Legislators ltrs, TIF restrictCity Manager's Office
50 West 13th Street
Dubuque, Iowa 520014864
(319) 5894110
(319) 589-4149 FAX
March 6, 2002
VIA E-Mail and
1st Class Mail
mike_connolly@legis.state.ia.us
The Honorable Mike Connolly
Iowa State Senator
3458 Daniels
Dubuque, tA 52001
Dear Senator Connolly:
I know there are discussions in the State Legislature to further restrict the use of Tax
Increment Financing (TIF). This would be disastrous for Dubuque.
Tax Increment Financing was designed to clear up slum and blight and create jobs.
The most important principle to recognize is that TIF is used as an incentive for projects
that would not have happened without this important financing tool.
When you use TIF, the existing base level assessed valuation continues to generate
taxes for the city, schools and county. Only taxes from the newly created incremental
assessed value are captured for use as a financial incentive, or to do public
improvements to help with the project. This new incremental assessed value would not
exist if the incentive was not used. This new incremental value is usually captured for a
fixed number of years, and then that incremental value also starts flowing to the taxing
bodies.
Dubuque has used TIF very successfully, but we were late in taking advantage of TIF,
and in the 1980's we paid the price. Dubuque did not start using TIF until the mid-
1980's, and not extensively until the 1990's.
From 1980-1989 the average annual unemployment rate in Dubuque was 8.9%,
compared with the state-wide average of 6.6%, and the national average of 7.3%. In
1982 the Dubuque unemployment rate was 14.2%. Then Dubuque became more
aggressive in the area of job creation, forming economic development organizations
and beginning to use financial incentive tools, the most important of which was TIF.
Service People Integrity RespormJbiHty Innovation Teamwork
Senator Mike Connolly
March 6, 2002
Page 2
From 1995-2001 the average annual unemployment rate was 3.8%, down from 8.9% in
the 1980's.
If you compare the number of jobs in Dubuque County in 1980 (43,700) with 1990
(46,000) with 2001 (52,700), you can see that the efforts being put forth are successful.
You might recall that the Greater Dubuque area was selected last year through the
"Metro Business Retention Index" as 2nd in the nation for business retention for the
nation's 324 metro areas.
Also, the Greater Dubuque area was ranked 18th by the Milken Institute for their "Top 50
Metros/High Tech Output Growth 1996-2001 ."
The job creation numbers and unemployment numbers I have given you are very
favorable, but no more so than the construction numbers. From 1990-1998 the City of
Dubuque averaged 350,000 square feet of non-residential construction each year. The
three-year period from 1999-2001, the City of Dubuque averaged almost 1,3 million
square feet of non-residential construction each year, and 2002 is shaping up to be
another banner year.
The total community assessed valuation has increased 55% over the last ten years, to
$1.5 billion. Much of this valuation is the direct result of projects that were assisted with
TIF.
Partnerships and the use of TIF were instrumental in the $188 million America's River
project. The City was required to issue $12.5 million in debt to get the $40 million Vision
Iowa grant. This $12.5 million is being partially repaid with TIF.
What kind of impact will the America's River project have on Dubuque? Besides the
1,000's of jobs and the 500,000 new visitors, the $188 million represents an amount
equal to 12.5% of our existing $1.5 billion assessed valuation. The consultant's
analysis show that after this initial investment, the City can expect over $150 million in
additional private development, an amount equal to 10% of the City's assessed
valuation.
Partnerships and the use of TIF have been key in the redevelopment of downtown.
Since 1985, the following has occurred in downtown:
Facade Building New Real Estate Public Net New
Renovation RehabilitationConstruction Sales Improvements Jobs
$3,214,156 $40,308,648 $34,088,597 $56,834,749 $11,337,041 +1,340
(+19%)
While we can be proud of the level of recent investment in our downtown, much work is
yet to be done, and TIF will be an important tool. Recognizing the long-term nature of
Senator Mike Connolly
March 6,2002
Page 3
this project, the City Council has adopted a policy that generally 75% of the TIF
revenues will be claimed, with the remaining 25% going to the city, schools and county.
TIF projects are useful for other purposes. First, this tool allows the City to leverage
Federal and State resources for projects, as those programs require a local match. But
more importantly to the schools, is that job creation creates other assessed property
that does pay taxes immediately to the taxing bodies. The 6,700 jobs created in the
1990% are held by people who own homes and rent apartments. The 600,000 square
foot Asbury Plaza retail development on the Northwest Arterial is under construction
and will open Phase II late this summer. Retail development pays sales taxes and real
estate taxes.
The creation of all this new value, among other things, has allowed the City of Dubuque
to avoid a property tax increase for the average homeowner for the last eight years, with
six of those years seeing a property tax decrease, including this year's 5% reduction.
The City of Dubuque's portion of the property tax bill is the second lowest rate of the
nine largest cities in Iowa. This takes some of the pressure off of the schools and the
county as they consider their budgets.
Adopting a plan, being inclusive, courageous political leadership and developing
partnerships to build on our assets is the key to our community's success, but TIF is an
important tool that is needed in its current form to assist in growth. TIF is used across
the country. If Iowa puts more limitations on its use, it will be more difficult for us to
compete. Please resist any efforts to further erode the use of TIF in the State of Iowa.
Sincerely,
Michael C. Van Milligen
City Manager
MCVM:jh
cc: Mayor Terry Duggan
Dubuque City Council
Tom Bredeweg, Executive Director, Iowa League of Cities
Rick Dickinson, Executive Director, Greater Dubuque Development Corp.
Steve Horman, President, Dubuque Area Chamber of Commerce
Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Pauline Joyce, Administrative Services Manager
Bill Baum, Economic Development Director
The Honorable Mike Connolly
Iowa State Senator
3458 Daniels
Dubuque, IA 52001
The Honorable Pam Jochum
Iowa State Representative
2368 Jackson
Dubuque, IA 52001
The Honorable Robert Osterhaus
Iowa State Representative
216 Austin
Maquoketa, IA 52060
The Honorable Thomas Flynn
Iowa State Senator
21367 Girl Scout Road
Epworth, IA 52045
The Honorable Pat Murphy
Iowa State Representative
155 N. Grandview Avenue
Dubuque, IA 52001
The Honorable Paul Scherrman
Iowa State Representative
P.O. Box 309
Farley, IA 52046