Tax increment financing (TIF), a tool for economic development and urban revitalization, allows local governments to use future projected taxes to finance current improvements.
The full taxes assessed on the property are collected, but the taxes generated by the increase in value of the property (or increment) are earmarked for use within an urban renewal district. Taxes received on the base value continue to be disbursed among all taxing jurisdictions, while taxes on the increment remain with the city or county for use within the urban renewal district.
Tax Increment Financing in Iowa
A fact sheet about Tax Increment Financing in Iowa was published by the Iowa League of Cities in April 2014. It summarizes TIF mechanics, legislative history, goals, and statistics on TIF use in Iowa. View TIF fact sheet (PDF).
Tax Increment Financing in Coralville
Tax increment financing has been used in Coralville for employment retention and growth, economic growth, and redevelopment, as well as for several other types of infrastructure and community betterment projects.
The increase in taxable retail sales in Coralville illustrates a growing economy: in 1997, the year prior to the opening of Coral Ridge Mall, sales totaled $166.5 million; in 2016, sales totaled $807.6 million.
The growth in Coralville taxable retail sales represents an increase of over $39.7 million in annual State sales tax revenue. Taxable retail sales for Johnson County and for the state grew during the same period. The state sales tax rate is 6%, a portion of which is distributed to school districts. State sales tax revenues support the State general fund.
Tax increment financing has supported the development of infrastructure and direct business assistance to attract and grow interstate commerce companies in the University of Iowa Research Park and other areas of Coralville.
In 2016, employment in the University of Iowa Research Park (excluding State Hygienic Laboratory) and other businesses that have received city support totaled approximately 2,000 jobs; these employers included CIVCO, Zero Energy Systems, Protek, Innovative Software Engineering, Sedgwick, Integrated DNA Technologies, C.H. Robinson, and West Music Distribution Center. Employment includes persons living in 45 Iowa counties and 161 cities.
Taxable Retail Sales in Coralville 1997-2016
Tax increment financing has allowed for redevelopment of areas that have become blighted, suffered actual or perceived environmental contamination, or are not being put to their best use:
The 12th Avenue Urban Renewal Area is now home of Town Center and the Coralville Center for the Performing Arts.
A $40 million private redevelopment in Old Town, south of 5th Street, is made possible by the purchase of flooded homes in 2008 using tax increment financing.
The Iowa River Landing, a former industrial park, is home to the Coralville Marriott Hotel and Conference Center, Backpocket Brewery, restaurants, upscale retail shops, a department store, a University of Iowa Hospitals and Clinics facility, a wetlands park, and more. This brownfields redevelopment, made possible by tax increment financing, has received national recognition for solving critical environmental challenges and transforming blighted and contaminated areas into productive new uses.
TIF Debt by Purpose
Tax increment financing is utilized by local governments for many purposes. The chart to the right shows the purposes for which TIF debt has been utilized by the City of Coralville over the years. Included in this chart are projects that fall into the categories of new development, redevelopment, hazard remediation, flood mitigation, and cultural and recreational amenities.
Coralville Outstanding TIF Debt
This chart characterizes the currently outstanding TIF debt of the City by purpose.
In Fiscal Year 2018, several amendments in the 12th Avenue Tax Increment Financing District with value of nearly $30 million expired.
In Fiscal Year 2019, the original Mall Tax Increment Financing District expired. At that time, taxes on the base property value as well as increased property value became available to all taxing bodies in Johnson County. The release of value and TIF revenues in the Mall TIF District is estimated to be $364.8 million in taxable value and $10.7 million annually in revenues to local governments.
Taxable Value of Property Supporting TIF Districts in Coralville
The chart shows the property value in urban renewal areas that is directed to repayment of debt through tax increment financing.