Ad-Express and Daily Iowegian, Centerville, IA

March 19, 2013

No legislation this year to change Iowa RIZ law

By Michael Schaffer - Managing editor
Daily Iowegian

CENTERVILLE — The second Legislative Coffee was minus Ken Rozenboom but Larry Sheets carried the load for nearly one hour and talked about the budget, taxes and rural improvement zones.

State Rep. Sheets, R-Moulton, talked in length about legislation he authored to fundamentally change the RIZ law. Sheets' bill would have installed sunset provisions and oversight of RIZ's.

Sheets said House leadership decided his bill was a "hot potato" and didn't deal with it this year.

Sheets' bill in seven year would have sunset all existing RIZ's or any newly established RIZ. His bill would have allowed the board of supervisors the option to extend the sunset date for a RIZ by seven years at a time.

Sheets' bill would have disallowed RIZ's to use money to acquire property by condemnation outside the zone to solve the problems inside the zone.

Under the provisions of Iowa Code Chapter 357H, if a RIZ is established it is entitled to receive and use all future real estate taxes based on the total incremental taxable valuation (that is, any increase in the tax base for the proposed zone) from and after the date of its approval. Those taxes may be used by the RIZ (through a Board of Trustees who are to be elected residents of the proposed zone) for “improvements,” which are further defined as “dredging, installation of erosion control measures, land acquisition, and related improvements, including soil conservation practices, within or without the boundaries of the zone.”

RIZ's divert general taxes from schools and local governments, something Sheets said was one of his concerns. As the lake developed and families took hold, their children would attend local public schools, and they in essence, wouldn't be paying their full share of property taxes to fund that education. The other Appanoose County residents would be the ones to fund the remaining portion of their education.

"You see my concern is, the people outside of the zone pay for them but they have no representation," Sheets said. "Fundamentally, everybody outside supports what goes on inside and has no say on what happens."

Sheets said county supervisors should have the opportunity once every seven years to decide if the RIZ is necessary.

Tracy Smith, of Waukee, a property owner at the lake and a member of The Coves of Sundown Lake Owners Association, questioned Sheets on his assertion people outside the zone support people inside the zone.

Sheets said the assessed value of the land not developed at Sundown Lake will be taxed at the same rate forever if a RIZ is established. Once a RIZ is established, any subsequent  improvements done with the property in the RIZ area won't have tax increases.

"And now you start building homes," Sheet said. "You build those homes and the homes don't have any property taxes associated with it."

Sheets said a RIZ at Sundown Lake is unique because so far so few properties have been developed in relation to the remaining properties for sale. A RIZ at Sundown Lake would place a burden on the rest of Appanoose County.

Sheets said as more kids come out of Sundown Lake and attend local public schools, the property taxes paid out of Sundown Lake will be based on what is in place right now based on the existing buildings.

Another thing bothering Sheets with the RIZ law is the people in charge have no incentive to say the goal has been reached and the RIZ is no longer needed. Sheets said they have no incentive to spend anything less than the full amount of taxes it receives.

"There's no reason for the people within the RIZ to ever say stop," Sheets said. "And there's no oversight at all."

Last year The Coves of Sundown Lake Owners Association approached the Appanoose County Board of Supervisors with a petition to establish a RIZ at the lake. The board denied the petition and the owners association took the county to court.

In January a judge sided with the owners, which prompted Appanoose County to file an appeal.

On the budget, Sheets said the House presented a $6.4 billion budget and the Senate presented a $6.9 billion budget. The House budget allows for 3 percent growth and the Senate budget has 11 percent growth, Sheets said.

"These two budgets are so far apart neither one will be acceptable," Sheets said.

It would take the Iowa economy to grow at an annual rate of 6.2 percent to support the Senate budget, Sheets said.

On taxes, Sheets said the House passed a bill that reduces income taxes and gives taxpayers a second option. Now it's up to the Senate to approve.

The bill would allow Iowa taxpayers to pay a flat 4.5 percent income tax with limited deductions or continue to use the existing method.

Sheets said an estimated 39 percent of all Iowa income tax filers would pick the flat tax. Iowans with incomes between $30,000 and $40,000 would benefit the most and the average savings would be $819.

"You don't have to go with it," Sheets said. "You can stick with what you've got. It's a great savings for a large number of people."

State Sen. Rozenboom, R-Oskaloosa, was away on business and could not attend. Approximately 25 did attend the second coffee that started at 10 a.m. Saturday at Chariton Valley Planning & Development.

The third and final coffee is scheduled for April 20.