The developer of the Bettendorf sports complex wants the city to accept a portion of state sales tax rebates over a 10-year period, rather than pay $556,000 now owed under terms of the 2017 agreement.
The agreement with developer Doug Kratz set a cap of $3.87 million on city paid infrastructure for the so-called Bettplex at Middle Road and I-80. However, the cost of the streets, sewers, storm water detention and walkways exceeded that by $844,000.
And, one of primary improvements in development agreement – upgrade of Forest Grove and Middle Road intersection – has yet to be completed with only temporary traffic signals installed.
The city council already has agreed to forego $288,000 of the overrun because the sewer line installed as part of the project would serve other development along Forest Grove Road. That, despite the normal practice of having developers pay the full cost of extending sewer lines to their development.
That leaves $556,000 owed the city under the agreement. Rather than pay that amount, however, Kratz now wants the city to accept 20 percent of sales tax rebates allocated by the State of Iowa for the sports complex over the next 10 years.
If the full amount of the sales tax rebates – $2.5 million over 10 years – is achieved, the city would get $50,000 a year, or a total of $500,000. Kratz would pocket the reminder of the rebates, or a total of $2 million over the 10-year period.
To generate $250,000 in state sales tax rebates, the sports complex would have to generate more than $4 million in sales each year. To help reach that level, the Enhance Iowa board Thursday (1/10/19) expanded the scope of previously approved rebates for the sports complex, now called the TBKBank Sports Complex.
Rather than just allowing tax rebates on the outdoor baseball/softball fields and outdoor concessions, the board agreed to expand the rebates to include all the indoor courts/fields, food/beverage, the bowling alley, bar and arcade within the sports complex building. The rebate does not include the hotel, restaurants or gas station being built adjacent to the sports facility, according to Iowa Enhance officials.
In addition to the rebate split with the city, Kratz has asked city officials to rewrite the development agreement to remove him from any personal financial liability in connection with the complex, and have the city pay him $187,000 to be used to build additional parking on 3.6 acres of land, currently owned by the city and adjacent to the sports complex property.
The proposed agreement changes were outlined in emails between Kratz and City Administrator Decker Ploehn obtained by bettendorf.com through a Freedom of Information (FOI) request.
It is unclear whether city council members have been informed about the proposed revisions to the development agreement.
City financing of the project includes:
• $3.2 million in general obligation bonds that would be paid by the city's property tax and gambling revenues.
• $2.3 million in Urban Renewal General Obligation bonds to pay for the forgivable loan, parking paving and land acquisition. The urban renewal bonds would be paid back through the city's debt levy.
• $5.9 million in Tax Increment Financing (TIF) bonds to cover the project development costs. The bonds would be paid back through the "incremental" property taxes on the sport complex, which would require a minimum assessment of $27 million in order for the higher property taxes from the development to cover the bond principal and interest over the 20-year life of the notes.
CLICK HERE for sports complex cost summary from December 2018.
CLICK HERE to download a copy of the development agreement between the city and the sports complex owner.
