first on decorahnews.com: Financial incentives for the new Fareway store in Decorah in 1996 were more than double the originally cited figure

Posted: Sun, Mar 24, 2019 3:37 PM

When Ridge Development recently approached the City of Decorah for financial help in renovating the former Quillin's store in Centrum Plaza, it asked for a package of financial incentives totaling $749,000--a 15-year tax abatement totaling $424,000 and a contribution of $325,000 from Decorah Jobs/Winneshiek County Development.

In support of that request, a document was distributed which said in 1996 the City of Decorah provided $300,000 of tax assistance to Fareway to move to their current location in Block 16 of downtown Decorah.

decorahnews.com has reviewed documents from that period of time and has discovered that the actual amount of financial aid provided in 1996 was $765,000--$16,000 more than what is being requested for the former Quillin's project 23 years later.

To help Fareway, the Decorah City Council in 1996 approved seven years' worth of property tax abatements for Fareway's new building. The tax abatements totaled $150,000.

The City of Decorah also agreed to purchase the existing Fareway building on West Water Street (which now houses the Oneota Community Food Co-operative) for $280,000. But the city was able to turn around and sell the building to Latham Furniture for $150,000 in 1997. That means the city's net cost wound up being $130,000, not $280,000.

That meant the financial assistance total was $280,000.

But there was an even more significant way in which the City of Decorah gave financial assistance to Fareway—by purchasing the land for the project. Those cost figures have not been included in past figures and when that is done, the entire financial aid package comes to $765,000 (which is roughly $1.25 million in 2019 dollars).

There were a number of property owners who accepted a total of $275,000 in payments from the city for their property on Block 16, according to records from the Winneshiek County Register of Deeds. There was one property owner—Gerald Schacht—who refused to sell his property to the City of Decorah. The city threatened to condemn the property, but then the two sides agreed to go to arbitration. The arbitrator ruled Schacht's property was worth $210,000. On October 3rd, 1995, the Decorah City Council voted to accept that ruling and pay Schacht the money the arbitrator said was a fair price for the property.

That means the city spent a total of $485,000 on getting the land for Fareway ($210,000 for Schacht's property plus $275,000 for all the other properties).

Adding $150,000 in tax abatements, $130,000 in net cost of buying and selling the old Fareway building and $485,000 in payments to property owners in Block 16, where Fareway built its new store, you get a grand total of $765,000.

But those costs represent the value of money in 1996. $1.00 spent in 1996 would be the same as $1.61 spent in 2019. That means $765,000 spent in 1996 on the Fareway project would be roughly equivalent to spending $1.25 million in 2019.

(Editor's note: decorahnews.com is not weighing in on whether cities should give financial incentives to corporations, but believes it's important to have accurate dollar figures available for any discussion)