The property tax bill that was passed by the Iowa Legislature over the weekend will cause the city of Des Moines to “re-evaluate [its] economic development strategies and how the city of Des Moines can grow in the future,” Des Moines City Manager Scott Sanders said in a statement released late Monday.

As a result of the new property tax regulations, at least one proposed redevelopment project has been put on hold.

Sanders said the city was still analyzing the final version of the bill, which was passed Sunday following a marathon meeting by lawmakers and is on its way to Gov. Kim Reynolds for her signature.

The bill that was passed caps growth in cities’ general services levy at 2%, excluding new valuation tied to new construction, debt service and school funding. It also limits revenue growth for transit services to 3% and hospital levies will be limited to 4% growth.

The bill defines new valuation as new construction, the addition or improvements to existing structures and are not normal and necessary repairs, and boundary changes including annexation, severance, incorporation or consolidation as defined in state code.

It also caps all Tax Increment Finance districts at 23 years, and limits revenue use for TIF districts without sunsets to 60%, and limits use of urban revitalization and urban renewal programs combined.

The bill also shifts the burden to multifamily development, which will have a new rollback set at 6% over the residential rollback rate and be phased in over three years.

It does not have exemptions for seniors and does not tie a gas tax increase to the consumer price index, provisions that were included in previous proposals. It also doesn’t give cities permission to increase their local option sales tax.

In his statement, Sanders said he is disappointed in the changes contained in Senate File 2472.

“Our team is still analyzing the final version of yesterday’s property tax legislation and the last-minute changes that were passed without time to provide input on its potential negative impacts,” he wrote. “I am exceedingly disappointed with many elements of the new legislation, including the hard caps, lack of alternative revenue sources and the new valuation definition impacting TIF and tax abatement.”

He said the new regulations “remove the very tools that the city has used successfully to transform downtown Des Moines into the vibrant city center that our residents and visitors love today.”

“The new changes will necessitate a complete re-evaluation of our economic development strategies and how the city of Des Moines can grow in the future,” Sanders said.

As a result, one project the city council was supposed to consider Monday was pulled from the agenda in what Sanders indicated would be the first of many projects potentially affected by the new property tax legislation.

That project was Rypma Properties’ proposed redevelopment of the former Nichols & Shepard building on Southeast Fourth Street in the East Village, where the company made agricultural threshing equipment.

The developer has proposed a $13.7 million project to redevelop the two-story, 27,696-square-foot warehouse at 108 SE Fourth St., into office space, similar to the project the developer undertook with the former Carpenter Paper building.

The council was set to consider a resolution approving preliminary terms of an Urban Renewal Development Agreement with Rypma Properties that would provide Tax Increment Financing to help fill a funding gap. 

According to documents, the TIF financing would not exceed $1.75 million over 20 years, or about 12.7% of total project costs. 

“I will also be halting any new TIF deals for the city until we can better understand complete ramifications of this legislation and its impact on Des Moines,” Sanders said.

Because the Rypma proposal was taken off the council agenda, an Urban Design Review Board meeting scheduled for this morning had to be canceled.

Carrie Kruse, economic development administrator for the city, said the city needs to further review the new bill before making any recommendation.

“Before we can proceed with any recommendation on any new development agreements, the city needs to complete a full analysis of the impacts of the property tax bill on TIF,” she said.

Efforts to reach Tim Rypma, president of Rympa Properties, late Monday were unsuccessful.

The topic of property tax reform was a primary talking point during the Business Record’s 2026 Commercial Real Estate Forum, where panelists raised concerns about the impact bills being debated at the Statehouse would have on development and lending.

Kruse was one of those panelists at the April 23 event, where she warned that restrictions on the ability to use TIF would have a negative impact on growth.

“Just the TIF piece would be a whole 15% of TIF off the table, and that’s a huge number to have to go out and source with private equity, that’s a lot of projects getting put on hold,” she said at the forum. “I think property taxes need to be simplified but there also needs to be alternative revenue streams that are figured out in how we continue to attract economic investment across our state. Limiting or reducing tax increment financing without some kind of backfill or alternative revenue source to attract investment will have a negative effect on our ability to compete nationwide.”