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How the Mason City Harley deal really got done

Editorial by Matt Marquardt –

MASON CITY – Harley Davidson of Mason City owner Steve Minert is a successful business owner.

He, along with his dad Ron, is lucky enough to own a Harley Davidson franchise that has been operating in the city for decades. He employs 20 people,  his product has a loyal following, and his business is expanding in new and surprising ways.

Over the last few months, the City of Mason City and other agencies have helped put together an incentive package to renovate his motorcycle dealership and increase the value of his property by about $1 million.

Among the incentives from the City are: 1) A $100,000 forgivable loan, $10,000 of which drops off each year as long as Harley stays in business; 2) A 10-year tax break on the NEW VALUATION of the property, created due to the renovation and improvements; 3) Relocation of utlities; 4) The alley that sits just to the west of the main store will be vacated by the City.  Harley is expected to comply with the terms of the deal by adding at least six new jobs paying at least $10 per hour.  It must also work with the City to complete the $1 million in added new property valuation.

Some in the community have asked questions on how this deal was put together.  “Why should a rich businessman be given tens of thousands of dollars,” people have asked (Steve owns 5 houses, he told me).  “What is the benefit to the community,” others have said, and “why is the City helping a retail business, using TIF?” (Tax Increment Financing is a controversial tool where cities keep tax dollars that would normally go to counties and school districts.  It was intended for manufacturing only, and to be used in blighted areas.)  Still others have asked “Did Minert approach the City for help… or did the City approach him?”

These are potentially explosive questions, and this story may not provide every answer, but it is an attempt to get to the bottom of the genesis of this economic development deal between Mason City Harley-Davidson and the City of Mason City.

Steve was candid about helping to answer these questions, as he sat down with me for an interview Friday afternoon.

“It’s the end of the day, but I’ll try and get you some answers,” Steve said, after he led me down a narrow hallway to his office, in the back of the main building at his dealership.

Steve explained that the dealership renovation was brokered by the City, the North Iowa Corridor and himself, working together.  See details the City provided at this link.

Steve explained that Harley-Davidson executives had been applying pressure to move the dealership since 2003.  He said that they had done a series of “write-ups” on the dealership, complaining about the location on South Federal Avenue and upgrades they wanted completed.

Steve said that every year between 2004 through 2007 he was told to “make it happen.”  “It” being moving the dealership either south on Federal much closer to the Avenue of the Saints or out west into the Indianhead shopping district.  Other possible options that were looked at included Northwood or next to Lake Chevy in Clear Lake.

“They left it at a bark instead of bite,” Steve said, referring to corporate not actually forcing the move, but only strongly advising that he do so.  High sales and a high level of customer satisfaction, he says, contributed to this softer stance.

Steve said pressure had mounted in the last two to three years for the dealership to make an improvement.

“Either cooperate or else,” was how he characterized the conversations with Harley regarding the location and overall facility.  Steve said he felt “the threats were real.  Waterloo lost its franchise through non-compliance.  Sioux City and Cherokee, Iowa,” as well.

Steve said he was feeling the pressure and began to have blueprints for a renovation drawn up.  He said that as late as 2011, plans were still being considered to move the dealership west to Clear Lake at the Highway 122 and I-35 interchange.

Just prior to that, in the late summer of 2010, a friend recommended that he meet Mason City Mayor Eric Bookmeyer.  A lunch at the Mason City Country Club was brokered by a mutual friend, and Steve met Bookmeyer for the first time, he says.

“We didn’t talk about the dealership much, mostly about golf, Steve said.  “It only came up briefly.”

A couple of weeks later, Steve says Bookmeyer called and asked if he bring by some of Senator Tom Harkin’s staff for a walk-through.  “I said sure,” Steve said.

Steve says that while at the dealership, Bookmeyer saw some of the blueprints of the renovation.  “That’s how the conversation started,” about the City possibly getting involved to help the project along.

Steve said that Bookmeyer brought in City Administrator Brent Trout and North Iowa Corridor Director Brent Willett to put together an incentive package to keep Mason City Harley in Mason City.  “Those three worked hard to keep us here,” he said.

“Our decision to stay had little to do with what the City was going to do for us,” Steve said.  “we are Harley of Mason City, not Harley of North Iowa or whatever.  It was an emotional decision.”

Steve explained that he called the bluff of Harley’s corporate execs.  He said he told them “If you want us as dealers, we are staying in Mason City.”

Harley relented, and got on board with the property and building renovations.  They sent a designer from California to Mason City four separate times to help draw up the designs.

Work on the property has been underway for months.  Harley owns the whole block minus one property that still has a house sitting on it.  They will build around that.  The progress is plain to see driving by, as new dark brown brick is added to the outside of the buildings, a new showroom is under construction, and a new canopy out front is being put together.  A plan is in motion now to add an outdoor motorcycle drive-in theatre in the southwest corner of the property, which would serve 30-40 bikes.  That wouldn’t be ready till spring of 2014.

The new dealership will be a great draw to (near) downtown Mason City.  In the end, if everything works out, the City should see a gain in tax revenues once the new valuation kicks in, 10 years from now.  In the meantime, Harley still pays taxes on the current valuation of the property.  The City looks at deals like this one as an investment.  TIF laws are still lax at this point, so there is nothing to stop any City from approaching virtually any type of business and brokering deals that seem to benefit both the business and the City.

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What about the people that work there? Do they only make $10 an hour?

Probably one of your best blogs. You outdid yourself this time in being objective and non judgemental.

It is obvious this would have happened without the city’s help.

Most important is, tax dollars should never be used in any kind of business deal.

I have no problem with the city providing infrastructure. However, giving tax incentives and loans are just plain wrong.

Tax money in any form given to any business is tax money that is competing against another like minded business. This is most unfair and biased on it’s face.

This country needs to get back to the concept of Banks loaning business’s money for start-up, growth, and expansion.

I am happy for Mr. Minert but this should have all been done with private money!

This is fantastic.We helped one of our own instead of just offering help to out of town companies thinking about coming here.Good job Mayor and staff and yes it really is starting to look GREAT.

This will be a little nicer place than the Harley dealer in 1948, which was at a gas station in Forest Park.

Mason City will benefit from this, in more ways than one. Steve is a very community minded person and has always given back with many charities. We are very fortunate to keep this business in Mason City and fortunate for everything Steve has done.

Six to zero vote by the city council to approve this deal…how could the mayor control that?

I think the place is starting to look pretty awesome!

im sixteen and i make that much. and this is only my first job..

10 years before the taxes go up. Then need tax dollars to pay back the 100k by the time the City gets any benefit it will be over 25 years. By then the property will need renovation again. It is a great deal.

That’ all fine and dandy, but still how does one get these deals? Moorman got a super sweet deal to move across the street. So if one claim that someone else is pressuring them to move will the city help anyone?

Great Job Matt. It’s to bad this story didn’t come out earlier. It would have saved a lot of speculation.

Nice job Matt. It sure does clear the mud out from many of the aspects of the deal. It’s too bad it was not made clear from the start, after all, it is the people’s money.

Matt, thanks for researching this. It makes more sense now.

Thanks, Matt, for doing the interview and writing this up. Whew. I can see now that it was no big deal, there was not a conspiracy, and MC will benefit in the end. I wasn’t so sure about this but a little daylight on the background should, I hope, squelch all the naysayers.

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