TIFing at windmills: a political hot potato in N.W. Iowa 

Harris, Ia. – When Al Brueggeman agreed to allow two wind turbines on his high ground, it was with the promise of tax relief from a $207 million wind farm that now juts from the landscape in far northwest Iowa.

But six years after 60 turbines began whirring, the farmer learned Osceola County leaders have been discretely plotting to use that money elsewhere for the next 20 years.

On Tuesday morning, supervisors will host a public forum that promises to draw a crowd in the county of 6,100 residents. Supervisors want feedback on a proposal that includes one of the most controversial uses to date of an increasingly contentious public financing tool.

Brueggeman and Lake Park-Harris school Superintendent Dennis Peters contacted the Reader’s Watchdog, saying people don’t yet know enough about the proposal – and supervisors aren’t answering enough questions.

“The thing is, this has been kept so quiet,” said Brueggeman, who farms 800 acres of corn and beans near Harris. “There’s been no honesty, integrity or transparency.”

Last week, I tried to ask county supervisors questions about the $6.9 million spending project they unveiled to residents for the first time three weeks ago. Somehow, they had managed to consult a legal firm, put together a five-page proposal and draft a resolution with no prior vote or discussion – a move that prompted one resident to file a formal complaint to Iowa’s Public Information Board alleging open meetings violations against supervisors.

Jayson Vande Hoef, chairman of the supervisors, said none were willing to be interviewed and sent me a statement.

“The objective … is to efficiently use a legal and commonly used process and the resources available to Osceola County to provide the greatest benefit for our residents.”

Or maybe, one in particular.

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Iowa cities and counties have increasingly been using tax increment financing in the last 20 years to lure new development and build their tax base.

State law allows municipalities to capture the new property taxes generated in a designated “urban renewal area” to cover some of the costs associated with that development over time.

While TIF has been used successfully for decades, critics say it’s being more widely abused – to subsidize the construction of public buildings that don’t pay taxes, to give a competitive advantage to one Iowa business over another, or build homes for new residents who will require more police, fire and school resources.

Osceola County’s TIF proposal promises to “promote business growth” but identifies only three projects already rooted in the county: the Endeavor Wind Farm; Sunrise Foods, the county’s largest employer; and a local abandoned school. The plan says the county also will entertain about $600,000 in other projects that are “unknown at this time.”

County officials attempted a similar TIF proposal in 2009 but backed away after strong local opposition.

Mike Earll, executive director of the Osceola County Economic Development Commission, said supervisors hatched the new TIF plan in response to a community’s groups request in mid-August to do something about the deteriorating school.

But if you examine the identified projects in the new TIF plan, it’s clear one business in particular – Sunrise Farms, one of the state’s largest egg-processing operations – would be the biggest benefactor.

The TIF proposal suggests taking on about $6.9 million in debt and spending $6.25 million on roads, all at or near Sunrise Farms or a local trucking company it uses, D&K Transportation.

Phil Sonstegard, president of Sonstegard Foods Company and Sunrise, said he never approached the county for tax breaks.

Instead, county officials offered them to him.

“All I said was that we were concerned about safety,” he said.

Sonstegard said those concerns were first expressed about 10 years ago because so many trucks go in and out of Sunrise’s sprawling plant on White Avenue.

The operation, which employs more than 100 area residents, is now undergoing a major expansion.

Sonstegard said he had no position on the TIF proposal, especially since it had become controversial.

Earll, the economic development director, acknowledges Sunrise benefits most from the new plan, but said “that can be amended and changed as well.”

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According to the draft TIF plan unveiled Aug. 26, only about $600,000 of the $6.9 million spent by the county would be used to rehab the abandoned school building in Ocheyedan that is owned by the Sibley-Ocheyedan Community School District. It suggests the town of 450 could put a community center there attached to apartments and retail.

But Peters says if the five supervisors ultimately approve the deal, his smaller school district nearby – which has grown 20 percent the last five years – will be forced to raise its tax levy by roughly 10 cents for every $1,000 in valuation. That’s because about $18 million a year in taxable valuation that was supposed to come into the county from 53 Endeavor turbines (seven are in Dickinson County) would be diverted to the TIF area.

State law also requires that all Iowans chip in to backfill money lost to districts, which would cost taxpayers another $2.7 million, he said.

Other than improved roads in the area, it’s unclear what benefit the TIF proposal would bring to the wind farm.

The turbines now owned by NextEra Energy already received a 20-year tax abatement deal after they began operating in 2008. Those taxes will be capped next year at 30 percent for another 13 years, according to the Osceola County Assessor Sharon Wolter.

The wind farm, which sits in one of the windiest locations in Minnesota or Iowa, also qualifies for a mix of federal and state grants.

Peter Fisher, a national expert on public financing who heads the Iowa Policy Project, says Osceola County’s plan abuses the intent of the state’s TIF law because it seeks to help existing businesses.

It’s also unfair because it will benefit one school district – Sibley-Ocheyedan – over another, he said.

“The problem is, it’s very difficult for some people to understand this,” Fisher said. “The fact is, it’s being used in Iowa as a mechanism for shifting taxes.”

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A year ago, the Iowa Legislature tweaked state law to reign in some abuse of the TIF law, but fell short of reforms many sought.

Sen. David Johnson, an assistant Republican leader from Ocheyedan, says the TIF plan unveiled in his county appears to be another example of how “we’ve really warped what TIF should be used for.”

“The road to hell is paved with good intentions,” he said, adding that he will be attending Tuesday’s meeting because of his concerns as a private citizen as well as a legislator.

The egg facility, wind farm and school to be included in the urban renewal area needed for the TIF aren’t even connected to each other, he said.

Johnson said he also thinks the abandoned school in his hometown is the school district’s responsibility.

“I don’t know why TIF revenues would even be used for that,” he said. “And who will own the community center? Certainly not a private developer in a town of 450 people.”

Johnson said TIFs were made possible in Iowa so cities and counties could lay the infrastructure for new business and growth.

“Look what we’re doing now,” he said. “We have existing turbines that have already been built and we’re going to TIF those? It seems like desperate grab for tax revenues.”