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Pella council adopts Fountain Hills urban renewal plan, approves developer agreement tied to $2.4 million infrastructure cost
Summary
The council approved Resolution 6956 establishing the Fountain Hills IV urban renewal area and introduced Ordinance 1079 to enable tax-increment financing, then approved a development agreement (Resolution 6957) for a 47-lot subdivision that relies on TIF reimbursements to cover about $2.4 million in public infrastructure costs.
Pella City Council on Wednesday approved an urban renewal plan for the Fountain Hills IV area and authorized a development agreement that would support a 47-lot single-family subdivision.
City staff presented the plan as a way to spur additional housing in the city. "The purpose of this urban renewal plan [is] to provide additional housing for the community," staff member Mike told the council, explaining the development requires roughly $2.4 million in public infrastructure that the developer would construct and dedicate to the city at no charge.
Under the plan the city introduced Ordinance 1079 to allow capture of incremental property-tax growth (tax-increment financing, or TIF) within the renewal area. Mike said a portion of those incremental property-tax receipts could be rebated to the developer over time to reimburse infrastructure costs if and when new taxable value is created. He also noted that Iowa law requires a portion of collected tax increments be set aside for low- and moderate-income housing; staff estimated the city could expect roughly $800,000 dedicated to such housing if the developer is reimbursed for the full infrastructure cost.
Council then closed the public hearing, moved to adopt Resolution 6956 designating the Fountain Hills IV area for urban renewal and proceeded to the first reading of Ordinance 1079 to allow collection of incremental tax revenues. The council subsequently approved Resolution 6957 authorizing a development agreement with the named developers for the same subdivision, a step staff said is contingent on the developer’s construction of the public improvements and on future property-tax collections.
Why it matters: The actions create a financing framework to support new housing but do not guarantee reimbursements unless the subdivision produces incremental tax value. The city keeps the base property-tax revenues for existing taxing districts while using only growth in value to finance infrastructure reimbursements.
What’s next: Staff said consultations with affected taxing entities — including the school district and Marian County — have occurred and further steps (a development agreement implementation and a possible 10-to-15-year TIF extension) depend on future revenues and the developer’s build-out schedule. The ordinance was introduced (first reading); additional readings or related agreements will return to council for final action.
