MASON CITY – Mason City citizens have been told that the $36 million downtown “Renaissance Project” will not cost the taxpayers anything, but the city finalized almost $19 million in general obligation bonds at Tuesday night’s council meeting to pay for the project, and citizens will be on the hook for an estimated $8 million in interest over the life of the bonds.
The owner of Southbridge Mall – US Bank – stands to gain over $12.5 million from the proposed upgrade / renovation of JC Penney into an arena, plus a pavillion at the mall’s north end that will cost hundreds of thousands more. The city (taxpayers) will then get to lease the arena (essentially, pay US Bank) to use the arena. The project also includes a hotel that was promised in 2013 but was never built, as well as a mixed-use building at the corner of Federal Avenue and Second Street NW.
Today, a city official in the finance department told NIT that there will be a steep price to pay for these General Obligation bonds:
“The City would be paying the interest along with the principal with the new TIF increment,” Finance Director Kevin Jacobson said. “The ESTIMATED interest would be around $8,000,000 over the 20 year life. Please remember this is an estimate based upon today’s rates. They will change somewhat over time.”
When pressed to explain or clarify how the $18.75 million in bonds plus the $8 million in interest would not be a burden to the people of Mason City, NIT was told by council member Alex Kuhn that it is all explained in “months and months of detailed memos in the public domain to answer that question”.
The city is awaiting final approval for $7.1 million in state funds for the project; that outcome won’t be known until March.
NIT intends to look deeper at these documents and work with other professionals to ascertain the truth behind this complex development.
From city council meeting minutes, Tuesday, November 3, 2015, regarding the mayor and council approving the bonds:
9. River City Renaissance Project: The Mayor stated now was the time and place for the Public Hearing and meeting on the matter of the issuance of not-to-exceed $18.75 Taxable General Obligation Urban Renewal Bonds to the City of Mason City, State of Iowa, in order to provide the funds to pay the costs of aiding in the planning, undertaking and carrying out of Urban Renewal projects under the authority of Iowa Code, Chapter 403 and the Urban Renewal Plan for the Downtown Reinvestment Urban Renewal area, as amended from time to time, including those costs associated with the acquisition, construction and equipping of a parking garage facility, performing arts pavilion, multi-purpose arena, generally in the vicinity of Southbridge Mall, and other related supporting public infrastructure improvements, including streets, intersections, sidewalks, traffic signals and sewer projects. Proceeds of the Bonds may be applied directly to pay project costs incurred by the City in constructing such facilities or may be utilized to fund one or more Economic Development Grants to provide developers that may construct certain facilities for subject leasing to or acquisition by the City for essential corporate urban renewal purposes and that notice of the proposal to issue the Bonds and the right to petition for an election have been published as provided by Sections 384.243q, 384.25, and 403.12 of the Code of Iowa.
Mayor Bookmeyer asked the City Clerk whether any petition has been filed in the Clerk’s office as contemplated in Section 362.4 of the Code of Iowa with City Administrator/City Clerk responding that there had been no written objection filed by any resident or property owner of the City to the issuance of the Bonds.
The public hearing was held as per published notice and the Mayor called for comments and objections which were noted.
There being no further comments, the public hearing was declared closed. Motion, Kuhn; 2nd, Hickey that Resolution No. 15-247, instituting proceedings to take additional action for the issuance of not to exceed $18,750,000 Taxable General Obligation Urban Renewal Bonds be adopted. Comments followed regarding the public process, repayment of the bonds, what was privately and publically owned, etc. AYES: All (Motion carried.)
10. Amendment No. 3 – Mason City Unified Urban Renewal Plan: Motion, Marinos; 2nd, Schickel that the Ordinance amending Ordinance Nos. 01-17, 01-18, 01-19, 01-20, 02-21, 03-23, 12-14, 13-10, 13-32 and related prior ordinances, providing that general property taxes levied and collected each year on all property located within the amended Mason City Urban Renewal Area, in the City of Mason City, County of Cerro Gordo, State of Iowa, by and for the benefit of the state of Iowa, City of Mason City County of Cerro Gordo, Mason City Community School District, and other taxing districts, be paid to a special fund for payment of principal and interest on loans, monies advanced to and indebtedness, including bonds issued or to be issued, incurred by the City in connection with the amended Mason City Urban Renewal Area (Amendment No. 3 to the Mason City Unified Urban Renewal Plan) be received and placed on file for 2nd Consideration. AYES: All (Motion carried.)
11. Downtown Reinvestment Urban Renewal Plan: Motion, Schickel; 2nd, Kuhn that the Ordinance providing that general property taxes levied and collected each year on all property located within the Mason City Downtown Reinvestment Urban Renewal Area, in the City of Mason City, County of Cerro Gordo, State of Iowa, by and for the benefit of the State of Iowa, City of Mason City, County of Cerro Gordo, Mason City Community School District, and other taxing districts, be paid to a special fund for payment of principal and interest on loans, monies advanced to and indebtedness, including bonds issued or to be issued, incurred by the City in connection with the Mason City Downtown Reinvestment Urban Renewal Area (the Mason City Downtown Reinvestment Urban Renewal Plan), be received and placed on file for 2nd Consideration. AYES: All (Motion carried.)