The Clinton Herald, Clinton, Iowa

March 13, 2013

City Council supports incentives for businesses

Moves forward with packages for RAIL.ONE, Data Dimensions

By Katie Dahlstrom
Herald Staff Writer

CLINTON — Members of the Clinton City Council pledged their support to two economic development ventures by moving forward with incentives vital to the projects.  

The first incentives that council members discussed during their Committee of the Whole meeting Tuesday night were for German rail tie manufacturer, RAIL.ONE, which plans to build a facility in the Lincolnway Railport.

Karen Mallinger with the Clinton Regional Development Corporation explained that the initial investment made by RAIL.ONE will be $20 million and the annual economic impact is expected to be $15.2 million. RAIL.ONE has agreed to pay $15.59 or above, which is the average wage in Clinton County. The company will bring 60 direct jobs and will result in another 40 indirect jobs.  

The city will offer RAIL.ONE a 100 percent Tax Increment Finance rebate not to exceed $2 million total over the course of 10 years.  The city will also construct a road from 44th Avenue South to RAIL.ONE’s property for its industrial traffic and future railport tenants. The road is estimated to cost $400,000, for which the city could apply for a Revitalize Iowa’s Sound Economy grant or use TIF funds to finance.   

City Council members were scheduled to apply for a $248,000 Community Development Block Grant of Economic Set-Aside Funds from the Iowa Department of Economic Development, but RAIL.ONE determined it was no longer interested in receiving this grant, according to Interim City Administrator Jessica Kinser.  

“We heard from RAIL.ONE yesterday that this money, because it was coming from the state, had too many strings attached to it for the small amount that it was they prefer not to move forward with that grant opportunity,” Kinser said.

Instead, the city will need to approve a resolution to sponsor an application to the Iowa Economic Development Authority for Enterprise Zone Benefits.

Even with council members approving a resolution of support for the project, the city has a number of steps to take before a development deal can be finalized.  

“We don’t have the necessary administrative infrastructure in place to just sign on the dotted line right now if that would be the choice of the council. There are still many actions that we would need to take,” Kinser said.

The city will need to create a railpark urban renewal area and plan in order to be able to offer the TIF funding. Once the plan is drafted and ready to be approved, the council will need to hold a public hearing, get approval from the county and the Camanche School District, review and get recommendation from the Planning Commission, and then send it back to the Council for final consideration. Once those steps can be completed and a TIF ordinance established, a development agreement can be finalized.  Kinser didn’t have a defined timeline for how long the urban renewal area would take, although she said it would not take several months because of the urgency she’s expressed.

“Ultimately, we cannot have a development agreement without an urban renewal area and the urban renewal plan being in place and being approved by the council. If that happens at the time that they (RAIL.ONE) do want to construct we will still as long as the council directs, we will still proceed with the development agreement. There are some of those things that can happen in tandem,” Kinser said.

Council members also approved a resolution to hire the firm of Frey, Haufe and Current P.L.C. to negotiate the sale of the property to RAIL.ONE. The outside counsel is needed because of the rapid timeline and the current workload of city Attorney Jeff Farwell, Kinser said. John Frey explained that the cost for services will be $160 an hour, which will be paid for from the proceeds of the property sale.

“It’s not going to be cheap to hire outside counsel, but you need it to get the job done I think,” Frey said.

Frey could not estimate how many hours the negotiation would take, but they are aiming to have the sale completed by May 1.  

RAIL.ONE will work in conjunction with Utah-based wooden rail tie recycler Nevada Rail Materials at the park. NRM will bring 35 jobs, but has not requested any incentives.  

The incentive discussion continued when council members shifted focus from the railport to the Lyons Tech Park, where Data Dimensions plans to construct an operations facility that will bring 130 new jobs to the area.

City Council members authorized an application to the state in order for Data Dimensions to receive benefits of the Enterprise Zone Program.  If the application was approved by the state, the city would need to provide a local match in the amount of $1.91 million in property tax abatements over a 10-year period.

Council members unanimously approved the resolutions.

For the sake of expedience and in order to have the local incentives set up before the state awards its incentives on March 22, council members agreed to set up a special meeting to give final approval.

That meeting time has not yet been determined.