Council deciding Tuesday on tax break proposal

CEDAR RAPIDS - Just how far does the city need to go to stay competitive with neighboring Hiawatha?

That question is part of an undercurrent in a City Hall debate here as the City Council decides today if it will give developer Joe Ahmann a property-tax rebate. Ahmann is requesting the break for five years on each of six upscale office and retail/services buildings he plans to build on 19 undeveloped acres near Edgewood and Blairs Ferry roads NE.

Mayor Ron Corbett says Cedar Rapids' lack of high-end office space has caused the city to lose out to Hiawatha in competitions for out-of-state employers. Hiawatha provides incentives for such development, so Cedar Rapids needs to do the same, he says.

On Monday, Corbett said Ahmann's $34 million proposal for The Fountains will better prepare Cedar Rapids to compete for employers and businesses.

“As with most deals, you're never going to always like 100 percent of it,” he said. “But The Fountains brings much needed Class A office space that will help us create more jobs.”

City Council member Scott Olson, a commercial Realtor, is the leading council voice against the extent of the proposed incentives.

“I know why the mayor and the city manager want the project. It is to battle loss of businesses to Hiawatha. But I think we've gone too far with this project,” he said.

Olson said appraisers, bankers, developers and Realtors have all made the case that a five-year tax break on six buildings and their 232,000 square feet of office and retail/services space will “depress” the rents in existing Cedar Rapids office and retail properties. The city already has more empty office space than at any point since 2001, Olson said.

Ahmann on Monday said he has built other office buildings in Cedar Rapids in recent years and has not sought City Hall incentives because the projects have been small in scope. The size of The Fountains project and the demands put on him by lenders have forced him to seek incentives for it, he said.

“We're not doing a one-building development or going in and buying a single lot,” he said. “We're doing a 19-acre, master-plan community. And that's the only reason I've asked. This is a different animal. It's a very large undertaking.”

Cedar Rapids City Manager Jeff Pomeranz on Monday noted that the city will repay Ahmann about $3.7 million in property taxes for his investment in the first five years after each of the buildings is built, but over a 20-year period the investment will bring in $10.2 million in additional property-tax revenue to government, he said.

Olson said he supports the use of incentives for one-of-a-kind projects that otherwise wouldn't get built. He said he will be voting today in favor of a second tax increment financing proposal, which will provide support to developer Fred Timko and his plan to both renovate the flood-damaged and historic Louis Sullivan-designed bank and the office tower next door at 101 Third Ave. SW and to build an 18-unit residential condominium complex next door on First Street SW.

Olson said Timko's project is a risk-taking venture that is the first significant investment in the flood-hit commercial area across the Cedar River from downtown.

By contrast, Olson said the Ahmann investment comes in a newly created urban revitalization district in a Cedar Rapids area of higher incomes that he said “doesn't need revitalization.”