(Radio Iowa) – Republican Congressman Randy Feenstra says if he’s elected governor, he’ll pursue changes in special taxing districts designed to spur development. Iowa cities and counties create these “tax increment financing” districts and property taxes for the targeted business or industry are frozen at the pre-development level. The property taxes collected based on the improvements at the site go into a fund used to pay off city or county bonds for things like roads and sewers installed to attract the development. “There’s constructive ways to use it,” Feenstra said, “and there’s also a lot of abuses.” Feenstra says some local officials have chosen to make the districts permanent.

“What you’re going is usurping money, taking money away from your school districts, from your county and your city when you put things in a Tax Increment Financing area,” Feenstra says. “And there’s a way to do this and yet allow allow some TIF to grow because we need that economic growth lever in some of these communities.” Feenstra says tax increment financing districts are useful and sometimes critical in rural areas of the state trying to attract commercial development. “I was a city administrator for eight years in Hull. It’s a small town,” Feenstra said. “I understand small business. I understand how property taxes work.”

Tax increment financing was enacted in Iowa in 1969 to help cities develop blighted, rundown neighborhoods. It was expanded to all 99 counties in 1985. City and county officials say the districts are a valuable way to finance the infrastructure needed to attract new businesses. Critics cite abuses, like Altoona’s decision to create a tax increment financing district for a Bass Pro Shop superstore or districts that finance road improvements around wind farms.