Story County supervisors consider using TIF revenue to fund housing assistance; tight Dec. 1 deadline prompts rapid plan amendment

Story County Board of Supervisors members on Oct. 3 discussed using tax-increment financing (TIF) to support housing and directed staff to prepare a draft urban renewal plan amendment and related documents ahead of an Oct. 14 consultation and a Nov. 4 public hearing, after hearing that a Dec. 1 certification deadline affects fiscal-year 2027 TIF availability.

John Danos, a lawyer with Dorsey & Whitney in Des Moines who serves as bond counsel on county matters, told the board that Iowa's urban renewal statute (Iowa Code chapter 403) sets distinct rules when counties use TIF to support housing. "What we have in terms of TIF law, chapter 403 of the Iowa code is our state's urban renewal law," Danos said, and he summarized three key constraints that apply when TIF supports market-rate housing.

Those three constraints, as Danos described them, are: (1) TIF can pay only for public improvements related to the housing project (streets, water, sewer, sidewalks, stormwater and other publicly held assets), not private construction costs such as home foundations or roofing; (2) while economic-development TIF districts commonly have 20-year collection windows, parcels that contribute TIF to market-rate housing projects are limited to an 11-year collection period for that parcel; and (3) if TIF is used to support market-rate housing infrastructure, the county must create an LMI set-aside equal to the county's LMI percentage applied to the TIF amount (Danos used an example: $1 million of TIF infrastructure support would require a roughly $500,000 LMI set-aside given Story County's LMI share is about 50 percent).

Danos emphasized that projects that are demonstrably affordable to households at 80 percent or less of county median income are treated differently under state law and generally avoid the additional market-rate restrictions. "If it's going to be facilitating affordable housing for people who are low and moderate income," he said, "the rules don't apply in the same way." He also noted that the statute does not require the LMI set-aside to come from TIF dollars; the county may fund it from any lawful source, though many governments choose to let TIF bear the cost.

Board members and staff discussed options for meeting the LMI requirement without derailing market-rate projects. One approach they explored was creating a county-administered grant pool or a TIF agreement with an external administrator (the Story County Housing Trust Fund was discussed as a potential partner) to hold LMI set-aside funds and make awards for clearly LMI-targeted activities (owner-occupied repairs, rental assistance, new affordable multifamily units, upper-story housing, or other programs). Brenda Dreyer of the Ames Regional Economic Alliance suggested coordinating with the Story County Housing Trust Fund, which focuses on LMI needs.

Lucy (finance) told the board that a TIF revenue estimate for fiscal 2027 was not yet available because rollbacks had not been finalized: "we don't have a TIF revenue estimate yet for f y 27. We don't have the rollbacks yet." Staff and counsel warned the board that properly amending the urban renewal plan and approving any debt obligation will take time; Danos said a plan amendment process would likely take about four weeks, and external borrowing could take eight weeks or more. He added that counties can certify TIF-eligible debt to the county auditor by Dec. 1 to claim TIF revenues for the next fiscal year.

Staff reported Story County currently has no external TIF debt for FY26 and that earlier bank borrowings (for projects including the Tedesco Learning Center) had been paid off. County staff also reported that Story Wind 2 (a conceptual repowering project with 23 turbines sited in part in Hardin County) may submit materials later; if the county deletes and later adds a turbine parcel to the TIF footprint, it may restart the frozen base and TIF collection period on that parcel.

Given the compressed calendar, the supervisors asked staff to return with draft language and a plan for the Oct. 14 meeting so the county can publish consultation notices and meet statutory timelines. Danos and county staff outlined two practical routes to secure the county's intended claim on future TIF: internal borrowing (a county loan documented on the books and repaid from future TIF) or a negotiated TIF agreement with an external administrator that the county could certify as debt for purposes of Dec. 1 certification. "You could create the obligation between the county and the third party," Danos said, noting the funds would not be available until FY27 property tax distributions but that the structure lets the county certify the debt.

The board discussed policy choices that will shape any program: whether to limit county-funded assistance strictly to LMI activities (which simplifies compliance) or to leave the pool eligible to help meet LMI set-asides for market-rate developments. Supervisor direction at the end of the meeting was for staff and counsel to prepare materials that would allow the board to act quickly: draft an urban renewal plan amendment, outline a not-to-exceed TIF amount to include in the amendment, and bring suggested agreements and notices to the Oct. 14 meeting and for formal public hearing and approval on Nov. 4.

Next steps recorded in the work session were: staff to work with Dorsey & Whitney to draft an urban renewal plan amendment and associated public notices for an Oct. 14 consultation meeting; prepare materials for a Nov. 4 public hearing and formal action; determine an appropriate not-to-exceed TIF amount for the program; and evaluate whether the Story County Housing Trust Fund or another third party should administer LMI set-aside funds. No formal vote was recorded at the Oct. 3 work session.

Ending: The board scheduled staff follow-up and signaled general support for pursuing a county-level LMI funding program funded by TIF collections, subject to legal compliance and the Dec. 1 certification timeline.