USA - IOWA Trends and Developments Contributed by: David M Erickson, Robert J Douglas, Jr, Christopher S Talcott and Amy S Montgomery, Dentons Davis Brown
Unlocking Opportunities: Exploring Current Economic Incentives for Development in Iowa Iowa offers a variety of tax and related eco - nomic incentive programmes for development. Economic incentives serve as useful tools to encourage development in Iowa, particularly in Iowa’s rural communities where development may not otherwise make financial sense as an investment for developers. Iowa has come to be known as a “silicon prairie” in recent years, with major data centres being developed in the state by Meta (formerly known as Facebook), Google, Microsoft, and Apple, which were each a recipi - ent of a combination of economic incentives at both the local and state levels. Iowa has a long history of offering incentives to developers for both large and small projects, and continues to introduce legislation promoting investment and growth in Iowa. There is currently pending leg - islation that could increase incentives for devel - opers. Although there is a push for investment and development in Iowa, the state’s agricultural identity remains an important consideration in the state’s development incentive programmes, as agriculture remains a cornerstone industry for the state. Iowa’s land is one of its most prized resources. As a result, incentives in Iowa are nuanced with protections for Iowa’s agricultural land, and navigating Iowa’s requirements for development projects to qualify for and receive tax and other economic incentives can be com - plex. The most common economic incentive
its. These tax incentives are governed by a vari - ety of different governmental entities. The Iowa Code places requirements on how some of these incentives may be implemented, such as by requiring that specific areas of a community be specially designated by a city council and/or county board of supervisors as a basis to qualify for incentives, for example, being designated as “urban renewal areas” and/or “urban revitalisa - tion areas.” A number of these incentives can be combined together. Tax abatement Tax abatement provides an incentive to develop - ers by exempting a project from paying property taxes for a period of time. Typically, a tax abate - ment is granted only on the increased property value amount resulting from the improvements made to a property. A base property value is established prior to the development of improve - ments, and the difference or a portion thereof between the base value and the new value of the property after construction of the improvements is “abated” and not subject to local taxation for a period of time. Tax abatement is implemented and approved at the local level by city councils and/or boards of supervisors, subject to restric - Tax increment financing (TIF) is an incentive that reallocates property tax revenues within a designated area of a city or county to finance projects in that designated area. TIF areas allow a city or county to make direct economic devel - opment grants or loans to developers for pro - jects. A base property value is established prior to the development of improvements, and the property is assessed with a new valuation post- development. The difference between these two values is the incremental amount that the por - tion of taxes being reallocated back to a city or tions in the Iowa Code. Tax increment financing
opportunities are explored below. Common tax incentives available to developers in Iowa
Some common tax incentives available to devel - opers in Iowa include property tax abatements, tax increment financing, low-income housing tax credits, tax-exempt private activity bonds, workforce housing tax credits, redevelopment tax credits, and historic preservation tax cred -
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