City schooled in Tax Increment Financing
“ax Increment Financing has long been recognized as a tool for economic development.
Monday night, the Ottumwa City Council received a lesson on Tax Increment Financing, also referred to as TIF, from Alan Kemp, the executive director of the Iowa League of Cities.
Kemp explained TIF is a method to promote urban renewal efforts in an area by directing the property tax revenues generated from property value increases within a designated TIF district to finance the costs of improvements made in the district.
Ottumwa would like to use TIF money to help finance improvements to Ottumwa Regional Airport by extending the runway length from 4,800 feet to 6,500 feet long. The money would provide a 10 percent local match toward the $9 million project. The rest of project would be funded by a federal grant.
In Iowa, Kemp said, local government authorities — including cities, counties and community colleges — have the authority to establish a TIF district.
According to Kemp, when a TIF district is created, a base valuation of the property is established. It accounts for the assessed values prior to the TIF designation. The tax revenue from the base value remains with all the taxing authorities. Increases in the assessed value over time are called the increment. The TIF authority may access the tax revenue generated by the increment or may choose to release some or all of the revenue back to the traditional taxing authorities.”
Moeller, Wanda. Ottumwa COurier 10 February 2015.