FY27 Proposed Budget

• Tax Increment Financing: Tax increment financing (TIF) is a mechanism used to provide financial assistance for projects within a designated Urban Renewal Area and TIF district, in which the difference between tax revenue derived from unimproved, underdeveloped, or underutilized property and tax revenue derived after its development, redevelopment, or expansion (the "increment") may be pledged by the City to help finance project expenses incurred by the City or the developer in furtherance of the development. TIF financing is available in the form of public infrastructure improvements or in the form of forgivable loans or property tax rebates. The amount of available tax increment financing is dependent upon the amount of new taxable property value added to a property, overall alignment with the City Council’s Strategic Plan, and compliance with Iowa City’s Tax Increment Financing Policy. • Tax Abatement and Exemption Programs: The City utilizes various commercial and industrial tax abatement and exemption programs to incentivize the creation of new taxable value in the community. Two examples of this include the Partial Industrial Property Tax Exemption, which offers a sliding scale tax exemption on new value added through building and site improvements for industrial property, and the Highway Commercial Tax Exemption, which offers a three-year 100% tax exemption when a minimum increase in new building value is created for commercial properties within the designation Urban Revitalization Area. • Direct Funding Assistance: Direct funding assistance may also be provided in limited circumstances for projects, programs, and initiatives which expand, enhance, or strengthen the local economy. This includes grant programs which are targeted at local businesses. Amount and eligibility of direct funding assistance is typically limited.

Capital Improvement Program Budget Policies

▪ The City will develop a five-year Capital Improvement Program (CIP), which will be reviewed and updated annually, comply with City Council goals and be compatible with the Comprehensive Plan whenever possible.

▪ The complete five-year CIP funding plan must be balanced each year by matching projected expenditures with proposed revenue sources by fund.

▪ Funding for projects should be obtained through borrowing from:

• bond market, general obligation or revenue bonds

• enterprise fund operations and reserves

• internal loans

▪ The City may utilize General Fund cash balances to fund capital projects whenever available and feasible. For the Airport, it is policy that the General Fund will match up to $100,000 in grants received per year.

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