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DES MOINES — Iowa lawmakers on Thursday advanced legislation that would place new restrictions on future casino projects in the state.
While it would not prevent the development of a Cedar Rapids casino, backers worry it would prohibit the city of Cedar Rapids from using a primary funding source to pay for needed road improvements and flood control measures tied to the project, but which benefit the larger surrounding area.
Republican lawmakers in both chambers of the Iowa Legislature on Wednesday introduced legislation that would prohibit a city’s urban renewal plan from including gaming projects that were awarded a state license on or after Jan. 1 of this year.
Earlier this month, state regulators awarded a license to build a proposed $275 million casino and entertainment center near downtown Cedar Rapids.
Developers and dignitaries in Cedar Rapids held a groundbreaking ceremony Feb. 7, the day after the Racing and Gaming Commission awarded the casino project a license.
Iowa law allows local governments to establish urban renewal areas to redevelop blighted areas, fund private economic development and finance construction of low- and moderate-income housing, according the state’s nonpartisan Legislative Services Agency. The primary funding source for urban renewal areas is tax increment financing, a public-funding method that uses future tax revenue to pay for community improvements.
Senate Study Bill 1159 would prohibit communities from using tax increment financing on any newly-licensed gambling facilities in the state.
While the planned location for the Cedar Rapids casino is in an urban renewal district, developers have said they have never sought and do not plan to seek tax incentives.
“We as the property have never approached any government entity for any tax incentives, and that will continue to be our position,” said R.G. Schwarm, a lobbyist representing Cedar Rapids Development Group LLC, the developer of the proposed Cedar Crossing Casino & Entertainment Center, and asks to be treated the same as Iowa’s existing casinos.
The bill, however, could prevent the city’s ability to use tax revenue from increased property values generated by the casino project to pay for infrastructure improvements that benefit the casino as well as the larger area, said Gary Grant, a lobbyist for the city of Cedar Rapids. That would include construction of a flood wall along the Cedar River and street improvements to accommodate anticipated traffic growth, Grant told The Gazette.
“But those street improvements won’t just serve this particular project, it will serve the larger urban renewal area,” Grant said. “We don’t believe that it will have an effect on the development of the casino, but we’re reviewing the bill to make sure that, in fact, is the case.”
He said Cedar Rapids officials are reviewing the development agreement to make sure it complies with provisions of the bill, should it pass and be signed into law.
Sen. Scott Webster, a Republican from Bettendorf who introduced the bill and chaired a subcommittee hearing on it Thursday, said it ensures tax incentives are not used in the future to expand gaming in Iowa.
“We should not take away from our schools. We should not take away from our local governments in order to expand gambling in Iowa,” Webster said. “That’s exactly what this bill does. It doesn’t say anything about any particular casino.”
Tax increment financing diverts property taxes from new development in the urban renewal area from their normal distribution to the county, schools, community college districts and other taxing jurisdictions to pay for projects and improvements within the district.
“It says we shouldn’t take money away from schools. We shouldn’t take money away from police officers, firefighters, taxpayers” to build new casinos, Webster said.
Sen. Dawn Driscoll, a Republican from Williamsburg, agreed and joined Webster in advancing the bill for further consideration by the full Senate Local Government Committee.
Driscoll’s and Webster’s districts include casinos whose revenues could be affected by a Cedar Rapids casino, according to market studies.
Sen. Janice Weiner, D-Iowa City, who also served on the three-member subcommittee, opposed the bill.
“I see it as the party of small government trying yet again to tell local governments what they can and can’t do,” Weiner said. “Your caucus obviously had an opportunity to bring a moratorium bill to the floor and chose not to. The process as it exists in code worked. That’s just following the rule of law, and, frankly, I view this bill as performative.”
The state’s approval of the Cedar Rapids casino license came shortly after an attempt by lawmakers to stop the project. A proposed 5-year moratorium on new casinos in Iowa passed the Iowa House but was not considered by the Iowa Senate when a key lawmaker there said the proposal did not have enough votes.
Webster managed the proposed moratorium bill in the Senate.
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