The following guest editorial ran in the Iowa City Press Citizen on August 2, 2011. Since that time the following changes have occurred:- The project has shrunk 12 units to a total of 67 through a 30 foot reduction in each building. Having fewer units would reduce the amount of revenue generated.
- The city office space portion of the commercial space would be 2,500 sq. ft. finished.
- The amount of TIF requested was reduced by $2 million dollars to $6.5 million.
- The rebate amount decreased from 20% to 10%.
- The developer has asked that the TIF request not be considered until after the PUD is closer to approval.
Aug. 2. 2011 Guest Editorial
University Heights TIF has benefits
Tax increment financing and University Heights have certainly been in the news lately. Here are some points to keep in mind as you read/listen to the stories in the local media.
No. 1: Hills and University Heights are the only two municipalities in Johnson County who have never granted a TIF. The vast majority of tax dollars committed to TIF projects are done through municipal bonding. Most TIF’s take 100 percent of taxes collected.
No. 2: The One University Place TIF proposal is a "rebate" type of proposal in which the developer receives back a portion of the property tax collected on One University Place only after the sites are constructed and paying property taxes. In this proposal 80 percent of the taxes generated by the sites would be rebated back to the developer up to a total of around $8 million dollars over a period 14 years. This means that 20 percent of the taxes collected would be available immediately for the entities to which they are due: University Heights, the Iowa City School District and Johnson County.
No. 3: The property, which now houses St. Andrew Presbyterian Church, currently pays no taxes. According to the developer, the annual tax projections on the project will be $180,000 during the TIF period and $900,000 after the TIF. For the participating entities, that breaks down to the following:
- University Heights ($58,000 during, $288,000 after)
- Iowa City School District ($75,000 during, 378,000 after)
- Johnson County ($40,000 during, $198,000 after)
- other ($7,000 during, $36,000 after).
No. 4: This rebate type of TIF is very different than another well known local TIF. The city of Iowa City passed a TIF and gave a developer an upfront check for $6 million to construct hotelVetro/Plaza Towers downtown. Iowa City had to let municipal bonds to finance this project. If the developer had gone broke, Iowa City would have lost all its investment. In addition to Plaza Towers, other properties in the downtown area also were part of the TIF district which repaid the city bonds.
By contrast University Heights and the county put out no upfront money. If the project fails, the municipalities lose no money. Any TIF monies paid to the developer are only from the new properties on a site that currently pays no taxes.
By contrast University Heights and the county put out no upfront money. If the project fails, the municipalities lose no money. Any TIF monies paid to the developer are only from the new properties on a site that currently pays no taxes.
No. 5: The TIF is set for a finite maximum amount of money and a finite time period. If the development proceeds more slowly, the developer will not receive as much money before time runs out. If the development exceeds projections in assessed value and returns greater tax revenue, the TIF will end sooner when the cap of total reimbursement is reached.
No. 6: In exchange for the One University Place TIF the developer agrees to complete public work projects not on the project property (realign the Melrose/Sunset intersection, water system upgrades, sewer and storm sewer improvements) Through TIF the city can purchase up to 4,000 square feet of office/community space in the commercial section of the front building. TIF is the most economical way to fund these improvements.
A lot has been said lately about the negatives of TIFs. But a rebate TIF protects the city and county and encourages the developer to proceed with a high quality, timely project. This will grow the city’s tax base 50% and ensure the long term financial stability for UH. I believe allowing the developer a relatively small financial compensation for these improvements is appropriate and allows both him and our community to benefit.
-Mike Haverkamp is a University Heights City Councilor
