You’ve probably heard of Tax Increment Financing (TIF). But do you understand what it is and how it benefits the Hiawatha community?
TIF is a method of financing public funds used for private development projects. Businesses who apply for and receive TIF money can take advantage of forgivable loans, deferred interest payments, or property tax rebates.
The increment is the difference between taxes on underdeveloped properties and newly developed facilities. The total amount of TIF funding awarded depends upon the new taxable property value added to a property.
While TIF was originally intended for the redevelopment of blighted areas and for properties with depressed property values, Iowa laws began to expand and change in the 1980’s. Local control became the norm and city officials became the governing bodies who could decide if TIF financing made sense for their economic development and public improvement plans.
Hiawatha was an early and active champion of TIF.
“Growth is beneficial to our tax levy. It helps reduce everyone’s tax burden,”
said Kim Downs, Hiawatha city administrator. “We want to help people; we want to be a thriving community.”
Iowa law states that cities may have numerous TIF areas. The advantages for Hiawatha are clear. Among many favorable outcomes, TIF:
- Increases property values and broadens the city tax base.
- Promotes private investment and development.
- Permits the city to make decisions, rather than state or federal bodies.
- Creates jobs and supports training programs.
- Allows other businesses outside TIF to grow.
“Hiawatha is a business-friendly community that is well-located near I-380,” said Jon Dusek, president and CEO of Armstrong Development Company. “Much of the growth occurring in Linn County is around Hiawatha.”
Dusek owns two business parks in Hiawatha: Tower Commerce Center on Tower Terrace Road and Longfellow Square Business Park on Center Point Road.
“TIF can help mitigate front-end costs for any business moving into a new space,” he added.
Interested developers can apply to the Hiawatha Economic Development Corporation, or HEDCO. On average, between 5-8 businesses accept Hiawatha TIF financing per year, said Downs. The scale and scope of each project varies.
Tim Wilson has received TIF financing for several different developments. Two years ago, the president of Hawkeye Electric was outgrowing his old building and needed additional office space in order to add more services and employees.
“TIF provides the ability to expand and reinvest,” he said. “It helps stimulate growth and results in new employment and better job retention.”
Wilson has always enjoyed working with Hiawatha officials.
“They provide excellent customer service, the mayor and members are engaged, and they help you through the process,” he said.
Pat Callanan, president of Hawkeye Communication, agrees.
“We approached Hiawatha officials with our plan in 2013. They quickly gave us a decision, a time frame, and offered help,” he said. “The timing all just came together.
As a result of TIF, Callanan was able to double his space—both office and warehouse—to accommodate the growth needs of his business.
“The decision to increase our original development goal was based on the city’s long-term plan to redesign the intersection of Center Point Road and Robins Road,” he said. “TIF is a great cash flow tool. It’s an incentive to do things better than you would have done otherwise.”
For more information about TIF or to apply for financial assistance, contact HEDCO.