Council reconsiders tax incentives for development project

City Council
By: 
Kim Brooks
Express Editor

     Following a bit of defeat at the last council meeting regarding a request for financial assistance in a development project on John Drive, McMATT Properties, represented by Mike McDonough, was present at the April 19 Monticello City Council meeting to seek answers to some questions and possible reconsideration.

     “I feel like we were shot in the foot right off the bat,” McDonough said.

     McMATT Properties is proposing to build a storage unit to serve the housing development area in the northwest portion of the community.

     During the April 5 council meeting, the council supported a 10-year tax abatement, starting at 90 percent and working down to 10 percent, with no upfront $20,000 TIF grant toward the project.

     McDonough worked with City Administrator Russ Farnum, and it was noted that there were mathematical errors in the projections shared with the council at the previous meeting. The revised projections start at 100 percent and work down to 10 percent of the rebate, with a total incentive of $27,192, which would be about 7 percent of the total estimated project cost ($378,000).

     McDonough said when they started this project, they spoke with former City Administrator Doug Herman on the matter.

     “We went at his (Herman’s) suggestion,” McDonough said of their request concerning the TIF grant and abatements.

     Council member Tom Yeoman said at the last meeting he’d support a standard tax abatement. To that, McDonough said Herman commented that there is no standard.

     “The city council does what it wants to do,” he said.

     McDonough said following the council’s decision last time, he had several people approach him. Since then, they realized the property is, in fact, within the city’s TIF district, making it eligible for a TIF grant and tax rebates/abatement.

     “Nothing was said at the time,” McDonough noted of this fact. “We’re not asking for anything someone else didn’t get. We want to get what other people have gotten, too.”

     “What’s fair for one should be fair for everybody,” commented Council member Dave Goedken. “Would Mike get $20,000 if he built this on Welter Drive?”

     McDonough asked the council if there were any criteria concerning who is awarded a TIF grant and tax rebates.

     Mayor Brian Wolken read from the State of Iowa’s TIF definition, noting that TIF funding has generally been used for development projects in blighted areas, or projects that have spurred job creation. McDonough said while the storage unit project wouldn’t create jobs, he considers the area “blighted.”

     “It’s a great benefit to the area with housing,” he said. “This is a nice spot for this.”

     The council, though, couldn’t commit to a sound source of TIF criteria that they have used in the past on various projects within the city.

     “It depends on the size of the project,” Yeoman said.

     “It’s supposed to encourage and enable growth,” Wolken added.

     McDonough was given history of three different projects within the city that received TIF grants and tax abatements. He said one particular project built by Brian Monk on W. First Street cost less and yet he was awarded the $20,000.

     “We do promote Monticello,” McDonough said. “We’re in the real estate business. If Monticello fails, we’ll be the first to fail.”

     Both Council members Chris Lux and Goedken felt the council needed to reconsider McMATT Properties’ request.

     The council directed Farnum to look at a 10-year abatement schedule as follows: 2022, 100 percent; 2023, 90 percent; 2024, 85 percent; 2025, 80 percent; 2026, 75 percent; 2027, 70 percent; 2028, 65 percent; 2029-31, 60 percent per year. This would offer a total tax incentive of $36,833, almost 10 percent of the total project costs.

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