Session Week 15
Fax: 563-355-9954

Tax Increment Financing Reform

Iowa ’s urban renewal law allows cities and counties to establish urban renewal tax increment financing (TIF) areas.  Generally, these areas are established for economic development purposes. 

Under TIF, assessments on taxable property in the urban renewal area are frozen on a date as provided for under Iowa law.  Revenues from the consolidated levy rate (city/school/county/etc.) imposed on increases in property tax assessments in the urban renewal area above that frozen level may be used to secure indebtedness issued to repay debt incurred to finance development projects within the area. 

Some of the consolidated levy rate is committed to fund debt service. A portion of the school district physical plant and equipment levy is diverted from the incremental property tax revenues before any distributions of these revenues are made.

House File 686 makes changes to the operation of Iowa ’s urban renewal law and application of tax increment financing. 

Beginning with Fiscal Year 2008, the $5.40 (per $1,000 of taxable valuation) levy for school aid on property in an urban renewal area will not be divided and paid to a municipality, unless the school board (of the affected district) adopts a resolution allowing the foundation property taxes (the $5.40 levy) to be paid to the municipality.

HF 686 limits the amount of all indebtedness in all urban renewal areas designated as economic development (TIF) to 5% of the total actual value of taxable property within the municipality (the actual value of taxable property is the assessed value of the property BEFORE the rollback is applied).

TIF Reform limits the urban renewal area to 20 years, beginning on July 1 of the first fiscal year in which the municipality receives the monies from the TIF. 

If an urban renewal area was established before July 1, 2003 , the area is limited to 20 years from the first fiscal year in which the municipality received monies from the TIF, or on June 30 of the fiscal year in which any indebtedness is retired, whichever is later.

HF 686 passed the House Friday morning and will now go to the Senate for debate.

House Passes Bi-Partisan Property Tax Reform Bill

House File 692 passed on a bi-partisan vote, garnering 81 votes for the legislation.

“This was a tremendous day for property taxpayers in the state of Iowa ,” noted Rep. Jim Kurtenbach, a drafter of the bill. “We all know that our current system is unfair and something needing to be done. Clearly, this is a step in the right direction.”

The new tax system bases tax rates on assessed value per square foot. The goal of the new system is to make the property tax code transparent and simple, allowing Iowans to be able to figure out his or her own taxes owned and why.

An implementation committee will be named that includes representatives of the General Assembly, the Department of Revenue and Finance, the Department of Management, counties, cities, school districts, local assessors, commercial property taxpayers, residential property taxpayers and agricultural property taxpayers, as well as other appropriate stakeholders.

“We are eager to get started on implementing our ideas,” noted Rep. Danny Carroll, floor manager of the bill. “We are prepared to study this extensively and in the end we will have a solution that doesn’t penalize Iowans for making improvements to their home. If someone wants to make their house a better place to live, we should not respond by raising their taxes.”

The bill now moves to the Senate for debate.

  Ways & Means Update

Bills passed out of Ways & Means this week:  

SF 384-A bill for an act relating to the Iowa education savings plan trust and to the taxation of activities involving out-of-state qualified state tuition programs.

HSB 314-A study bill providing a wind energy production tax credit under the individual and corporate income taxes.

HSB 315-A study bill relating to ethanol blended gasoline tax credits.

Bill Assigned in Ways & Means this week:

HSB 316-A study bill providing an income tax check off to fund grants relating to veterans and Sullivan brothers historic preservation.

HF 183-A bill for an act providing an income tax check off for deposit in the free health clinic fund.

   Week in Review Archives

2003 Session
04-18-03
04-11-03
04-04-03
03-28-03
03-21-03
03-14-03
03-07-03
02-28-03
02-21-03
02-14-03
02-07-03
01-31-03
01-17-03
01-24-03

2002 Session
05-28-02 Special Session II 
05-10-02 Special Edition
04-22-02 Special Session I
04-12-02
04-05-02
03-29-02
03-22-02
03-15-02
03-08-02
03-01-02
02-22-02
02-15-02
02-08-02
02-01-02
01-25-02
01-18-02

2001 Session
05-04-01
04-27-01
04-20-01
04-13-01
04-06-01
03-30-01
03-23-01
03-16-01
03-09-01
03-02-01
02-23-01
02-16-01
02-09-01
02-02-01
01-26-01
01-19-01
01-12-01

2000 Session
04-28-00
04-21-00
04-14-00
04-07-00
03-31-00
03-24-00
03-17-00
03-10-00
03-03-00
02-25-00