Local Government

Tempers flare over Cedar Rapids tax deal for Terex

Mayor Corbett, council member Olson go at it

Cedar Rapids City Hall on the corner of 1st Avenue and 1st Street East. (file photo)
Cedar Rapids City Hall on the corner of 1st Avenue and 1st Street East. (file photo)

CEDAR RAPIDS — Mayor Ron Corbett and council member Scott Olson verbally duked it out Tuesday over a first-of-its-kind property-tax break in the city that will help a local company pay lower rent and get new furniture as a tenant in a new office building.

The council majority sided with Corbett on a 5-3 vote, a verdict that supported a request from Terex for a tax break valued at $506,000.

The equipment manufacturing company said it needed the help if it is to stay in Cedar Rapids and move into the The Fountains at Edgewood Road NE and Blairs Ferry Road NE.

Without the incentive, Terex said it would take its 50 jobs, many of which are engineering ones, to Marion.

Corbett said the City Council had sat back for years and watched jobs slip away to Hiawatha and Marion as those communities offered tax breaks. He said the City Council changed that with an “open for business” philosophy and said he wasn’t about to see Terex’s 50 jobs go to Marion.

He called the deal “a home run” for Cedar Rapids and he said, “We’re going to fight for our jobs.”

Olson, a commercial Realtor, railed against the tax proposal, saying two businessmen approached him at morning coffee asking him if they, too, were going to get a tax break for new furniture after reading a news story about the proposal.

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Olson pointed out that the City Council already had granted the $34 million Fountains development a five-year, 100 percent property tax break three years ago valued at $3.7 million.

Adding a break for a particular tenant “opened Pandora’s box.” he argued.

Olson was the lone vote three years ago against the incentive for The Fountains, saying he opposed such incentives for a retail/office development when the city had plenty of vacant office space at the time.

Back then, he wore a T-shirt emblazoned with “Where’s the Beef?” which he donned again Tuesday night.

He said the city has seen a surge in vacant office space, and said the incentive to Terex to help The Fountains gain a tenant was unfair to owners of vacant office space elsewhere in the city.

The city should not “jump on the sword” to keep 50 Terex jobs from moving 300 feet over the Cedar Rapids line to the Berthel Fisher building at 701 Tama St. in Marion. Berthel Fisher, which has secured economic incentives from Cedar Rapids, is moving to Cedar Rapids.

Council member Monica Vernon, who voted against the Terex proposal, said the city’s staff packaged the deal in the wrong way. She said The Fountains, in essence, needed the additional incentive to attract a tenant. She said the city should have extended the developer’s incentive a few more years to recognize it needed help.

She said the developer then could have provided a break to Terex without the city getting involved.

The city has extended tax breaks for projects before, she said.

Council member Kris Gulick, who also voted against the proposal, said the city didn’t stand to see much of an increase in future tax revenue expected from The Fountains with or without Terex as a tenant.

Gulick also said he wanted Terex to agree not to fight to lower the property value and hence city property-tax revenue on its current office building at 909 17th St. NE once it leaves it. Terex already had succeeded in lowering the value from $1.2 million to $600,000 in recent tax appeal, Gulick said.

Council members Justin Shields, Ann Poe, Ralph Russell and Susie Weinacht voted with Corbett.

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Jennifer Pratt, the city’s development director, said the city will ask The Fountains’ developer Joe Ahmann to begin constructing the second office building there in 2016 upon the award of an incentive to Terex. Under the current agreement, Ahmann has until 2020, she said.

Only time will tell if Olson is correct and Tuesday’s council vote raises a new expectation that other potential office tenants at The Fountains or in any other new office building also will get their own incentive after the project developer gets one.

Terex, which is now Terex Minerals Processing Systems, purchased Cedarapids Inc. in Cedar Rapids in 1999. At one time, Cedarapids Inc. employed some 900 employees in the city, including 640 production workers.

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