HomeMy WebLinkAboutA008 - Council Action Form dated May 12, 2020 ITEM # 13 27
DATE: 04-28-20
05-12-20
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.
1
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.
2
ORDINANCE NO.
AN ORDINANCE TO AMEND THE MUNICIPAL CODE OF THE CITY
OF AMES, IOWA, BY REPEALING SECTION 24.9 AND ENACTING A
NEW SECTION 24.9 FOR THE PURPOSE OF EXTENDING THE
AVAILABILITY OF THE PARTIAL TAX EXEMPTION FOR
QUALYIFYING INDUSTRIAL REAL ESTATE; REPEALING ANY AND
ALL ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT TO
THE EXTENT OF SUCH CONFLICT; AND ESTABLISHING AN
EFFECTIVE DATE.
BE IT ENACTED,by the City Council for the City of Ames, Iowa,that:
Section One. The Municipal Code of the City of Ames, Iowa shall be and the same is hereby amended by
repealing Section 24.9 and re-enacting the same to state as follows:
"Sec.24.9. LENGTH OF TIME EXEMPTION IS AVAILABLE.
The exemption provided in Section 24.8 shall be available for the period from June 1, 1985,until
July 1,2030,unless sooner repealed."
Section Two. All ordinances, or parts of ordinances, in conflict herewith are hereby repealed to the extent
of such conflict,if any.
Section Three. This ordinance shall be in full force and effect from and after its passage and publication as
required by law.
Passed this day of 2020.
Diane R. Voss,City Clerk John A.Haila,Mayor