DES MOINES — The Iowa House voted 96-0 Monday to place new reporting and transparency requirements on cities and counties that use tax increment financing.

Proponents said the changes heading to Gov. Terry Branstad’s desk for his consideration are designed to curb some TIF abuses without limiting an important economic development tool used by many local governments to spur development, especially in urban renewal areas.

Representatives agreed to accept modifications the Senate made last month before approving a revised House File 2460 by a 26-22 margin.

The legislation seeks to establish new yearly reporting requirements for cities, counties and rural improvement zones and create a searchable database of information contained in those TIF reports to be accessible via an website by Dec. 1. The Legislative Services Agency also would be required to issue an annual report to the General Assembly and governor that would summarize and analyze the data provided by local entities.

Another provision would require a city to conduct a public hearing and a public vote on any amendments or modifications made to an adopted urban renewal plan to include additional projects.

The bill also included an “anti-piracy” provision. It would bar TIF incentives from being used for the relocation of a commercial or industrial enterprise not current located in the municipality unless the governing body where the business currently resides agrees in writing to approve the relocation or the governing board of the city where the enterprise is to be relocated must show written proof the TIF is in the best interest of the public.

Local governments use TIF to finance public improvement projects and economic development. In theory, the improvements will increase the property tax base and the “increment,” or difference, between the original tax base and post-development tax base will cover the costs of improvements.

A TIF freezes the property taxes on a site at predevelopment levels and diverts the increase in taxes, or increment, into a fund used by the city. Sometimes, the increment goes to a developer of a project in the TIF area, or the city might use it for infrastructure work. Closer legislative examination was sparked this session by Coralville’s use of TIF to finance its Iowa River Landing commercial project, which last fall landed a Von Maur department store as its retail anchor.

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