A building that used to be a strip club could now become another branch of a wholesale plumbing and heating supply company.
Tom Deimerly, president of Marshall Economic Development Impact Committee (MEDIC), spoke to the Marshalltown City Council at its Committee of the Whole meeting Monday about giving Pat Nicholson, branch manager of Plumb Supply Company, a wholesale distributor of plumbing, heating and air conditioning supplies, a five year tax abatement.
The building, 207 E. Iowa Ave., has been vacant for four years and previously generated $6,500 in property tax revenue. Deimerly said since the building was last occupied it has fallen into disrepair.
According to the county assessor, a 2013 assessment of the property valued it at $164,950.
"It's necessary in this case," Deimerly said. "We haven't had very many developers looking into the property. Those that did generally didn't get out of the car."
Deimerly said Nicholson plans to gut the building down to its concrete and steel and make $500,000 worth of upgrades when complete. Deimerly said he has been working with the company to search for a suitable building for the business to occupy, but none of the currently available buildings suit the owner's needs.
With the proposed improvement, Deimerly said the owner estimates the new taxable value at $400,000, which would increase the taxes to roughly $18,000 a year.
According to Nicholson's letter to the council, the $500,000 in improvements to yield a building worth $400,000 necessitates the tax abatement.
In addition to the square foot increase, HVAC additions, facade upgrade and various other improvements, MEDIC has been working with Alliant to add a gas pipe that would open the surrounding areas for development, which there has been some interest in, Deimerly said. Although the parcel sits in an area annexed by the city, it would be serviced by the Marshalltown Water Works and not rural water.
"This would be a pretty dramatic enhancement to that property that exists in one of our major growth corridors," Deimerly said.
Deimerly said MEDIC would likely cap the abatement at $100,000 - between $18,000 and $19,000 per year for five years. Doing so allows for an apples-to-apples comparison of the property and fills the gap between the investment and the valuation.
Curt Ward, city attorney, pointed out that the abatement is actually an urban renewal reimbursement, not an abatement.
"They would be paying the taxes, and we could have the taxes repaid from TIF (tax increment finance) revenues," Ward said.
The council will vote on the abatement at a subsequent meeting.