On December 7, 2021 the City Council voted in favor of a development agreement, which will add an additional seventy-two units to the thirty-six unit building currently under construction on Bonita Avenue. City staff was contacted by Huegerich Construction to assist with a financial gap in the construction of the 100+ unit development. The development agreement approved by the City Council will add over $8M of new value to the city by using Tax Increment Financing (TIF) to provide a rebate to the developer, which can be utilized as an asset to secure a construction loan.
“When used correctly TIF can be a powerful economic development tool.” stated City Administrator, Philip Rath. “Unfortunately TIF gets a bad rap as an unfair advantage. Rather, TIF should be viewed as an investment in the future. Similar to a retirement account – we give up a little of the new revenue today for a more prosperous future.” Staff worked with legal counsel to draft the agreement, which provides a fifty percent rebate of the additional tax revenue up to $87,500 per year for twenty years.
This project addresses housing - one of the key objectives identified in the Our Ottumwa 2040 Comprehensive Plan. “Everything we’ve seen shows that housing is a barrier to economic development and job growth,” said Director of Community Development, Zach Simonson. “JBS took the initiative to recruit a developer for this project because they have at least 200 open positions they are trying to fill. When the right project comes up, we have to be willing to use any tool in our toolbox. The Council vote shows that we’re willing to do that.”
