Make no mistake, it's the taxpayers that are floating a loan to the developers of BettPlex.
And, amid shrinking state support for schools, BettPlex should be a wake-up call at Scott County that standards for hand-outs to for-profit firms need to be tightened going forward.
There's plenty of merit to the planned sports and entertainment complex near Interstate-80 in Bettendorf. That part of town could use an economic lift.
But, as Scott County supervisors suggested this week, there's just something off about the whopping incentive package Bettendorf is offering lead developer Doug Kratz. All told, a proposed Tax Increment Financing district would fund a $4.9 million loan upfront and additional rebates for 20 years. The project's first phase is expected to cost $45 million, developers have said.
TIFs are complicated, widely tapped means of subsidizing economic development, particularly in blighted neighborhoods. The quick and dirty is this: Government officials estimate how much a project would boost property value and use that expected bump in taxes to finance some of the costs. There's a hitch. That additional tax money must only be spent within the TIF district.
By and large, it's the schools, already struggling under Iowa's austerity budgets, that end up getting shorted.
In fact, schools across Iowa couldn't collect $115 million in taxes in 2012 thanks to existing TIFs, says a 2013 study by the state Department of Revenue. State taxpayers made up $51 million of it through Iowa's education funding formula. The remainder fell to the school districts, and the local tax base that support them.
Meanwhile, the results on the economic development front are mixed, researchers concluded.
"These results suggest that greater concentration in the usage of TIF within a county does not explain either higher employment growth or aggregate wage growth within a county," the analysis reads.
It's also unclear whether TIFs are driving development or if these projects would have happened anyway, the state analysts noted.
But, even with those questionble results, the number TIFs have exploded in Iowa in recent years. Less than 1 percent of property taxes statewide were diverted to TIFs in fiscal year 2000. That number jumped to 6 percent in FY 2014, totaling more than $300 million. Again, it's the remainder of the tax base making up for the shortfall.
It's cash Iowa's strapped districts can't afford to lose.
Scott County supervisors this week rightly groaned at the generosity of Bettendorf officials. Some griped about the 20-year life of the TIF. Others expressed legitimate concerns about offering taxpayer subsidies to a for-profit firm that intends to compete with other hotels and restaurants throughout the county.
At the end of the day, it's likely county supervisors will OK the Bettendorf's incentive package and BettPlex will be under construction by this summer. The sports complex could indeed be a significant boost to the I-80 corridor. And, by all accounts, it will be a fine addition to the Quad-Cities economy.
That said, live or die, it's the taxpayers -- state and local -- that will be on the hook for decades. And it's the local school district that will miss out on tax revenue because incentive packages are given away these days like lollipops at the bank.
After much grumbling, supervisors agreed to review their standards for TIFs going forward. It's a reasonable position, considering how far along BettPlex is and the political momentum behind it.
That's the least taxpayers can expect from officials gambling with house money.