Taxing Entities Suffer Financial Setbacks As Result Of TIF Error
As a result of an error made on a report filed with the State Of Iowa 20 months ago, seven taxing entities - most notably the Glenwood Community School District and Mills County Board Of Supervisors - are all dealing with an unexpected loss of tax revenue less than two months into the 2025-2026 fiscal year.
Mills County Auditor Amber Farnan said tax valuation dollars for two TIF (Tax Increment Financing) areas were not removed in a report filed with the Iowa Department Of Management in January 2024 by the county auditor’s office. Ami Petersen was serving as Mills County Auditor at the time the report was filed. As a result of the oversight, the seven taxing entities impacted didn’t receive the amount of tax revenue they were expecting for the 2024-2025 fiscal year, which ended June 30. Farnan estimates the total impact at $840,000.
“Several taxing entities are short of what they thought they would get in taxes,” Farnan said. “At the end of the year, when they’re doing their end-of-the-year balances, they’re seeing there’s a big discrepancy. It created a shortfall.
“When the 2024 assessments were uploaded to the Department Of Management by the previous administration, two large areas of TIF were not removed from that valuation amount so when everybody was working on their tax numbers, those areas were in there so they assumed those valuations would be taxed upon. They should have been removed from that report.”
According to Farnan’s initial estimate, the Glenwood Community School District took the biggest hit – a loss of $409,000 in expected tax revenue, while Mills County received $347,000 less than expected. Other entities impacted were Iowa Western Community College ($37,000), Oak Township ($15,000), Plattville Township ($11,500), Iowa State University Ag Extension ($7,900) and the Mills County Conference Board / Mills County Assessor’s Office ($16,500).
Farnan said each entity impacted has been notified in writing of how much tax revenue has been diverted from the TIF areas. She said once the error was discovered, following an inquiry from the Glenwood Community School District, she contacted the Iowa Department Of Management.
“The school had already started their end-of-the-year stuff and they had seen the discrepancy,” Farnan said. “I don’t know how it’s going to affect us (county) long-term because you assume a starting balance on July 1 and that’s probably not going to be there.
“Everybody is going to be less a little bit of tax money and I don’t think there’s a way to fix it without undue burden on taxpayers.”
TIF is a mechanism often used in Iowa for residential or commercial development purposes. Initial property taxes collected from a particular development area go to retire start-up and infrastructure costs incurred by the developer. The taxing entities don’t start receiving the tax dollars from the area until the TIF debt is retired. Farnan said the two TIF areas of impact in this case were projects near the Interstate 29-Highway 34 interchange (connected to a loan scheduled to be paid off this year) and new construction and development in the Lake Ohana area.
Nicole Kooiker, superintendent of the Glenwood Community School District, said the unexpected loss of revenue is troubling because the district thought it was ending the FY2025 fiscal year with some dollars to roll over into its FY2026 budget.
“It’s a pretty big deal. It’s over $400,000,” Kooiker said. “We’re currently working on finishing budget-end of last year. We were hoping to be above and have some additional funds in general fund and so forth to roll over. Right now, there is an impact and appearing that will not be the case.
“You budget for a certain amount, right? And you expect to serve kids and to provide services, but we’ll figure out how to make it work and we’re in conversations, of course, with the county auditor. There will be additional conversations coming up, I’m sure.”
Kooiker said she’s still hopeful the school district will get back all or some of the $400,000-plus it was counting on. She added the district’s own calculation indicates a shortfall of about $423,000 in tax revenue because of the error.
“Mistakes happen, we understand that,” she said. “But, if there’s a way, I don’t know if there is, we’re early in the stages of trying to figure out what’s happening with those dollars. We’re still curious. Is there a way to get those dollars or part, or something, even if it’s not making us whole?”
Kooiker noted the unexpected loss of tax revenue is the latest in a series of financial challenges the district has encountered in recent years.
“Of course, last year we did the budget reductions because we had 94 less students from the year before,” Kooiker said. “The year before I came, they spent down all the categorical funds. Before I came, they went to self-funded insurance. Not saying any of those things are bad in isolation alone, but when you put all these puzzle pieces together, it’s like ‘Oh gosh, what other money situation are we going to have to problem solve our way through?’”
Farnan made the public and members of the Mills County Board of Supervisors aware of the situation at the board’s regular meeting last week, noting valuations were submitted correctly to the Iowa Department Of Management this past January for FY2026.
“For the current year right now, those valuations were submitted correctly when I did them in January. This is a one-time deal, something I am trying to work through,” she said. “This was the result of an oversight from the previous auditor and in interest of protecting taxpayers from further losses, reimbursements cannot be given.”