Cedar Rapids Panel backs use of taxes for land buys

Much of City Hall's focus of late has been on the hunt for local funds required to help build the now-$75.6-million Convention Complex, to buy and renovate the Crowne Plaza Five Seasons Hotel and to build a flood-protection system.

The Convention Complex needs $26.6 million in local funds; the hotel, maybe $20 million; the flood-protection system, $35 million for starters.

Now next week, the City Council will confront another funding demand, one which has not been discussed for six months and is tied to the site the council earlier picked for the city's new bus depot, called the Intermodal Transit Facility.

At its meeting Tuesday evening, the council will discuss and possibly vote to spend $10 million to both buy 2.4 blocks of downtown property now owned by Pepsi Beverage Co. and to help build Pepsi's warehousing and maintenance operation a new facility south of Wright Brothers Boulevard SW. Pepsi estimates its new facility will cost $10 million, according to a memorandum to the City Council from Sushil Nepal, a planner with the city.

In the memorandum, the largest share of the $10 million City Hall-approved public funding - $6.3 million to help build the new Pepsi facility - would come from the incremental growth in property-tax revenue in the city's existing tax-increment financing district where the Pepsi facility will be located. Some of that increase in revenue in the taxing district will come as a result of the tax that Pepsi will pay on its new facility.

This kind of tax-increment financing is similar to the financing the council used in late October as an incentive to support the new medical mall to be built by Physicians' Clinic of Iowa on Second Avenue SE between 10th and 12th streets SE. In the PCI deal, the city will incur $13.24 million in debt for a new parking ramp and street improvements, debt that will be paid off over time by new property taxes coming from the medical mall.

In the proposed Pepsi deal, the city will pay Pepsi another $3.7 million for its 2.4 acres of downtown property. Of that amount, $3.07 million will come from city's sale of bonds to be paid back over time by property taxes and $631,400 from a grant from the Federal Transit Administration grant, according to the city memorandum.

The city and Pepsi have been discussing the city's purchase of the Pepsi for some two years when the City Council identified the site as the possible place it wanted to put a new bus depot. In March 2009, the council directed city staff to begin negotiations to purchase the Pepsi property.

Almost a decade has passed since the city secured an $8-million grant to build the new transit facility, though the city never has managed to get the job done. The Pepsi site is the fourth site for the facility.

The transit facility will take up only one block - between Fifth and Sixth avenues and Fifth and Sixth streets SE - of Pepsi's 2.4 blocks of downtown property. Pepsi, though, has told the city it can't function as necessary on only 1.4 blocks of its downtown land, so the city would have to locate the bus depot elsewhere or buy all of the Pepsi property.

During the time of the Pepsi negotiations, some on the council and the city's former city manager had explored the idea of building a new city hall on part of the Pepsi property as well as the bus depot. However, a council with a new mayor and two new members this year rejected the plan to build a new city hall.

In any event, some on the current council have pointed out that the Pepsi operation just off the heart of the downtown is better suited at a site away from the downtown, which is where it is headed under the city's proposal.

The new location is at the west end of Capital Drive SW off Atlantic Drive SW south of Wright Brothers Boulevard SW.

According to the city memorandum, Pepsi will retain 90 jobs in the move and will have its new facility in place by the summer of 2012.