New Cedar Rapids program matches investments in underdeveloped areas

CEDAR RAPIDS — Cedar Rapids is putting public funds toward a new program that aims to spur underdeveloped business districts to invest in amenities and beautification projects that support their own growth.

The Cedar Rapids City Council voted this week to approve the establishment of a Self-Supported Municipal Improvement District incubator program.

This is an effort to leverage public dollars to inspire more areas of the city to establish the districts. Parts of town that form SSMIDs are able to assess additional property taxes inside the district and use the extra revenue to improve the area with amenities and services to supplement day-to-day municipal services.

“I think the real magic in our city happens … when the city leverages private partnerships, and this is exactly that,” Mayor Tiffany O’Donnell said. “This is partnering, leveraging our city resources — taxpayer resources — with private partners. So anytime we can we can do that, we've seen success.”

Council member Ann Poe, who works for The District: Czech Village & New Bohemia, recused herself from voting on this item.

Cedar Rapids currently has three such districts. Eligible SSMIDs under this program would be those that were created after Jan. 1, 2014, which would exclude the downtown and MedQuarter districts. But the Czech Village-New Bohemia SSMID was created in December 2015, so that would be eligible.

The city will match dollar for dollar the amount the qualifying SSMID generates, up to $100,000 a year. Once a SSMID enters the program, its participation would be limited to five years. The district would present an annual plan to council outlining how its SSMID dollars are being invested in the district from this program.

City Finance Director Casey Drew said sometimes certain parts of the city generate less property taxes than others, and the city wants to encourage investment.

“We want to allow the district to support small businesses sooner, we want the look of the district to be meaningful so that it portrays that the distinct characteristics that district wants to have,” Drew said.

This move also helps the city leverage funds in a way that groups don’t have to keep returning to the city requesting funds to support certain projects, Drew said.

He said staff thought, “Let's create a program that would encourage contributions from the private side as well as from the city side.”

As a newly formed SSMID or soon-to-be-established SSMID continues to grow its tax base and generate more SSMID dollars to invest back in itself, he said the idea is that the city’s matching funds would prompt the district to execute its own long-term plans.

“It's a win-win for both the city and the private side,” Drew said.

Asked by council member Scott Olson if residential property owners in neighborhoods might be able to band together and form a SSMID, Drew said organizations would have to work with the city through the SSMID establishment process and within the confines of Iowa law.

Under state law, at least 25 percent of the property owners and owners of 25 percent of the property value must agree to seek to create a SSMID. Properties in a SSMID also must be zoned for commercial or industrial uses or be within a designated historic district.

Council member Dale Todd said this is a great way to incentivize development and revitalize neighborhoods.

“First there has to be revenue, but think of all the other places in town that are generating revenue where they could actually benefit from a more focused discussion and relationship with the city by going this route,” Todd said.

Monica Vernon, executive director of The District and a former council member, said in her role she has spoken with city officials about how both Czech Village and NewBo are growing areas with housing and other developments, driving the need for additional streetscape on essentially new city blocks.

The District is separate from the Czech Village-New Bohemia SSMID.

Vernon said things such as benches, wastebaskets, flower boxes and streetlights are some of the basics needed to greet the thousands of tourists who come to recreate, shop and dine in the area each year.

A district like Czech Village and NewBo, still reemerging after the devastation of the 2008 flood, doesn’t have the tax base yet to fuel such investments, Vernon said, so these dollars would be appreciated and wisely invested.

Plus, Vernon said the city knows it’ll likely get these program dollars back through increased property taxes the program would spur, so it’s a “good bet.”

“When things look more spiffy, when there are attractive things, when you work on an area of town, people do notice,” Vernon said. “Sometimes they don’t notice the details, they just know it’s more of a place they want to hang out in or visit … This is an investment in the future.”

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