Riverdale's first Tax Increment Financing (TIF) district – aimed at diverting future property taxes that its largest taxpayer ALCOA would normally pay to Pleasant Valley schools and county government – will be set up before the end of the year to help fund municipal improvements of the 400-resident village.
Riverdale officials have asked the Scott County Auditor to establish a TIF district that will generate $16,700 in "incremental" taxes from the recently established Urban Renewal Area along State Street, which includes the sprawling ALCOA aluminum rolling mill with an assessed value of more than $40 million.
Based on the current tax levy rates, the new TIF will mean Riverdale will receive approximately $7,100 which would otherwise go to the Pleasant Valley School District and about $3,000 which would have been paid Scott County. Riverdale's portion, based on its own tax levy, would be approximately $6,000. Incremental property taxes due the Mississippi Bend Area Education Agency and assessor's office also would be paid to the village.
The move by Riverdale to extract more tax revenue from ALCOA is surprising given that Riverdale's establishment as a city in the late 1940's was to avoid annexation and taxation by Bettendorf. The Iowa Supreme Court eventually ruled against the City of Bettendorf in its efforts to capture the plant within its boundaries, along with the property tax revenue largess.
Despite objections to the move from ALCOA, the Pleasant Valley School District and Scott County, the village recently filed the TIF district request with the county in order to begin collecting taxes on the "incremental" property values in effective after Jan. 1, 2013. That means the TIF will capture higher assessed values expected on ALCOA's facilities, which saw significant upgrades over the past two years.
The city can use the incremental taxes to pay for municipal improvements over the 10-year life of the TIF. The initial $16,700 in incremental taxes is earmarked to pay legal and consulting fees incurred by the city to establish the Urban Renewal Area and TIF district.
Establishment of the first TIF district is just the initial step in what is expected to be a long-term strategy to obtain a larger share of property taxes paid by ALCOA as the land-locked community struggles to fund village improvements. Riverdale has little land to attract new businesses, industry or housing and does not want to increase the city's property tax levy on residents.
Today, the tax assessments on the ALCOA manufacturing facilities total more than $40 million, generating a total of more than $1.2 million in property taxes for Riverdale, PV schools and the county.
Based on Riverdale's current tax rate $12.22 per $1,000 assessed valuation, the community's portion of ALCOA tax revenue is more than $464,000. The PV schools receive approximately $550,000 from ALCOA currently, while the county receives approximately $233,000 in property taxes from the plant.
Those property taxes paid by ALCOA based on the current assessed value would remain the same. Only "incremental" values – after the date the TIF district is established – are used to compute the TIF amounts which are paid to the city rather than being split among the various taxing bodies.
Under current state TIF rules, only city approval is needed for establishing a TIF district. Even though school and county taxes are significantly affected by TIF's, neither entity has a vote in the matter. In Bettendorf, the city normally holds meetings to discuss TIF district plans with other taxing authorities to seek their support and approval.
In LeClaire, the use of TIF districts has been used to provide rebates to residential builders, thus adding to the student population without providing any additional property tax to fund the school district.
LeClaire currently diverts more than $1 million from the school district each year to fund municipal projects and pay rebates to developers.
