Tax Increment Financing (TIF)
TIF is the City’s most versatile and useful tool for encouraging economic development. The increase in taxes generated by a project within a TIF district can be captured by the City for use in financing public improvements. TIF funds have often spurred development in areas which would otherwise lack proper streets, sanitary sewer, or water.
Low-Interest Loan Program
A portion of the City’s 1% local option sales tax is committed to economic development programs. The City uses these funds to provide direct loans to businesses based on job creation or gap financing needs for the project. Loans are typically at 4% for a term of 5 years and up to $1,000 per job created and/or retained.
Special Assessment Program
Through its power to assess property taxes, the City can provide assistance to developers and businesses to construct public improvements such as streets and utilities. The City can complete the improvements and finance the improvements through a loan which will be repaid by a special assessment on the property taxes associated with the development.
Property Tax Abatement
The city may abate the property taxes on new developments for a period of years. In Urban Revitalization Zones, the program has spurred the growth of new housing developments and renovations of existing homes. In other cases, the State of Iowa has granted the City the authority to abate property taxes for new industrial developments.
Property Tax Rebate
In TIF districts, an alternative to up front financial awards traditionally associated with TIF, the City can provide a rebate of property taxes. The developer will pay the taxes and receive an immediate rebate from the City. Developers find this tool especially beneficial over the traditional upfront award because the entire amount of the property taxes are rebated. In upfront situations where the City must finance the cost, the cost of financing (usually 30%) is subtracted from the amount of the award.
Urban Renewal in Iowa gives the City the power to acquire private property through condemnation and sell the property to a private redeveloper. Usually this program is used to clear slum and blighted areas, the City will many times use Urban Renewal in conjunction with TIF to clear slum properties and sell the land to a developer.