DSM USA Policy HQ - Tax Increment Financing
Kris Saddoris, Vice President of Development for Hubbell Realty, and Carrie Kruse, Economic Development Administrator for the City of Des Moines, 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.
Public-Private Partnerships
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.
The DSM USA Policy HQ podcast was previously produced by the Greater Des Moines Partnership. Stay in the know on the latest policy updates with The Partnership’s Government Policy Council newsletter.
Greater Des Moines Partnership
The Greater Des Moines Partnership is the economic and community development organization that serves Greater Des Moines (DSM), Iowa. Together with more than 400 Investors and an Affiliate Chamber of Commerce network of more than 6,700 Regional Business Members, The Partnership drives economic growth with one voice, one mission and as one region. Through innovation, strategic planning and global collaboration, The Partnership grows opportunity, helps create jobs and promotes DSM as the best place to build a business, a career and a future. Learn more at DSMpartnership.com.