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The Akron Hometowner

712.568.2208

110 Reed St.,

PO Box 797

Akron, IA 51001

Online Edition Archive

The Akron City Council announced they are considering annexing land from Akron city limits south along Iowa Highway 12 to the Northwest Iowa Renewable Energy LLC site, which is located on both sides of the highway, south of 180th Street. “iunderstand by annexation, we may well benefit both the county and the city in terms of taxation,” responded Akron Mayor Harold Higman, Jr. at a public hearing for “possible annexation and creation of a Tax Increment Financing (TIF) District” held during the council's June 12 meeting. “We're exploring those avenues at this time.” When asked if the council had a map detailing the area they wanted to annex, they said, “No.” After questions from The Akron Hometowner, city resident Larry Boe and county residents Nancy Enstrom and Karen Barwick, it was revealed that plans included only annexing Iowa Highway 12 and the biodiesel plant sites – not other land between the city limits and the biodiesel facility site. The annexation would not include the Akron Riverview Corn Processors Inc.'s ethanol facility property or Higman Sand & Gravel or property adjacent to 170th Street. To annex land, the parcels must be contiguous to current city property. Only Iowa Highway 12 would be the contiguous piece of land between Akron's current city limits and the biodiesel land parcel they want to annex. The city's annexation plans would not include the whole 30-square mile area that Plymouth County is creating an Urban Renewal Area, said City Attorney David Stuart. “That's about all there is at this time,” said Higman. “We're just here to make it public and move forward with it.” He explained that with annexation, the council could then either create 1) a TIF District; 2) a tax abatement to Northwest Iowa Renewable Energy LLC or 3) do both of the first two options. “All avenues are being explored,” said Higman, adding that city officials will begin talking with Plymouth County officials and have their attorneys involved. “We haven't talked with (Akron Riverview Corn Processors Inc. officials),” he said. “The county really has not been willing to discuss with us what all is going on so we don't know all the answers but the biodiesel folks have given consideration to do it and they would do it in an unchallenged manner that would go through pretty easily.” “What drives this is that the impact of the (biodiesel) plant is going to have more effect on Akron than on the county,” said Councilman John Lucken, who is also the biodiesel's board of directors' president. “It is a situation where the city may benefit directly more this way than through county TIF or county annexation.” “We put this on the agenda just to have a public hearing,” said Stuart. “Start getting some of the questions out so we can go back, know what to ask, know what's important. We're just starting the fact-gathering, finding out – can we work with the county? Do we have to go on our own? What are the things needing to be done in the future? Just getting the ball rolling and heading down that road.” Stuart assured the public present there would be more public hearings in compliance with the statutory requirements if anything proceeds with annexation. “As we have said at the onset, no decisions have been made,” said Higman. “Simply an exploratory position right now. We want the best for thing for the people of Akron – that's who we have to watch out for.” When asked if the city's process needed to be finished within the 30-day time limit of the county's Urban Renewal Area project, especially the signing of the county's agreements, Higman responded, “We have seen no proposals from the county so we know nothing about it.” With two councilpersons and the mayor on the Northwest Iowa Renewable Energy LLC's board of directors, how would they go about a vote on annexation? Lucken and Frerichs said they would “recuse” themselves, leaving it up to the other three councilpersons. It was asked if that would apply to Councilman Chad Ericson, who is an investor in the biodiesel group, and was absent from this portion of the meeting. “idon't know if he is (an investor) or not,” said Higman. “That would remain – that's undisclosed.” “You have to keep in mind as this (council) acts and reacts,” he added. “It has interest of only the best for Akron. We're not thinking about what's going on in an outlying area, trying to benefit someone out there. We're trying to do what's best for the people of Akron. That's what we've been elected to do. That's what we're charged to do and what we are going to do.” Later, Plymouth County Economic Development Director Gary Tucker appeared at the meeting. When asked to share what Plymouth County officials were doing, Tucker responded, “Long and short of it is, we approved to move forward with a public hearing to create an Urban Renewal Area (as reported in last week's Hometowner).” Since it's within two miles of Akron city limits, we have to get (Akron city officials) to sign off (on the county's Urban Renewal Area plans), and county officials will be at the June 26 council meeting, he explained, adding the county's public hearing was set for July 10. The county is also considering creating Urban Renewal Areas at Merrill and Hinton...because of cities' debt capacity limits. The county has a debt capacity of $83 million, said Tucker. Akron's is $2,317,411 for the 2007-2008, which only 5 percent of the assessed value, said City Clerk LoriMartin. Their current general obligation debts are Portlandville Heights Subdivision, $145,000; and the Akron Fire Station, $471,167. For the 2007 Summer Improvement Projects, city officials are also considering undertaking another $675,888. This gives the City of Akron a general obligation debt load of $1,292,055, leaving them with just over $1.025 million before they'd reach their debt capacity limit. In addition, county officials approved a tax incentive package for Akron Riverview Corn Processors Inc., said Tucker. The package includes seven years of a TIF rebate: 100 percent tax abatement, first two years; 75 percent, third year; 60 percent, fourth year; 45 percent, fifth year; 30 percent sixth year; and 15 percent, seventh year. “So much is speculative,” said Tucker, explaining they don't know what the facility's assessed taxable valuation will be. “We've made some assumptions.” The county is facing more than $7 million in Iowa Highways 3 and 12 infrastructure required specifications by the Iowa Department of Transportation, he said, adding the county's probably already spent between $70,000 and $100,000 in roadway design engineering. The county originally planned to have Akron Riverview officials fund this through their equity drive and give them a larger tax rebate. However, ethanol equity drives are much tougher now, said Tucker. “We're going to have the county be creative to fund it because it takes two years to gather taxes and then the next two years the facility receives tax incentives. The county will have to borrow the funds to do this.” “The first four years there is no revenue (from these facilities),” said Tucker adding not only does the infrastructure debt count against an entity's constitutional debt capacity but any tax incentives offered do, too. “A joint venture is a good venture,” said Tucker, adding the county has discussed it but when city's annex properties, those properties are taxed at the higher city rates. The county's net tax mill levy for TIF is $25.67 while Akron's is $33.02 Therefore, if annexed the biodiesel property owners would pay the city's higher mill levy. “Unless you relinquish the rebates back to the biodiesel plant, I'm not sure it makes sense to the biodiesel group to do (annexation).” “The real issue for the city is you don't have the debt capacity to handle the rebate schedule,” said Tucker. “You don't have the debt capacity to handle the infrastructure. Either way you go about this, it'll have to be a joint venture of some kind. The county's obviously not opposed to doing that.” “Quite honestly, we'd prefer the city do it,” said Tucker, “because the county would just as soon you take care of the $2 million for the biodiesel and $7 million for the whole works.” “There is no revenue there,” he said. “If you're looking at it as a revenue stream, it's not. By the time you pay all the infrastructure costs, it's not for either the city or county. Nor should it be.” “It will be some day down the road,” said Higman. “No, once the infrastructure is paid for, technically, the TIF should go away,” said Tucker. “You're not supposed to create a TIF District for revenue. You're supposed to create a TIF to pay for infrastructure costs involved in the project. When those costs are paid, the TIF should go away.” “That's fine,” said Higman. “Eventually it'll go under general taxation.” “Yes, that's correct,” said Tucker. Editor's Note: In a later phone conversation with Chad Ericson, he told The Akron Hometowner, “I am an investor...a silent investor. ihave no votes, no decision-making power.” He had had an advisory capacity when the original biodiesel committee was deciding to form a company and through the transition period from committee to board of directors. “iwill vote in what's the best interest of the city. We have a lot of questions to be answered first, how will it affect the county? How will it affect the city? If the city does annex the land, how will it affect the city financially? We're trying to figure that out right now.”