Tax Increment Financing

Tax increment financing (TIF) is a method of reallocating property tax revenues , which are a result of an increase in taxable valuation above a 'base valuation' figure within a tax increment area. Until the tax increment debt within an area has been repaid, tax revenues produced by property tax levies imposed on the increased taxable valuation by a city, county, school district, area school or any other taxing jurisdiction are all allocated back to the jurisdiction (city, county or community college) which established the tax increment area, and must be spent by a that jurisdiction for projects within that area. 

The process to establish a tax increment financing area includes the following steps:
  1. Identify the boundaries of the proposed area.
  2. Determine if the conditions in the area qualify the area to be designated a 'slum', blighted' or 'economic development' area, as defined in Iowa Code 403.
  3. Prepare an urban renewal plan outlining objectives to be accomplished within the area.
  4. Set a date for a public hearing by the city council or board of supervisors.
  5. Obtain approval of the plan by the local planning and zoning commission.
  6. Send a copy of the plan and the notice of hearing to each of the other affected taxing entities (counties, local schools and area colleges) and schedule a date and time for a 'consultation session' with those other affected taxing entities.
  7. Hold a public hearing.
  8. Adopt a resolution approving the urban renewal plan.
  9. Adopt an ordinance designating the tax increment area.
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