HomeMy WebLinkAboutA002 - Council Action Form dated July 11, 2017 ITEM # 31 a-c
DATE: 07-11-17
COUNCIL ACTION FORM
SUBJECT: BARILLA URBAN RENEWAL AREA AND TAX INCREMENT DISTRICT
BACKGROUND:
At the City Council meeting on February 28, 2017, staff was directed to initiate the
creation of an urban renewal plan to provide an economic development incentive in the
form of a rebate of incremental property taxes for expansion of the Barilla manufacturing
plant at 3303 and 3311 East Lincoln Way. Barilla proposes an expansion to add two
additional production lines, improved rail facilities, and new silos. The estimated cost of
improvements is $64,000,000, of which $16,320,000 will be in the form of increased
taxable valuation.
The City Council directed staff to prepare a development agreement providing for a
rebate of incremental property taxes for a period of 10 years or $3,000,000, whichever
occurs first. The property tax rebate will be provided as an incentive for the Barilla
expansion project and requires that the company create 41 new jobs within three years
after completing the project and agreeing to a minimum assessment of $16,320,000 of
incremental new taxable property valuation to receive the City's incentive. In order to
provide a rebate of property taxes, an economic development Urban Renewal
Area must be created along with Tax Increment Financing (TIF) district. The
proposed Urban Renewal Area and tax increment district comprises 140 acres of
land zoned Planned Industrial (PI) owned by Barilla America, Inc.
URBAN RENEWAL AREA AND TIF DISTRICT:
Code of Iowa Chapter 403 allows cities to establish tax increment financing districts
through the creation of an urban renewal area. The creation of an urban renewal area
requires the adoption of an urban renewal plan. A copy of the plan is included.
Because the proposed urban renewal plan includes tax increment financing as a
component, the City Council invited the affected taxing entities (Ames Community
School District and the Story County Board of Supervisors) to a consultation on June
22. No one from those entities attended or provided comments.
The Planning and Zoning Commission met on June 21 and made a determination that
the proposed urban renewal plan is consistent with the Land Use Policy Plan.
Following the public hearing on July 11, the Council can approve resolutions adopting
the urban renewal plan and establishing the urban renewal area. City Council can then
proceed with the first reading of an ordinance establishing the Barilla Urban Renewal
Area Tax Increment District.
Council should be aware that the establishment of the urban renewal area and TIF
district does not provide for rebate of incremental taxes. The rebate of taxes will
be made per terms of a development agreement that will be negotiated with
Barilla, and will require separate Council approval each year that Barilla meets
the terms of the agreement.
URBAN RENEWAL PLAN:
Included with the City Council packet is the urban renewal plan. This plan includes the
necessary components described by the Code of Iowa. It describes the project and its
objectives and includes a summary of the process of its preparation and adoption. The
plan identifies those components of the Land Use Policy Plan that are supported by the
proposed urban renewal area.
The plan also contains a summary of the City's current debt obligations and the City's
limits on issuing debt.
DEVELOPMENT AGREEMENT OBJECTIVES:
The draft development agreement with Barilla is still being prepared. The development
agreement will provide terms which Barilla must meet to receive a rebate of incremental
taxes. This includes completion of the expansion project, entering into a minimum
assessment agreement, and meeting the specified employment target. Once the
agreement is agreed to by Barilla, it will be placed on a City Council agenda.
ALTERNATIVES:
1. The City Council can adopt the urban renewal plan and create the urban renewal
area by resolution and adopt an ordinance establishing a tax increment financing
district.
2. The City Council can choose not to initiate the urban renewal plan for Barilla.
CITY MANAGER'S RECOMMENDED ACTION:
Following the direction of the City Council at its February 28t" meeting, staff has
prepared an urban renewal plan that follows the requirements in the Code of Iowa and
is needed to allow the city to offer a rebate of incremental property taxes as an incentive
for the Barilla expansion.
Therefore, it is the recommendation of the City Manager that the City Council accept
Alternative No. 1 as described above.
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