Financial Incentives

Hiawatha offers a very favorable business climate. The City and the State of Iowa have a tax structure that is very business-friendly, and the Community Colleges in the area provide a number of employee training opportunities through the State of Iowa jobs training programs. Local incentives include, Tax Increment Financing and Tax Rebatement. Iowa is a right-to-work state.

Iowa Coporate Tax Structure

Iowa's corporate tax structure offers several advantages to businesses that locate in the state, including:

  1. A single factor nonunitary tax based only on the percentage of total sales income in the state of Iowa. There is no Iowa corporate income tax on profit from out-of-state sales.
  2. A 50% federal tax deduction if an Iowa company is subject to paying Iowa corporate income tax. Iowa is one of only five (5) states that offers federal deductibility.

Other tax advantages include:

  1. No sales or use tax on industrial machinery, equipment and computers.
  2. No sales tax on purchases of electricity or natural gas used directly in the manufacturing process.
  3. No sales tax on purchases of water if used directly in the manufacturing process.
  4. No sales tax on purchases of electricity used directly for qualifying data centers.
  5. No sales or use tax on computer and peripherals used in the processing or storage of data.
  6. No property tax on manufacturing machinery, equipment and computers.
  7. No tax assessment on personal property (includes corporate inventories of salable goods, raw materials and goods in process).

Goals, Policies, Criteria and Procedure

City of Hiawatha Economic Development Policy Statement
Goals, Policies, Criteria and Procedure as approved on November 4, 2015

Goals:

The City of Hiawatha, Iowa, has developed the following guide for businesses seeking economic development incentives available under Chapters 15A and 403 of the Code of Iowa. The goals of the Economic Development Policy Statement and the Tax Increment Financing (TIF) Program are to encourage quality economic development and to enhance the City's commercial, industrial, and specialized retail tax base by providing incentives to businesses and developers that want to expand or locate in Hiawatha and by extending the City's infrastructure to promote commercial, industrial, and specialized retail development. The City of Hiawatha, Iowa, has developed the following guide for businesses seeking economic development incentives available under Chapters 15A and 403 of the Code of Iowa.

Policies

  • TIF is a discretionary program. The recommendation to the City Council to use TIF as an economic development incentive shall be at the sole discretion of the Hiawatha Economic Development Committee, which consists of the Mayor, two Council Members, the Finance Director, and the City Administrator. Each project/development will be considered on a case by case basis. Tax increment financing is also subject to required legislative process (public notice and public hearing).
  • TIF funds may be used for improving City infrastructure as well as for improvements to private commercial and industrial properties.
  • The City will not provide TIF funds for residential developments, residential structures, multi-residential developments or multi-residential structures. The City may provide TIF funds for specialized retail development as follows: (1) retail establishments with a minimum anticipated assessed value of at least $500,000; or (2) franchise car dealerships with a minimum anticipated assessed value of at least $3,000,000.
  • If the City has already committed TIF funds to benefit a property through infrastructure or building improvements, the City may reduce the amount of TIF assistance for subsequent improvements to the property or decline to provide any TIF assistance.
  • Whenever possible TIF project/developments will be funded on a rebate basis, with the owner or developer receiving a refund of a portion of the incremental property taxes according to the specific provisions of the development agreement.
  • The Economic Development Committee may recommend any TIF incentive allowable under this Policy, State law and the Hiawatha Urban Renewal Plan as adopted and amended. If awarded, rebates normally range from one (1) year to a maximum of five (5) years and are dependent on the merits of each project/development.
  • The Economic Development Committee may consider issues beyond those mentioned in this policy when deemed to be in the public interest, including impacts of natural disaster.
  • Retention and/or creation of jobs will be required.

Criteria

The following factors will be considered in determining whether a project/development may be eligible for TIF funding:

  • The anticipated assessed tax value for commercial and industrial must be a minimum of $500,000, specialized retail development must be: (1) a retail establishment with a minimum anticipated assessed value of at least $500,000; or (2) a franchise car dealership with a minimum anticipated assessed value of at least $3,000,000
  • In special circumstances, any improvements requested by the city, may not be required to have the minimum tax base creation of $500,000 and will be a 1 (one) year grant, payable after proof of receipts of the improvement costs, amount determined by Economic Development Committee
  • If the city determines to make an Economic Development Grant, the project/development may not be required to have the minimum tax base creation
  • Demonstration by the applicant that the project/development will not occur or will be reduced in scope if TIF funds are not advanced.
  • Commercial development and rehabilitation
  • Commercial development that directly serves the needs of the City's current industrial base
  • Industrial development that enhances the community
  • Infrastructure project/developments that enhance development
  • The project/development is a new business or existing business located in Hiawatha that is improving property with infrastructure or building expansion.
  • The project/development is a business relocating and does not conflict with the anti-piracy provisions of the Iowa law.
  • The project/development complies with the City of Hiawatha's Comprehensive Plan, Design Standards, and Zoning ordinances
  • The project/development will not deter from the quality of life in, or the environment of, the community
  • The project/development is in the best interest of the public and the business community
  • The project/development must contribute to the development of a sound economic base that will serve as a foundation for future growth and economic development in the community
  • The project/development creates additional tax base and creates or maintains quality employment, i.e. the business agrees to retain and/or create jobs.
  • The project/development will not cause undue stress or demand on City infrastructure or services and is sensitive to the environment.
  • The project/development does not create an unfair advantage for the applicant over any existing business in the community.
  • The project/development meets or exceeds the architectural standards established by the City and is compatible with surrounding development.
  • The project/development incorporates low impact design, green infrastructure and/or LEED construction. Examples are porous pavement, native landscape, bioswales, rain gardens and green roofs.
  • Other considerations determined by the City Council or the Economic Development Committee to be relevant.

Application Procedure

  • Requests for Tax Increment Financing (TIF) assistance will be made on application forms provided by the City. Application forms are available at Hiawatha City Hall, 101 Emmons Street, Hiawatha, Iowa, 52233 or on our website. Completed applications should be returned to the attention of the Economic Development Committee at the City Hall. The Economic Development Committee will review applications and forward recommended project/developments to the City Council for their consideration. The City Council will make all final and binding decisions relating to economic development assistance.
  • A TIF application should be submitted to the City as early as possible in the planning process. At a minimum, the application must be submitted prior to submittal of a site plan, building plans, as applicable.
  • All requests for TIF assistance must be submitted and approved by the City Council prior to the issuance of a building permit. The Community Development Department can process, an "at-risk" building permit, with City Council approval, if construction is to begin prior to the development agreement approval by City Council. A request for TIF assistance will not be considered once a building permit has been issued or construction has commenced.
  • Upon submittal of the application, the Economic Development Committee will review the project/development. If the committee finds the application acceptable for funding, the committee will then make a proposal to the applicant. If and when the proposal is accepted, staff will be directed to prepare an appropriate development agreement for consideration by the applicant and City Council
  • If a proposal is made by the committee and there is no response from the applicant within six (6) months, the applicant will need to re-apply for TIF assistance for it's project/development.
  • When a draft of the development agreement has been reviewed and accepted by the applicant and City staff, the City Council will conduct a public hearing, after due notice, and consider public input before considering and taking final action on the development agreement.
  • The City has no legal obligation to provide any incentive until a mutually agreed upon development agreement has been signed by the City and all parties after a public hearing.

Disclaimer

This policy and procedure is only a guideline and does not obligate the City of Hiawatha to approve a TIF district or project/development or to pay any costs incurred by any developer prior to a final approval of a development agreement, which has been executed by the City after the required legislative process, including notice and a public hearing. The City of Hiawatha, in its sole discretion, reserves the right to reject any and/or all applications for tax increment financing if it is in the City's best interests to do so. The City of Hiawatha may at any time change or end this Economic Development Policy for any reason without notice.

Access and download forms regarding Economical Development here.

State of Iowa Incentives

The State of Iowa offers numerous incentives, including financial incentives and employee training assistance programs.

To learn more about these State of Iowa Incentives, please visit the Iowa Economic Development website.

Other Incentives