What is tax increment financing? - KTIV News 4 Sioux City IA: News, Weather and Sports

What is tax increment financing?

A map of TIF districts in downtown Sioux City. A map of TIF districts in downtown Sioux City.

What exactly is tax increment financing, or TIF, and does it have an impact on various entities, like the Sioux City School District?

Several areas across Sioux City are broken up into "TIF districts."

Sometimes businesses, such as Lakeport Commons, decide to build within a TIF district.

But before Lakeport Commons was constructed, it got financial help from the city for surrounding infrastructure. At the same time, Lakeport Commons and the city of Sioux City agreed on the initial property tax value, or TIF.

Part of that money is then used to pay the city back for financial help, with the rest divided among several entities.

The same is true downtown, where there are also TIF districts. City officials say all three of the casino proposals would lie within one of them.

However, every business that builds within a TIF district has the option to take the assistance, or not. If they take it, they agree to an initial assessed value for the property, if not they may be able to fight for a lower property value.

Bob Padmore, Sioux City's Finance Director, says the only difference is how the money is routed.

"It's strictly how those taxes are allocated. Are they allocated to pay back some incentive or infrastructure improvements or are they just divided amongst the various tax entities," said Padmore.

One of those entities, the Sioux City School District. Although the district does receive some TIF money, it doesn't depend on it as a source of funding.

"The primary driving factor to any school district budget anywhere in the state of Iowa and in most other states is the number of students that attend that district," said Dr. Paul Gausman, Sioux City Schools Superintendent.

The more students, the more state funding. So a lack or surplus of TIF money may not impact the school district, but rather the tax payer.

"That would be a potential benefit or detriment to the property taxpayers in the community, but would not have impact to the overall revenue available to the school district," said Gausman.

Either way, city officials say development projects like Lakeport Commons or downtown projects mean more money for a community and, more growth.

Just to be clear, neither city officials nor the Sioux City Community School district are taking sides on the casino issue.

Neither one of them has endorsed any of the proposals.

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