City manager proposes keeping part of downtown TIF revenue for operating needs, trimming Five Flags overhaul

City Manager Mike Van Milligan told the Dubuque City Council during a special budget meeting April 13 that the city must change how it uses downtown tax-increment financing revenues to address lost revenue from recent state property-tax reforms and other declining revenue streams.

Van Milligan recommended that, starting in fiscal 2028, the city claim 75% of the downtown TIF revenues and return the remaining 25% to the other taxing jurisdictions that overlap the district. He said the shift would produce roughly $1.2 million in recurring general-fund revenue for the city and would also increase operating revenue to the school district and county — an estimated $1.2 million and about $700,000 respectively.

"Property-tax reform and elimination of some revenue streams have left us with structural pressure," Van Milligan said in a presentation to the council. He described a two-step approach: use internal TIF loan repayments in FY2027 as a one-time bridge, then take the reduced TIF claim in FY2028 to produce recurring operating revenue.

That recurring revenue, officials said, could be applied to personnel and other ongoing obligations rather than one-time projects. Van Milligan and Finance staff warned that keeping the current 100% claim would require cutting recurring improvement packages from the FY2027 budget and likely produce deeper operating reductions in FY2028 if the legislature enacts further caps.

The recommendation would also reduce the amount available for downtown capital projects and incentive programs. Calcs presented by staff showed the city’s previously planned near-$24 million investment for Five Flags over a five-year window would fall to about $8 million under the revised approach — preserving funding for some critical repairs but eliminating the larger makeover previously discussed.

Several council members and public speakers pushed back during the meeting, calling the prospect painful and saying the timing was difficult coming after Oak View Group had taken over Five Flags’ operations and begun reinvestment. "I don't like anything you just said," one council member said after the manager’s explanation, noting the difficulty of balancing downtown renewal with city operating needs.

Van Milligan said the council would need to decide whether to adopt the recommendation. If the council instructs staff in December to claim only 75% in the FY2028 declaration to the state, staff said they would leave FY2027 largely intact; if the council declines the change, staff recommended cutting most improvement packages in FY2027 to avoid digging a deeper hole in FY2028.

Next steps: the council will consider the budget package during the remaining public hearings and must decide eventual property-tax and TIF declarations by the statutory deadlines later this year. City staff also warned the legislature’s final property-tax measures, still pending in some respects, could require further adjustments.