Marshalltown Times Republican, IA
07-27-06
Presenter suggests city suffering in TIF results
By RYAN BRINKS
Iowa State University economic researcher Dave Swenson suggested to
Marshalltown officials Wednesday that the city’s yield off tax increment financing
is “not so hot.”
Swenson presented statewide and county-specific TIF research during the joint
meeting between the Marshalltown City Council and Marshall County
Supervisors.
TIF creates special districts for the economic development of projects or areas
where property taxes are treated differently than outside the districts. Funds
generated within them can be reapplied to other area-related improvements
before the rest is given for the general fund activities of cities, counties and
schools.
Use of TIF is considered a business incentive mechanism that has grown over
the years from strictly urban renewal to economic development and housing, but
Swenson warned against reliance on only it as a tool for economic development.
While admitting certain factors shape the economic dynamics of the region —
like the pressure from three metropolitan areas surrounding Marshalltown and a
focus of TIF effort on industry retention rather than purely growth — Swenson
indicated that large urban areas like Marshalltown gain in their TIF districts but
lose outside them.
“We’re getting TIF effort, but we’re not getting the total valuation base growing,”
he said. “That’s the part that’s got me. We have high effort and low yield in a lot
of our communities.”
The county’s average wages and jobs are eroding against the state average.
Where TIF districts gain, he said, retail sales is losing and the rest — private firm
growth and wages — fights to hold the line.
“Business incentives ain’t the only story out there,” Swenson said. “The whole
idea of economic development is way bigger than business incentives.”
Other suggested tools included quality public goods — quality government and
the scope of value that comes with services people are getting — and a city’s
commitment to human capital development.
A good starting point would be to understand the economic base and direction
through an involved research process, he said. A multi-county regional study
could cost around $40,000.
“Growth in a region comes from the ability to produce for export sales. Being able
to take care of your community’s needs is important as part of your community’s
vibrancy, but being able to attract jobs in your region that ship a product out and
bring a dollar in is what you need to do to grow your economy,” Swenson said.
He summarized his conclusions by advising the city look into other directions it
can go with its economic development efforts and to continue cautiously with TIF.
“[Public officials] have an obligation to demonstrate to the public that what they’re
doing is prudent, effective and a good use of public property,” he said.
Contact Ryan Brinks at 641-753-6611 or rbrinks@timesrepublican.com