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Experts: Eagle Grove school project unusual, but not improper use of county funds

Swenson

Fisher

EAGLE GROVE | Earlier this month, the Wright County Board of Supervisors approved up to $1.5 million in county dollars for a $6 million, 13,200-square-foot addition to the Eagle Grove elementary school.

Eagle Grove Superintendent Jess Toliver and Belmond-Klemme Superintendent Dan Frazier disagreed on whether that move should have taken place, and whether tax increment financing — also known as TIF, a type of public financing used to subsidize redevelopment, infrastructure and other community-related projects — was the best route for funding the addition.

The TIF financing is directly related to the incoming Prestage pork processing plant, which will be located in rural Eagle Grove.

In the first 10 years, the $250 million plant is expected to generate $1.8 million annually for taxing entities in Wright County, the company said on its website, and more than $2 million each year after that.   

Multiple people who have studied TIF issues for decades told the Globe Gazette this week that while Eagle Grove and Wright County's use of TIF funding seems rare, it's a fair use of county money.

Dave Swenson, an associate scientist in the Department of Economics at Iowa State University, said the type of financing is typically used for other infrastructure needs, like water, sewer or fixing roads. 

He does, however, believe Eagle Grove is right in receiving the money, because the TIF district only includes Prestage and the Eagle Grove school district, and not neighboring school districts in Wright County.

"That school district (Eagle Grove) is the only district that was impacted directly by the granting of the tax increment financing to Prestage," Swenson said.

Peter Fisher, research director at the Iowa Policy Project, has taught TIF-related courses at the University of Iowa. Like Swenson, he said he hasn't seen this particular use of TIF funding like the Eagle Grove addition.

Fisher said TIF has changed since it was initially introduced decades ago, because the concept was additionally only intended for "blighted" areas. Now, he said, the money can be used for "economic development," allowing it to be used in a much wider range of projects.

According to Fisher, what makes Eagle Grove's situation unique is that school districts typically suffer when it comes to similar funding situations.

"School districts are often left having to raise taxes," he said about similar situations. "But here, it’s almost like the county was doing a TIF on behalf of the school district … So they’re (county and school officials) saying, well, the (Prestage) plant’s gonna cause population growth ... it's an innovative use of TIF."

Larry Sigel is another academic who has studied finance issues — including TIF. He currently works for Iowa School Finance Information Systems, which helps "provide electronic finance tools and financial consulting services to Iowa public schools," according to its website.

Like Swenson and Fisher, Sigel said Eagle Grove's funding is fair use of TIF dollars. He's seen similar examples before, but indicated it's rare to see counties and public school districts working together to solve a common issue — in this case, an education shortage because of expected population growth.

"That doesn’t mean it’s bad," Sigel said. "If I could get 99 counties to work with over 300 school districts, we could solve some problems."

Swenson, Fisher and Sigel all indicated that using TIF money for a school addition seems like a positive use of funds. Swenson, however, is skeptical of how many people will live in and near Eagle Grove, simply because of a new pork processing plant.

He added he disagrees with some of the studies Wright County has used to determine population growth and expansion because of Prestage.

"This is just one of those interesting things where local governments try to get creative," Swenson said. "I don’t know how it’s going to play out."

Fisher, however, said he is in support of what Wright County and Eagle Grove is trying to do.

"Overall, I’ve seen some pretty egregious uses of TIF, but building an addition for school children seems to be one of the better uses," he said.

Hopefully, Eagle Grove's example can serve as an indicator for other school districts and communities, and how they can properly use TIF dollars, Sigel said.

"The more that people understand what the process is, the better," he said. "I’ve been working in the area over 20 years, and it’s complex ... the simple explanations often don’t work, it does require people to sit and find out about this stuff."


CHRIS ZOELLER, The Globe Gazette 

Riders take off from the starting line for a race during the ninth annual Jack Helgren Memorial Race Saturday in Clear Lake.


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Clear Lakers enjoy ninth year of 'The Jack'

CLEAR LAKE | Clear Lakers and other North Iowans enjoyed the festivities of the ninth annual Jack Helgren Memorial Race this weekend.

"The Jack," as it is locally known, is a series of snowmobile races that takes place each year on Clear Lake. Despite the warm weather and slushy conditions, more than a hundred snowmobilers zipped along the race track in the South Bay area of the lake.

“Perfect day, perfect conditions, you can’t get a better day than today,” says event chairman Gary McVicker of Hampton.

Jack Helgren, the namesake of the event, was a snowmobiler, and former dealer/racer, who also promoted the sport in Clear Lake. Helgren died in 2009.

There are varying lengths of races, ranging from three to 10 laps. There is also the Stud Boy race, which is a maximum length of 50 laps, based on track conditions and time available.

On Friday night, there was a cruise around the lake. Opening ceremonies were held 9 a.m. Saturday, followed by this year's round of racing.

Aaron Casler of Des Moines, in his fifth year of competing at the event, set a record for the Radar Run, where riders have 500 feet to reach the top speed for their snow mobiles, with a speed of 146 mph. Casler had set the previous record last year with a speed of 132 mph. 

"We came out to win the top speed of the day, and so far we have it under control," Casler said soon after his record setting run, about half way through the day's races. 

"This is a perfect day, you can't get any better than this to come out and do it [race] for charity," he said.

Awards were handed out at 7 p.m. Saturday at Best Western Clear Lake, where the Split Second Band — a rock 'n' roll cover band that plays throughout the state — also performed.

The Jack was sponsored by more than a dozen area businesses this year.

McVicker pointed to the dozens of volunteers, some of which have been involved with the event since year one, that help make the event successful.

“The community makes this thing happen, he said. “Without that, we wouldn’t be here.”

— Steve Bohnel. Chris Zoeller contributed to this story. 


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State defers action on Mason City downtown project 'until further notice', sets June deadline

MASON CITY | The state agency with the money to help fund Mason City's River City Renaissance Project is willing to wait for the city to meet all requirements for the money — but it must be done by June 30, a spokeswoman said Friday.

The Iowa Economic Development Authority Board deferred action "until further notice" Friday on Mason City's request for up to $10 million to help leverage the city's $38 million downtown project. There was no discussion.

The board has given the city several extensions on meeting its requirements but has not grown impatient, said Kanan Kappelman, marketing and communications spokeswoman for the board.

"The board's stance on this is that we understand some projects take longer than others and we are willing to work with the cities," she said. "The board wants to make sure all the i's are dotted and the t's are crossed.

"But the program ends on July 1 so June 30 is the absolute deadline," she said.

Interim City Administrator Kevin Jacobson said last week there were three major hurdles for the city to meet the state requirements — signing a development agreement with the developer; G8 Development dropping a lawsuit it had against the city for an earlier hotel deal that fell through; and proof of appropriate financing.

Jacobson said the first two requirements have been fulfilled. The missing link is the proof of financing. Chodur claimed in an email Thursday he has the financing and blames the city for dragging its feet.

The River City Renaissance Project includes a hotel in the Southbridge parking lot, connected to The Music Man Square via a skywalk; a conference center inside The Music Man Square; building a museum adjacent to the Square; and putting a performing arts pavilion and an ice arena/multipurpose center in Southbridge Mall.

The money would come from the Iowa Reinvestment Act which the IEDA oversees.

The hotel is a key component in the city's project because one of the requirements is $10 million in private investment. The hotel is valued at $15 million. 

Chodur originally planned to build a hotel next to City Hall. When he failed to meet several construction deadlines, the city found him in default and the deal fell through. City officials said at the time that Chodur could not get financing.

After he defaulted, the city put out requests for new bidders. G8 and Gatehouse Capital responded. The City Council approved Gatehouse's proposal.

The council negotiated with Gatehouse for several months during which major changes were made in the proposed agreement. Because of that, the city was required by state law to put the project out for bids once again.

G8 submitted a bid that the council found more favorable than Gatehouse's, council members said. They voted to go with G8.