TIF in Johnson County: A Case Study

Peter Fisher The Iowa Policy Project

What TIF in Iowa Has Become •  Much of TIF spending has little or nothing to do

with economic development •  In many cases, TIF is just a cash cow for city

spending •  Shifts city taxes to taxpayers outside the city •  Used to pirate businesses from neighboring

communities •  Entire cities are tiffed •  Instead of TIF causing growth, growth causes

TIF

Solon TIF Areas 

In Three Cities, Over Half of the Tax Base is tiffed

0.9%

18.5%

18.6%

24.0%

27.4%

39.7%

50.7%

55.4%

56.7%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Iowa City

Solon

North Liberty

Lone Tree

Swisher

Coralville

Oxford

Shueyville

Tiffin

How TIF Diverts Taxes Taxes Where Taxes Go

Collected$10,000 City

General FundCity Tax

$40,000 $30,000

$5,000 CityCounty County Funds TIF Tax Fund

$20,000 $15,000$75,000

$15,000 SchoolSchool FundsTax

$45,000$30,000

TIF as a Cash Cow:  Share of Property Taxes from TIF

0.0%

0.0%

1.7%

37.5%

39.9%

47.6%

58.5%

58.6%

75.4%

78.0%

83.8%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Hills

University Heights

Iowa City

North Liberty

Solon

Lone Tree

Coralville

Swisher

Oxford

Tiffin

Shueyville

For Some Cities, the TIF Fund has become a Second General Fund or a 

Substitute for the Debt Fund

Shueyville: Fiscal Year 2012 TIF fund is over 5 times as large as the general fund.  What TIF revenue is used for: •  City hall/community center •  12th street project

Coralville TIF Areas 

    

Coral Ridge Mall – 

Highway 6 Combined Area (blue) 

 Other Areas (cross‑hatch) 

   

TIF $

Mall/6 TIF: Where Taxes Go, With and Without TIF Diversion

Mall/6 TIF Forces County & School Property Taxes Higher

School District

Iowa CityClear Creek 

AmanaIncrease in levy rate ($ per thousand)School tax $0.34 $2.83County tax 0.45           0.45             Other countywide taxes 0.06           0.11             Total $0.85 $3.40

Additional Property Taxes on anaverage ($200,000) home $80 $319

TIF Shifts Taxes Outside the City 

 

Percent of Property Taxes from Outside the City

0.6%

23.2%

24.1%

30.7%

30.8%

42.0%

48.1%

48.8%

62.1%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

Iowa City

North Liberty

Solon

Lone Tree

Coralville

Swisher

Oxford

Tiffin

Shueyville

(Property in Clear Creek or Iowa City School District)

Additional Rural Property Taxes Caused by City TIFs

Where Might Incentives Make Sense?

•  Maybe: Cost-driven industries are “footloose” o Manufacturing o Wholesaling and warehousing o Central office (finance, insurance etc.) o Corporate HQ, research and development

•  NO: Market-driven industries have to locate where the market is o  Retail o  Residential o  Services to local residents and businesses

Tiffed Property in Johnson County

How to Reform TIF •  Severely limit use of TIF for residential and

retail. •  Restrict percent of tax base or geographic

area that can be within a TIF area. •  Limit TIF to projects; diversion ends when

project is paid for. No more cash cows. •  Prohibit a TIF area from including more than

one school district. •  Add meaningful prohibition on piracy.