The Cedar Rapids city council discussed one of the ways it works to bring new development to the city in its meeting Tuesday.
The city offers a 10-year TIF, or tax increment financing, as part of its economic development incentive program. With that, developers would pay full property taxes, but if the developer then meets certain requirements, a portion of those taxes would be reimbursed.
But several recent projects have been awarded a TIF beyond 10 years, and now another developer is asking for a 16-year TIF for a new project.
The project is at the “Loftus Lumber” site, in the city block between 3rd and 4th Streets Southeast and 9th and 10th Avenues Southeast in the NewBo District. The mixed-use building will feature retail space and about 150 market-rate apartments.
On Tuesday, members of the city council said, overall, they were supportive of the project, with some mentioning how it will bring more market-rate apartments to the downtown area, which is something a recent study showed Cedar Rapids needs.
But a few council members also had concerns.
Councilmember Scott Olson said the city should set a defined standard for when it approves TIFs past the standard 10 years, to be fair to developers and transparent with the public.
Community Development Director Jennifer Pratt said projects requesting more than a 10-year tax break have to meet additional qualifications right now.
Councilmember Tyler Olson also asked with more developers requesting a longer tax break than 10 years, if the city would increase the incentive standard.
Pratt said the city reviews its incentive package every year, so that could be something it’ll discuss this fall.
“That will be one of those questions we’ll have to be looking at,” Pratt said. “What are the other state resources out there currently? What are other things happening in the marketplace? And make sure, again, that what we are providing helps bridge that gap so that we get the type of private investment that we’re looking for.”
Councilmember Ashley Vanorny also expressed concern with the potential rental rates of the apartment, saying she’s received feedback that the average rate in the NewBo area is too expensive.
With those hesitations in mind, city council unanimously voted to allow negotiations to begin between the City of Cedar Rapids and the developer of the Loftus Lumber project.
Pratt said she expects city staff to return with an official development agreement for the council to vote on in August or September, with construction scheduled to start in October of this year, if approved.