PEOSTA, Iowa — Current and upcoming construction in Peosta gave the City Council and city staff a stack of development agreements to consider this week.
Peosta City Council members this week unanimously approved four development agreements with tax increment financing incentives and discussed a fifth.
The city has negotiated agreements with incentives for developers, supporting projects such as community college housing, a taproom and a coffee shop.
The city will provide financial assistance in the form of incremental property tax rebates that each developer will use to construct and maintain each project.
An agreement with Crosvik Development also was set to be approved. The council opted to leave the agreement for a later meeting after Crosvik representatives said they had some questions about the agreement.
Crosvick Development sold two of its lots to Thunder Valley LLC and Kalbman Real Estate LLC to build a taproom associated with Dimensional Brewing Co. and a Jumble Coffee Co. location. Crosvick is developing another 22 lots for residential and commercial uses.
Brett Crosby and Slavik Nakonechnyy, of Crosvik Development, attended this week’s meeting.
The discussed agreement would only provide the rebate to cover commercial development. Crosvik Development officials had expected the agreement would also cover residential development.
“What we’ve got in front of us is an agreement in writing, but we don’t necessarily have a common understanding of how this agreement should play out,” Mayor Jim Merten said.
City officials said recent staff turnover likely caused the misunderstanding.
Though new City Administrator Annette Ernst attended her first City Council meeting this week, she had not yet been hired when the city was working out agreements with the developers.
Interim City Administrator Doug Herman presented the agreements to the council Tuesday, but he also was not a part of the initial discussions. Herman currently serves as city attorney.
Herman worked from notes left by former City Administrator Whitney Baethke, who has worked as an economic development coordinator for the City of Des Moines since April.
All three recent administrators were at the meeting Tuesday. Herman and Ernst attended in person, and Baethke answered questions via Zoom.
The council decided to hold off on giving final approval to the Crosvik development agreement in order to rewrite it and ensure both parties fully understand it and agree with the terms.
The council also discussed the Peosta Square development agreement. Peosta Square, a project of developer Wes Schulte, will be located in Peosta Commercial Park.
Schulte plans to construct a three-story building with commercial businesses on the bottom level and housing on the second and third floors.
“Unlike with Crosvik, the infrastructure serving this development, the Peosta Square development, largely exists,” Herman said.
Over the course of 20 years, the tax rebate payments will not exceed $1.5 million under the agreement. The incentives are tied only to incremental property taxes created by commercial development on the first floor.
Herman said he will look into other incentives that could apply to the residential part of the structure.
The council approved the agreement and also approved a resolution to support Schulte in applying for state workforce housing tax credits for the property.
The next development agreement was with College Suites LLC for housing for Northeast Iowa Community College students. Herman said the project has a commercial connection because it is tied to NICC.
“It’s for the benefit and growth and stability of the college,” Herman said. “And because of all those things and the commercial connection, this is eligible to be treated as a commercial improvement.”
Under the agreement, College Suites will receive a rebate of 85% of incremental property tax revenues with a maximum amount of $2 million over 15 years.
The city also approved an agreement with Thunder Valley LLC, developer of the taproom associated with Dimensional Brewing Co., with a rebate of 85% of incremental property tax revenues with a maximum amount of $300,000 over 15 years.
“The coffee shop and brewery have been the battle cry ever since I got here and, from my understanding, long before I was in Peosta,” Baethke said.
Herman said: “The only unique thing with this is they also negotiated a forgivable loan.”
The loan is worth $50,000 and is only forgivable if the developers finish construction and the business remains open in six years.
For the Kalbman development, which will become the home of a Jumble Coffee Co. location, the council approved a rebate of 85% of incremental property tax revenues with a maximum amount of $200,000 over 15 years.
“I’ll just comment, this is a fantastic thing for Peosta,” Merten said.