020617-Noel-Anderson

Anderson

WATERLOO — The city may renew portions of two tax-increment financing districts to keep them from expiring before development occurs.

Waterloo City Council members have set 5:30 p.m. Monday public hearings on plans to remove undeveloped land from the Northeast Industrial Area and San Marnan TIF districts. That land would then be added back into the TIF districts.

“The areas removed and then put back into the TIF are undeveloped areas that are not likely to be developed before their 20-year sunset,” said City Planner Aric Schroeder. “The amendment will establish a new 20-year sunset for these areas.

“This would appear to be the best model to accomplish economic development in this area,” he added.

Tax-increment financing allows cities to provide industrial park infrastructure, buy land and provide tax incentives to entice business development. Those investments are then paid off with the property taxes generated by the new development within the TIF district.

But economic development TIFs have 20-year time limits. If a city extends incentives or spends money in the latter years of a TIF’s life, it could lose the ability to capture the increment property taxes before the debts are paid off.

The original Northeast Industrial Area TIF was created in 1993 to buy land and provide incentives for Ryder Integrated Logistics and subsequent projects. While that TIF was created before the state added sunset clauses, an expansion area created in 2004 has yet to see construction and will expire in 2024.

The San Marnan TIF was created in 1999 for the former GMAC document storage building near Tower Park. It saw a major expansion in 2004, which extended it west past the VGM Group project at Ansborough Avenue and included a large area of farm land south of U.S. Highway 20 from Ansborough east to Iowa Highway 21.

Portions of the San Marnan expansion area, primarily north of U.S. 20 have been developed and are generating increment taxes for the district. Those areas would remain in the district when the undeveloped lots essentially start with a fresh 20-year sunset.

Community Planning and Development Director Noel Anderson said the city could face problems negotiating development agreements with the current 2024 expiration dates approaching, especially since many of the parcels in question need sewer, roads and other infrastructure.

“The city needs time to recaputure the increment to pay for the debt incurred,” he said.

A new warehouse locating in the Northeast Industrial Area likely would be eligible for free land and five years of 50 percent tax rebates. Such a project starting in the summer of 2018 may not begin paying property taxes until 2020, so the TIF would expire before the warehouse was fully on the tax roles.

“We need to have that guaranteed amount of taxes coming in on the tail end of the rebates to pay back city for costs and also be planning for the next area or parcel to be developed,” Anderson said.

Any increased value on the property being removed from the TIF district would be released back to the city’s general fund, school districts and county tax base. The property would be returned to the TIF district at its current value.

The City Council took a similar action in November 2016 to remove and return undeveloped portions of the Martin Road TIF district, which includes areas along U.S. Highway 63 from just north of Ridgeway Avenue to the south city limits.

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Waterloo City Reporter

Waterloo city reporter for the Courier

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