The question reads:
Every city wants to grow. Growing the tax base helps distribute the burden more broadly. That’s obvious. But in today’s competitive climate—where cities vie for businesses, industries and housing—many resort to incentives to lure them in.
So, what’s the “sweet spot”? What are the best guidelines for offering land, infrastructure, tax rebates, TIF, abatements, or other perks? Especially when every expansion strains basic services that current taxpayers are already funding.
The short answer: there is no sweet spot. No magic formula of giveaways will grow your city. These incentives are poor policy and should be avoided.
There’s no substitute for the hard work of delivering core services efficiently and keeping costs down. Anyone telling you otherwise likely wants a subsidy—or works for someone who does. That includes a long list of consultants and public officials.
That doesn’t mean cities are powerless to attract growth. But the real work involves undoing what local governments have done to make growth harder. It’s not just taxes. It’s occupational licensing, building and energy codes, permitting delays, zoning rules, advisory panels, set-asides for certain businesses, environmental studies and using tax increment financing (TIF) for urban renewal. These layers all add cost and kill momentum. Even policies that sound appealing on paper can make your community less attractive for doing business.
The result? Developers large enough to afford lobbyists demand subsidies just to cover the costs of navigating these hurdles. Cities end up with two problems: costly regulations and redirected tax dollars to offset them.
This isn’t governance. It’s dysfunction.
Yet cities keep doing it. Conditioned like Pavlov’s dogs, they leap at the chance to land big deals—Google in Cedar Rapids and Council Bluffs, Facebook in Altoona, Bombers Golf in Johnston, or the Field of Dreams stadium in Dyersville. Who can forget the shiny new soccer stadium in Des Moines or the state-of-the-art water park and conference center in West Des Moines?
And what do they get in return? Very little. Decades of research show these deals rarely generate meaningful jobs or deliver a real return on investment. At best, they offer a ribbon-cutting photo op—at the expense of decades of diverted tax revenue from essential services like roads, libraries, and public safety.
Consider John Deere as a prime example. The cities of Waterloo, Cedar Falls, and Ankeny granted the company millions in property tax abatements. Now, John Deere is shifting production to Mexico and laying off thousands of workers in Iowa while these three cities are increasing their property taxes.
A more recent example can be found in Indianola, where city officials are re-evaluating their long-standing residential tax abatement program—a move originally intended to stimulate housing development. But now, facing budget pressures and rising costs for essential services, the city is considering curbing or even ending the program like the nearby cities of Norwalk and Carlisle have done. This dilemma underscores our core message: short-term giveaways often undermine the long-term financial health of a city.
Worse still, once one subsidy is handed out, the next developer expects the same. It becomes a cycle of bad deals, chasing an illusion of progress.
And like any addiction, the damage isn’t just fiscal—it’s spiritual. Local governments forget that they are inherently powerful: engines of industry, culture, wealth and innovation.
Focusing on the basics—lean, reliable, pro-growth governance—won’t guarantee success. But trading away your tax base certainly guarantees failure.
Real progress doesn’t come from giveaways. It comes from leadership—cities that believe in their own value and build communities worth investing in. The fact that cities like Indianola are beginning to question decades-old incentive programs is a promising sign. Bet on your people, your services, and your future. That’s how you grow.
