FY25 Proposed Budget

The growth in assessed property value has averaged 6.16% over the last ten years. The growth in taxable value has averaged 3.82% in that same timeframe and has been in part by increases in the state-mandated “rollback”; a higher percentage of residential properties’ value is taxable.

*Assessed valuations before rollback; military exemptions deducted; includes TIF; excludes gas & electric utilities and Taxable valuations after rollback, military exemptions deducted, includes TIF, excludes gas & electric utilities Tax collection year displayed (Source: Iowa Department of Management)

The State of Iowa limits the portion of a property’s value that is taxable, known as the assessment limitation order or “rollback”. This system is intended to limit the amount taxable value can increase in any one year. Taxable value can differ by property class (e.g. residential, commercial, agricultural, and industrial); for City revenue streams, this most notably affects the taxable value of residential properties.

The portion of residential properties’ assessed value that is taxable hit a low point in fiscal year 2009, when forty-four percent of residential property values were taxable. This percentage has remained fairly consistent for several consecutive years. However, this has coincided with slower assessed value growth and an Iowa Supreme Court decision allowing some apartment complexes previously taxed as commercial properties to reorganize as residential cooperatives. Currently, ninety percent of a commercial property’s assessed value is taxable, meaning that as apartment complexes are reclassified as residential, the revenue the City realizes in property taxes from these complexes drops by approximately half. As Iowa City has more multi-unit apartment buildings per capita than elsewhere in the state, this decision disproportionately affects Iowa City’s tax base.

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