South Grand TIF dollars could be used by city to purchase certified site

By Kelly Terpstra, kterpstra@charlescitypress.com

Just over 75 acres of land near the Avenue of the Saints could be prime real estate for an industrial park that could potentially provide hundreds of jobs for the Charles City area.

It could only take a short amount of time before that site is certified by the state and in the hands of a developer near the northeast corner of the intersection of South Grand and Highway 2018.

It comes down to who is going to fund the money to purchase the property?

That crystal ball became a lot more clear at a City Council planning session held at the Charles City Fire Department on Wednesday evening.

City Administrator Steve Diers said the city can directly purchase the $2.165 million property through the use of general obligation bonds and repay those bonds with incremental tax dollars generated from the South Grand Urban Renewal TIF District, where the land is located.

There initially had been a question whether the S. Grand District produced enough incremental TIF tax revenue to purchase the property, and whether the city had enough bonding capacity to purchase that property and still have enough in reserve for other potential projects such as the Charley Western Trail bridge replacement, the broadband project and possible City Hall renovations or relocation.

Wednesday, Diers told the council that a more detailed look at the numbers shows there is enough increment revenue to repay the bonds, and enough city bonding capacity to stay within safe margins.

One possibility had been to request that Floyd County purchase the property, and be repaid with the TIF revenue, but some county officials have initially balked at the purchase idea when it has been discussed.

Once purchased, the city would grant the property to the Charles City Area Development Corp. to market and hopefully sell to an industry to locate there. Once the property was sold, that money would also be used to repay the city bonds.

The CCADC and Charles City Realtor Connie Parson obtained a three-year option to purchase the land from 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. That option extends until 2022 to meet the requirements for a state-certified site if the property isn’t owned by a public body.

Parson said the application for certification of the site has not been finished yet. She said CCADC Executive Director Tim Fox is still working with the state site certification committee on what to do with the 1.3 acres of wetlands on the property.

“It’s gonna be a great site,” said Diers.

Parson said the site is perfect for a distribution center to be built on the land.

“We’ll be one of a handful of sites in the state of Iowa that would actually be a certified site. That would make us extremely marketable, especially from a state standpoint as far as economic development is concerned,” said Parson.

“We feel that we have to absolutely have to own this property. That was the intent of our negotiations, which we spent, basically the last two years doing on this.”

Parson said the time is now to get the ball rolling to be able to market the land and find a buyer.

“We want to be in a position to move now, when we have a viable prospect for that property,” said Parson. “We believe that in fact that that property will be absolutely gone and hopefully a site for hundreds of jobs for Floyd County residents within the next three to five years.”

Diers said he will know more about the specifics of the certified site at the next council workshop, to be held on Monday, June 24.

“By the next workshop, we’ll have a development agreement or that grant agreement in hand,” said Diers.

Also at the workshop meeting Wednesday, the council discussed a 10-year, 100% tax abatement requested by Johnston developer Shawn Foutch so his company, JMAE LLC., can build market-rate apartments as part of $4 million project in the 1930s portion of the 500 North Grand Building.

“We have this iconic structure here that we’re trying to find an end solution for,” said Diers.

Foutch is currently in discussion with the Charles City School District to acquire the building for $1. In order to move forward with design work and engineering on the project, he’ll need the consent of the council in order to meet his tax abatement demands for the project.

Diers said Foutch has constructed similar projects in Fort Dodge and Algona. An Algona school building received a 15-year, 100% tax abatement, and the Fort Dodge building was able to break ground after a 10-year, 100% tax abatement was agreed to that also involved rebates.

Under a 14-year plan that Diers laid out that was constructed by Floyd County Assessor Gary Vander Werf, Foutch would pay property taxes once construction was started in the fiscal year 2021. The 10-year tax abatement would start in 2025 and last until 2034.

The property was assessed at $3 million and the total amount of property taxes due over the time frame was just over $614,000 – meaning Foutch would only have to pay $70,000 in property taxes. Just over $544,000 would be abated.

Council member DeLaine Freeseman thought that the council should at least try to negotiate for less than a 100% abatement. A 90% or 92% abatement was bantered back and forth.

“What I’m hearing and what we heard that night was here’s the deal, take it or leave it. And kind of like, so in other words we all just roll over and play dead?” said Freeseman. “I think it should at least be talked about and negotiated.”

Councilman Michael Hammond reminded everyone at the workshop what Foutch had to say the last time he was in person to speak about acquisition of the property last March.

“He flat out said the property is a go at 100%. At less than 100% it’s not a go,” said Hammond. “So there’s no room left for negotiations. So we’re either on board or we’re not.”

Mayor Dean Andrews said the difference between 100% and 90% was about $6,000.

“So do we jeopardize this whole thing for $6,000 a year – between a 100 and 90? To me it’s not worth $6,000 a year to even go that direction,” Andrews said.

Justin DeVore, representing the Charles City School District, said about Foutch: “Every building he has started, he has finished. I want that on the record. I know what we have. I know the challenges that we have as a community.”

Also at the meeting, Circle K Communication owners Dan and Tammy Elthon were present at the planning session to talk about a new contract for the upcoming fiscal year for the public transit system. Circle K took over operation of the transit system last August.

The current contract called for the city paying Circle K an annual sum of $48,500. Circle K is requesting just over $61,000 in the new contract.

The public transit system also makes runs to Mason City and outside the Charles City limits. A yearly payment of $30,000 from Floyd County was also requested.