Chapter 403 of the Code of Iowa allows a city to establish urban renewal areas to assist in the removal and redevelopment of blighted and substandard properties. Cities can also undertake urban renewal activities that promote new economic, commercial, and housing developments. Each of these efforts are intended to expand the tax base. Efforts can include the acquisition and clearance of structures, utility and infrastructure installation, rehabilitation or conservation of properties, and other development assistance through the use of tax increment financing (TIF).
The primary incentive of the Urban Renewal Law is the use of tax increment financing (TIF). TIF is a method by which the amount of increase in property tax revenues generated by a project can be used by the city to assist in the development of the project. This includes assistance to acquire, prepare and assist in the development of project that would not have been otherwise developed by the private sector. TIF districts are established by ordinance through the urban renewal process. Using TIF districts "freezes" the base valuation of the designated area and captures the increment gained from the new development. This new increment is what is used to help finance the project.