PCI’s new medical building poised to get substantial city tax breaks

One question about which no one on the City Council has talked much about is the size of the local incentive package that taxpayers already may be expected to provide if Physicians' Clinic of Iowa builds a $36-million medical “mall” at 10th Street SE and Second Avenue SE.

These are the proposed taxpayer-paid incentives even before the City Council takes on another sizable PCI issue and the costs related to it - the PCI request that the city close a major arterial into downtown, Second Avenue SE, between 10th and 12th streets SE.

The plan to close a piece of Second Avenue SE also comes with plans to convert parts of Second and Third avenues SE to two-way streets and, eventually, to widen at least one part of Third Avenue SE as traffic from Second Avenue SE at 13th Street SE is directed onto Third Avenue SE.

According to a proposed development agreement with PCI passed by the City Council in January, the city agrees:

• To pay for a 450-space parking ramp, the cost of which PCI has put at $8-million.

• To provide an additional “economic development grant” to cover PCI's additional cost of building in Cedar Rapids versus the lesser cost of PCI building on previously undeveloped land somewhere else.

• To allow future PCI property taxes that PCI will face with its new building to be used to “offset” property assessments against PCI for improvements to streets in and around the PCI development.

The proposed agreement notes that PCI, in turn, will retain 400 jobs and add 100 more within five years.

The Jan. 27, 2010, resolution by the City Council calls on the city manager to prepare a private redevelopment agreement between the city and PCI with the above terms incorporated into it.

The agreement is still a work in progress and has not been signed, Jennifer Pratt, a planner in the city's Community Development Department, reported on Wednesday.

City Council member Kris Gulick on Wednesday said the incentives listed above are part of the council's “memorandum of agreement” with PCI. Gulick, though, said some of the agreement depends on the amount of new property-tax revenue available for the project in the tax-increment financing (TIF) district where the development sits.

Gulick added: “This (the memorandum of agreement) was all done before the plans to redirect traffic around Second Avenue, which changes the components of the project both from an infrastructure standpoint and also a financial standpoint.”

PCI has made it known that it had looked at building its new building in Hiawatha, and it has said it may take a new look at such a plan should Second Avenue SE not be closed.

Mayor Ron Corbett, who favors closing Second Avenue SE for PCI, says he thinks he has five of the nine council votes to do so.

The council is slated to discuss the matter of Aug. 24.