HomeMy WebLinkAboutA004 - Council Action Form dated April 28, 2020 I
ITEM # 13
DATE: 04-28-20
COUNCIL ACTION FORM
SUBJECT: ORDINANCE EXTENDING THE INDUSTRIAL TAX EXEMPTION
AVAILABILITY TO YEAR 2030
BACKGROUND:
Iowa Code Chapter 427B authorizes municipalities to provide for five-year declining
scale property tax abatement as an incentive for new construction related to
manufacturing, research. warehousing, and distribution uses. The City of Ames first
enacted an ordinance providing for this industrial tax exemption in 1985 for an initial
period of five years. The ordinance was subsequently amended to make the exemption
available until 2010, and once again extended through July 1 , 2020.
State law provides the following partial property tax exemption schedule for the
incremental value of improvements for qualifying uses determined by the City
Assessor:
• Year 1 = 75% Property Tax Exemption
• Year 2 = 60% Property Tax Exemption
• Year 3 = 45% Property Tax Exemption
• Year 4 = 30% Property Tax Exemption
• Year 5 = 15% Property Tax Exemption
Nearly every City in Iowa has adopted an ordinance to provide abatement under
Chapter 427B as a method to attract new construction that will also improve
employment opportunities. Cities have been allowed to use the abated taxes as local
match to various other economic development incentive programs managed by the
state. The City of Ames would be at a competitive disadvantage with other Iowa
communities if the ordinance offering this property tax abatement incentive was not
extended beyond 2020.
ALTERNATIVES:
1 . Set the date of hearing for May 12, 2020 to approve an ordinance extending the
availability of the Industrial Tax Exemption incentive for an additional 10 years
through June 30, 2030.
2. Decide to not extend the availability of the Industrial Tax Exemption incentive and
allow it to expire on July 1 . 2020.
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CITY MANAGER'S RECOMMENDED ACTION:
The Industrial Tax Exemption provides an important economic incentive to attract new
industries to Ames and expand existing industry. Abated taxes can be used to match
other state economic development incentive programs managed by the state.
Continuing this form of property tax abatement allows the City to remain competitive
with other communities.
It is therefore the recommendation of the City Manager that the City Council approve
Alternative #1 and set May 12. 2020 as the hearing date to approve an ordinance
extending the availability of the Industrial Tax Exemption incentive through June 30,
2030.
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