The city of Dubuque reported about $104 million in outstanding tax-increment finance debt obligations in its annual report to the Iowa Legislature, continuing a downward trend for the second straight year.
At the same time, while the total TIF revenue also increased slightly for the second straight year, from $14.4 million to $15 million, TIF expenses increased sharply from $9.1 million to $13.6 million, reversing a two-year decline.
About $3.1 million was rebated back to developers, with the remainder paying off other TIF-related improvements, such as bonds.
The report ties about 4,400 local jobs to businesses that have benefited from tax-increment financing, including 2,300 downtown and 2,000 in the West End’s industrial park.
“It’s crucial to what we do. That’s the one tool that we have to incentivize development,” said Dubuque Economic Development Director Jill Connors of TIF. “All the revitalization you’re seeing in the greater downtown is supported by TIF.”
The TIF debt includes internal loans and general obligation bonds the city has taken out using TIF dollars and tax rebates owed to businesses that developed in TIF districts.
Tax-increment financing works by taking most new property tax revenue generated from property improvements and either giving it back to the developer or funneling it into site-specific improvements rather than the general fund of local taxing entities.
The dedicated money stimulates economic development but if over-used could simply take tax dollars away from local governments for projects that would be otherwise be built without government help.
The Iowa General Assembly monitors tax-increment financing by requiring each municipality and county to report its TIF obligations each fiscal year.
The amount of TIF debt obligations Dubuque reported is down sharply from a decade ago, when it peaked at $175 million in 2015.
Connors said the reduction in TIF obligations is the result of a long-term effort by Dubuque City Council to increase its debt capacity and increase the city’s bond rating.
“They wanted to return the debt we took on,” she said.
City of Dubuque spokesman Randy Gehl said the city is currently at 35% of its debt capacity with the goal of lowering that to 20% by 2034. Last year, Moody’s Ratings increased the city’s bond rating from Aa3 to Aa2, helping the city receive better borrowing terms.
Of similarly sized cities, only Waterloo and West Des Moines reported higher TIF debt obligations, along with several smaller Des Moines suburbs and the state’s two largest cities, Cedar Rapids and Des Moines itself.
Other midsize Iowa cities like Urbandale, Iowa City and Ankeny reported about half as much TIF debt as Dubuque, while Council Bluffs reported about one-quarter and Ames reported only $1.5 million. Two larger cities, Sioux City and Davenport, also reported less reliance on TIF.
“Tax increment financing is the primary incentive available for economic development in the state of Iowa,” said Rick Dickinson, the president and CEO of the Greater Dubuque Development Corp., which helps attract business by negotiating public-private partnerships.
Dickinson said even with TIF, Dubuque can struggle to land every development deal it seeks. TIF dollars were offered to A.Y. McDonald to expand production but the company ultimately accepted a better deal across the river in Wisconsin. He said another company that operated locally, Barnstead Thermolyne, pulled up shop and headed for North Carolina.
“Fortunately, we win more than we lose, and tax increment financing is a critical reason for that,” he said.
The top two recipients of TIF rebates in 2024 were again Simmons Pet Food and Medline Industries, although they switched places. Simmons’ rebate increased to $410,000 from $220,000 while Medline’s increased from $282,000 to $311,000.
Both companies have TIF assistance tied to 10-year development agreements with multimillion private investments: $20 million for a new Medline building and $80 million for a new pet food factory.
In downtown Dubuque, the biggest TIF rebates went to the renovation of the former Roshek Department Store Building — $290,000 — and the rehabilitation and reuse of the Novelty Iron Works factory, $229,000, in the Historic Millwork District into lofts and mixed commercial use.
“Our experience is these projects do not happen without this support,” Connors said. “If it was easier to make them financially viable, we’d have a lot more redevelopment than we do have.”