The easy part of attempting to secure state tax revenue through the Iowa Reinvestment Act program is done: submitting the preapplication and gaining approval.
Now comes the hard part.
“You’re dealing with a lot of unknowns when you put your pre-application in,” said Matt Anderson, Des Moines’ deputy city manager. “It was really a concept stage. … Now a lot of money is going to start to be spent doing all the nitty-gritty real estate development components that need to get done.”
Those steps include completing detailed architecture and engineering drawings and reports, conducting detailed site analyses, securing financing, rezoning land where necessary, gaining all of the necessary city approvals for site plans, and lining up contractors and other workers.
In addition, the projects that were preliminarily approved to receive the state tax revenue must now get final approval.
The Iowa Economic Development Authority board in June gave preliminary approval to providing six redevelopment projects across the state $100 million in state tax revenue through the Iowa Reinvestment Act program. The program allows communities to use new state hotel/motel and sales tax revenue generated by the developments to be reinvested in the area in which the development is located.
Projects in Des Moines, Urbandale, Ames, Newton, Fort Dodge and Cedar Rapids were selected to receive the funding.
The Des Moines project, spearheaded by Krause Group, includes construction of a 6,300-seat multiuse outdoor stadium (pictured) on property at 200 S.W. 16th St. where Dico Inc.’s manufacturing plant was located. Surrounding the stadium would be what’s being called the Global Plaza as well as parking for about 500 vehicles, a 150-room hotel and additional soccer fields.
The cost to redevelop the site, which in 1983 was added to the Environmental Protection Agency’s Superfund list, is estimated at nearly $116 million. The state board approved providing $23.5 million in future state tax revenue to the project.
A separate project that straddles the Urbandale and Des Moines city boundary lines includes development of a 3,500-seat multiuse arena and training center on the west side of Merle Hay Mall, located at Merle Hay Road and Douglas Avenue. The facility would be home to the Des Moines Buccaneers hockey team. A multistory hotel would be attached to the arena and training facility.
Redevelopment costs are estimated at $128.6 million. The state board approved providing $26.5 million in future state tax revenue to the project.
Before any of the projects can receive the state tax revenue, all must submit final applications by next February. The applications will be reviewed, and if all the criteria are met, the projects will be able to collect the state tax revenue. The prorated portion of the revenue will be distributed annually over 20 years.
When the preapplications were submitted, most applicants provided rough estimates of project costs, Anderson said.
“Nobody nailed down the numbers,” he said. “Now you’ve got to put a finer point on your pencil. You’re going to be more precise with your budget.”
In addition, project backers must determine how the projects will be financed, Anderson said. Both Urbandale and Des Moines are expected to provide tax increment finance funding. Des Moines is expected to provide up to $9 million in tax increment financing for the stadium project; Urbandale is expected to provide up to $3 million for the arena project (pictured).
In addition, Krause Group has raised about $20 million of a private fundraising goal of $25 million, according to Charley Campbell, general counsel for Krause Group. “The recent generous commitment from American Equity Life [Insurance Co.] has given the project a great boost and significant momentum as we move confidently toward our goal,” he wrote in an email.
Krause Group is also seeking other grants and will take out construction loans for the project. Construction loans will also be taken out for the Merle Hay project.
The portion of Merle Hay Mall that is in Urbandale will be rezoned to accommodate the future uses of a stadium and hotel, said Curtis Brown, Urbandale’s assistant city manager and economic development director.
While the outdoor stadium planned in Des Moines will be built from the ground up, the new Merle Hay arena will be located in an existing building that once housed a department store. The roof of the building will need to be raised to provide the space needed for an arena, said Elizabeth Holland, CEO of Merle Hay Investors, owners of Merle Hay Mall.
The project will be similar to the construction that occurred before the opening of Flix Brewhouse, which includes a movie theater, at Merle Hay Mall.
“We took the roof off, we raised the ceilings, we got rid of the columns,” Holland said of the project. “We will be doing something similar in the former Younkers building. Since we’ve done it before, we’ve got the skill set and know some of the big things that need addressed.
“Now we’re fine-tuning all of those details.”
Construction is expected to be completed on the arena in time for the Bucs hockey team to play there during the 2022-23 season, Holland said.
Anderson said construction of the multiuse stadium in Des Moines is expected to begin early next spring.
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