Akron Council sets public hearing on annexation, TIF

Just what land is the Akron City Council thinking of annexing? They aren't saying. At their May 29 meeting, the Akron City Council went into closed session to discuss “land acquisition.” Upon returning to open session 20 minutes later, Mayor Harold Higman Jr. said, “We've just discussed in closed session. No motions, no seconds were made.” Then he gave City Attorney David Stuart the floor. “Pursuant to our discussion in closed session, we should set up the potential for a public hearing on June 12, which will be our next council meeting, so I ask the clerk to put a public hearing down for June 12 for discussion of potential Tax Increment Financing (TIF) and annexation.” Then Stuart turned to The Akron Hometowner and said, “There was no action taken in, coming out of closed session.” When asked what they were considering annexing, Stuart responded, “At this point, we're just deciding a potential hearing date. Whether we even use it or not, we don't know.” And that's all the information any Akron city official would say. On the same date as the council's public hearing, Plymouth County Supervisors are having a public hearing regarding the creation of a 30-square mile urban renewal area in Akron, which will also create a TIF District.

According to Wikipedia, an internet free encyclopedia, “Tax Increment Financing, or TIF, is a tool which has been used for redevelopment and community improvement projects throughout the United States for more than half a century. With federal and state sources for redevelopment generally less available, TIF has become an often-used financing mechanism for municipalities. TIF is a tool to use future gains in taxes to finance the current improvements that will create those gains. When a public project such as a road, school, or hazardous waste cleanup is carried out, there is an increase in the value of surrounding real estate, and often new investment (new or rehabilitated buildings, for example). This increased site value and investment creates more taxable property, which increases tax revenues. The increased tax revenues are the 'tax increment.' Tax Increment Financing dedicates that increased revenue to finance debt issued to pay for the project. TIF is designed to channel funding toward improvements in distressed or underdeveloped areas where development would not otherwise occur. TIF creates funding for public projects that may otherwise be unaffordable to localities. Today 49 states and the District of Columbia have enabling legislation for tax increment financing. Arizona is now the only state without a tax increment financing law. Cities use TIF to finance public infrastructure, land acquisition, demolition, utilities and planning costs, and other improvements including: Sewer expansion and repair; Curb and sidewalk work; Storm drainage; Traffic control; Street construction & expansion; Street lighting; Water supply; Landscaping; Park improvements; Environmental remediation; Bridge construction & repair; Parking structures; and Land Acquisition.”

According to the Iowa Department of Economic Development, IDED website, Under the TIF program, businesses are given the incentive to construct new industrial or commercial facilities by receiving direct benefit from the property tax increase caused by the added value of those new facilities. How it works is: 1) Business constructs new industrial or commercial facility; 2) New facility increases property tax assessed on the business; 3) City councils or county board

of supervisors may use the additional property tax to: finance direct grants or loans to the business; offset the costs of public improvements or provision of utilities to serve the new private development; and provide the local match for federal or state economic development assistance programs.” “TIFs are complicated,” said Plymouth County Auditor K. Kae Meyer in a telephone interview with The Akron Hometowner. The City of Akron has two TIF Districts: the Portlandville Heights TIF District and the Downtown TIF District. By creating a TIF District, entities such as the City of Akron can claim the development “costs” as debt and receive TIF revenues from property taxes in that TIF District. Cities and counties cannot have TIF Urban Renewal Areas on the same land because cities can only create TIF Districts on land within their city limits, explained Meyer. However, a city could create a TIF district on land that already is in a county's TIF District -- when the city annexes the land, said Meyer. For instance, in the city of Le Mars, Wells' Dairy Inc. had an established TIF District. Later city officials created a TIF District on the whole west side of Le Mars. The city's TIF District was on top of the Wells' Dairy Inc.'s TIF District, she explained. “Wells gets the first TIF (monies),” said Meyer. “I get the dollars they need for their TIF and the rest of the money beyond that goes to the City of Le Mars.” So, it is possible Akron city officials are thinking of annexing the biodiesel and ethanol plant land along with land including and adjacent to 170th Street where Plymouth County Supervisors are planning to create a TIF District. But several Hometowner sources do not believe that the proposed county TIF area is what Akron city officials are considering annexing. By annexation of the ethanol and biodiesel plant sites, those businesses would be forced into paying the higher city tax rates. Furthermore, if the city annexes the same land as the county plans to TIF, then the city would be responsible for its portion of the costs to change 170th Street to Iowa Highway 3. Projected cost estimates are in the $5 million to $6 million range. In looking at an Akron city map, another area for annexation would be the land south of South Street on the east side of Iowa Highway 3 and land south of the Akron Fire Station on the west side of Iowa Highway 3.Councilman John Lucken and Councilman Bob Frerichs both own land in these areas. The Akron City Council has talked about annexing Lucken's land since Lucken built a house just outside the city limits, south of the Akron Fire Station, at 13657 Hwy 3. On Nov. 14, 2006, City Attorney David Stuart said that Lucken could continue as city councilman since he still had his house in Akron. But last month, Lucken and his wife, Mary, approached city officials, the Akron Historical Society and the Albert E. Hoschler American Legion Post No. 186 about their desire to donate their Akron home, located at 250 S. Sixth St., to the city for use as the Akron Area Museum. The American Legion would move to the Masonic Temple, where the Akron Area Museum is now and the Legion Hall would become part of the Akron Children's Center.

Property owners with land in a TIF District pay the same amount of taxes that they did before. “The only difference is where the tax revenues go,” said Meyer, explaining the base tax monies are still allocated to the school district, city and county. But the part that is TIF revenue, which is all of the tax monies above the base tax amount, goes to the entities that have established TIF Districts. For example, the City of Akron has a residential TIF District on its Portlandville Heights Subdivision. City officials can have infrastructure costs such as for street construction, and water and sewer services certified as debt. This debt is then paid off through TIF revenues collected on that TIF District. The purpose of the county's proposed Urban Renewal District, which will run along 170th Street and include Akron's biodiesel and ethanol facility sites, is to recoup its infrastructure costs. A developer can ask a city or county to create a residential TIF District on land he or she would like to construct homes, said Meyer, explaining cities are required by law to provide water and sewer to annexed areas. Therefore, a city would create a TIF District to recoup these expenditures. If TIF revenues exceed city expenditures, then the rest of it would go to the developer to repay himself for his development expenses such as street construction, said Meyer. Of special note, people who own agricultural land in a proposed TIF District can opt out of participation in that district. Only agricultural landowners have this option, said Meyer. “There is not really a lot of advantages to participating in a TIF District for agricultural landowners,” said Meyer, “unless they think their property may be a really good site for a motel or a corner where a big truck stop would go -- where they think it's of value to the property.” Several of The Akron Hometowner sources say Lucken's area is most likely the land that the City of Akron is considering annexation and a potential TIF District. The Akron City Council may reveal its plans at their June 12 public hearing.