116 3rd St SE
Cedar Rapids, Iowa 52401
CEDAR RAPIDS - Newly released details of a possible refinancing plan for Westdale Town Center - formerly just Westdale - show taxpayers could be asked to extend a tax break for the mall redevelopment through 2036 as part of guaranteeing a proposed private loan.
Cedar Rapids Finance Director Casey Drew said this new information doesn't mean the city would provide more money than previously planned. Additionally, he noted a refinancing plan has not formally been presented.
'The city would not finance a new loan if it did not mean savings for the city,” Drew said on Wednesday, noting the proposal will be analyzed when and if it is presented. On Tuesday, City Council set a public hearing for Sept. 25 on a proposed amendment to the development agreement for Westdale. Another public hearing is set for that same day as part of the process of notifying other taxing entities of possible changes to the urban renewal area, created as part of the tax increment financing - or TIF - process, which allows the city to sequester new taxes generated on the property to rebate to the developer.
The Frew Development Group's John Frew, who is redeveloping Westdale, is seeking a $21.75 million loan to refinance outstanding debts, according to city documents. Debts include two loans with about a $12 million remaining balance, Frew has estimated.
Refinancing will 'release restrictive loan covenants,” which have limited Frew's ability to develop and free up operational cash flow in the short term, so he can continue reconstruction of the 71-acre property where the once-failing Westdale has stood since 1979. Frew is part way through a $90 million redevelopment plan, but progress has stalled.
The city is aware of the refinancing plan and must sign off because the city is the guarantor on an $11.5 million loan issued in 2015, of which Frew said about $9.7 million remains. Also, in 2013, the city signed an economic development agreement for Westdale promising a 100 percent rebate on new tax value for 12 years worth an estimated $20 million, including $5 million up front.
In exchange, Westdale must meet a series of bench marks for jobs and property value assessments, which it largely has done.
Drew noted that the development agreement was previously amended to extend the rebate to 14 years, with an additional six years added on if there were still outstanding loan balances.
'This just formalizes the additional six years,” he said.
As part of the refinancing plan the city would provide economic development grants payable in semiannual installments in June and December each year through the term of the amendment - June 1, 2036.
Frew would assign rights to those grants as security for the refinanced loan, according to city documents. The city would also commit to 'replenish any shortfall in a reserve fund established for repayment of the loan,” if the economic development grants were insufficient to meet loan payments.
Additionally, the city would need to increase the amount of TIF that could be used to support the redevelopment to $45 million, up from $25 million in the original 2013 plan.
Drew said this does not mean the city would tap into all of that money; it merely shows the projected new tax value created on the property based on new development for the purpose of securing a loan.
'We are being asked to take a look at this,” he said. 'There is no decision yet.”
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