How much is too much? What percentage of the cost of new infrastructure (roads, sewer, sidewalk, etc.) should the city pay for in order for developers to be competitive in the Huxley market through tax increment financing (TIF)? That’s the question Huxley City Council has been debating the last several months regarding development agreements for area builders, and it became a heated topic at last week’s council meeting, with several developers in attendance.


Since 2003, the council has, on numerous occasions, funded 100 percent of the cost of infrastructure as an incentive to spur local development. Here is a list of some of those TIF agreements over the last 15 years in Huxley:$600,000 (100 percent) for 9 years$600,000 (100 percent) for 9 years$14,000,000 (100 percent) for 20 years$1,400,000 (100 percent) for 20 years$400,000 (100 percent) for 20 years$1,785,000 (100 percent) for 10 years


Now, some members of the council are looking to reverse course, stating the city has gone too far in the past with incentives and has been overly generous to builders during a time when demand for residential construction is strong, creating an already-favorable environment for developers.


One local builder, hearing the council may no longer offer such incentives, threatened to leave town if the council backs away from 100 percent funding of infrastructure, stating he can’t be competitive at anything less.


The debate stemmed from a discussion regarding financing for a condominium project proposed by Kading Properties of Urbandale. Dan Novelli, president of Kading Properties, wanted $840,000 in public funding. The council was recommending half that.


“The residential development for Huxley (in the past) has been inextricably tied to TIF agreements and 100 percent reimbursement of TIF agreements,” said Kading in a presentation to the council. “In order for this to be a competitive product in the marketplace, the reimbursement of 100 percent of the public infrastructure costs is necessary. With the reduction to 50 percent, it makes the product not competitive in the marketplace.”


Council members were split on the debate.


“For the last 10 years, the 100 percent rebate has not attracted a tremendous amount of development,” said Councilman Kuhn. “I’m concerned if we ratchet that back to 50 percent, what little development we have had may come to an end. It’s certainly very difficult to determine where that line is. Is 100 percent too much? It may be. I don’t think 50 percent does it either.”


Councilmen Peterson and Mulder both stated they were not comfortable with 100 percent, while Councilman Jensen remained neutral on the topic, stating, “I think we have experienced growth. I like the growth, and I’m an advocate for the city.”


Councilwoman Tracey Roberts was the most animated at remaining at 100 percent financing, stating she didn’t want this council to be known as the council that halted residential development in Huxley. She made the motion to finance the project at $840,000, or 100 percent of the cost to provide infrastructure for the project. The motion failed on a tie vote, with one abstaining.


After debate about the actual costs of infrastructure for the project, a motion was made for $486,000 (50 percent). The motion passed with four yes votes and one abstaining.


The TIF debates at the city government level regarding their pros and cons rage nationwide. The Huxley council intends to develop some more stringent guidelines moving forward on future TIF agreements.


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Other cities around the state of Iowa are having similar debates about TIF agreements. The editorial staff at the Quad City Times in Davenport recently argued that “TIF’s should never fund residential development.” The piece argues that TIF is not being used for its original intent of assisting economic development in blighted areas. The editorial staff goes straight for the jugular of the negative aspect of TIF, stating the following:


“Here’s a quick and dirty about TIF: It reroutes tax revenue, generated through increased property value due to a development, to solely the zone where the construction occurred. Cash that would otherwise flow to schools or county coffers is, instead, used to build roads and sidewalks. Ultimately, the cash benefits the developer.”


The editorial goes on to argue that “market forces” should dictate the level city government gets involved in spurring development, and in times of a strong residential housing market, incentives like this are “needless.”


The full editorial regarding TIF’s from the Quad City Times can be found at: http://qctimes.com/opinion/editorial/editorial-tifs-should-never-fund-residential-development/article_d53ee8ae-ee73-5272-9bc4-75e5228c3b9c.html#comments