Downtown Des Moines (DSM) offers a range of corporate tax advantages and incentives to the businesses who call this region home. From extensive tax credits to financial assistance programs, Downtown DSM economic development professionals work with companies to create an environment that is beneficial to everyone involved.
Assistance that does not have to be repaid. Contemporary examples of federal grant programs include programs in the U.S. Economic Development Administration, CDBG and various specialized federal programs for environmental.
Permit firms that have difficulty borrowing from the private sector to obtain funding at market or below-market rates, often with less equity than would be required for a private sector loan. Public loan programs often have a higher default rate due to the higher risk of the loan and can result in financial loss to taxpayers.
Repayments from outstanding loans are "recycled" to make loans to other businesses. Revolving loan funds can provide a self-renewing pool of funds once they are established and the loans are being repaid.
The City of Des Moines can offer land for private redevelopment. The sites are sold at a reduced cost with the City able to provide various incentives, such as subsidizing acquisition, undertaking demolition and other site preparation, and provide infrastructure and other area amenities.
A governmental unit ensures payment of a large portion of a private bank loan in case the borrower company defaults. Loan guarantees can promote development by reducing the risk to private banks when they make loans.
Two or more lenders contribute to a fund from which loans are made.
As a condition of the governmental financial assistance, the governmental entity is given a portion of part ownership in an enterprise.
Self-Supporting Municipal Improvement District (SSMID)
A SSMID is an assessment district created to improve and convey special benefits within the identified district. Property owners within the SSMID boundary elect to assess themselves for funds that will be used for improvement projects and services in the district beyond what has been committed to by the City.
Iowa state law allows cities to create urban revitalization districts in which property taxes can be abated for residential and commercial construction, including rehabilitation and new buildings. In creating an urban revitalization district with tax abatement, the city must detail the tax abatement rates. In Des Moines, residential development (major rehabilitation and new construction) may receive five-year/100% or 10-year/declining abatement in most locations. In some neighborhoods surrounding the center city area, residential development can receive up to 10-year/100% tax abatement.
Legal agreement between a government entity and a property owner or real estate developer to forgo taxing a portion of the assessed real estate value of the property's improvement for a certain period of time.
Property Tax Exemptions
A property tax exemption is permitted under Iowa law for certain property uses such as religious, hospital, educational or charitable organizations. Typically, 100% of the property's assessed value is exempted from paying taxes. In some cases, the City has negotiated a payment with the property owner in lieu of taxes (PILOT) to assist in payment for fire and police services for the property.
Tax Increment Financing (TIF)
A municipality may designate an urban renewal area as a tax increment district for a specified number of years; any increase in the property tax revenue may then be used by the municipality for economic development purposes. Because a TIF typically extends for 15 years or greater, municipalities often bond for improvements using the projected TIF revenues for the bond repayments.
State and/or federal law will permit a credit on income taxes for a corporate entity when it undertakes specific actions such as investing in an enterprise zone. Tax credits subtract specific amounts of money directly from tax bill obligations. From a company's perspective, a tax credit may be more desirable than a tax exemption or tax abatement because it directly reduces tax obligations.
Property Tax Classifications
Iowa law requires private property to be classified as residential, commercial or agricultural for property assessment and taxation purposes. The classification determines which rollback rate is applied to the property tax assessment.
Other Forms of Assistance
The practice of acquiring and improving contiguous parcels of land to assemble sites suitable for development.
Enterprise Zones (EZ)
Enterprise Zones are established to generate new investment and employment in declining areas. They provide tax incentives and regulatory relief to businesses that are willing to locate in the designated zone.
Iowa state law allows cities to designate areas as urban renewal areas if the areas meet "slum and blighted" criteria or can support new economic development. Once an area is designated as an urban renewal area with a written urban renewal plan, the city can then undertake certain activities that are permitted under the statute that can include land acquisition and disposition and tax increment financing.
Job and Customized Skill Training
State law provides tax credits to companies that contract with area community colleges for job and customized skill training that will allow the company to retain and expand its employment base.
The Office of Economic Development of the City of Des Moines is committed to helping businesses grow and prosper. A variety of business incentive programs, financial assistance, tax assistance and training programs are available to businesses that are located in Downtown DSM or that are interested in locating in Downtown DSM. Many small, medium and large companies have worked with the City to make their start-up or expansion plans a reality.
Des Moines Action Loan Fund (DMALF)
The purpose of the Des Moines Action Loan Fund is to provide long-term financing for industrial and commercial expansion that creates permanent, private sector employment opportunities for new and expanding businesses. The program is intended to be used in conjunction with loans from private lenders.
The MicroLoan Program creates and stimulates a healthy and sustainable community by stimulating economic activity, successful business development and growth, and job creation for low- and moderate-income residents with the City of Des Moines.
Loan Injection Program (LIP)
The LIP assists projects locating in target areas to utilize the SBA 504 Loan mechanism.
Enterprise Zone Incentives for Business Expansion
Enterprise zone incentives promote new economic development and attract private investment in economically distressed areas.
Tax abatement may be used to forgive an increase in the real estate taxes for a specific period of time. The abatement may result from a renovation, new construction or the purchase of qualifying machinery and equipment.
Revolving Loan Fund (RLF)
Short-term financing for fixed assets, equipment, inventory or working capital may be provided with an RLF loan.
The SBA 504 Loan Program assists small business formation and expansion, thereby creating new jobs.
Neighborhood Commercial Revitalization Program (NCR)
The Neighborhood Commercial Revitalization Program’s purpose is to assist the revitalization of older commercial buildings in neighborhoods. Low-interest loans are made for property and site improvements.