Legislation could aid development around speedway
If legislation that was introduced to the Iowa House late last month is eventually signed into law, Newton could become home to a bevy of new shopping and entertainment options.
House File 2480, submitted on Feb. 19 by Representative Roger Thomas (D-Clayton), who is also Chair of the Iowa House economic Growth Committee, proposes a tax bonding measure that would create new districts for the purpose of economic development, with repayment of bonds coming through a portion of sales and service taxes. While the bill addresses all of Iowa, if approved, the first project would likely target Newton and include new restaurants, retail outlets and entertainment venues, such as a water park, to attract visitors from across the state. The development would be built off of Interstate 80 by Iowa Speedway.
“Our idea is to have kind of a destination — entertainment, retail, any kind of hospitality area — near the speedway,” said Troy Strawhecker, a managing member and partner at Trilogy Investments in Iowa. Trilogy currently owns 66 acres of land adjacent to the speedway and is the bill’s biggest proponent.
In theory, the bill would allocate 4 cents out of the 7-cents-per-dollar sales tax to repay the bonds in these newly created districts over a 20-year period. After 20 years, the created district would be dissolved. Once the bond is repaid, sales tax from the district would go back to being appropriated in whole to the state. The proposed requirements for any project, which would target rural farm land that is easily accessible, ensure that new developments are done on a grand scale. Of the requirements, any development must: consist of 400 or more contiguous acres of land, create at least 200 new, permanent jobs; have a capital investment of $50 million or more; and generate at least $25 million in annual revenue.
Development of Iowa Speedway was facilitated by the state’s current TIF (Tax Increment Financing) model, which is based on property taxes. HF 2480 would most likely result in an additional tax bonding model, one similar to the STAR (Sales Tax and Revenue) bonds used to finance Kansas Speedway and the surrounding area in Kansas City, Kan. and based on sales tax revenue.
“The Kansas bill ... is a model that we’re certainly following,” Heckersham said. “If the legislature were to pass [HF 2480] and the governor were to sign it, the work is hardly done.”
While the bill has the support of legislators looking to spur job creation and economic growth in Iowa, there are opponents, such as the Iowa Farm Bureau.
“The community growth is a good thing and the money spent in the economy is a good thing. But freezing the tax base means all the new tax revenues that would normally pay for the services needed by this influx, would be siphoned off to pay for the economic development bonds,” IFB Public Relations Manager Laurie Johns said in a statement. “This leaves the state and local governments without the resources needed to support the newly grown community. Again, that means property taxpayers would be picking up the tab.
“We already have quite a tab to pay; right now we have over a $500 million hole to fill in our state budget and decision-makers are looking to shift a significant portion of that to property tax payers. Our budget is being balanced on the backs of all property taxpayers, regardless of their zip code, without exacerbating the problem with this new legislation.”
Bill Peterson, Executive Director of the Iowa State Association of Counties, said his organization opposes the measure because of conflicts with the local option sales tax.
“One of the reasons we have a concern for a city creating one of these districts ... they would be redirecting the local option sales tax that might be going to the county, and many of our counties have issued bonds of their own for that sales tax,” Peterson said.
“If they made a couple of little changes, we would probably go from opposed to this to undecided or neutral on the bill.”
The bill has the backing of Rep. Paul Bell (D-Newton), who cited the jobs and resources development around the speedway would provide while the city puts little on the line.
“I think it’s an option for people to use,” Bell said. “From what I’ve been told, it’s harmless to the county and the city.
“Investors have the burden. If it doesn’t happen to go (well), they’re the ones who will be suffering.”
Heckersham said Trilogy has been in talks with Stan Clement to purchase an additional 107 acres the Iowa Speedway CEO owns around the raceway.
Because the bill is currently being reviewed by the House Ways and Means Committee, it is not subject to Friday’s second funnel deadline.
