Developers of the proposed Bettendorf sports complex would receive more than $14 million in property tax rebates over the 20-year life of the Tax Increment Financing (TIF) deal with the city. That's in addition to $7 million in upfront incentives from taxpayers contained in a development agreement on the fasttrack for approval by the city council Tuesday (5/2).
In a "talking points" memo given aldermen by City Administrator Decker Ploehn, the city claims the "net benefit" from the sports complex (if a 100-room hotel is built) would be $2.95 million. However, the "city incentives vs. city benefits" overview fails to include 20 years of "incremental taxes" which will be rebated back to the developers.
Without the TIF, those "incremental taxes" from the development would otherwise go to the city, the county and the Pleasant Valley school district.
Based on a $45 million estimated assessed value of the sports complex and a $12 million value for the adjacent commercial development at I-80 and Forest Grove Road, the project would generate more than $1 million in incremental taxes each year, or nearly $22 million over the 20-year life of the TIF.
After subtracting $7.65 million the city would receive from the TIF to pay off bonds (issued for sewers, streets and storm water improvement on the site), the total TIF rebates to the developers would total more than $14 million. The rebates could be much greater than that, however, depending on the actual value of commercial development eventually built on the land adjacent to the sports complex.
Under the proposed development agreement, all buildings on that commercial parcel also would get a 20-year TIF, with all those tax dollars going back to the developers.
Most of the TIF rebate dollars will come out of the pockets of school and county taxpayers because Bettendorf has such a high debt and debt levy.
Under state TIF law, the debt levy portion of the property tax must be paid to the taxing body.
With nearly two-thirds ($5) of the city's $8.10 property tax rate used for debt service, the city will still receive an estimated $190,000 a year ($3.8 million over the life of the TIF) from the sports complex and commercial development. The school district would still get taxes from the development to pay for its Physical Plant and Equipment Levy (PPEL) under the TIF. The county's debt is relatively small, $32 million compared to Bettendorf's municipal debt of more than $125 million.
Asked to provide its calculation of the total TIF rebate to developers, City Finance Director Carol Barnes referred all questions to the city administrator.
As of Saturday (4/29), the city administrator had not responded to an email from Bettendorf.com asking for the city's calculation of TIF rebates to the developers.
The TIF rebate calculation by Bettendorf.com were made using the Scott County online tax calculator and based on the sports complex having a $45 million assessed value and commercial development a $12 million assessed value.
To show a positive net return for taxpayers' investment in the project, the city is relying on the construction of a 100-room hotel on the commercial parcel.
However, the calculations for the hotel revenues appear optimistic given the location and seasonal use of the outdoor sports complex.
The city "talking points" memo says the 100-room hotel would generate $2.2 million from a $5 room fee over the 20-year period, based on a 60 percent occupancy. In addition, the hotel is projected to generate $30,000 in increased sales tax, or $600,000 over 20 years, plus $140,000 a year ($2.8 million over 20 years) in increased hotel/motel tax to the city based on charging $90 per room per night at 60 percent occupancy.
The assumption by city officials is the hotel, if built, won't take business from competing hotels, which would offset sales tax and the hotel/motel tax the city now receives. When the Isle of Capri Casino hotels opened, the city's other large hotel, Jumer's Castle Lodge, began a steady decline, eventually closing.
It is unknown who wrote the "talking points" memo sent aldermen, but the document reads more like a developer promotional article than a balanced presentation of costs and benefits of the project.
The final points of the memo claims the sports complex "could spur an explosion of growth around the I-80/Middle Road Corridor," and argues the developers should receive "significant incentives" because they are taking "significant risk" by being the first anchor project at the I-80 and Middle Road site.
CLICK HERE to download a copy of the "talking point" memo circulated to the city council to justify the development project.
