A University of Iowa professor who also works for an eastern Iowa "think-tank" is questioning why city councils have broad authority to change tax rates on certain properties to spur economic development, while citizens vote on other issues that affect property taxes.
Iowa Policy Project research director Peter Fisher says it’s "odd" that if you want to build a school, paid for by property taxes, 60% of voters must approve the deal, while city councils may create "tax increment financing districts" in areas to spur new development.
"As soon as it becomes a TIF project, that voting requirement disappears. It’s automatically exempt from a voter referendum," Fisher says. "That doesn’t make sense. We have to get 60% (of voters to approve construction) for a school, but this council can build a hotel just by a majority vote of the council." In addition, Fisher says city officials need to be very careful when considering tax breaks for a shopping mall that’s being challenged by a new, suburban competitor.
"If you think about why a mall gets empty in the first place it’s because the private market has moved onto another location, typically. There’s this succession of malls, the older ones replaced by newer, bigger ones farther out on the periphery." Fisher says. "If the city is going to do something I think they have to ask what the market forces would do by themselves and why there is a role for this city or what the role for the city properly is in this kind of a situation."
Fisher cites the example of Iowa City where a downtown mall floundered and major retailers like Younkers cleared out. "If there’s an excess of retail space, which is the problem, then why is it in the city’s interest to subsidize retail that the market isn’t ready for?" Fisher asks. Fisher is a professor of urban and regional planning at the University of Iowa. He made his comments during a recent appearance on Iowa Public Television’s "Iowa Journal."