On this page:

• Tax Increment Financing (TIF) & Urban Renewal
• Partial Industrial Property Tax Exemption
• Highway Commercial Property Tax Exemption

Tax increment financing (TIF) is a mechanism used to provide financial assistance for projects within a designated urban renewal area and TIF district. 

The difference between taxes derived from unimproved, underdeveloped, or underutilized property and those derived after its development, redevelopment, or expansion is the "increment" of taxes which may be pledged by the City to help finance project expenses incurred by the City or the developer in furtherance of the development.

The TIF ordinance makes available to the City incremental tax revenues for repayment of project-related expenses or the provision of a property tax rebate. The incremental tax revenues include those levied by and for other taxing jurisdictions, such as the county, school district, and community college.

TIF financing is available in the form of public infrastructure improvements or in the form of forgivable loans or property tax rebates for qualifying businesses. The amount of available tax increment financing is dependent upon the amount of new taxable property value added to a property.

• Iowa City TIF Policy (updated 8/20/24)
• Understanding Gap Analysis and TIF
• Key Elements to the Financial Analysis
• Basic Financial Review Form

Urban Renewal Areas & Plans

• Map of All Iowa City Urban Renewal Areas
• Map of City-University Urban Renewal Area (Downtown/Riverfront Crossings)
• Urban Renewal Area Plans

Under Iowa Code Section 427B, projects which add value to real property (building and site improvements) that are classified as either an industrial building, warehousing/distribution center, or research-service facility qualifies for the partial industrial property tax exemption. The exemption is for a period of five years where a portion of the new value in a qualifying is exempted from taxation at the following rate:

• Year One: 75%
• Year Two: 60%
• Year Three: 45%
• Year Four: 30%
• Year Five: 15%

How to Apply

1.  Complete the application form and return to the Iowa City Assessor (Johnson County Assessor's Office). Applications must be filed by February 1 of the assessment year in which the value added is first assessed for taxation.

Commercial properties located within the Highway Commercial Urban Revitalization Area may be eligible for property tax exemption on new value created by improvements to existing or new buildings on qualifying properties.

To be considered eligible for property tax exemption, Council must approve the project and all improvements must increase the actual value of the property (not including land value) as of the first year for which an exemption is received by at least fifteen percent (15%). A 100% exemption will be given on the taxes created by the new value for three (3) years. The City Assessor determines whether a project meets this criterion once improvements have been made.

The areas designated in this Plan are generally older commercial areas along Highway 6 and Highway 1 with local, small businesses that have not had access to many economic development incentives in the past and generally do not attract the kinds of projects that would be appropriate for tax increment financing. The proposed Plan makes this incentive available to commercially-taxed properties only. In the case of a multi-residential property, where a portion is taxed commercial, only the commercial portion of the property would be eligible.

• Highway Commercial Urban Revitalization Plan

Tax Abatement Area Maps

• Zones A-D
• Zone E
• Zones F-G

How to Apply

1.Submit the application form below. It is recommended you submit the form prior to the start of construction. An application must be filed no later than February 1 of the Assessment Year for which the exemption is first sought. The value will be based on the value of the property as of January 1 of that same Assessment Year.

For example: A project fully completed before January 1, 2025 must apply by February 1, 2025 in order to receive the first 100% exemption on the 2025 Assessment Year. However, a project that is not completed until after January 1, 2025 will be held until February 1, 2026 in order to secure the full 100% exemption.

2. The City's Economic Development Coordinator and City Assessor will review the application. You may be contacted for additional clarification or questions.

3. If the application appears to be a qualifying project, staff will work with the applicant to execute a Minimum Assessment Agreement (required by State Law). Additionally, staff will prepare the application for an upcoming City Council agenda and notify you of that meeting date.

4. City Council must approve all applications before they are considered eligible to receive the tax exemption. Regardless of whether City Council approves the application, the project must still meet the required 15% minimum value increase (as determined by the City Assessor upon completion of construction) to qualify for the exemption.

• Highway Commercial Urban Revitalization Tax Exemption Application

Questions?

For questions about whether your improvements may meet the 15% minimum threshold to qualify or questions about timing of the first year of exemption, please contact the City Assessor's Office at 319-356-6066.

For questions about the City's Highway Commercial Urban Revitalization Area and Plan, contact the Iowa City Economic Development Coordinator at 319-356-5248.