension of TIF to occur, we have to know what occurred in Coralville. We know the big picture, but I would imagine there are always several levels of decision-making involved in these things, and I don’t think you can explore that with just a one-time discussion in the rotunda,” Kaufmann said.
Kaufmann added that the oversight hearing is a chance to shine light on current TIF practices, and he and other members of the legislature will be able to suggest questions that could provide helpful information as the TIF subcommittee proceeds to its own review of the state’s existing statute.
“I think the full weight of a legislative inquiry is what we are going to need to get through the layers to see what happened; certainly to make sure that everything was in the confines of the law, but also how far was this law stretched, and do we need to clear up the gray areas that allowed that to happen,” Kaufmann concluded.