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City moves to create new TIF District

Fairmeadows North targeted for urban renewal

Published: Tuesday, Oct. 3, 2017 9:58 a.m. CDT • Updated: Tuesday, Oct. 3, 2017 10:41 a.m. CDT
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(Jamee A. Pierson/Daily News)
The Newton City Council discusses creating the Fairmeadows North Housing Urban Renewal Area and corresponding TIF district at its meeting on Monday. A public hearing is set for Nov. 6 on the topic.

A public hearing is set to create an urban renewal area with a Tax Increment Financing (TIF) district for the Fairmeadows North subdivision expansion. The Newton City Council will open the hearing on Nov. 6 after discussing the topic at its regular meeting on Monday.

“Here in Newton, we are in a recovery mode and as we increase our industry in a variety of ways, we’re going to have to have more housing for people and a variety of houses that are affordable and are in good neighborhoods,” councilman Steve Mullan said. “Fairmeadows is a logical place to continue that growth in the city — it is great spot to develop. Hopefully, it won’t be the last.”

The expansion consists of seven acres divided into 23 lots located east of Agnes Patterson Park. The creation of the Fairmeadows North Housing Urban Renewal Area and corresponding TIF district will be used to facilitate project, namely the infrastructure for the expanded housing development.

“We’re setting up a district where we are going to make some development happen that we couldn’t accomplish otherwise. In this case the city is putting in the infrastructure to the tune of just under $900,000,” city administrator Matt Muckler said. “We expect to recover about half of that cost through lot sales and we think the lots will move once they are there, builders will buy them up and we will have more residents. In order to cover the other half of the infrastructure costs we are putting in a urban renewal area where we will create a TIF District and the idea is then to recover the other half of the infrastructure.”

An urban renewal area is a place the council can set out where it wants to take on different economic development activities, Muckler said. There are five categories of urban renewal areas that are allowed under Iowa code including slum, blight, economic development, low to moderate income housing and non-low to moderate incoming housing. A sixth category can be created by combining two or more of the categories for an area. The city is looking to use the low to moderate income housing at Fairmeadows North.

The creation of a TIF District will designate taxes generated from the houses to a fund to pay off the remaining infrastructure bill before distributing them to other tax districts including the school district and county. While it may seem money is being withheld from other entities, Muckler said the money would never be there without the city doing the work.

“If you have a bare piece of land, like we have now, it is not generating any taxes. Say it generates $100 in taxes a year, it is almost a none issue,” Muckler said. “Had the city not stepped in and provided an urban renewal district, if we didn’t have that option on the table, there would be no houses. We don’t have developers knocking on our door saying we want to purchase that seven acres and develop the 23 lots.”

Muckler said, for example, the school could, on principle, object to the creation of the TIF district, but with or without the district, the school’s budget does not change. It could, in fact, generate additional money should a family with school-aged children move into a house, he said.

In time, though, once the debt is paid off, the school would begin receiving tax dollars that would not have been made possible without the creation of the TIF district and the houses being built, creating taxable property.

“It is taxes they (the school, county) are not getting now. It’s not like they are going to miss out on taxes or getting less, it is just they won’t receive those tax dollars directly until after the infrastructure is paid off. They don’t receive one dime less than what they would have received at the end of the day.”

There is a 10-year time limit on the TIF district to collect funds, but Muckler said he expects the debt to be paid off much sooner

“We won’t get anywhere near that. We hope that these lots will be built out quickly and theoretically, we’d love to be completely built out in two to three years,” Muckler said. “We’ve already heard a lot of interest in a lot of these lots.”

Another active urban renewal area and TIF District in the city with noticeable improvements is the North Central Urban Renewal Area. Projects underway or in the works for the city in that area include the DMACC Campus, renovation work at the Newton Public Library and the rehabilitation of Hotel Maytag.

“It is a tool we use for growth and in the end we all want to see some growth,” Muckler said.

Contact Jamee A. Pierson at 641-792-3121 ext. 6534 or jpierson@newtondailynews.com

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