Terex tax deal with Cedar Rapids not dead, but still months away
Fountains development, Terex still haven't finalized lease
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CEDAR RAPIDS — A tax incentive deal that could facilitate Terex and 50 engineering jobs remaining in Cedar Rapids could still be months out.
In December, Cedar Rapids City Council voted 5-3 for city officials to negotiate a development agreement worth up to $506,000 in tax breaks with The Fountains, an up-and-coming retail-office park at Edgewood Road and Blairs Ferry Road NE.
The Fountains agents were negotiating with Terex, a construction equipment manufacturer, to relocate staff from 909 17th St. NE to its new office building, while Terex sought lower rent and new furniture, which could be made possible through the incentives.
A deal was expected to be brought up for approval at the Feb. 23 City Council meeting, but that isn’t happening.
“The Fountains development agreement is not on the agenda for revision in February as originally forecast, and it doesn’t appear it will be on next month either,” Mayor Ron Corbett said.
The Fountains-Terex deal has become somewhat of a local soap opera.
The City Council got into a testy discussion about whether it would set a bad precedent for future tax deals because it didn’t appear to add much tax base, while others including Corbett argued Cedar Rapids needed to fight for its jobs rather than lose them to Marion.
The deal undercut Terex moving to a building being vacated by Berthel Fisher at 701 Tama St. in Marion, which was not offering tax incentives. Terex wrote a letter to Cedar Rapids officials saying it needed the incentives to stay in Cedar Rapids.
Marion Economic Development Corp. President Nick Glew penned a letter criticizing the deal, saying it would set a “dangerous precedent” and weaken how tax incentives are used by local governments.
In yet another twist, in January, Chinese company Zoomlion Heavy Industry Science and Technology made an unsolicited takeover bid, offering $30 per share for the Westport, Conn.-based Terex Corp., which also has crane manufacturing operations in Waverly. The proposal would value the deal at about $3.28 billion.
David Castelluccio, The Fountains property manager for Ahmann Design, said negotiations with Terex are still active and they are “completely unaffected” by the possible sale.
“We are still in negotiations with them,” Castelluccio said. “There’s really no hold up.”
Jennifer Pratt, Cedar Rapids community development director, said the city is ready to move forward with a development agreement, but is waiting for a finalized lease between Terex and The Fountains, which the developer has indicated could take a couple of months.
“We don’t want to bring this back (to City Council) until there is a lease,” Pratt said. She declined to discuss the terms of the agreement that would go to the City Council.
Cedar Rapids already signed a five-year, 100 percent tax incentive agreement worth about $3.7 million for the $34 million The Fountains development in 2012. The new deal would be in addition, possibly extending the life of that deal but also adding new requirements for the planned six-building complex.
Terex came to the Cedar Rapids market in 1999 after purchasing Cedarapids Inc., which opened in 1923. At one time, Cedarapids employed some 900 employees in the Cedar Rapids, including 640 production workers. In 2009, Terex announced plans it would end its manufacturing operations and eliminate 170 local jobs, leaving the 50 engineering jobs that still exist.