T-R PHOTO BY ROBERT MAHARRY During Monday night’s meeting, the Marshalltown city council voted 4-2 to approve an amended development agreement for the Glenwood 7th Addition housing project in the southwest part of town to stretch the Tax Increment Financing (TIF) payments out over a longer period.

The Marshalltown city council voted 4-2 to modify a Tax Increment Financing (TIF) agreement with Glenwood Marshalltown LLC, the company behind the development of 42 lots in the southwest part of town, during Monday night’s regular meeting.

As City Consultant Cindy Kendall, who sat in the city administrator’s chair, explained, the change was primarily in extending the length over which the $1.41 million development agreement is being staged.

“They’re asking for staging in four different segments. That way, the tax increment financing would also be staggered in four different segments depending upon the construction that is in front of (us),” Kendall said.

She noted that the new agreement added safeguards not included in the previous contract from 2021 like limiting the dollar amount to what has already been established, not allowing any single segment to go more than 10 years and not allowing the final segment to go past 2043.

Councilor Gary Thompson asked how the state legislature’s newly implemented rules on TIF would affect the agreement and whether they would potentially necessitate public hearings. She said they would not affect individual agreements unless the overall plan for Urban Renewal District 6, which is where the Glenwood project is located, was modified.

Citing frequent comments about the need for additional housing in Marshalltown, Thompson asked if the developer was seeking to phase out the TIF agreement further because the lots weren’t selling as fast as he had originally anticipated. Kendall said that was indeed the case.

“Then I don’t understand. You know, I don’t know why we would slow down the money that he owes us for the LMI (Low to Moderate Income Housing),” Thompson said.

Kendall responded that the LMI is not generated if he doesn’t build houses.

“We want to make sure that we can get the growth going as fast as we can, and by doing it in smaller segments, doing it by four segments, perhaps, then we would get to mobilize the LMI sooner,” she said.

Thompson reiterated his confusion that what the city was initially sold on wasn’t coming to fruition, and he worried about setting a precedent for future developers, indicating he would be voting against the amendment.

Marshalltown Area Chamber of Commerce President/CEO John Hall then stepped forward during the public comment period and agreed with Thompson that approving the agreement would set a precedent — although, in Hall’s view, it would be a positive one.

“The precedent we would be setting is that if individuals choose to take a risk by investing in our market, that our city stands behind their investment and stands with them in taking that risk,” Hall said. “There is an outside developer that chose to invest in our community. They could’ve invested those dollars into what would be considered less risky communities, but they chose to invest that here in Marshalltown. That investment has not panned out at the speed at which they anticipated, and we have an opportunity to say ‘You know what? Thank you for investing in our community.'”

He added that the overall dollar amount was not changing, and the modification simply allowed for more flexibility in allowing the project to come to fruition. Hall challenged Thompson to reconsider his position on the matter.

Mark Eaton commented that he understood the idea of supporting a developer who took a risk on Marshalltown but also expressed concern about changes in TIF regulations as the financing can no longer be pulled from school district revenues effective July 1.

“How will this be affected, if at all, by adding more burden to this TIF project to the city and to the county, and, to that end, we had a good start on TIF and maybe I could answer my own question if we could have about six more lessons and get that whole eight-hour class in,” he said.

Kendall explained that the school levies are being carved out just like general obligation debt for the school, city and county, and as a result, all are held harmless when it comes to calculating the increment being used. In a follow up, Eaton said the school districts receive a backfill of about 60 percent from the state when TIF is utilized, but the backfill is going away with the new rules. He asked if this agreement would be grandfathered in, and Kendall said it would not be.

Eaton wondered if it would place a heavier burden on the other taxing entities.

“Not necessarily, because again, the increment is the only thing that this developer is asking the calculation to be based on. When it does not go into the increment, that’s going to be shared with the developer,” she said.

Mayor Pro-Tem and Councilor Mike Ladehoff said the city should be willing to work with developers rather than “stepping on their necks” when unforeseen roadblocks present themselves. A motion to approve the modified agreement carried 4-2 with Thompson and Mark Mitchell opposed.

It was estimated after the meeting that eight to nine residences have been built on the development thus far.

In other business, the council:

• Approved the consent agenda as listed.

• Approved a new eight-month special Class C retail alcohol license for Brewsters Inc. at the Marshalltown Softball Complex.

• Approved the appointment of Gary Thompson to the solid waste commission for a term ending on Jan. 13, 2025 by a 5-0-1 vote with Thompson abstaining and appointed Mark Mitchell as an alternate on the same commission with a term ending Dec. 31, 2026 by a 5-0-1 vote with Mitchell abstaining.

• Rejected a motion to suspend the council manual rules and reconsider the disposal of dangerous and dilapidated buildings from the March 11 meeting. It required a supermajority of five councilors, and Barry Kell and Jeff Schneider voted against the reconsideration.

• Approved the reallocation of up to $750,000 in general obligation (GO) bonds for downtown street construction projects in lieu of the railroad safety and quiet zone.

• Approved the third and final reading of an ordinance amendment to the fire prevention and protection code related to violation penalties.

• Approved a resolution on the status of funding update for the Iowa Economic Development Authority (IEDA) Community Development Block Grant (CDBG) downtown revitalization project.

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Contact Robert Maharry

at 641-753-6611 ext. 255 or

rmaharry@timesrepublican.com.