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Divided over Destiny

Voters are split over a proposed 1-cent local option sales tax


By Michael Swanger, Sean J. Miller, Andrew Brink and Emily Garrett

As the cost of living continues to increase, some have made the argument that the penny has little use in our modern economy — that it is merely an outdated symbol of a bygone era from which the old saying “a penny for your thoughts” was coined, and a round piece of copper stamped with President Abraham Lincoln’s likeness represented buying power. But those who count them know that pennies add up. And a debate over the value of taxpayers’ pennies and how to spend them is at the heart of a proposed local option 1-cent sales tax known as Project Destiny that divides elected officials, businesspeople and taxpayers.

On July 10, voters in Polk, Dallas and Warren counties will go to the polls to vote for or against a 1-cent increase in sales tax for the next 10 years on most goods, excluding some items like groceries, medicine and automobiles. If approved, officials estimate that the measure would raise approximately $75 million per year, or $750 million over the course of the 10-year plan.

The money generated from the sales tax would be divided in three ways among 43 of 48 city and county governments that have voted to participate in Project Destiny. One-third (33 percent), or $24.75 million, would fund mandated property tax reduction. Another one-third (33 percent), or $24.75 million, would give governments the option to provide additional property tax relief. And one-third (34 percent), or $25.5 million would be used to improve regional attractions.

Proponents of Project Destiny, including the Greater Des Moines Partnership and a group called “Yes to Destiny,” say the measure’s approval would have far-reaching effects. They say decreased property taxes for the next 10 years not only would benefit residential and commercial property owners, it would help recruit businesses that would stimulate the economy and tax base — particularly the one in Des Moines. They also say the money generated from the sales tax would be used to pay for attractions that enhance residents’ quality of life, including pumping millions of dollars each year into making Central Iowa the bicycling capital of the world.

Opponents of the bill, including George Davey, who leads a group and maintains a Web site called No Local Option, and Jeff Riese, president of the watchdog group Polk-Des Moines Taxpayers Association, argue that the tax is regressive — penalizing poor people — and that an increase in sales tax costs residents more than they’ll save on property taxes. [Polk County officials estimate that a typical suburban family of four would spend about $270 a year more in sales taxes.] Another group of opponents, including elected officials in Dallas County and five communities that have decided not to participate in Project Destiny, say the measure mostly benefits Des Moines and not their communities and that advocates of Project Destiny have a long, difficult road ahead of them to unify enough people to vote in its favor.

The one thing both sides agree on is that property taxes in Central Iowa — especially Des Moines — are too high. How to pare those down, however, is the sticking point. The Capital City, for example, is burdened with a number of properties located in tax increment finance (TIF) districts that are tax-exempt. The city is also home to a number of regional attractions that draw visitors and income from neighboring communities and counties — venues that can require upgrades and improvements typically paid for by tax dollars.

On Feb. 26, the Des Moines City Council approved the Project Destiny 28E Agreement for the regional application of local option sales taxes and created a Tri-County Regional Authority that includes governmental representatives from Polk, Warren and Dallas counties. The city held a series of public meetings asking the community how it should spend the discretionary funds that could be generated by Project Destiny.

Among these was an online virtual town meeting where citizens could share their thoughts on the spending of those funds. Both skepticism and excitement were expressed about the possibilities the money could afford the city of Des Moines. However, property tax reduction wasn’t discussed as much as was spending less on tourism and more on youth and family-focused investments. [Visit www.ci.desmoines.ia.us/departments/AC/ProjectDestiny]

Opponents of Project Destiny say expenditure on regional attractions is focused on many downtown amenities. But according to Des Moines City Manager Rick Clark, “Des Moines has historically had more of these (attractions) that benefit the entire metro area.”

When it comes to divvying up the local funds for Des Moines, “Most of the money will be allocated for tax reduction,” Clark says. If approved, the city would receive about $151 million, two-thirds of which will be devoted to property tax reduction. The remaining $50 million would be spent on community development, $18 million would be spent on zoo expansion, $10 million on neighborhood street improvements, $10 million on commercial area improvements, $10 million on city parks and $2 million on a low income energy assistance program.

However, Des Moines homeowners aren’t the only ones being hit with increased property assessments. Their counterparts in the suburbs and neighboring cities are being hit hard, too. A 2005 study funded in part by the Iowa Taxpayers Association showed that property taxes for homeowners in Greater Des Moines are about 30 percent above the national average (16th highest state in the nation) and commercial property taxes are 76 percent above the national average (third highest state in the nation). Another study ranked Iowa 11th nationally in terms of percentage of income collected for property taxes.

With that said, last month’s increase in low- to middle-income property assessments by Polk County in which double-digit home valuation spikes were common, does little to reverse Greater Des Moines’ image as a property tax-unfriendly place to own a home or business. Those who support Project Destiny say Polk County’s timing might hurt their proposal at the polls on July 10, though others speculate it was a well-orchestrated increase to generate support for the measure designed to reduce property taxes for the next 10 years.

Dave Swenson, an associate scientist of economics at Iowa State University, says he’s not surprised Project Destiny has divided voters — even though the revenue generated from it could jumpstart several projects — given its complexity and the longstanding competition between Central Iowa cities.

“The only way it’s going to be acceptable to people is if they believe paying more sales tax for a little bit of property tax relief and quality of life is worth it,” he says. “Because no matter what, it’s a tax increase, and if it doesn’t benefit you you’re not going to vote for it.

“Tradition tells us that sales taxes hit poor people, renters and those who use the metro for shopping but don’t pay taxes here the hardest. It depends on your income level. Rich folks do better than poor folks with increased sales taxes.”

Project Destiny also brings to light the age-old battle between Des Moines and its neighboring cities over sharing resources. Some Dallas County officials, for example, say the tax favors Des Moines. They support the tax increase but want more of the money spent within their own county.

Last month, the Dallas County Supervisors voted to reject the tri-county joint election on July 10. Instead, voters in Dallas County will go to the polls that day to determine whether or not Dallas County should have its own sales tax bloc. Dallas County stands to gain significantly from a sales tax increase because the West Des Moines-based Jordan Creek Town Center is located there. The mall generates tens of millions of dollars in sales each year, which would provide additional revenue to Dallas County residents if a sales tax were passed.

“We’ve seen past attempts at regionalism get thumped badly,” Swenson says. “Even sharing services can be difficult. The nature of the Des Moines metro is intense competition and strong community identity. The other is that big bad Des Moines will run over the small guys.”

Another factor that could sway voters is an increased sense of public distrust with elected officials and how they spend taxpayers’ money. Though a number of checks and balances are built into the Project Destiny agreement, anxiety over how taxpayers’ money is spent is high following last year’s CIETC scandal.

Potentially adding to the public’s anxiety about such matters is a loophole in Project Destiny’s ballot language, one in which there are no restrictions on how 11 participating governments (Clive, Grimes, Alleman, Adel, Bouton, Dexter, Woodward, Waukee, Bevington, New Virginia, Sandyville) could spend abut $2.5 million of the $75 million generated each year. In those 11 communities — five of which are in Dallas County and have rejected the plan’s guidelines — officials can allocate funds for “any other lawful purpose.”

“Many people are still unsure about the idea of whether we can take a pot of money and entrust it to a group of users to achieve a set of objectives,” Swenson says. “It’s taken a while for voters to trust local option taxes for schools, for example. People have a right to be cynical, but they don’t have a reason at this point to believe that Project Destiny has a hidden agenda. But if a community wants to protect itself they should agree to evaluate their commitment to the plan every year or two.”

Strengthening cultural amenities

Most communities in Dallas, Polk and Warren Counties have passed resolutions pledging their support for Project Destiny. And while many of the more vocal proponents of the 1-cent tax increase have been members of city councils, one of its loudest cheerleaders is a mother of three.

Cyndi Harmeyer Fisher, who works for Flynn Wright Inc., a Des Moines agency providing advertising and marketing services, is the spokeswoman for Yes to Destiny (YTD), a group working to mobilize public support for the local option sales tax. As with the majority of people involved with YTD, Fisher donates her expertise and time to the campaign, which typically exceeds 20 hours a week.

“We have a small campaign staff that is paid, but most of us are volunteers,” she says. “My work for Destiny is driven by my love for the community and my family. I want our communities to be strong, vibrant and prosperous. I want my kids to grow up and either choose to stay in Iowa, or if they leave, want to come back.”

Fisher views the estimated $25 million that Project Destiny would funnel into recreation trails, arts and cultural organizations and regional quality of life facilities as key to making Central Iowa a more vibrant and attractive place to live.

Fisher grew up in Iowa and lived out of state for years before returning. “I returned to Iowa because I knew it was a wonderful place to raise a family,” Fisher says. “But when our youth eventually decide where they want to live, amenities are an important factor.

“They want to know, ‘do you have a good arts and cultural scene? Do you have things to do?’ It’s important to have employment opportunities, but equally important is offering places to play. Quality of life amenities in the tri-county area are sorely under funded.”

According to the “State Arts Agency Overview” report published in March by the National Assembly of State Arts Agencies, Iowa ranks 46th in the nation in terms of arts funding provided by state agencies. Iowa’s arts and culture community will receive $1,857,211 from state agencies this year (by comparison, arts and culture organizations in Oklahoma, which ranks 22nd in the nation, will receive $5,238,495 from state agencies).

If approved by voters, the 1-cent tax would allow more than $60 million — more than $6 million each year for 10 years — to be invested in arts, cultural, scientific and historic preservation organizations located in the tri-county area.

The Science Center of Iowa is one example of a cultural amenity that could benefit from the influx of funding created by Project Destiny. According to its executive director, Mary Sellers, the Science Center is primarily funded through earned revenue in the form of admissions and fees for service (65 percent of its total operating revenue) and donations and grants (35 percent of its total operating revenue). Less than 3 percent of the center’s operating revenue comes from public sources.

“The Project Destiny funding has been based on successful models in other cities and should provide a consistent funding source for arts and cultural institutions,” Sellers says. “In communities around the country that have had similar initiatives, our colleagues have brought in blockbuster exhibitions and upgraded and renewed experiences and exhibits. I would imagine the same would be true here in Des Moines.”

Beyond bricks and mortar, Sellers sees Project Destiny as fostering cooperation between communities within the tri-county area. 

“The fact that more than 30 municipalities could come together and agree on [an] agreement was remarkable,” Sellers says. “And the fact the community supports arts and culture to the degree that we could get this type of initiative on the ballot speaks volumes about the metro’s priorities.

“In any environment, business, not-for-profit, community, you have to remain competitive. This initiative would give Metro Des Moines an opportunity to be very competitive.”

One out of state proponent of the measure agrees. Last Tuesday, at Hoyt Sherman Place, Denver Mayor John Hickenlooper gave his two cents worth about Project Destiny to a large audience including former Gov. Tom Vilsack.

An entrepreneur and unlikely candidate for office, Hickenlooper won his first governmental office in 2003 when he was elected mayor of Denver, an ailing city with a $70 million deficit. Now, after a few short years, Hickenlooper is the well-respected mayor of a thriving metropolis.

“Good civic leadership is the defining characteristic of successful cities,” he says. Leadership and trust remained prominent themes throughout Hickenlooper’s speech, but he mostly spoke about the importance of collaboration of municipalities within a metro area.

When Hickenlooper was elected to office, “all the suburban communities hated Denver.” But, as the Denver area soon discovered, “nothing but greater overall benefit comes from municipalities working together.” Since passing a 1 percent sales tax increase in 1988, Denver has developed its arts and cultural attractions and the gains have extended into its surrounding area. Hickenlooper sees a similar opportunity for Des Moines in Project Destiny.

Project Destiny’s reduced property taxes would attract businesses, resulting in an influx of young professionals who would live throughout the area. “Building on the brand of Des Moines,” through investment in current area assets like parks and trails, would also promote economic activity and welfare, he says. When a listener voiced the concern that suburbanites might see few returns in comparison with their urban counterparts, Hickenlooper emphasized cooperation instead of competition saying, “These people are looking at a very narrow self interest and need to see the larger picture. They will more than benefit from the investment in communal assets. It takes a while to recognize that.”

Steady stream of money for trails

While the Science Center of Iowa currently has no specific plans on how they would use funding received from Project Destiny, Tina Mowry-Hadden does. And it’s 300 miles long.

Mowry-Hadden, an appointee to the Polk County Conservation Board and a trails enthusiast, believes that Project Destiny could help make Central Iowa the “trail capital of the world.” Mowry-Hadden was the first director of the Transportation Management Association and currently runs Mowry Strategies Inc., a strategic planning and public relations agency.

“We are at the tipping point of creating an incredible trail system in Iowa,” Mowry-Hadden says. “We have the potential to connect what would end up being over 300 miles of trails.”

In addition to funding arts and culture, Project Destiny would earmark more than $6 million annually to invest in recreational trails in the tri-county area (as with the arts and culture funding, equaling an investment of more than $60 million over a 10-year period). Mowry-Hadden says the current annual state budget for recreational trails is $2 million, which is distributed across Iowa.

“Central Iowa only gets five to six hundred thousand dollars a year for trails,” Mowry-Hadden says. “We are basically piecemealing a budget together. What Project Destiny would provide is a consistent source of funding. A plan to expand our trail system is already in place. We just need to implement it.”

The plan Mowry-Hadden refers to was drafted by the Metropolitan Planning Organization and links existing trails with connections that could be constructed with funding from the one-cent sales tax. The end result would be recreational trails — for hiking, biking, walking, running and camping — connecting Dallas, Greene, Guthrie, Jasper, Marshall, Polk, Story and Warren Counties.

“At this point, if you are a trail user, you get to a point and have to turn around. With increased connectivity, you can take a loop and see new and different scenery,” Mowry-Hadden says. “You can be more mobile and instead of just going from Des Moines to Cumming and back, you could go from Cumming to Pleasant Hill and then from Pleasant Hill to Carlisle and then back to Des Moines. You could experience so much more, from urban to rural trails.”

Mowry-Hadden says the ultimate goal is to give Central Iowans the ability to step out their door and get on a trail. In addition to connecting existing trails, Mowry-Hadden says funding could also be used to integrate more bike lanes into city streets and create more access points to trails.

“We have a good system so far,” she says. “You can get on trails and go places. But the additional funding would allow us all to go to many different places from wherever we live.”

Mowry-Hadden cites the Katy Trail in Missouri as an example of what Central Iowa’s trail system could become. Campsites, restaurants, outfitters, guides and shops have cropped up along the Katy Trail.

“Once the connected trail is developed, and people use it, they will need places to eat, shop and sleep,” Mowry-Hadden says.

Fisher agrees. “The Katy Trail is known nationally, and you find bed and breakfasts and restaurants and other amenities along the trail,” Fisher says. “That’s the same vision of Project Destiny. If we connect existing trails, all these other pieces will come. Enhancing the trail system would help with tourism and economic development.”

Mowry-Hadden says that if people knew what saying “yes” to Project Destiny would mean to improving their everyday recreation opportunities, they would vote for it in a heartbeat.

“If people vote yes, we could have a complete trail system,” she says. “But if we were to wait for state funding, it would take three lifetimes to achieve what we are trying to achieve.”

Creating their own Destiny

There are five communities in the tri-county area (Waukee, Dexter, Adel, Woodward and Dallas County) that have decided to implement their own agreements on how to spend the new revenue, should Project Destiny pass. These communities are rejecting the idea of diverting the money raised from the new tax toward regional initiatives. A spokeswoman for the Yes to Destiny campaign says the withdrawal of the communities from the main revenue sharing agreement will only remove about $1 million from the regional authority’s $75 million annual budget and will make little difference. But for the five Central Iowa communities the money could have a huge impact.

Waukee voted earlier this month to implement its own agreement that would direct 90 percent of the revenue from the initiative toward infrastructure projects, like a new aquatic center for the city. The remaining 10 percent would be awarded to regional projects approved by a citizens’ committee.

“It really wasn’t the right business plan for Waukee because of the state that we’re in,” says Councilwoman Darlene Stanton, who voted against adopting the Project Destiny version of the revenue sharing agreement. Waukee is still going through the growing pains of a new community, and doesn’t yet have the same public facilities as its neighbors. “The extra money would be a gift to our community,” she says.

Waukee’s total budget is $38 million, according to city officials. The current budget for the city’s parks and recreation department is $560,000, which goes toward programs and building maintenance. There’s currently not enough money in the city’s budget to pay for the new facilities Waukee needs, Stanton says. Under the city council’s plan, Waukee would receive close to $1 million that it could direct toward capital projects.

“I personally support the concept [of regional integration], but this is the opportunity to bring our [living] standards up to our neighbors,” Stanton says.

Jerry Clark is a councilman and planning and zoning administrator in the town of Dexter, which also drafted its own deal. The town, with a population of 682, is in the southwest corner of Dallas County.

“The council felt that the city would not see any of the money back because we’d have to apply for it,” Clark says. “So we went with our own local option sales tax. We can do more with the money locally.”

Dexter’s plan would see 10 percent of the money go to property tax relief in the community, 70 percent go to capital projects and 20 percent go to the Dallas County LOSST Authority, for regional improvements. Dexter would receive about $108,000 if the measure passes, he says. “I’m not expecting it to pass, but I’m happy if it does. A lot of the streets need work.”

George Davey leads a group and maintains a Web site called No Local Option, which represents some of the only organized opposition to the measure. “Everybody we talk to is up in arms about it. People want to tighten down on the money we have and find out why it’s not enough,” he says. The suggestion that the initiative could help attract residents to the state is backward, he adds. “A higher tax makes the problem worse.” Iowa offers low wages compared to other states, he says. “We need tax breaks and higher wages,” not a higher sales tax.

“This idea of three major counties teaming up — not only does that get away from the ‘local’ in local option sales tax but it makes it difficult to oppose the campaign,” Davey says.

Davey, a computer professional, says he’s received some donations to bolster his effort, but nothing compared to the $300,000 budget that the proponents of the measure have to spend. Some observers say campaign money won’t be the deciding factor in the vote.

“It will be people making up their minds,” says Jeff Riese, president of the watchdog group Polk-Des Moines Taxpayers Association. Voters will more likely be influenced by how the government has handled past local option decisions.

Some residents will recall the School Infrastructure and Local Option Tax, SILO, which passed in Polk County in 1999. The measure raised the local sales tax by a penny, in order to provide funds for “construction, reconstruction, repair, purchasing, or remodeling of schoolhouses, stadiums, gymnasiums, field houses, or bus garages.” Even with the influx of funds, however, school boards still needed to close buildings and that angered many area residents. SILO also had organized groups pushing for its passage.

Despite heavy spending by proponents of the measure, it failed in Polk County by 43 votes in March 1999. Organizers got it back on the ballot in November, at which time it passed by more than a 10-point margin. Memories of SILO “are going to have an effect on people’s minds — it goes right to the heart of trusting government,” Riese says.

The association, which will decide on June 20 whether to endorse or campaign against the measure, has heard positive and negative opinions from its members. “It does open up a new revenue stream,” he says. “It will free up property taxes.”

However, the tax will have the most impact on the poorest area residents. “The tax is one that effects the lower economic strata more than the upper economic strata,” because 1-cent represents a greater portion of income for some one with a lower salary. Income taxes are considered “more fair” than sales taxes because they take more money from higher income earners, he says. The new tax could change the way local communities raise money to pay for large projects.

“It could be a success and could develop a new model for communities throughout Iowa and the United States, but we won’t know until it’s passed and we see the effects,” Riese says. CV


Destiny data

Vote: July 10. A simple majority of 50 percent plus is needed for its approval.

Spending details: “Yes to Destiny,” proponents of the proposed 1-cent sales tax increase, say it’s time for Polk, Warren and Dallas counties to start working together because the economic success and the quality of life for our region depends on it. Forty-three of the counties’ 48 city governments have approved the Project Destiny 28E Agreement for the regional application of local option sales taxes and creating a tri-county regional authority to disperse as much as $75 million each year in new revenue generated by the penny sales tax. During its 10-year tenure Project Destiny is expected to generate more than $750 million. The plan requires that one-third of each penny be used as follows:

• One-third (33 percent), or $24.75 million, for mandated dollar-for-dollar property tax reduction.
• One-third (33 percent), or $24.75 million, for additional property tax relief, debt reduction, essential services and/or capital improvements as set forth in community plans as determined by each participating government.
• One-third (34 percent), or $25.5 million, to improve regional attractions including recreational trails ($6.37 million), quality of life facilities ($7.65 million), scientific, arts cultural and historical preservation groups ($6.37 million) and regional equalization and transition ($5.1 million in payments to governments for tax-exempt properties — i.e. churches, government offices and other tax exempt properties — for the first four years of the tax plan).

Winners: Residential property owners in participating cities would see tax reductions over the next 10 years if Project Destiny were approved. Des Moines property owners could see more than $100 million in tax relief. Commercial property owners — including large companies like Wells Fargo, Allied Insurance, Meredith Corp. and Knapp Properties [they’ve helped contribute $307,500 to the “Yes to Destiny” campaign] would also benefit from reduced taxes. Bicyclists, as well as arts, sports and history fans would also benefit, as money would be used to improve facilities or help build new ones. Cities and county elected leaders would have cash to spend on additional tax relief, debt reduction, essential services and capital improvements. The Greater Des Moines Partnership, which has long clamored for “regionalism” — funding from Des Moines’ suburbs and neighboring towns to help pay for upkeep and taxes to Des Moines attractions as well as offset lost revenues as a result of Des Moines’ outdated tax code.

Losers: Citizens whose governments don’t include their input on how to spend the money. A high level of public distrust regarding the spending of tax dollars already exists following the CIETC scandal. Opponents to Project Destiny say property tax savings would be offset by the higher sales tax. Business owners would also pay more for goods and services — costs that might be passed to consumers. Schools could also be affected because voters might be less willing to approve bond referendums for school improvements. Education advocates are concerned that Project Destiny might affect a similar 10-year tax for Polk County schools. Eight years ago, voters approved a sales tax to generate money for school improvements — some of which didn’t happen or have been delayed due to a shortage in funding (West Des Moines used sales tax money to build Valley Stadium and Des Moines used some to build John R. Grubb Stadium) — and in two years voters likely will be asked to approve an extension for the tax plan.

Tri-County Regional Authority representatives: Polk (nine), Dallas (three), Warren (three)

Accountability: The Destiny 28E Agreement is designed to be a model of regional cooperation, fiscal responsibility, financial accountability, oversight and transparency, proponents say. The one-third mandated property tax reduction is non-discretionary and property owners will see dollar-for-dollar reductions on their bills. Each community is required to file a 10-year plan for the one-third of additional property tax relief and will hold a separate hearing each year and provide a full report to its citizens. Also, the new Tri-County Regional Authority will have to report to each participating community and the public how each dollar was spent. Additionally, the authority will also have a standing audit committee, subject to independent audits and open records and meeting laws, to establish accountability standards for grant recipients, which includes a 75 percent vote for all funding decisions, and includes other checks and balances. Finally, the authority can use no more than 1 percent of the 34 percent of the total revenue generated by the tax for administrative costs.

Web sites: www.yestodestiny.org and www.nolocaloption.com


Property owners who benefit from Project Destiny

A cut in property taxes would benefit everyone from homeowners to commercial developers. Here’s a listing of the top 20 property owners in Polk County in 2006.

Company Total Value of Real Estate
1) Principal Mutual $259,204,910
2) R & R Investors $220,575,770
3) William Knapp $151,290,130
4) Mid-American Investments $109,444,400
5) Hubbell Interests $103,966,700
6) Qwest $101,497,343
7) Wells Fargo $100,431,550
8) John Deere $98,216,250
9) National Mutual Insurance $89,829.350
10) Polk County (Prairie Medows) $83,868,700
11) Valley West Mall $82,868,700
12) Pioneer Hi-Bred $80,778,520
13) Mercy Hospital $76,973,900
14) Foods Inc. $70,918,400
15) Ladco Properties $70,258,760
16) Target $69,040,050
17) Wal-Mart Stores $63,689,400
18) Ruan $63,534,300
19) Regency $53,416,040
20) Iowa Methodist Hospital $53,259,550

Source: Polk County Auditor’s Office

The top five contributors
to Yes To Destiny
(See this week’s “It’s your money” for a complete list on page 13)
1) Wells Fargo Bank, N.A.             $62,500 on Aug. 9, 2006
2) Allied Insurance                      $50,000 on July 12, 2006
3) Wells Fargo Financial Inc.             $37,500 on Aug. 9, 2006
4) R&R Realty Group              $25,000 on June 21, 2006
5) Knapp Properties Inc.              $25,000 on July 12, 2006


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