DSM USA Policy HQ - Tax Increment Financing
The DSM USA Policy HQ podcast is a monthly conversation between experts on public policy topics impacting business and the relationship between government and the private sector.
The newest episode welcomes Kris Saddoris, vice president of development for Hubbell Realty, and Carrie Kruse, economic development administrator for the City of Des Moines, to discuss tax increment financing, or TIF. TIF is used by local governments to provide financing for public improvement or economic development and redevelopment projects in targeted areas. As an economic development organization, the Greater Des Moines Partnership works with its Members, Investors and other organizations to protect the use of TIF.
Saddoris explains how TIF is an example of a collaborative public-private partnership. Kruse describes it as an incentive program. For the City of Des Moines, the majority of incentives are on a pay-as-you-go system, structured so the minimum amount of public funding needed is put in to make the project viable and ensure the project meets certain objectives, such as job creation, affordable housing, incorporating public art, sustainability goals and more. Kruse says that since many goals of public and private entities align, a partnership can make a public project more successful in the private market. Saddoris says that taking the time to sit down and find out how both parties can work together and how the private business can uniquely meet the goals of the public entity is an important step in addressing and understanding development projects and issues.
You can hear more about the importance of public-private partnerships in the first DSM USA Policy HQ podcast here.
Process of TIF Financing
In a community that understands and values communication, relationships are essential. Off-deal conversations are a must and help different parties reach agreements down the line. Saddoris says these relationships are what helps deals move forward.
Kruse says that negotiated incentives on development projects go through a transparent process, first going to the City Council with preliminary terms of agreement. Next, the development agreement goes to the Urban Design Review Board to determine the level of incentive, in which all meetings are open to the public. Finally, it is sent back to the City Council to make a decision on the development agreement and incentive.
What Makes a Good TIF Policy?
According to Saddoris, understanding what TIF is, what risk you’re willing to take and the ripple effect of jobs, income, growth, etc. is what leads to the best development projects. Kruse says that the strategy and implementation differs from city to city. For the City of Des Moines, the pay-as-you-go model is low-risk to the taxpayer and to the city. Combined with the regional fair play agreement, the risk lies with the private entity, which creates a sense of comfort for taxpayers.
Also discussed in the podcast are arguments against the TIF tool, the region’s fair-play agreement, successful projects that have utilized TIF, including the Gray’s Station deal, suggestions for the legislature on expanding TIF and more.
Listen to the entire podcast here.
The DSM USA Policy HQ podcast focuses on public policy topics impacting business and the relationship between government and the private sector. Join us each month to hear from local Greater Des Moines (DSM) experts. To listen to more Partnership podcasts, click here.
DSM USA Policy HQ
The DSM USA Policy HQ podcast focuses on public policy topics impacting business and the relationship between government and the private sector.