The Clinton Herald, Clinton, Iowa

January 30, 2014

Unearthing urban renewal: Clinton council schooled on need to update Lincolnway plan

By Brenden West
Assistant Editor

CLINTON — The Lincolnway Industrial Rail and Air Park west of town isn't the only Urban Renewal Area subject to potential changes in the future.

It's a priority for the city, though, if Clinton and current area occupants RAIL.ONE and Nevada Railroad Materials are to finalize tax increment financing (TIF) agreements made when both companies chose to set up in the city. And if the city is going to continue offering TIF arrangements with prospective companies, it needs to update the Linconway Urban Renewal Plan.

Clinton City Administrator Jessica Kinser held something of a course lecture Tuesday regarding changes in TIF law that mandate the city update its plan. Iowa legislators amended their laws regarding what a city can and cannot do with TIF in 2012, and among the changes was a directive that a city must spell out its intents for TIF within Urban Renewal Plans.

"There is a chicken and there is an egg here," Kinser said during a PowerPoint presentation that explained the history of urban renewal. As it applies to Clinton, the city currently maintains 10 other UR districts as well as Lincoln Way. "Urban Renewal comes before TIF."

TIF is used as an economic driver and takes place within many economic development agreements statewide. It allows cities to collect the increment above the tax baseline over a given period of time. Using a chart, Kinser explained, in theory, the city would receive these surplus increments, and said increments would be used by the city to finance public infrastructure associated with driving the Lincolnway Urban Renewal Area. Those costs, according to the plan, are not to exceed $25 million and there is no commitment made in the plan for how those projects would be paid for.

Kinser also explained TIF's recent alterations: cities have to specifically state intents with TIF, there has to be an analysis for why TIF is a good resource for public infrastructure in question, there needs to be a reason why an Urban Renewal Area is intended to be redeveloped and TIF can't be used as a mechanism to relocate a business.

That's why Clinton (as well as every municipality in the state) needs to outline infrastructural costs associated with UR Areas. Kinser acknowledged last week during the city's planning and zoning commission that large sums  such as the $53.6 million referenced in the Lincoln Way plan  caused a stir in the community. Contextually, though, that eight-digit figure doesn't bind the city to spending anything.

"That seems to be the negative," Kinser said Tuesday. "There's no binding authority that we have to complete the projects... If you intend to exceed that dollar amount listed, you cannot do that. That dollar amount is the cap."

The large sums have clouded the main objective for the plan. When the Lincolnway UR Plan was presented to the council Jan. 14, it drew a 4-3 split decision on whether it should make it as far as the Feb. 11 public hearing.

But the aforementioned objective, said Kinser, is to drive economic development. The bottom line, she added, is to entice more businesses, create more jobs and raise the tax base the city of Clinton can tap into.

"Jobs equal people," Kinser said. "People who are hopefully going to be local taxpayers, and they equal new spending as well. So this is one of the reasons we do this. There's a multiplier effect when a new job is created."

Clinton owns 259 remaining acres in the UR Area still available for purchase by interested businesses  land bought through a $6 million loan from Clinton County that the city is expected to pay off through sales of land to businesses. Another 212 acres are owned by the Clinton Regional Development Corp.

Steve Howes, chairman of the CRDC, stressed the importance of finalizing the Lincolnway UR Plan so his organization can continue attracting business. One primary need is to upgrade businesses' abilities to access water and sewer, something that could be accomplished through TIF.

"Their tax revenue needs to be that funding source to finance that," Howes said. "As other projects come, if we have a project that creates enough taxable value to provide some of these other services, we can look at those and provide those."

The only negative associated with the Lincoln Way plan is the "large numbers" associated with the project, Kinser said. But Mayor Mark Vulich added that nothing commits the city to any spending unless Clinton has "a bird in the hand."

Development agreements become easier when the city can offer TIF as an incentive. Per state law, TIF can't be offered unless an Urban Renewal Plan designating TIF is in place.

As for the plan itself, there is a cost associated with amending it. Kinser said she's joined the city finance director to propose a $15,000 budget that would cover the costs of three UR Plan amendments. If the council approves the Lincolnway Urban Renewal Plan, $5,000 would be allocated to make necessary updates.