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City Notes: Recommend city invest in future through site buy

By Dean Andrews, Mayor, Charles City

The news of the week is certainly the closing of the Simply Essentials plant in Charles City. I really don’t have any more information than what has been reported in the newspaper.

I do know that of the 513 individuals who will lose their jobs, approximately one-third are Charles City or local area residents. It is still too early to see what the future of that facility will be, but I certainly want to express our concern for those who have lost employment and wish good fortune in their search for new jobs.

Speaking of jobs, another topic that has been in the news lately is the work being done by the Area Development Corp. (ADC) to develop a recognized “certified site” for industrial and commercial development.

City Notes: Recommend city invest in future through site buy
Dean Andrews

The process has been moving forward for the last year or so, and is now nearing completion.

Our site would be one of the approximately 39 other certified sites throughout the state which can then be marketed and promoted by the Iowa Economic Development Authority as “shovel ready” for industrial development.

The City Council planned to discuss the potential of purchasing the property at our council workshop Wednesday night.

The parcel is currently owned by the Steve Swartzrock family on South Grand Avenue (Shadow Avenue), adjacent to the Avenue of the Saints. The ADC has been looking for new industrial property for several years as the current Industrial Park on 11th Street has very little remaining available property.

This specific site would be right up there as one of the top sites in the state. The 75-acre parcel is close to a four-lane highway, has sewer, water and electrical utilities already in place, has paved streets and has close proximity to gas and high speed Internet.

To best market the property, the ADC feels it would be best to be the owner of the property. ADC currently has a three-year option with the Swartzrocks on purchase of the land.

The ADC feels there are several reasons to move forward with the option and actually make the purchase. One reason is it would be less cumbersome to work with a client as the actual owner, rather than go through a potential time-consuming trail as part of the negotiation process.

Another reason is the status of Tax Increment Financing (TIF) districts on a statewide level. Each year there is discussion in the Iowa Legislature about changes and limitations in TIF laws.

The third reason is we never know how interest rates will vary – they may go up or they may go down. What we do know is that currently interest rates are at a rather low level.

The reason for the concern about TIF districts is that this parcel is a part of the South Grant TIF District. For those of you who don’t know much about TIF districts, I will try to give a simple lesson (although I have been familiar with TIFs 20 years and still don’t know if I understand all there is to know).

Say you have an undeveloped property in a TIF district that is valued at $10,000. The owner currently pays taxes on that $10,000 valuation. Now you have a developer who comes in with a project that makes the valuation of that land $100,000.

The base value of $10,000 is still subject to property taxes just as before, but that increase in value of $90,000 is what is called the “increment.” This increment can be used in many ways, usually a combination of all the options.

One scenario is the developer may want an incentive to complete the project. They may want a rebate of all or part of that $90,000 increment valuation for say seven years. In that case, the developer would pay the entire tax bill each year and then receive part of that bill as a rebate, as designated in the agreement.

If agreement was for 7 years, in year 8 that developer would now be paying taxes on the full $100,000 valuation, rather than the $10,000 valuation that was in place before the development project.

As I mentioned before, this increase in taxes paid can be used in several ways. The increased tax dollars can go back to the three taxing entities (city, county and school) to help with their budgets.

The money can also be used to fund improvement in the TIF district (which is how streets, sewer and water were paid for several years ago in this particular parcel through use of “increment” taxes in this South Grand District). Increment funds can also be used to help fund future development in the district.

This last scenario is what ADC would like to see happen with this project.

Over the years with development in the South Grand TIF District, an increment has been established which would allow enough revenue to fund the purchase of this project from the Swartzrocks.

These dollars are part of the increment that has already been established in the Sound Grand TIF and would not be decreasing tax dollars that are currently being received by the city, county and schools, but it would be used to create further economic development.

This is the proposal that I will propose to the City Council.

I have always said that if you have a prime economic site, it does not guarantee that you will have a prospect to fill it. But if you don’t have the property available, it does guarantee that you won’t have anyone willing to come and look.

I feel this proposal is a positive for Charles City as we look toward a vital future.