An eastern Iowa city’s plan to use a unique kind of tax break to lure a department store to town is drawing the ire of a key state legislator. Cities in Iowa have the authority to set up special districts where property taxes are diverted to pay for things like new roads and sewers in the area rather than sent to local cities and schools, as would happen under normal circumstances.
The City of Coralville is using that kind of a tax break, worth at least $9.5-million, so Von Maur will put a department store in Coralville’s “Iowa River Landing District” — but critics say Von Maur will likely close its store at a mall in neighboring Iowa City.
Senator Joe Bolkcom, a Democrat from Iowa City, considers that among the worst abuses of this tax policy. “There’s been a number of examples that are of concern,” Bolkcom says, “But maybe the most immediate one that people are knowledgable about is the use of $15 to $20 million to essentially move a clothing store from one community to another.”
Bolkcom suggests it’s a tax shift to property owners who aren’t getting the break. “I don’t think it’s in the best interest of property taxpayers to simply spend that kind of money for really no increase in decent jobs,” Bolkcom says, “and I think that example has gotten the attention of a number of policy-makers.”
Bolkcom leads the Senate Ways and Means Committee, which drafts tax policy. He says reform of this particular tax break will be on his agenda in 2012. Bolkcom spoke Tuesday at a meeting of the Iowa Taxpayers Association.