FY 18 Annual Report

Economic Development

2018

CITY OF SPENCER, IOWA

Departmental Highlights

The Economic Development department consists of several activities of the city. Expenses considered Economic Development include property tax rebate payments, loan repayments for previous projects, and payment to support Spencer Main Street. General Economic Development activities for the FY 18 included support for Spencer Industries foundation, public art projects in the community through SPACE, interest payments for outstanding loans created through the Storefront Initiative program, new information signs for the three industrial parks, and sponsorship of the Iowa Lakes Economic Development Corridor booth at the 2017 Clay County Fair. The City revised its Urban Renewal Plan in FY 18 to includes the addition of two new development agreements, the construction of the Iowa Great Lakes Trail, Phase II, the acquisition and renovation of the Northwest Bank building for use as a new City Hall and a retail retention and development study. One of he new development agreements and the repayment of debt associated with the construction of the Iowa Lakes Trail, Phase II will utilize property receipts captured through Tax Increment Financing. The other development agreement will rebate the incremental increase in local option sales tax. Further information on both of these development agreements can be found later in this section. The final activities to take place for Economic Development in FY 18 are in connection with the city's Self Supporting Municipal Improvement Districts (SSMID). These areas are defined areas in town that have agreed to the imposition of an additional property tax, for which the revenues are spent on a defined purpose. All revenues collected in the SSMID area are used in one of two ways. The first is to fund a rebate program of SSMID taxes to the 1987 tax year contributions. This agreement was put into place at the time of the District's creation to ensure the property owners at the time that as property values increased, the amount the contributed to he SSMID would remain flat. The remaining money is then forwarded to the Spencer Main Street organization to support their program and operations.

Budget Review

Total expenditures for economic development was $1,525,630.41 in FY , an increase of $634,187.48 (+71.06%) compared to FY 17. Activities that occur under the guise of economic development include expenditures related to economic development, rebate payments granted through Tax Increment Financing, Local Options Sales Tax Increment Financing LOST TIF) payments and payments from the city's Self Supporting Municipal Improvements Districts (SSMID). The cause of the increase can be mainly attributed to two factors. The first being that the State of Iowa overpaid the city for eligible LOST TIF payments. The city was then required to return the overpayment. The second cause of the increase was payment to Spencer Main street Company from SSMID receipts. The City made minimal payments to Main street Co. in FY 17, due to property rebates not being calculated and the need to maintain a reserve in that fund. In conjunction with Spencer Main street, property owners eligible for rebates were notified and paid for FY 17 and FY 18 payments. The City then disbursed all but $5,000 of the remaining SSMID receipts to Spencer Main street. The City has several active development agreements that are actively rebating property owners their property taxes. A summary of the agreements is found on the following pages. Other activities that are classified as Economic Development include support Spencer Industries Foundation, public art, and interest payments on the Storefront Initiative program.

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