SETTING DATES OF PUBLIC HEARINGS FOR APPROVAL OF CREATION OF AND AMENDMENTS TO URBAN RENEWAL AREAS
On September 9, the City Council reviewed a report about strategies to address changes to Tax Increment Financing (TIF) within Urban Renewal Areas (URA) as a result of recent state legislative approval of SF 2472 that changes property tax collections and established caps on growth in the General Fund utilizing property tax revenue.
SF 2472 made significant changes to the operational components of URAs related to TIF in how it is accounted for as "new construction" in relation to the General Fund, along with the time for collection of TIF.
The most significant impact to the General Fund is that now when the collection of TIF expires, the increased incremental value does not count as new construction and thereby does not let the City exceed the 2% cap to cover needed costs predominantly for our Police, Fire, Library, and Parks & Recreation services.
Additionally, any TIF area that exists before January 1, 2027 has greater financial benefit to the City because it includes the school foundation levy of $5.40 within the allowable TIF levy rate. With the loss of the school foundation levy after the first of the year, the financial benefit from a TIF incentive will be decreased by approximately 25%.
NEW FINANCING STRATAGIES RELATED TO TAX INCREMENT FINANCING BEING RECOMMENDED:
At the September 9, 2026 meeting the City Council indicated approval for two new strategies that benefit the City; 1) to delay claiming future TIF increments until after development is credited as new construction, and 2) to create and update existing Urban Renewal Areas.
STRATEGY #1:
Staff is recommending to allow the use of a TIF incentive to finance projects and activities only after a new development has occurred and has first been accounted for as new construction. This new strategy could result in delaying the availability of a TIF incentive by one or two years.
STRATEGY #2:
Staff also is recommending that certain CIP projects be funded with existing TIF revenue stream rather than releasing the TIF revenue back to all taxing entities once the initial obligations have been paid off. This new strategy benefits the community by moderating the impact on future property tax increases by positively impacting the City's Debt Service Levy.
THE URBAN RENEWAL AREA PROCESS:
Urban Renewal Areas are an economic development and slum and blight remediation tool for municipalities authorized under Iowa Code 403. There are a number of procedural steps of identifying an Urban Renewal Area and adopting an Urban Renewal Plan with projects and activities that then may be undertaken to support the objectives of the Plan.
The first step to establish an Urban Renewal Area is to review a draft plan with a description of the area and its objectives. After review of the draft plan the City Council will set a date of hearing for review and approval of the URA and associated Plan with a Resolution of Necessity.
Additionally, consultation with affected tax entities (County, School Districts, and DMACC) and a review by the Planning and Zoning Commission must occur prior to a public hearing when TIF is proposed for an URA. A separate and subsequent action will require Council approval of a TIF ordinance for the collection of TIF. It is expected that this action will occur in November.
Attached to this report are the proposed Urban Renewal Plans for 10 areas of the City. Each Plan is customized to the area and types of project and activities that may be undertaken by the City. Of the ten proposed plans, four include currently identified CIP projects consistent with Strategy #2, five are focused on economic projects, including yet to yet to be determined private economic development projects consistent with Strategy #1, and one area is related to both strategies. Below is a summary of the major components of each Plan.
POINTS TO BE EMPHASIZED ABOUT THE IMPLEMENTATION OF THE TWO NEW STRATEGIES:
1) The implementation of each Urban Renewal Plan and the identified projects that will receive a TIF incentive is at the discretion of the Council.
Therefore, the mere mention of a project within any of the ten Urban Renewal Areas does not obligate the City to ultimately provide the TIF incentive for that project.
2) Only projects identified within an Urban Renewal Plan may be funded by TIF in accordance with the Urban Renewal authority granted to Cities by Iowa Code 403.
Therefore, to take advantage of Strategy #2, the staff had to project future needs and related projects as well as their associated costs without the benefit of detailed studies, cost estimates, nor commitment by the City Council. These projects were projected to occur over the next 24 years. In addition, the total amount for a TIF incentive in Urban Renewal Plan cannot exceed the the stated maximum dollar amount.
3) Private developments assisted with TIF rebates will require City Council approval of a development agreement because there is no by-right use of TIF.
The development agreement will allow the City Council to stipulate to certain conditions that are priorities in return for offering the TIF incentive.
SUMMARY OF THE TEN URBAN RENEWAL AREAS:
North Growth URA Area-New
The North Growth URA is proposed to help implement the City's Council interest in providing housing incentives for three projects in North Ames, The Bluffs, Greenbriar, and Hayden's Preserve.
The North Growth Urban Renewal Area will include approximately 358 acres of land in north Ames extending from west of George Washington Carver Avenue in the Bluffs Subdivision and extending eastward in an undeveloped area between Ames Golf & Country Cub and Northridge Heights across the Union Pacific Rail Line over to Hyde Avenue.
A portion of the land is currently categorized as Agricultural land. As a result property owner consents for inclusion of Ag land were obtained for the URA. The URA also includes some areas of right-of-way in rural Story County for the GW Carver roundabout, the Supervisors consented to including this area.
The North Growth Area will contain projects involving infrastructure improvements for roadways and intersections, including a new roundabout planned for the intersection of GW Carver and Cameron School Road, public stormwater infrastructure, park system improvements, construction of a Fire House along Stange Road, greenway trail crossing of the railroad, and potential economic development rebates for developers.
The maximum TIF collection in this URA is proposed at $11,345,000 for all of the projects. Approximately $2.6 million is planned for use as developer rebates based upon the current planned incentives for housing development in this URA.
Multiple TIF areas are planned to support future undertakings within the URA and to capture future general fund growth.
East Industrial Urban Renewal Area- New
The East Industrial Urban Renewal Area will include approximately 875 acres of land located along East Lincoln Way south of the railroad tracks and area along Teller Avenue. This area includes East Industrial Area and the Prairie View Industrial Park. Because most of the land is currently categorized as Agricultural land, property owner consents were obtained as needed to defined the URA boundary.
Proposed projects relate to providing infrastructure improvements necessary to support the development of the area for roadway improvements and utility infrastructure. Economic development rebates for developers and planning and engineering studies for the projects are also included.
In total, the maximum TIF collection is proposed as $51,000,000. Approximately $22 million of the total is identified for developer incentives when projects are consistent with City's economic development policies supporting responsible water and sewer utility usage, high value development, and new high quality jobs.
The land in this area is undeveloped with large tracts that are not yet subdivided. Multiple TIF areas are planned to support future undertakings consistent with the Plan and to capture future general fund growth.
East 13th Street URA-New
The Urban Renewal Area includes planned East Expansion area for the Elwell/Reutter owned properties east of I-35 along East 13th Street. The area is approximately 245 acres of property plus right-of-way extending along East 13th Street to the Dayton intersection.
This area has a Community Commercial Retail land use designation. Public infrastructure exists to begin development of the area, but overall growth in this area will require improvements to public infrastructure, with the primary projects contemplated as widening and signalization of East 13th, paving of 570th, oversizing and extension of water, sewer, and storm mains. The Plan identifies $12 million of potential developer TIF rebates. The maximum TIF collection is established as $22.7 million.
The land in this area is undeveloped with large tracts that are not yet subdivided. Multiple TIF areas are planned to support future undertakings consistent with the Plan and to capture future General Fund growth.
Ontario & Scholl URA -NEW
The Ontario-Scholl Urban Renewal Area contains approximately 17.4 acres on the north side of Ontario Street between Minnesota Avenue to the east and the homes on the east side of Garfield Avenue to the west. The property is bounded to the north by the Union Pacific Railroad tracks. Scholl Road bisects the site.
The land was recently sold by Iowa State University to local developers for residential development. The land has been used for decades by the university for agricultural teaching purposes. To the west of Scholl Road has been used for row crops. To the east of Scholl Road has been a man-made, research prairie.
Scholl Road north of Ontario Street has been owned and maintained by ISU; no public right-of-way has ever existed for this private street. The road surface is in poor condition and the street does not have curbs, storm sewer, or sidewalks. As a part of the sale and development of the land, Scholl Road right-of-way will be dedicated as a public street up to the railroad tracks. (Scholl Road north of the railroad tracks will remain a private street owned and maintained by ISU.) Scholl Road will also be completely reconstructed by the residential developers with infrastructure that complies with City code (curbs, storm sewer, sidewalks, trails, etc.).
The road will be constructed to commercial standards, beyond what would normally be required for developers to construct for a residential redevelopment. As such, the proposed project for this URA is that the City will contribute $870,000 in TIF funds as a developer rebates towards the upgrading the street beyond residential standards. The maximum TIF collection is set at $870,000.
Planning to maximize the capture of new growth with single family home development will require multiple TIF areas for the development site.
Downtown Reinvestment District URA Amendment
The Downtown URA was originally created in concert with the City's State Reinvestment District Application and was limited to the Lincoln Way Corridor and between the Fitch Aquatics Center and Duff Avenue and for the western half of Downtown totaling approximately 75 acres.
Projects identified in the original Plan included the Aquatics Center, public infrastructure improvements, public space and plazas, acquisition of property, and economic development assistance to developers. The Plan identified the use of TIF for certain activities totaling a maximum of $32 million.
The proposed amended Plan expands the URA boundaries north of the railroad tracks to include the broader Downtown area extending generally from Northwestern Avenue to Bandshell Park along 6th Street for a total area of 131 acres.
The proposed project activities have been updated based upon potential public improvements and private redevelopment projects related to the City's Plan 2040 land use designations and the Downtown Guiding Vision. The project list includes projects related to public improvements for roadways, utilities, streetscapes, bicycle and pedestrian facilities, parking, public spaces, economic development grants, developer rebates, planning studies, and other activity that is allowed by law and meets the objectives of the Plan.
The total TIF collection has been increased due to potential additional projects and inflated costs of projects since the original Plan's approval to a maximum total of $83 million. The Plan identifies $56 million in relation to developer rebate incentives.
This URA currently has two established TIF districts related to the Linc site. Additional new TIF areas are planned to support future undertakings consistent with the Plan and to capture future general fund growth.
North Dayton Industrial Subdivision Urban Renewal Area Amendment
The North Dayton Urban Renewal Area was created in 2022 to spur economic development of small lot industrial development along Dayton Avenue. The development area coincides with the North Dayton Industrial Subdivision and included developer rebates for the cost of public improvements that serve the development. The initial area was 73 acres.
The proposed amendment does not change the development area of the URA, but includes adjacent rights-of-way within the URA boundary to facilitate public improvements to serve the growth and development of the City. Rights-of-way for Dayton Avenue and East 13th Street are included in the URA boundary.
Planned public improvements for reconstruction and improvement of E. 13th Street, shared use paths extensions, and the potential widening of Dayton Avenue are proposed projects. The maximum TIF collection will increase by approximately $7 million, this is in addition to previous development rebate commitment of approximately $3.1 million for the initial infrastructure improvements to the area.
No new TIF areas are anticipated at this time, but the current TIF Area may be divided into multiple areas to capture future general fund growth.
Campustown Urban Renewal Area Amendment
The Campustown URA was originally adopted in 2013 at the request of the developer of the Kingland project for economic development purposes. It is proposed to be expanded in area and purpose. The broader Campustown area is proposed to be included in the URA area boundary, including areas between S. Hyland and Lynn Avenues. The boundary is also expanded to include Hyland and Ontario drive extending to the Scholl Road and proposed Ontario Park Subdivision. The URA’s purpose is also being expanded in support of City actions for removal of slum and blight to better serve the area’s growing population.
New projects proposed with the Plan include Chamberlain Street improvements and other general public improvements such as enhancements to the streetscape, trash and recycling, sidewalks, parking, public space, and stormwater. Economic development grants for private small businesses and redevelopments, including for blight elimination, vacant ground commercial storefront business improvements, building rehabilitation and construction, and other site improvements are also proposed.
Public improvements related to roadway improvements for Hyland and E. 13th Street and Scholl Road are also included. Economic development rebates for developers and planning and engineering studies for the projects are also included. In total, the maximum TIF collection is proposed as $32,770,000. The Plan identifies $22 million for developer rebate incentives.
Only one existing TIF district is establish within Campustown. Additional new TIF areas are planned to support future undertakings consistent with the Plan and to capture future general fund growth.
Barilla URA Amendment
The proposed amendments are focused on improvements to public infrastructure to serve the economic development needs of the city with additional growth. The boundaries are proposed to be expanded beyond the existing Barilla site to include East 13th Street right-of-way from Dayton Avenue to 570th Avenue. East Lincoln Way will be included from the Barilla site to the east to the intersection with Freel Drive. No new private property is included with the amendment. The maximum collection of TIF will be increase by $6 million for public infrastructure improvements. No new TIF districts will be created.
ISU Research Park URA Amendment
The City established the URA and Plan in 2014 to include 245 acres of existing development generally south of South Loop Drive and planned expansion area. The amended URA is expanding to include the airport property with development sites identified within its Master Plan, the whole of the Research Park, rights-of-way, and City land at Billy Sunday Road, an increase by approximately 460 acres.
The original Plan included Ag land consents and approval by the Board of Supervisors to include rural road right-of-way for improvement of University Boulevard. The amended Plan includes these original consents, and by virtue of the City Council approving the Plan consents to including agricultural land located on City property at the airport.
The project list included public improvements to support expansion of the Research Park, including the University Boulevard extension and utilities. TIF was identified as the funding source for the public improvements and set at a maximum collection of $7 million. The City has completed the initial set of planned public improvements by utilizing approximately $3.8 million of TIF already. Additional TIF increment can be generated over the life of the plan to supplement costs of additional infrastructure needed for the economic development and growth of the City.
The proposed amendment expands the URA for the Research Park to include both additional land and infrastructure improvements. The primary purpose of the amendments is to improve infrastructure with paving of Cottonwood Drive, Lincoln Way bridge replacement, airport site improvements, rehabilitation and reconstruction of other streets and intersections.
The proposed public improvement projects will occur over an extended period of time and have an estimated cost $11 million. Additionally, developer incentives with TIF rebates are identified to help fund other infrastructure extensions need for the expansion of the Research Park, totaling $9 million. The maximum collection of TIF will increase from the original Plan by $20 million to a total of $27 million, with approximately $23.2 available for new projects.
Two TIF Districts exist within the current URA, but these areas will need to be modified to separate undeveloped land from developed land to better capture new construction valuation for the general fund. New TIF areas will also be created to account for potential new growth.
South Bell Urban Renewal Area (Urban Renewal Area No.5) Amendment
The South Bell URA was created in 2009 to assist with economic development goals of the City related to industrial land. At that time the project area was referred to as both South Bell and Urban Renewal Area No.5.
The proposed amendment includes additional right-of-way of SE 16th Street, South Dayton, Freel Drive, SE 5th Street, and East Lincoln Way as project areas. The proposed project list includes potential roadway improvements in these areas that will improve traffic conditions related to growth in this industrial area of the City. City staff has proposed to increase the allowable TIF collection by $6 million. No additional TIF areas are anticipated at this time.
1. Resolution setting the date of hearing for the ten Urban Renewal Plans for November 10, 2026, referring the URA Plans to the Planning and Zoning Commission for a recommendation, and designating Kelly Diekmann, as the City representative for the consultation meetings with affected tax entities.
2. Direct staff to modify any of the proposed draft URA Plans and then proceed with a Resolution setting the date of hearing as November 10, 2026, referring the URA Plans to the Planning and Zoning Commission for a recommendation, and designating Kelly Diekmann, as the City representative for the consultation meetings with affected tax entities.
3. Refer the item back to staff for more information.
The proposed URAs are a departure from past City practice to respond to immediate economic development that is necessitated by the recently adopted SF2472 in order to best manage future accounting for new construction valuations and to maximize the incentive value of TIF.
The proposed action of setting the hearings for November 10th is the first step in this process. The City Council will still have to approve the individual Urban Renewal Plans at a public hearing before they become effective.
Additionally, any Plan that includes new TIF areas will require separate ordinances to be approved before the end of the year to maximize the value of TIF. Future amendments to the Plans and other TIF areas can occur still after January 1st if new projects or needs arise.
Based upon the estimated TIF maximums of the Plans, new growth must occur to fund all of the projects and activities identified. Much of the funding is dependent on new development happening as expected.
Direct benefits to City of Ames taxpayers includes the financial assistance of TIF for public improvements identified within the Plans, which address approved projects in the current five-year CIP totaling approximately $15 million. Therefore, the City Manager recommends the City Council approve Alternative 1.