The rift widens between PV schools and LeClaire over use of Tax Increment Financing (TIF)

It wasn't lost on Pleasant Valley School Superintendent Jim Spelhaug that the comfortable chair and well-appointed LeClaire City Council Chambers were paid for primarily by school district taxpayers.

And, it wasn't lost on LeClaire Mayor Robert Scannell that Spelhaug and one other school district official were the only taxpayers at the council meeting to question the city's continued use of Tax Increment Financing (TIF) to pay for a growing array of municipal amenities.

Spelhaug's appearance before the council Monday (10/7) was to strenuously object to the continued use of a "layered" TIF by the city, a practice which has helped the city build a new library, city hall and sewage treatment system improvements.

Thanks to the TIF established nearly 20 years ago, the city has been able to funnel property taxes levied by the school district and Scott County into city coffers for use as rebates to developers or to pay for city capital improvements.

Spelhaug voiced support for TIF as a way to encourage commercial or industrial development, but only under limited time frames. And, while LeClaire's use of TIF to encourage residential development has provoked the recent ire of both county and school officials, that is not the most offensive part of the city's TIF use, Spelhaug told the council.

The unending nature of the city's TIF – established long before the state law was changed to limit the duration of the development tool – means school taxes on $111 million in increased property tax values are not paid the school district. That translates into more than $600,000 each year in lost property taxes to pay student education costs. And, it also means existing school district taxpayers must pay more in property taxes to make up for the lost property value/assessments.

Pleasant Valley school officials have criticized LeClaire TIF policies in the past, but school district concern has grown as student enrollments have increased the district's need to boost property taxes to pay for new facilities and increased staffing. This year, for the first time ever, the property tax rate for Pleasant Valley schools exceeded the tax rate of the Bettendorf school district.

Mayor Scannell told Spelhaug the city was planning to have a discussion in the coming months about the use of TIF for residential development, a practice avoided by neighboring communities Davenport and Bettendorf. It was unclear, however, if the city will consider terminating its original TIF district (which does not have an expiration date) to return the property tax values and resulting property tax dollars to the school district and county.

In its most recent fiscal year, the city of LeClaire received more than $3.3 million in TIF revenues, far more than the $1.26 million the city brought in through city property taxes.

Spelhaug told the council the financing of city infrastructure – the new city hall, new library and sewage system improvements – are municipal facilities which should be paid for either through debt financing (general obligation bonds) or higher taxes on residents, not on the backs of school district taxpayers.

Spelhaug, as if to draw attention to the upcoming municipal election, denied he was trying to politicize the TIF issue.

However, it was council member and mayoral candidate Judy Hartwig who requested the superintendent's remarks be read into the city council meeting minutes rather than simply attaching them as a letter. Hartwig, who is opposing Scannell in the November 3 election, has voiced support for the school district in its quest to reform the city TIF policy.

After a second by another TIF reformer, alderwoman Terri Applegate, Scannell agreed to read the superintendent's letter into the minutes.

And, in what may have been the most ironic part of the evening, a dozen Boy Scouts – the very Pleasant Valley students being shortchanged under the city TIF policy – sat next to each of the aldermen and mayor as part of their merit badge work to learn about local government.