Under the Iowa Reinvestment Act, municipalities may apply to the Iowa Economic Development Authority to establish a reinvestment district and receive tax-generated funds for large-scale development projects.
The act originally approved $100 million in funding and required the Economic Development Authority Board to approve proposed district plans no later than July 1, 2018. The recently passed House File 2641 will reopen approval for district plans, permit additional funding for new districts, and expand the qualification definitions.
New Reinvestment Districts and Funding
The changes to the act will allow the board to begin approving district plans again. All district plans will need to be approved no later than July 1, 2025. The changes also allow for an additional $100 million in total tax revenue to be transferred to the state reinvestment district fund to be used for reinvestment districts that are approved between July 1, 2020 and July 1, 2025.
Expanded Definition of Reinvestment Districts
An application to establish a reinvestment district must be submitted by a “municipality.” Under the original terms, the definition of a municipality was limited to a county or an incorporated city. The changes to the act will now allow two or more contiguous counties and/or incorporated cities to join forces and apply as a single municipality as long as they have an active 28E agreement.
Additionally, the area of land that can be included in the reinvestment district is being expanded from 25 acres to 75 acres for all districts approved after July 1, 2020.
All reinvestment districts, regardless of the approval date, remain in existence for 20 years unless dissolved by the municipality at an earlier date. However, the changes to the act will allow a municipality to request an extension of up to five years under certain conditions.
New applications for reinvestment districts implementing these changes may be accepted as soon as July 1. Municipalities looking to fund large development projects through the establishment of a reinvestment district should watch for updates from the Economic Development Authority regarding future application opportunities and requirements.
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