Watch out, taxpayers: Mason City asks state for millions more to finish downtown arena/hotel project

MASON CITY – To avoid putting the burden  on the backs of weary Mason City taxpayers, city officials admitted today they need at least $3 million more to “fill the gap” to fund the massive downtown redevelopment project they are pursuing.

City officials have said time and again that Mason City taxpayers would not be on the hook for the $36 million downtown arena/hotel development they are pursuing.  Today, however, the project’s co-leader, councilman Alex Kuhn, dropped a bombshell and admitted the city needs millions more to “fill the gap” on funding “without putting our population in debt”.

Speculation has swirled ever since the $36 million project was unveiled in 2015.  It includes a hotel, ice area, parking ramp, music pavilion and mixed-use building in the downtown.  City leaders have said time and again that taxpayers would not be on the hook to pay for it and that most of the project is “privately funded”.  Despite these promises, many citizens are not convinced that taxpayers will not ultimately pay for this project – and that their taxes will not someday reflect how this deal unfolds.  Taxpayers are already weary after thousands of property owners have been socked with tax hikes connected to two school levies, and a massive property assessment project OK’d by city hall, the school district and Cerro Gordo county.  Many property owners have seen their assessments raised as a result of that action by the city assessor.

Previously, the city requested $9.8 million from the state for the project last year.  State officials countered – preliminarily – with an offer of a non-guaranteed $7.1 million that the city would need to re-apply for once the project matured.  The city did its part by approving a roughly $7 million parking ramp paid for with $19.75 million in general obligation (GO) bonds the city council approved – and would have to be paid back.

“The City would be paying the interest along with the principal with the new TIF increment,” Finance Director Kevin Jacobson said, regarding the GO bonds.  “The estimated interest would be around $8,000,000 over the 20 year life” of the bonds issued by the city.

The arena, slated for construction inside the former JC Penney building – would cost roughly $12 million to build.  Southbridge mall is owned by US Bank.  Sources tell NIT that the bank, however, cannot lease the property to the city, as city officials have said would happen.  City officials have refused to respond to repeated questions from NIT as to whether they are now pursuing actual ownership of Southbridge Mall, due to the lack of a lease possibility. Its upkeep is a massive expense, and how the city would pay for that is still a question.

In its final application for state economic development dollars – some call this state taxpayer dollars – the city now has upped the ante to an even $10 million – even more than the $9.8 million it originally asked for.

For months, Councilman Alex Kuhn and Mayor Eric Bookmeyer have parroted the same lines, that the city would not be on the line to cover the cost and/or fund any part of the $36 million downtown “River City Renaissance Project”.  Alex Kuhn and Eric Bookmeyer have so far ignored repeated questions today from NIT asking how this project could be funded without the people of Mason City at risk.  Even after the city was “OK’d” for $7.1 million from the state, taxpayers were told they were not at risk to fund the project.  Now, an extra $3 million is required to ward off debt and exposure to the people of Mason City.

The only answer NIT is given is that all documentation connected to this development has been made public and they can read it.  Alex Kuhn has been good enough to send that advice to NIT; Eric Bookmeyer never responds to questions from NIT about this project.  Both men personally went to Des Moines to lobby the state to support the project.  The problem seems to be, however, the project continues to evolve.  New developments are taking place behind the scenes, and the only ones who seem privy to the actual state of the project at any given time is Alex Kuhn and Eric Bookmeyer.  Their updates to the project are typically to refer to very complex “public documents” or to have John Skipper explain it in the Globe Gazette – explanations many find dubious at best.

Today, February 24, the City of Mason City announced it has submitted the Our River City Renaissance Final Application for the Iowa Reinvestment District program to the Iowa Economic Development Authority Board. The application contains the same five projects in the pre application (sent in 2015) with updated information, approved development agreements and approvals in financing for the projects.

In a press release, the city said today the final application “includes a request for $10 million in funding from the Iowa Reinvestment District program, an increase of $2.9 million from the pre-application.”

The city touted a “financial feasibility study” that claims to show a “major impact this project will have in Mason City and the North Iowa region.”

The Mayor and City Council of Mason City have unanimously approved several actions over the last nine months to complete the necessary steps and submit the final application. The City of Mason City was selected by the IEDA Board to submit a final application for Iowa Reinvestment District funding in the spring of 2015. The City of Mason City was required under program guidelines to submit the final application prior to March 1, 2016.

Mayor Eric Bookmeyer said, “I am very proud of all the work our valued partners, staff and council have done to get this project to the point of submission to the IEDA board. This is a true team effort. The Our River City Renaissance Project is a transformative redevelopment right in our downtown core that compliments all our previous redevelopments and will continue to spur Mason City to new heights.”

In the most-telling of admissions, Alex Kuhn stated this in the press release:

“From day one I have believed that our project will have the most transformative effect of any of the finalists being considered as our project is a true re-investment of existing infrastructure in the hub of North Iowa and eliminates our decades-old struggle of not having an adequate venue for our nationally renowned hockey team and convention center. This past year we have been extremely diligent and met every expectation placed upon us and feel Mason City should be given strong consideration for full funding of $10 million to fill the gap to build the venue without putting our population in debt.”

NIT has calls into state officials seeking information.  Stay tuned for more in this rapidly-evolving situation.