Marion leaders blast Cedar Rapids tax incentive

MARION - City leaders are criticizing a deal the Cedar Rapids City Council made last month to keep a business from moving to Marion, calling it a 'dangerous precedent” that weakens local governments' use of a popular tax incentive.

Last month, in a 5-3 vote, the Cedar Rapids council approved a tax break worth $506,000 on behalf of Terex, an equipment manufacturing company, to help it pay lower rent and purchase office furniture as a new tenant in The Fountains development. Terex said that without the financial help, it would move its 50 jobs out of Cedar Rapids and into Marion.

At the time of the vote, Cedar Rapids Mayor Ron Corbett said his city had watched Marion and Hiawatha lure away businesses with tax incentives and it was time to 'fight for our jobs.” A majority of the council agreed with him in a contentious meeting.

But Marion leaders say they never planned to offer financial incentives to Terex.

They called the deal between the company and Cedar Rapids inappropriate in a state where the use of tax increment financing is criticized by some lawmakers who say cities have been improperly using the incentive.

'This sets a dangerous precedent,” said Nick Glew, president of the Marion Economic Development Corp. in a letter to the group's board. 'If I'm a company that hears of this, why should I not be asking for similar assistance, regardless if it increases the amount of tax revenue generated in a municipality?”

The Terex agreement is unusual in Cedar Rapids because the tax break is on behalf of a tenant moving into a complex that already got a tax break. The developer of The Fountains, at Edgewood Road and Blairs Ferry Road NE, where Terex will move, received a five-year, 100 percent tax break three years ago to build the complex.

Terex had been looking into a move to the Berthel Fisher building in Marion. Berthel Fisher is leaving Marion for Cedar Rapids - after also securing economic incentives from Cedar Rapids.

But Marion leaders refused to offer a similar agreement to Terex, saying TIF awards are available only when taxable value is added.

'Furnishing a site with new furniture has no impact to property value, thus taking TIF off the table,” Glew wrote. He also said Cedar Rapids used the incentives to intervene and keep Terex from moving to Marion.

'This disagreement is not about Terex,” Glew said. 'It is a larger issue that as a region, we must view differently, set politics aside, and act in the best interest of our communities.” He added: 'We remain concerned about the precedent this project will set should it be allowed to move forward.”

Marion City Manager Lon Pluckhahn defended the city's decision to not award a TIF to Terex, saying the project didn't fit its guidelines.

'One of the concerns you always have is whether or not savvy businesses are just playing the odds and pitting communities against one another to get a benefit they don't really need,” he said.