Todd Dorman

Todd Dorman is a columnist for The Gazette. His blog has been bringing smiles to readers' faces since November 2007.
Updated: 25 October 2012 | 9:12 am in 24 hour dorman by Todd Dorman

Tax breaks are now business as usual


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Members of the Cedar Rapids City Council gushed over The Fountains. But there was some disagreement on whether the city will be carrying too much of its water.

The Fountains is $34 million worth of “high-end” office space, retail and restaurants on 19 open acres along Edgewood Road at Blairs Ferry Road. The office space will be “Class A,” with the sort of nearby walkable amenities that Class A workers expect. Backers say a shortage of such space is chasing off business prospects.

The developer, Joe Ahmann, is seeking a five-year, $3.7 million property tax break through tax increment financing, or TIF, which means designating the site as an urban renewal area. The council took the first big steps Tuesday toward making that happen.

“We’re going to build a city that young people want to stay in,” said Council member Justin Shields.

Council member Scott Olson, a commercial realtor, “loves” the project. What he doesn’t love is designating an urban renewal area that is neither urban nor in need of renewal. And, he warns that providing tax breaks for retail and restaurant space will ”mess up” the local property market.

That break will be passed on to tenants in lower lease rates, putting a governmental thumb on the scales of competition. It’s possible existing, taxpaying property owners will watch some current tenants flow to The Fountains.

“Somewhere, we have to draw the line,” said Council member Pat Shey, who also questioned the plan.

Others insist Cedar Rapids must fight nearby cities coveting thy big neighbor’s jobs. “We’ve got to draw the line in the sand,” said Council member Don Karr.

But really, no one is drawing lines. Thanks to the state’s unwillingness to stem the TIF arms race, there simply are no lines. When TIF is for anything, anywhere, TIF is for everything.

One of the most telling moments Tuesday was when Ahmann said banks would not loan him money for the project unless the city pitches in. So even a successful guy with a solid record and a great project can’t get financing without government. We can fight over who did and didn’t build it, but this sort of thing is now baked into our capitalistic cake. At least, in this case, it’s for a reasonable five years.

To expect local leaders to stand against a wind that stiff is folly. As Mayor Ron Corbett argued, if you draw a line at retail and restaurants today, you’ll erase it when a Westdale developer comes calling. It’s unfair, clearly, to existing businesses. But now, it’s also business as usual.

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Tax breaks are now business as usual
  1. It is remarkable that we lament our government debt and that many would like to drastically reduce the expenditures for food stamps and other social programs when TIF welfare just keeps rolling along. How often do we hear that the project would not be feasible without the TIF? If the project isn’t feasible without the TIF than it isn’t feasible. The developers should go back to the drawing board and find a way to make it feasible without the TIF. And it is obvious that somebody is going to make a lot of money with this project, otherwise it wouldn’t be happening. So why do we give these folks a tax break?

  2. In this briefing we hear a number of references to “line in the sand”. Let me suggest where at least one line in the sand should be. It’s wrong to use urban renewal money for a project that is not urban or in an area that needs renewal.

    When funds were designated for urban renewal, then those funds should be used for urban renewal. The integrity of our government deteriorates when it becomes common practice to weasel around requirements like this.

    You can be sure that the requirements are strictly applied when a poor person is applying for some needed assistance. The same standard should apply when corporate welfare recipients are applying for assistance.




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