Industry News

2007 Convention Speakers Announced

The Iowa Bankers Association is “Looking for Adventure” at the 2007 IBA Annual Convention. The IBA is pleased to announce another outstanding lineup of speakers.

Dr. Michael Swanson, Ag Economist, Wells Fargo Bank will be the featured speaker at the Ag Breakfast. Michael Swanson will discuss the current agricultural boom and its implications on the industry, including land value and ethanol issues. Michael Swanson holds a doctorate in applied and agricultural economics from the University of Minnesota. As Wells Fargo’s agricultural economist, Mr. Swanson represents the largest commercial agricultural lender in the country. His expertise focuses on competitive strategy and risk management for a wide variety of crops and livestock throughout the United States and internationally.

In addition to agricultural economics, he analyzes and forecasts major developments in the national and international economic arenas. His primary areas of focus internationally are Australia, Canada, and China which represent some of the most important players for the United States’ agricultural future. Mr. Swanson joined Wells Fargo as senior economist in 2000.

David Gergen, Presidential Adviser, Harvard Professor and Author, will speak during Monday’s Opening Session. Commentator, editor, teacher, public servant, best-selling author and adviser to presidents - for 30 years, David Gergen has been an active participant in American national life. He served as director of communications for President Reagan and held positions in the administrations of Presidents Nixon and Ford. In 1993, he put his country before politics when he agreed to first serve as counselor to President Clinton on both foreign policy and domestic affairs, then as special international adviser to the president and to Secretary of State Warren Christopher.

David Gergen currently serves as editor-at-large at U.S. News & World Report and as a regular television commentator. He served as moderator of World @ Large, a 13-part PBS discussion series for two seasons. He is also a professor of public service at the John F. Kennedy School of Government and is director of its Center for Public Leadership. In the fall of 2000, he published the best-selling book Eyewitness to Power: The Essence of Leadership, Nixon to Clinton.

In the past, he has served in the White House as an adviser to Presidents Nixon, Ford, Reagan, and Clinton. Most recently, he served for 18 months in the Clinton administration, first as counselor to the President and then as special adviser to the President and the Secretary of State. He returned to private life in January 1995.

A native of Durham, North Carolina, he is an honors graduate of Yale University (AB, 1963) and the Harvard Law School (LLB, 1967). He is a member of the District of Columbia bar. In addition, he served for three-and-a-half years in the United States Navy, where he was posted for about two years to a ship home-ported in Japan.

Ken Schmidt, Former Harley-Davidson Executive and Communications Expert will “Make Some Noise” during the final session of Convention. Ken Schmidt has lived a life that most can only dream about. As the former director of communications for Harley-Davidson Motor Company, he played an active role in one of the most celebrated turnarounds in corporate history - and got paid to ride motorcycles.

The longtime motorcycle enthusiast’s formal association with Harley-Davidson began in 1985. As a specialist in corporate positioning and media relations, he was asked to work with the then-struggling Harley-Davidson to help restore the company’s image and create demand for its motorcycles.

In 1990, Schmidt became director of Harley-Davidson’s corporate and financial communications, and served as its primary spokesperson to the media and the financial communities. He appeared numerous times on network news programs and was frequently called upon by business media to share his insights on non-traditional communications and customer relations.
Get more Convention information online at www.iowabankers.com

NCRC Announces Regional Conference

Always on the cutting edge of social and economic issues affecting our world, the National Community Reinvestment Coalition invites you to experience our Regional Conference in the heart of the Midwest – Davenport, Iowa August 21-22, 2007 Radisson Quad City Plaza.

Focusing on hot button banking, rural development, and mortgage financing issues, the NCRC regional conference offers trainings and dialogue designed for today’s community development professionals, fair lending advocates, and member based coalitions. Join leading experts, elected officials, and community leaders in exploring solutions to promote opportunities for building wealth.

For more information, contact the National Community Reinvestment Coalition at 202.628.8866 or visit their website www.ncrc.org for a registration form.

Federal Reserve to Hold Training

In response to requests from bankers, the Federal Reserve Bank of Chicago’s Iowa Field office has developed a Market and Liquidity Risk training program for community bankers.

The Federal Reserve is sponsoring a one-day seminar August 16 to offer topics covering additional liquidity risk management guidance, appropriate risk measurement tools, and management’s responsibility to develop and support model assumptions. Additionally, a panel discussion representing various regulatory agencies (FRB, FDIC and the Iowa Division of Banking) will provide an avenue for active participation from the audience.

Please feel free to contact Federal Reserve Representative Chad Jorgensen at 515.241.1462 or 800.642.6389 for additional details.

The program will be held at the West Des Moines Marriott in West Des Moines. Attendees must register by August 1 to attend. Registration may be done via email or telephone by contacting Barbara Agan at 515.241.1468 or email barbara.agan@chi.frb.org.

Provide a Great Service to Your Latino Customers

The Iowa Bankers Association has developed three Spanish language brochures to help educate your Latino customers on banking matters. The three brochures are: “Sending Money to Your Family”, “How to Purchase a Home” and “How to Purchase an Automobile”.

These brochures are available in Spanish and English versions and can be personalized with your bank’s information such as bank name, address, phone number and web address. Establish financial relationships with Latino customers in your community by providing them with informative tips on important financial decisions. You can also help prevent them from becoming a victim to predatory lenders.

If you would like a sample of the brochures or you have questions, please feel free to contact the IBA’s Cheryl Miller at 1-800-532-1423 or cmiller@iowabankers.com. For pricing information or to order your bank’s Latino brochures, refer to the order form in this week’s edition of Extras.

Property Tax Reform: An In-Depth Look

The following is the second in a series of articles to be published in the Exchange this summer highlighting important state issues to be discussed in depth at the 2007 Legislative Policy Symposium at the IBA annual Convention.

The failure of the Legislature to act on property tax reform continues to be a disappointment. Although it is always the centerpiece of nearly all politicians’ campaign goals, collectively the Legislature has fallen short of passing reforms that will result in property tax relief.

In the meantime, Iowa’s high property tax burden continues to take its toll on economic development efforts. In the most recent rankings done by the National Taxpayers Conference, Iowa ranked fourth highest in the country in the property tax burden placed on commercial business and fourteenth highest in residential property tax burden. (The study does not include agricultural property.) The study further found that Iowa ranks eighteenth highest in the overall cost of property tax per capita.

In the closing hours of the 2007 legislative session, two competing bills were debated with neither the House bill (HF 905 /931- supported by the IBA) nor the Senate version (SF 604 – opposed by the IBA) passing prior to adjournment. The Senate touted its bill as a first step toward commercial property tax reform, yet all the groups representing commercial property taxpayers including the IBA were registered in opposition to the bill. The legislation did provide a huge amount of commercial property tax relief to apartment building and mobile home park owners - $90 million dollars worth. Iowa’s business community was left scratching its collective head as to why a majority of the Iowa Senate believed that apartment buildings and mobile home parks are the economic engine that will drive the state’s future economy. Additionally, because the Senate bill only partially “backfilled” the loss of revenue to cities and counties and did not “backfill” any of the loss to schools not covered by the school aid formula – the bill would have resulted in a tax increase for all other residential and commercial taxpayers. To add insult to injury, the bill also put a floor on the residential rollback so residential property taxpayers could have expected to see additional tax increases in future years as a result of this amendment which was added during the floor debate.

The IBA and other property tax reform advocates adamantly opposed the Senate bill as did most members of both parties in the House. The House of Representatives was on a much more thoughtful course. While the Senate never discussed property tax reform until the final two weeks when the aforementioned bill passed – a bi-partisan group of House members met weekly throughout the session to study the issue in depth asking the Legislative Services Agency to provide it with detailed analysis of how Iowa’s current system works, how much money is being collected, where it’s going, etc. From those meetings, the House developed legislation that passed the House Ways and Means Committee but stalled on the House floor once the Senate passed its proposal.

As passed by the House Ways and Means Committee, HF 931, did the following:

Division I – Provided an annual $320 individual or corporate income tax credit for taxpayers owning less $300,000 in aggregate taxable commercial property statewide. The property for which the credit is claimed had to be improved, meaning a structure must be present and the property must be in productive use. Estimated cost to the state was $25 million annually. (This was the Governor’s proposal as recommended by his Commercial Property Tax Task Force). The credit was repealed effective January 1, 2012.

Division II – Lowered the allowed annual statewide growth in taxable value due to revaluation of existing commercial and industrial property from the current four percent to one percent phased in over a three-year period. This section would have rolled back commercial property values to an estimated 88.8 percent of their taxable value by fiscal year 2015.

Division III – Established a Legislative Property Tax Study Committee to conduct a comprehensive review of property taxation in Iowa. A final report to the General Assembly was required by the start of the 2009 General Assembly. (Only this Division survived in a later adopted appropriation bill.)

Financial Snapshot
In fiscal year 2007, nearly $3.8 billion was levied against Iowa’s property tax payers. The average annual percentage growth in revenue for cities and counties from fiscal year 2002 to 2007 was 6.3 percent and 4.5 percent respectively. These figures compare with an average annual increase of the Consumer Price Index of 2.7 percent and Iowa State General Fund revenue growth of 3.5 percent for the same time period. Adjusted for inflation, city and county revenues increased 2.1 percent faster than employment.

Of the total property tax paid, $2.3 billion was paid by residential and agricultural property owners. Continued growth in these sectors will likely continue to push property assessments higher.

Residential
Over the past decade, residential taxable valuations (after the rollback has been accounted for) have increased on average 5.2 percent per year. If that pace continues, residential taxable valuation would exceed $65 billion in FY 2013. Using the FY 2007 average statewide levy rate ($33.72), $2.19 billion in actual residential property tax dollars would be generated in 2013 for local governments.

As large as these numbers are, many experts feel the estimates are conservative for two reasons:
 1. Previous slow growth in agricultural productivity values had slowed the taxable valuation increases in residential property because the two classes are tied together. With higher commodity prices forecasted well into the future, the tie of these two classes most likely will not have this effect over the next several years.
 2. The figures above also do not calculate any increase in levy rates. The average statewide levy rate (imposed by local governments) has increased a total of 11 percent since FY 1998.

Agriculture
In fiscal year 2007, agricultural land generated about $569 million in property tax for local governments across the state. The bio-fuels industry has created a new level for both corn and soybean prices in the state. The Food and Agricultural Policy Research Institute (FAPRI) estimates that average corn prices will exceed $3 per bushel for at least the next six years. If the statewide agriculture productivity value increases four percent every two years until fiscal year 2013, the per acre amount would reach $790 and the statewide value of all agricultural land and buildings would reach $24 billion. Using the average rural levy rate of $26.56 per thousand of taxable valuation, over $640 million would be generated by agriculture property taxes in 2013.

Looking at all the financial facts, both actual and future projected, Iowa’s local governments are in a good financial position and may be more willing to help solve the problem of Iowa being one of the highest property tax states (for all categories) in the nation. The Association representing cities and counties has been a strong opponent to any property tax reform proposals that the business community has supported. A property tax system that encourages economic development rather than hinders it is sorely needed if our communities are going to prosper into the future.

The IBA felt that HF 931 was and continues to be a good starting point for discussion on property tax reform and supports the efforts of the Iowa House to continue working on the specifics of this bill. The Association will closely follow the Study Committee’s work when it begins meeting later this summer and keep the membership updated on its’ progress.

FDIC Updates Teller Signage

The FDIC recently updated the look of its official teller decals and official counter signs. The IBA has a handful of these new decals and signs. Iowa bankers may order, at no cost, the decals and counter signs from the IBA or from the FDIC. Contact Kristi Junkin in the IBA mail room at 800-532-1423 to order or contact Elizabeth Kelderhouse at the Kansas City FDIC office at (816) 234-8151.