Certified development site question comes down to ownership

By Bob Steenson, bsteenson@charlescitypress.com

Floyd County has been working since 2017 on creating a state-certified industrial development site — a plot of land that is essentially shovel-ready for a new business to purchase and begin building on.

That process is nearly complete, but a major question yet to be answered is who will own that property while it is being marketed.

The Southwest Bypass TIF Administration Board approved a motion on March 29 to recommend that Floyd County purchase the property and that the Charles City Area Development Corp. own it and market it.

That recommendation was on the Floyd County Board of Supervisors agenda for discussion Monday morning, and a contingent of members of the TIF Board and others were on hand for a lengthy debate on whether the county should buy the property now.

The property in question is 75.3 acres on the northeast corner of the intersection of South Grand Avenue and U.S. Highway 218 (the Avenue of the Saints). A three-year option to purchase has been agreed to with the current property owners, Steven and Diana Swartzrock and Rockland Enterprises LLC., at a purchase price of $28,500 per acre, or about $2.15 million.

One wrinkle in the decision is how a purchase would be paid for. It has been proposed that the county sell bonds to pay for the purchase and TIF — tax increment financing — revenue be used to repay the bonds.

But the area where the property is located would be part of the South Grand TIF District, which isn’t producing enough TIF tax revenue to finance the purchase.

The idea is to extend the SW Bypass TIF District — which contains the industrial area where Cambrex, Zoetis and the Southwest Development Park are located — to include the Swartzrock site.

The problem is that those TIF districts are currently perpetual, grandfathered in from a time when the state didn’t set TIF time limits. If the districts are amended, it starts a 20-year clock ticking on when the districts would end.

Gloria Carr, the Floyd County auditor and a member of the SW Bypass TIF District Board, said she was worried that putting those areas on a timeclock could cause problems down the road.

For example, she said, recent expansion projects at Cambrex and Zoetis were eligible to be helped with TIF financing that would not have been available had there been a 20-year limit on those districts initially.

“My concern is we don’t have to purchase this property” in order for it to be state certified and for the ADC to market it, Carr said.

Tim Fox, executive director of the Charles City Area Development Corp., confirmed that the state site certification can be accomplished with the current option to purchase, but the preference would be that the ADC own the property to make it the most attractive for prospective business purchasers.

Connie Parson, a Charles City Realtor who has been donating her time to work on finding a site for the project, said the benefit of the ADC owning the property is it’s ready to go when a company comes along.

“We are able to say to any client, ‘We’re ready. When you want to buy this property we own it.’ There is no going and having to exercise options and find out of you have a title problem on the property or a platting problem or a surveying problem,” she said.

But Carr said that state certification means all the legwork has been done, except for the actual ownership.
Currently some of the incentive deals in the SW Bypass TIF District are coming to an end, and the full property tax revenue generated by those businesses could be used to pay off the bonds without a property tax increase for taxpayers.

But both Carr and Supervisor Roy Schwickerath said that money could also go back to the taxing entities, the city, county and school district, to be used to fund their budgets or to reduce the property taxes they collect.
Carr said the ADC could market the property for three years, then if it hasn’t sold by then it can come back to discuss the county purchasing it.

But Fox said it’s unlikely that the taxing bodies, if they have been getting those tax revenues for three years would be willing to give them up.

Schwickerath said, “I’m sitting here trying to figure out what changes. If we weren’t willing to do it three years from now, why would be willing to do it today? If it’s good to buy it now, it’ll be good to buy it three years from now.”

Parson said, “This particular site, I don’t look at as a long-term economic development site. I think at a minimum of five years that’s going to be over, done with, gone. … That’s a one big company site, that’s what that is. And it is prime. It is considered one of the best sites in the state of Iowa.”

Former Charles City Mayor Jim Erb, seeing little consensus on the question, suggested a group of non-elected officials be formed to sort out the questions and come up with a recommendation.

Current Mayor Dean Andrews said it isn’t often he disagrees with his predecessor, but “I think we’ve gone around on this for two years. I think we’ve studied it to death. … At some point you need to pull the trigger and go.”
No decision was made on the question, nor could there have been as the supervisor meeting was a planning meeting.

It was suggested that the topic be put on the agenda for a regular meeting where a decision could be made. The next regular supervisors meeting will be May 14.