City councilors will not likely spend city money on what Iowa law refers to as “token” property taxes.
After purchasing flood-damaged buyout properties in the middle of the fiscal year, the city became responsible for roughly $37,000 in property taxes.
Property-tax revenue is split among the city of Iowa City, Johnson County, and the Iowa City School District.
But to avoid paying the taxes, city councilors said at work session Monday night they will likely pursue abatement, defined as postponing or eliminating a tax.
The law stipulates the Johnson County Board of Supervisors “shall abate the taxes” if city officials decline to pay.
City councilors advised staff members to pursue the abatement process.
If city councilors had opted to pay, the city would owe itself property taxes, officials said.
Of the $37,000 incurred by the city through the property buyouts, roughly $22,000 would go to the School District and county, officials said.
But councilors said county and School Board officials have shown little concern regarding the city’s decision.
A majority of city councilors present were against paying the tax, though some said they wanted to see how surrounding communities — such as Coralville — handle similar issues relating to flood buyouts.
City officials said they were unclear on whether Coralville has already opted to pay similar property taxes.
Iowa City Mayor Regenia Bailey said paying the tax would be unnecessary, and other councilors agreed.
“We don’t have to pay it. Why would we?” she said. “There’s already been a large [flood-related] impact on tax payers.”
The flood buyout properties were purchased in May, when Iowa City received $8.6 million in Federal Emergency Management Agency funds from the Hazard Mitigation Grant Program. The funding was intended to aid families affected by property damage in the 2008 flood.
The grant money — secured by Rep. Dave Loebsack, D-Iowa — was used to purchase 39 homes and one vacant lot located on Taft Speedway, Park Road, Normany Drive, and Eastmoor Drive.
