Decorah City Council members have learned more about the incentives available to encourage projects

One week ago, Decorah City Council members voted 4-3 against a proposed property tax abatement schedule for a multi-family housing complex proposed by Echo Development.  That doesn't mean they're opposed to the project, however.

That brought on a work session Monday night with Dorsey Whitney Law Firm attorney John Danos, an expert in Iowa's economic development system.  Danos told city council there are basically two tools city councils can use--the property tax abatements or "rebate agreements" proposed by Echo Development and Tax Incremental Financing Districts, or "TIFs," that are often used in urban renewal projects.

Danos says tax abatements "have a harsher result on local governments," since the developer's property tax bill is lowered and school districts, cities, counties and other governments receive less money than they would have without the abatements.  But he also noted that even booming communities are making some incentives available to developers--especially if they think there's a particular type of weakness in their town, such as low-income housing or industrial development.

TIF districts don't lower the property tax bills of developers, but usually dedicate the additional property taxes to a project which benefits the developer, such as paying for a road or utility project. 

All seven Decorah City Council members attended Monday night's work session.  The city's Economic Development Committee has been asked to discuss possible incentives for the apartment complex and come back with a revised proposal for the full city council.

Danos offered one bit of advice for the council members: "Developers always ask for more than they think they will get."