WATERLOO -- Black Hawk County's tax base experienced its largest growth in a decade.

The value of land and buildings available for property tax purposes rose 7.4 percent countywide between 2006 and 2007, based on reports from the auditor's office. The $277 million increase -- bringing the total taxable valuation to more than $4 billion -- is the biggest annual jump since 1997.

While record construction seasons in Waterloo and Cedar Falls played a role in the added value -- projects finished during the 2006 calendar year would be included -- the lion's share of the tax base growth came from a boost in the value of existing homes, farms and businesses.

Public policy makers prefer to see growth from new construction -- which adds taxpayers to share the burden of funding services -- rather than realizing the increase from rising property values -- which essentially requires the same taxpayers to dig deeper.

"We're glad to see the value of people's property grow, but we'd prefer to see new construction, new people on the tax rolls," said Michelle Weidner, chief financial officer for the city of Waterloo. "We are pretty excited about the growth this year because we did see some actual growth from construction."

Waterloo added $141 million to its tax base, or 7.7 percent. Weidner said the growth would have been 2.4 percent without the hike in existing property values.

The story was much the same in Cedar Falls, which saw $80 million, or 7.8 percent, growth in the tax base.

Tangled web

Assessors start the complicated process of establishing the tax base when they determine what they perceive as the market value of property in various jurisdictions.

The 2007 assessed values would take into account projects built in 2006, when the metro area was enjoying a construction boom. But not all of that construction finds its way to the general tax rolls.

Many of the industrial and some commercial projects receive tax abatements from city councils, and many development projects are captured in tax increment financing districts, which do not contribute property taxes to general funds, school districts or county government coffers. The taxable value of property in TIF districts countywide jumped to $346 million last year, a $61 million increase from 2006.

The Iowa Department of Economic Development stepped in last fall to help boost the tax base when it determined assessed property values in Black Hawk County were not keeping up with sales data.

The IDED issued an equalization order that raised the assessed value of every residential property by 7 percent across the board. Commercial building values were raised 9 percent and agricultural land went up 15 percent. The effect of those orders were mitigated, in part, when the IDED later issued a rollback, reducing the amount available for taxing purposes.

In the end, homes saw a net 3.5 percent increase in taxable value. Commercial and agricultural property grew 8.7 percent and 3.6 percent respectively for taxing purposes.

Those are the taxable value increases. Actual property tax bills based on those values will be payable in September and will be factored using tax rates adopted by cities, the county and school districts over the coming months.

Effect unknown

Such a large increase in the county's tax base could result in a windfall for cities, counties and school districts for the fiscal year starting July 1. But that discounts the political pressures that go along with setting a budget.

County Auditor Grant Veeder said the Board of Supervisors has yet to begin discussing the upcoming budget. That debate will include setting a rate to apply to the new tax base.

"If the board didn't change tax rates from last year, if they were to keep tax rates the same, that would increase tax askings by 7.4 percent," Veeder said.

But that would also boost tax bills for residential, commercial and agricultural property owners.

"In Black Hawk County, the tradition has been to look at the tax askings as a separate issue from the tax rate," Veeder said. "The board pays attention to what the effect is going to be on the taxpayer regardless of what the valuation is."

Richard McAlister, director of Cedar Falls Administrative Services, said city leaders also try to adopt budgets that don't rely on higher tax bills from property owners.

The Cedar Falls general fund would see $647,000 in new taxes but only about $208,000 is attributed to growth.

"The equalization portion is significant," McAlister said. "We try to do our budget without tapping into the impact of the equalization order."

He added with the real growth the city had and some changes in state pension programs, Cedar Falls should be able to maintain stable taxes.

Weidner also said Waterloo's goal "is not to pass that equalization increase all along" to property owners. But she said it was too early in the budget process to determine where the City Council ultimately will set a tax rate.

Housing values

The valuation reports seem to indicate residential property is responsible for the most real tax base growth.

Countywide, residential values grew by $140 million with about $65 million from new construction and $75 million due to equalization increases on existing housing. Commercial values grew $119 million but only $26 million came from new growth. Industrial property values fell $4.3 million countywide. Agricultural property values grew $7.5 million.

County Assessor Vicki Atkins said the actual value of industrial property in Black Hawk County grew by $10 million. The loss in taxable value shown in the reports appears to be related to much of the value being in TIF districts or covered by tax abatement programs.

"Our construction values are still running strong," Atkins said. "You don't see much change in your industrial values from year to year."

The taxable value of commercial property countywide has also been slow to rise in recent years, which might be affected by a number of apartment owners turning their buildings into condominiums for tax benefits. That could also account for an increase in the residential tax base.

Apartment complexes are classified as commercial while condos are residential.

Other notable information in the valuation report:

-- Gilbertville had a huge jump in its tax base at 36 percent, which comes on the heels of a 24 percent drop in taxable value a year before. The wild swing is because the city moved $3.5 million in value into its TIF district last year.

This year, Gilbertville officials moved $4 million in value out of the TIF district and onto the general tax rolls.

-- Dunkerton lost tax base this year but the drop is because of value the city moved into a TIF district.

-- While Waterloo saw about $30 million growth in its TIF district -- which does not provide tax revenue for city services -- officials were able to release $9 million from its Northeast Industrial Park to put back onto the tax rolls.

"That's how TIF districts are supposed to work," Weidner said. "That value eventually is added to the (tax base)."

Contact Tim Jamison at (319) 291-1577 or tim.jamison@wcfcourier.com.

{M3TAX BASE

{M3Most communities throughout Black Hawk County saw healthy growth in the taxable value of property during calendar year 2006. The 2007 values will be used by local governments when they set property tax rates for the fiscal year 2008-09 budgets this spring. Figures below do not include value in tax-increment financing districts and are rounded to the nearest $1,000.

{M3District 2006 Value 2007 Value Increase Pct.

{M3Waterloo $1,845,991,000 $1,987,252,000 $141,261,000 7.7%

Cedar Falls $1,021,932,000 $1,102,139,000 $80,207,000 7.8%

Evansdale $88,768,000 $96,652,000 $7,884,000 8.9%

Hudson $67,266,000 $71,601,000 $4,335,000 6.4%

La Porte City $46,730,000 $49,610,000 $2,880,000 6.2%

Elk Run Heights $30,741,000 $32,518,000 $1,777,000 5.8%

Dunkerton $21,160,000 $20,471,000 -$689,000 -3.3%

Raymond $15,818,000 $17,159,000 $1,341,000 8.5%

Gilbertville $11,169,000 $15,221,000 $4,052,000 36.3%

*Janesville $4,001,000 $3,904,000 -$97,000 -2.4%

*Jesup $2,458,000 $3,117,000 $659,000 26.8%

Urban ag land $22,217,000 $22,744,000 $527,000 2.4%

Unincorporated $546,847,000 $579,769,000 $32,922,000 6.0%

{M3Total $3,725,097,000 $4,002,158,000 $277,061,000 7.4%

{M3* Includes only those portions of Janesville and Jesup in Black Hawk County.

{M3Source: Black Hawk County Auditor's Office.