Cedar Rapids opens door on tax deals for upscale warehouse projects, ag land

Members have ‘spirited’ debate over projects

March 28, 2014 | 10:16 pm

City Council member Scott Olson accomplished this much: He provoked the “We’re-Open-for-Business” council last night into a “spirited” debate over just how aggressive it should be in handing out economic development incentives.

In the end, though, the City Council agreed to follow up its decision late last year when it provided a tax break for an upscale office and retail development called The Fountains by approving a tax break last night for an upscale warehouse development.

In addition, the council approved a tax break for a second development project that Olson said likely would invite every owner of agricultural land hoping to sell it to a developer to have City Hall define the land as an urban revitalization zone. That way, they, too, can obtain a partial, 10-year tax break as a way to lure developers to build on their property as one owner won council approval to do last night, he said.

Olson, a Realtor with Skogman Commercial, estimated that 700 acres of agricultural land is now on the market in Cedar Rapids for commercial development, and he and council member Don Karr both said they wouldn’t be surprised if the owners of those properties would be at City Hall in the days ahead to get their deal, too.

In the ag-land case in front of it last night, the council on a 6-2 vote approved the expansion of an existing 18-acre urban revitalization area at C Street SW and Kirkwood Parkway SW to 80 acres, a move that will position the property owner to offer a partial, 10-year property-tax break equal to 44 percent of the tax bill as the property is developed.

The matter must be approved by two subsequent council votes, and council member Kris Gulick agreed with Olson that he wanted to know if the tax break automatically comes to anyone building on the property or if the council can make a decision on each building project on the land.

Olson said putting the property owner, Frantz-Hobart Community Investors, in a position to offer tax breaks provided them with an unfair advantage without having to show what jobs they might add to the city or what projects they might have in line.

“Bring us the bacon. Bring us the project. Bring us the jobs,” Olson said. Then, he said, he will know if he wants to offer City Hall incentives.

“I want to see something that is shovel-ready,” said Karr. “I want to know it’s going to create jobs.”

Some time ago, the council agreed to create the 18-acre revitalization area and provide tax breaks to local firm RuffaloCODY to build on the 18-acre site.

Mayor Ron Corbett said expanding the development area would allow the city to build on the investment of “homegrown firm” RuffaloCODY.  Corbett compared the “master plan” development approach to the one at Westdale Mall, the long-languishing property which has secured City Hall incentives as it becomes a retail, office and residential community.

Council member Monica Vernon argued in favor of City Hall incentives for the area around the RuffaloCODY project, saying it addressed “best practices” and “the bigger picture.” She said other similarly positioned property owners shouldn’t complain about somebody getting something, but should try to sell the city on what they have to offer.

The $4.7-million upscale warehouse project proposed by Bowling Street Flex-Space LLC is comprised of two buildings located on 6.38 acres of property at 4700 Bowling St. SW.

Dennis Jordan, vice president for economic development at the Cedar Rapids Metro Economic Alliance, argued in favor of incentives for both projects in front of the council last night, and he said the warehouse project offered a new, upscale warehouse product to Cedar Rapids that markets like Des Moines already have in place.

However, Jeff Busse, of Busse Investments, said his company owns 11 flex-space buildings in Cedar Rapids that would lose tenants to the new buildings if they are given tax breaks to cut their rents. Busse estimated that his company could lose $2.2 million over 10 years to the new buildings.

This council vote was tight on the warehouse project after council members Vernon and Pat Shey said they didn’t have enough information to know if the new warehouses with office space in front were different from what is now available in Cedar Rapids or not.

However, a council vote failed 5-4 to table the warehouse tax breaks, and then the incentives were approved on a 6-3 vote with the understanding that the council must vote two more times on the matter before it is final. Olson, Karr and Shey voted no in the second vote.

Corbett said the debate on incentives was fine, but he said the City Council did not want to be “a fader” or a “maintainer,” but it wanted to be a “gainer” of investment and jobs.

“We want to be open for business,” he said.

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