HomeMy WebLinkAbout1985-01-08 CorrespondenceI
:Ity of Iowa City
MEMORANDUM
Date: January 3, 1985
To: City Council
y"�
From: Karin Franklin, Senior PlannerrY�l
Re: Tax Abatement Issues
INDUSTRIAL SHARE OF IOWA CITY TAX STRUCTURE
At the December 20 Council meeting, the Council was presented with an
article by Caroline Oieterle arguing against adoption of an ordinance
providing tax abatement for industrial uses. In the article Ms. Dieterle
stated that "the percentage of local property tax valuation that was
commercial/industrial property in Iowa City was 32 percent of the total."
This figure was offered as a demonstration that the tax burden in Iowa
City was similar to Des Moines and Cedar Rapids and that it did not fall
heavily on residential but was shared to a large extent by commercial/in-
dustrial properties even though Iowa City did not have provisions for tax
abatement. The following information obtained from the City Assessor's
office shows the distribution of taxable valuation in 1984.
IOWA CITY'S 1984 TAXABLE VALUATION BY SECTOR
Residential
54.1%
Residential - multi -family
14.7%
(commercial)*
Commercial
20.0%
Industrial
6,6%
Other
4.6%
100.0
*Note: The term "commercial" includes apartments for the purpose of
assessment.
The table above illustrates the relatively small contribution made to the
total taxable valuation of Iowa City by industry. The proposed abatement
ordinance will be applicable to only those properties in the industrial
sector (6.6%) and only qualifying warehouses and distribution centers in
the commercial sector (less than 20%).
RETROACTIVE FEATURES OF ORDINANCE
Any existing development the construction of which was completed in 1983
will not qualify for abatement under the proposed ordinance. If the
ordinance is adopted and published by January 31, 1985, any appropriate
construction completed in calendar year 1984 would be eligible to apply
for abatement and application must be made by February 1, 1985.
Page 2
Applications for prior approval cannot be made until the abatement
ordinance is adopted establishing such a mechanism. Any project then
given prior approval must also apply to the City Assessor by February 1 of
the year following project completion. Prior approval of a proposed
project does not guarantee an exemption.
IMPACT OF THE ABATEMENT ORDINANCE ON MILLARD WAREHOUSE
Attached is an analysis prepared by Ray Muston showing the effect the
abatement ordinance would potentially have on the $3.8 million Millard
Warehouse project based on 1984 millage and rollback rates. (Property tax
due is calculated by the following equation: assessed value (rollback)
(millage) = tax due) Mr. Muston has also provided an estimate of the
impact the project will have on the community in terms of population,
personal income, retail business, bank deposits, residential property
taxes expected, etc. The total tax abated for the project would equal
$307,168. This is offset by a projected increase in revenues from the
residential property tax leveraged of $510,480.
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Page 2
Applications for prior approval cannot be made until the abatement
ordinance is adopted establishing such a mechanism. Any project then
given prior approval must also apply to the City Assessor by February 1 of
the year following project completion. Prior approval of a proposed
project does not guarantee an exemption.
IMPACT OF THE ABATEMENT ORDINANCE ON MILLARD WAREHOUSE
Attached is an analysis prepared by Ray Muston showing the effect the
abatement ordinance would potentially have on the $3.8 million Millard
Warehouse project based on 1984 millage and rollback rates. (Property tax
due is calculated by the following equation: assessed value (rollback)
(millage) = tax due) Mr. Muston has also provided an estimate of the
impact the project will have on the community in terms of population,
personal income, retail business, bank deposits, residential property
taxes expected, etc. The total tax abated for the project would equal
$307,168. This is offset by a projected increase in revenues from the
residential property tax leveraged of $510,480.
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Filer New Job Mod
lava City Council : December 18, 1984
Subject: Economic Impact of Industry Expansion
LOCAL COMMUNITY IMPACT OF 100 INDUSTRIAL JOBS
Source: Community Guide to Insdustrial Development .
Iowa Development Commission
Populations
Households:
School Children:
Personal income:
Retail establishments:
Bank Depositi:
Passenger cars:
Nos -manufacturing jobs;
Annual retail sales:
351
97
79
1000000
$500,000
97
68
$500,000
PROPOSED MILLARD EXPANSION EXAMPLE
The Millard Expansion Plan calls for :
a) New construction of 75,724 sq feet (Phase One '85, Phase Two '061
b) Capital investment of $3.8 million
c) An estimated 100 additional industrial jobs
PROJECTED IMPACT OF EXPANSION
Given the above economic impact factors and proposed Millard expansion:
Ave Annual Property Tax on Millard Expansion First Five Years:
Assumdng tax based on 1984 millagelmith abatement)
Year One; 25598
Year Two: 40956
Year Threes 56315
Year Four: 71673
Year Five: 87032
Year Sim: 102390
Residential Property Tax an 97 Households at Johnson County
Average of 850,400 (1980) it 1984 millige rates
Total Tax Revenue Impact (Industrial #Residential)
Increase in Bank D_poslts:
Increase ln'Retill Sales:
$56,315
$102,096
fI5B,411
1500,000
$500,000
Second Five
Years
$102,390
1102,096
1204,486
$500,000
1500,000
Page 1
DEC IB 84
Janus 8th. 1984
The City Council of. Iowa -City, Iowa, met in special__
session, in the Council Chambers, Civic Center, 410 E.
Washington Street, Iowa City, Iowa, at 7 o'clock P .M., on
the above date. There were present Mayor Pro Tem Clemens Erdahl,
in the chair, and the following named Council Members:
Ambrisco, Dickson. Strait, Zuber
Absent: —Baker LblcDonald ____
* * * * * * * * *
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