September 3, 2009 by ggackle
The Iowa Finance Authority (IFA) is re-evaluating its tax credit allocation for the Hometown Harbor housing project after learning the developer had not included a 10-year, $650,000 Tax Increment Financing (TIF) incentive from the city of Bettendorf in its financial projections.
The IFA first learned of the project receiving the city TIF from an inquiry by bettendorf.com.
Carla Pope, director of Affordable Rental Production for the IFA, said the authority "expressed our displeasure that we hadn't been made aware of the TIF" during a recent conference call with Hometown developer Jim Bergman and his consultant, Tom Monico, of Thomas & Thomas Associates, Inc., Glenview, Illinois.
The city approved the 10-year TIF incentive for the project June 2.
According to Pope, the developers during the conference call said the failure to notify the authority about the TIF was "an oversight." Authority regulations require disclosure of such tax credits, Pope said.
Finance authority officials also said they were told during the conference call that Dave Smith of Bettendorf is not a partner in the Hometown Harbor project and participated in the city council TIF discussions as a friend of Mr. Bergman.
At the city council's public hearing June 2 on the Hometown Harbor TIF, Smith said the project partners were he, Bergman and Ryan Companies.
"We are reviewing the agreement from the city and will be revising our pro forma for the project," Pope said. "We are in the discovery and analysis process right now. We may or may not change the project tax credit amounts."
The state initially granted Hometown Harbor developers $2.9 million in annual tax credits over a 10-year period, or a total of $29 million in tax credits. The tax credits are a $1 to $1 offset to federal income taxes.
Developers sell those tax credits through a syndicator to businesses wanting to offset their federal taxes. One of the reasons Smith cited for seeking the city TIF funds was the declining market for such tax credits in the current economic times.
He estimated the Hometown Harbor developers would receive only about 60 to 70 percent of the tax credit value through the syndication.
Subsequent to the city approving the TIF and the allocation of $29 million in tax credits by the state, Hometown Harbor in August was allocated $6 million from the state's share of federal Section 1602 funds. Under the Section 1602 program, developers who previously received an allocation of federal housing tax credits, may exchange those credits for cash awards.
For Hometown Harbor's Section 1602 funding request/pro forma CLICK HERE.
