Cedar Rapids, Iowa News, Sports, and Weather
Cedar Rapids Backs Tax Incentives for "The Fountains"
By Rick Smith, Reporter
CEDAR RAPIDS, Iowa - City officials here can do more than whine about businesses that might choose to move to Hiawatha or some other place in America rather than staying in or moving to Cedar Rapids.
So said City Council member Justin Shields on Tuesday before he voted with an 8-1 council majority to approve a property-tax deal with local developer Joe Ahmann who is proposing to build a $34-million, high-end office park with restaurants and retail and service shops on 19 undeveloped acres near Edgewood and Blairs Ferry roads NE.
The city incentive package is being driven by what Mayor Ron Corbett says is a lack of upscale, Class A office space in a single large development in Cedar Rapids, a deficiency that the mayor has said has been accentuated by an out-of-state firm's tentative decision to move to a Hiawatha office building and not to one in Cedar Rapids.
Hiawatha offers property-tax deals for such office developments, and so Cedar Rapids needs to do the same, Corbett has said.
Shields said Cedar Rapids had this choice: " ... (W) e we can say, 'Woe is me, somebody is not being fair with us.' Or we can stand up and take care of our business."
The city incentive package which is commonly used in cities across Iowa and is called tax increment financing will allow Ahmann to keep all the property-tax revenue that is generated for five years by each of the six buildings he intends to build in the development, which he calls The Fountains. Eighty percent of the 232,000 square feet of space in the development will be Class A office space, he has said.
Christine Butterfield, the city's community development director, estimated that Ahmann will keep about $3.7 million in property-tax revenue that he otherwise would have to pay, but the new development will bring in about $10.15 million more in property-tax revenue to local government over 20 years that would not be coming in without the development.
Council member Pat Shey, who voted for the incentive package, pointed out that the city may realize less than the $10.15 million in new tax revenue if Ahmann's new development attracts tenants from existing office buildings and leaves those buildings with high vacancy rates and lower taxable values.
Shey also noted that Ahmann has agreed to add 300 jobs with the project, though Butterfield pointed out that he earns credit for jobs even if tenants from a building elsewhere in Cedar Rapids move into one of his buildings. Shey said he would be willing to count jobs that might come from Hiawatha or Marion, but not from inside Cedar Rapids.
Council member Scott Olson, a commercial Realtor, voted against the incentive deal because he said it was too broad in scope and would hurt other parts of the local commercial real estate market.
Council member Monica Vernon, though, said Cedar Rapids needs to focus on competition and growth and not worry about cannibalization from existing buildings and property owners.
"When you want to grow, you got to be in competitive mode," Vernon said.
She added that Cedar Rapids has not used tax increment financing enough, and both she and council member Don Karr said they were ready to use it for the next unique development idea. Both said that were eager to use the incentive for a Westdale Mall redevelopment plan should one surface.
In fact, the council also on Tuesday approved a 10-year incentive package for developer Fred Timko, who is buying and will renovate the historic Louis Sullivan-designed bank and the office tower next to it at 101 Third Ave. SW and who will build a new six-story, 18-unit condominium building next door on First Street SW. Not only is Timko saving the historic bank building, but his investment will be the first large one in the flood-hit commercial area directly across the Cedar River from downtown, council members said.
Council member Kris Gulick noted Tuesday that he had just returned from a National League of Cities meeting, where he said came to the conclusion that growing communities need to look ""pretty hard" at supporting incentives like the one for the Ahmann project. He said experts at the meeting said companies looking to locate in a community move on to other locations quickly if they need a building and one is not available.
Ahmann has said he plans to start on the first of six buildings in The Fountains in 2013. The development will come with water features, green space and amenities like restaurants and shops that both office workers and the general public will want to use, he has said.
Timko will begin his redevelopment in 2013, too, he has said.