Municipal squeeze. Iowa's cities and towns struggling ... providing streets, sewers and services for taxpayers wanting more for less. A conversation with two mayors ... Council Bluffs' Tom Hanafan and Cedar Rapids' Ron Corbett on this edition of Iowa Press.
Borg: Effects of the shaky, sluggish economy trickle from the statehouse to city hall. So these aren't the most pleasant times at most city council meetings, no matter what size the city or town. And, for some cities, Mother Nature adding an extra challenge. For some it is wind, for others too much water. In fact, both guests today are well acquainted with flood waters. In Council Bluffs the Missouri River spending most of last summer in places it shouldn't have been. Cedar Rapids still recovering from the epic 2008 Cedar River flooding. Council Bluffs first elected Tom Hanafan its mayor in 1988. He is now in his sixth four-year term, up for election next year if he chooses to run. Cedar Rapids put Ron Corbett in the mayor's chair two years ago. He has spent 13 years representing Linn County in the Iowa House of Representatives. In fact, five years ago as the Speaker of the Iowa House of Representatives. Mayor Hanafan, Mayor Corbett, welcome to Iowa Press.
Mayor Corbett: Thank you.
Mayor Hanafan: Thank you.
Borg: And across the table, Associated Press Senior Political Writer Mike Glover and Radio Iowa News Director Kay Henderson.
Glover: Mayor Corbett, let's start with you. There is a property tax plan floating in the legislature that I'm certain you're very familiar with which would cut deeply into commercial property taxes, 40% over a series of years. How much would you lose in Cedar Rapids? And what would that mean if that plan is enacted?
Mayor Corbett: Well, certainly we would suffer depending on the final plan and what it looks like, if there isn't a full reimbursement to the communities. So we certainly sympathize with the Governor and the legislature as the differential between the commercial property taxes and the residential property taxes. We've seen the rollback really go down over the last 15 years and it is just starting to come back up the other way and so that is going to lessen the differential. But we're on the front line. We get stopped all the time at the Hy-Vee or some convenience store people grousing about their property taxes. So we're sympathetic but at the same time we want to make sure that the cities remain whole and don't have to do major cuts in our services.
Glover: Have you calculated how much you'd lose?
Mayor Corbett: Yeah, it is up to over $4 million in some cases depending on -- again, it's all based on additional growth so as more growth comes from the communities there is less reimbursement. It's hard to say from our standpoint what that growth is going to be because you're projecting in the future. This year I can say our growth and our property tax valuations was two percent. That is not even from an inflationary standpoint very large.
Glover: Mayor Hanafan, same question to you. How much would you lose if this property tax plan is enacted? And what would it mean in Council Bluffs?
Mayor Hanafan: Of course, there's three different property tax plans that are on the table. And calculating the first one that was out there a year ago by the Governor we were estimating up to $20 million worth of losses of revenues over an eight year period. The new one on the table that comes from the House is kind of a combination of three bills and we assume probably in the $6 to $8 million area depending on what is voted on and, again, on the amount of growth. It would be a big number and it is in our general fund --
Glover: What would it mean?
Mayor Hanafan: Well, what it would mean is, for example, in our general fund we're capped at $8.10 so we can't go up anymore.
Borg: $8.10, what does that mean?
Mayor Hanafan: That is the $8.10 level on property taxes that you can levy, the state sets that level.
Borg: Right, so you're capped?
Mayor Hanafan: We're capped and we are at the top and have been there since the '70s.
Henderson: Mr. Corbett, you said you are sympathetic to property owners who complain about their taxes. But in this instance would stalemate be what you desire at the statehouse, which appears to be what is happening?
Mayor Corbett: Well, certainly we recognize that there is unfairness in the property tax system for a business owner that owns $100,000 business, they are taxed at $100,000, a homeowner is basically taxed at 50% of that so there is disparity there. It didn't happen overnight and it's not going to be solved overnight. So we get a lot of pressure from our local citizens, not just the homeowners but the business community. And so we're happy to continue to work with the state and the Governor's office and the legislature. Frankly the cities are partners with the state government and we're on the front lines when it comes to economic development and trying to get businesses to grow and expand in Cedar Rapids. So we just don't want to be handcuffed as we move forward.
Henderson: Mayor Hanafan, is stalemate your desired outcome? Or is there some incarnation of property tax reform that you could stomach?
Mayor Hanafan: Well, I mean, tax reform would be good for us in the respect that we are in the far western part of the state and our competition is the state of Nebraska, the city of Omaha. For example, when you look at property taxes on commercial we're much higher. That's because Nebraska has a formula that is set up that all classes of property are at the same value. There is not a residential rollback and so if you have $100,000 home in Omaha you'd pay on 92% of value, if you have $100,000 gas station you'd pay on 92% of value, which we don't have that option in Iowa.
Borg: Let me go back and pursue what you were alluding to, Mayor Corbett. You said that you had some empathy for commercial property tax payers and it might affect economic development. You're in a unique situation here because you're trying to rebuild a city right now, trying to get commercial people to invest in commercial property and development. It seems to me that that might outweigh because these are property tax payers who in the future will be paying the city bills, tax bills.
Mayor Corbett: Well, certainly from a commercial standpoint our entire downtown was devalued right after the flood and we're not back up even to our pre-flood assessments from 2008 and here we are going on four years post-flood. So we've seen a reduction in the valuations, at least in the inundated area of the flood from that standpoint. When it comes to any economic development deal -- we have a groundbreaking coming up here in the next couple of months with a company in Cedar Rapids called Intermec, they're wanting to build a new building but as they're building that new building one of the things that they look at is property taxes and in our case we had to provide some tax increment financing to keep that building and that company in Cedar Rapids.
Borg: Mayor Hanafan, the same question to you. Wouldn't the reduction in commercial property taxes enhance your economic development efforts?
Mayor Hanafan: Well, it has an opportunity to do that. But on the same token if you're going to deliver those services that we offer today and you have reduced income you're going to have to get the income from somewhere. So I think it would be as a shift from the commercial property tax owners over to the residential. Somebody has to pay the bills, the police, the fire that have to be there for the businesses, the roads, those type of things would have to be paid for by somebody.
Mayor Corbett: If the growth exceeds the reduction in the amount then you're correct, Dean, then cities would not be hurt by it but we're not so sure that the growth is going to exceed the reduction. And so there is a pretty aggressive step-down of what their rate would be with an estimate of what the growth might be in the future and we're not sure about that.
Glover: Mayor Corbett, I'd like to go back to something you just mentioned. When you talk about commercial property taxes, haven't cities already moved on this on a lot of areas, in relieving property taxes on businesses in order to lure them there?
Mayor Corbett: Well, on the TIF that you have but that doesn't address all the businesses that are currently in town that are being assessed at a higher rate. So normally if you're going to have an expansion or a new building then you're eligible from a TIF standpoint and based on the individual project and number of jobs we may give a five-year TIF, it may be 10, it may be even a little longer from that standpoint. But from our city standpoint we've kept our rate, we're going to pass our budget next week, we've kept our rate flat the last three years in a row and considering the demands that we have had from personnel and just a recovery standpoint that shows that the city council locally is sensitive to what people are saying. We haven't added any employees and we've had to work at reducing and becoming efficient in other areas.
Glover: Mayor Hanafan, let's switch gears if we could for a second. There is an issue in the legislature that would prohibit cities from using what we call red light cameras. Both of your cities have these. Make the case for having them. And what kind of revenue do you garner from it?
Mayor Hanafan: Well, we put in, for example, our main street which would be West Broadway and Highway 6. We had a number of accidents, in fact, we had six deaths in the late '80s along that stretch in a three year period. One of the problems was speed and running red lights. And so we looked at options that we could do. So we put in -- went to a company and dealt with them, they put in equipment and we were able to eliminate -- our accidents are down about 35% in the areas that we have put in red light cameras. That is a benefit to all of us. And we have generated revenue. We're in about $3 or $4 million revenue that we received. About half of that will go for property taxes and dealing with our operation. The other half we use for safety issues.
Borg: $3 to $4 million a year?
Mayor Hanafan: Right.
Glover: Mayor Corbett, what is the experience in Cedar Rapids?
Mayor Corbett: Cedar Rapids has done the same. We're into a three year contract with red lights cameras at the intersections and also our speed cameras on Interstate 380 and we've seen the same results. We targeted the intersections that had the highest number of accidents and those accidents are down. And on Interstate 380 we had a big problem with accidents. If the legislature passes the laws but they don't provide any funding for local governments to enforce the laws that they pass, in this case we're trying to use technology which is cheaper and more efficient than using actual police officers out there trying to stop people on Interstate 380. We have about 50,000 cars a day, a month that go through Cedar Rapids and less than one percent are being ticketed. So we're not being obsessive, we're not trying to gouge anyone, we just want them to obey the laws. So what we've seen is a reduction in accidents and the same is true with the deaths on 380. And the local community at first probably rejected a little bit, but as they have seen the results and they have experienced it personally getting on 380 and not feeling like it is a racetrack we've seen a general increase in the acceptance. And so we hope the legislature respects our decision that we make locally. They may not like it but --
Glover: How much do you pull in?
Mayor Corbett: We pull around $3 million a year from that and we're using that similar to what Tom is. Really we have to underwrite our police and pension funds that the legislature, again, requires us to fully fund from an actuary standpoint. So we're using some of the revenue for that.
Borg: And would either of you share that revenue with the state, half or it? Mayor Hanafan?
Mayor Hanafan: Probably not.
Mayor Corbett: We wouldn't be open to that idea. The state has a lot of revenue options. They have revenue on alcohol, they have revenue on cigarettes, they have revenue on banks, they have revenue on sales, they have revenue on income. We basically have revenue on property taxes. So if everyone really is concerned about rising property taxes then letting cities keep the revenue that is helping them keep property taxes down should be favorable from a legislative response.
Henderson: Gentlemen, your communities both suffered through flooding. Mayor Hanafan, yours a bit more recent than Mr. Corbett's. Are you a victim of your own success in Council Bluffs in that the levy held and so you're not getting as much support from the federal level to finance the rebuilding?
Mayor Hanafan: Well, again, totally different. We had 104 days of flood stage and we do have 28 miles of levy. They held. We're in recovery stage right now. We've spent about $16 million to hold off the water and we're in recovery now. We actually have had very good cooperation with all of the agencies, the Corp has been doing some rebuilding right now. But there are some people that are going to suffer from this that we're going to have to deal with.
Henderson: Mayor Corbett, this past week voters in your community rejected a plan that would have provided some local money to match federal funds that would be used for a massive flood protection project in downtown Cedar Rapids. Are you back to the drawing board? Will you go back to voters and try to get them to approve this in the future? I mean, where do you go from here in terms of flood protection in Cedar Rapids?
Mayor Corbett: Well, it is interesting, it's the second time now it has been defeated and so I'm personally disappointed. The Corp of Engineers came out and we put together a plan, it's not 28 miles, but it was a little over 7 miles and the Corp said we could only participate in protecting the east side of Cedar Rapids. So from that standpoint I just felt there was some moral issue of protecting both sides of your community. And so while we've pushed hard for this bill that is going to the legislature for state support and to protect the west side. But now we've had the citizens defeat that twice so the only option the city has right now is to continue to work with the Corp as they finish the engineering and design of the east side and begins construction in the next several years.
Glover: Mayor Hanafan, another issue that is bubbling in the legislature, we don't know where it's going to go is the proposal to increase the gas tax. The Majority Leader of the Senate from your city of Council Bluffs has said that would make a big deal in the Council Bluffs area because some repairs there could take as long as 20 years if you don't do that. Do you favor the gas tax increase? And what would it mean for your city?
Mayor Hanafan: Well, we have favored the gas tax increase as a community for a long time. We've got $1.4 billion interstate improvements that have to be made. They said that they may be done in 20 years. We carry 100,000 cars a day in our community and without those repairs or changes we're not going to grow and it needs to be addressed.
Glover: Mayor Corbett, same question to you. And take Mayor Hanafan's we're not going to grow if the road system isn't fixed. Is that the same situation in Cedar Rapids?
Mayor Corbett: Yeah, I've come out in favor of the fuel tax and what we've seen here in Iowa is it used to be a user pay system. Since the fuel tax hasn't been raised since the late '80s there has been a shift from paying our roads using fuel tax to actually using property taxes. Cedar Rapids has $85 million in debt for road construction. That is over 50% of our debt service levy which is, again, puts pressure on increasing property taxes. So because the legislature hasn't raised the fuel taxes in so long that shift has meant increases in property taxes. Now we'll get about $2.5, $3 million a year if they do raise the fuel tax and that will go a long way to our $200 million of needs we project over the next ten years. That is why we're in favor of it but I don't know if they're going to get it passed with rising gas prices. But the needs don't go away and all it does is just put more pressure on the local people to fix the roads using property taxes.
Glover: And I've seen you around a lot, I assume you're talking to legislators about this issue. Are you making any progress?
Mayor Corbett: Well, we certainly have made progress in them understanding that there has been a shift from a fuel based payment system to one of property taxes. We've also been making progress on having state support to help communities like Cedar Rapids or Council Bluffs repair their levees or build new levees. That is a pretty important bill for us also.
Henderson: You've mentioned that bill a couple of times. Mayor Hanafan, it would take $30 million of state money and make it available to cities for flood protection, mitigation projects. Do you think that is doable at a time when you have legislators talking about how tight the budget is and they can't spend money on the state universities and they are quibbling about how much to spend on K-12 schools? Do you think it is realistic to expect legislators to advance that much money to cities?
Mayor Hanafan: Well, I don't think it could happen immediately. I think the reality is that we have to look at our state and see the disasters that we have had. If you look at Cedar Rapids, the second largest city in the state of Iowa, they're darn near gone. The city of Des Moines, and as you look around our state I think flood mitigation is going to be important for us in the future. And if you can't do it today let's start putting together a plan that will address it in the future.
Borg: Mayor Corbett, I just heard him say Cedar Rapids, darn near gone. Some people driving in Cedar Rapids right now are just amazed that Cedar Rapids has as many empty neighborhoods as it does. In fact, we're going through right now some controversial school closings. Some of that is related to people moving out of that flooded area. But my main question to you is how do you get people to move back in? And how do you recover? Don't you have an image problem?
Mayor Corbett: Well, I don't know if we have an image problem. We have made significant progress in flood recovery and they say it takes five to seven years to fully recover. Specifically from a business community aspect, programs we put in place, federal stastistics say that 60% of the businesses that were affected by the flood are no longer in business five years after the flood. Right now we only have a rate of losing 28%. So there's some things that we have done on the ground. Certainly our core neighborhoods are something we're trying to focus on and to get people to move back in we have put together housing incentive programs, Dean, that give people a large down payment assistance, reduced mortgage assistance to get them to move back in the area, not in the 100 year flood, we're not having people move back in the 100 year flood. Remember we were flooded to the 800 year flood level so outside of the 100 years flood is where we're trying to repopulate the neighborhoods.
Glover: In Detroit they have a problem with whole sections of the city depopulating, property values basically going away. I have driven through some sections of Cedar Rapids and it looks like areas of Detroit. Is Cedar Rapids going to be the next Detroit?
Mayor Corbett: No, not at all. I mean, we're first of all not as big as Detroit and the community, the neighborhoods are organized and we're making big efforts to repopulate. But as Dean said, one of our schools I think before the flood had 450 students and after the flood they are at less than 200. That puts a lot of pressure on the school board to keep a school like this open. And, again, these recoveries, Mike, don't take place in like an eighteen month or twenty-four month period. They are long-time -- it takes five to seven years and even ten years from that standpoint. So we've asked the patience from the school district to give the city time to rebuild our community from the inside out and focus on infill.
Henderson: Mayor Hanafan, a situation unique to Council Bluffs, there is a dog racing track there and folks in Des Moines are talking about getting rid of dog racing in the state of Iowa. Is that something you would support? And what would happen to that real estate?
Mayor Hanafan: Well, we would probably support that and the reason is if you look at the dog track, I was involved in the dog track when it started, it's not active, we don't see people there. We have talked to the owners of the property and it would make more sense for them to redevelop that into something that would be more attractive for the area. And I think that is part of what they have to sell to the legislators.
Glover: Mayor Corbett, one of the jobs of a mayor is to go around the country and sell your city to businesses that are looking for a new location. Both Council Bluffs and Cedar Rapids have been in the news nationally for being under water. How much of a burden is that when you try to go out and lure a new business? Oh Cedar Rapids, wasn't that the place that was under water?
Mayor Corbett: Yeah, I think we certainly have gotten a lot of publicity from that but we use that to show the resiliency of our community and we obviously then show what we have done. We came very close to losing all of our water. We have now since raised all of our collector wells so in the next time, if there is a flood similar to 2008 we won't be in jeopardy of losing our water supply. Same we have worked with Alliant Energy to put new, two new substations in, we won't be in jeopardy of losing our power grid. And the same is true with our sewer treatment and our water treatment facility, we have built a flood protection system around that. So we have tried to safeguard ourselves in the future until at some point in time we're successful at building flood protection.
Henderson: Mayor Hanafan, let's move to your future. You, in some respects, may be the state's longest serving mayor, you were elected in 1988. That's correct, right?
Mayor Hanafan: Correct.
Henderson: Do you intend to seek another term?
Mayor Hanafan: Well, I actually have not been -- I'm kind of looking at retiring. I've got two years left of this term and something came out and somebody said they were planning to run if I retired and I've been inundated with people saying you can't retire. And I say, well yeah I can. I get to a point in my life that I've been around a long time. That is a decision I'm going to make by the first of the year.
Glover: Mayor Corbett, same question to you. What is your future?
Mayor Corbett: Yeah, I'll probably make my decision later this summer, probably early fall on whether I want to seek re-election in 2013.
Glover: Are you inclined to?
Mayor Corbett: I would say today I'm more inclined to run. I think I like the job about 85% of the time. The other 15% --
Glover: You're ahead of the game.
Henderson: Do either of you have aspirations for a different office other than mayor? Mr. Corbett?
Mayor Corbett: You know, I came from a partisan environment spending my thirteen years in the legislature and so I feel I've gotten that out of my system. The great thing about being the Mayor of Cedar Rapids, it's a non-partisan position and you're not bound by one party's ideological views of the community and stuff like that so I really appreciate that and just the way partisan politics has gotten over the last ten years it really isn't something that I'm inclined to jump back in.
Henderson: Mayor Hanafan, do you have an heir apparent picked out?
Mayor Hanafan: No. No.
Borg: There's someone who is interested in that job --
Mayor Hanafan: There would be more than one that would be interested in that position and there are some good quality people there. I mean, I took the job when I was 40 and maybe there's somebody out there in the 40-somethings that would be there too. But there are a number of people.
Borg: One decision is hard and fast right now for me to close the program. We're out of time. Thanks so much for being with us.
Mayor Hanafan: Thank you.
Mayor Corbett: Thank you.
Borg: We'll be back with another edition of Iowa Press next weekend but it will be slightly altered by our special Festival programming. You'll be able to find Iowa Press Friday night on IPTV World at 7:30 and on our main channel at noon on Sunday. I'm Dean Borg. Thanks for joining us today.