TIF Reform

A second Tax Increment Financing (TIF) bill, SSB 3118, was introduced this week. The bill, by Senator Sodders (D-Marshall), chair of the Senate Economic Growth/Rebuild Iowa Committee, includes the following: 

·         Requires municipalities having an existing unlimited duration urban renewal area to elect one of the following by July 31, 2012:

 o    Terminate the urban renewal area by June 30, 2027.

 o   Continue the urban renewal area until dissolved by the municipality without incurring any additional debt.

·         When calculating TIF for payment of costs and debt, the difference between the base year and the assessment year cannot exceed 15 years or the base year will be adjusted so that the difference is 15 years.

·         With certain exceptions, the urban renewal area is to be terminated after 15 years. With approval of other affected taxing districts; however, TIF may be extended for up to five years if necessary to sufficiently fund a project.

·         The bill does not modify the 20-year limitation on economic development urban renewal areas if the plan was adopted on or after January 1, 1995.

·         Requires the county auditor to provide the amount of certified debt to DOM, and DOM is required to make the information available online.

·         Excludes the school district foundation property tax from TIF except for foundation property taxes used for costs and indebtedness incurred or issued before the effective date of the bill.

·         Requires municipalities to certify for foundation property tax revenue necessary for costs and indebtedness incurred or issued before the effective date of the bill.

·         Except for specified expenses related to low and moderate income housing, taxes resulting from TIF can only be expended for purposes related to the TIF district.

·         Unless approved by the affected taxing entities, taxes collected from TIF cannot be used for movable property or equipment, public buildings, or for debt or expenses related to such purposes. This limitation also applies to buildings or facilities leased by a public body.

 

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