Bonita Avenue residents react after workforce housing proposal decision

OTTUMWA, Iowa (KYOU) - Huegerich Construction may be changing its plans to build in Ottumwa. Tuesday night, the Ottumwa City Council voted down two of three measures regarding Heugerich’s proposed agreement with the City.

The first vote established Heugerich’s property along Bonita Avenue as an urban renewal district, which allowed the Council to vote on an ordinance establishing a tax increment funding (TIF) district on that property for 20 years. That would mean 100% of property taxes levied on the property would be paid back to the developer. That vote failed. The third vote would have the City enter into a development agreement with Heugerich Construction. That vote failed as well.

But despite controversy among Ottumwans, City Administrator Phil Rath believes TIF is a useful tool, especially when it comes to risk. “The developer is taking the risk; they’re taking the loan. And they use the dollars coming back to them to pay that loan off.” He compares that to paying the developer outright, where the City would have to take out a loan. But even Rath wasn’t keen on the two decades the tax rebates would span.

However, the CEO of Heugerich Construction says he can’t build the apartment complex without those rebates. When KYOU spoke to the City Administrator, he hadn’t heard from the developer about the next steps. However, construction vehicles continue to move on the property.

Many residents around Bonita Avenue, where the complex was proposed to be built, are happy. One resident, Julia Blunt, started a petition that gained 748 signatures, both on paper and online, from people who opposed the 20 year TIF. Blunt explains “I pay a lot of taxes to live in this neighborhood and the house. And I know everyone else does, too. And this isn’t just affecting our neighborhood, it’s affecting our whole city of Ottumwa.”

Several of those signers appeared before the Council on Tuesday night, including County Supervisor Jerry Parker, who appeared as a private citizen. “It’s residential,” Parker said, speaking on the proposed property. “It’s going to be taxed as residential. Why shouldn’t they pay their own property taxes?” As a County Supervisor, he says, he sees taxes go up each year, and wants all residents to be pulling their weight. “Taxes will go up [for all other Ottumwans] if you give the property taxes back to the developer,” Parker explained Tuesday night.

The City Administrator asserts that wouldn’t happen.

All in all, the Council turned down establishing a TIF district, as well as an agreement with the developer. In a 1-3 vote, with Council Member Holly Berg abstaining. Council Member Bob Meyers voted in favor of the proposals, saying it’s the Council’s responsibility to provide people a place to live. “We owe people adequate housing,” he said to applause.

However, City Administrator Rath says the failure of the Bonita Avenue proposal points to a much larger issue: a lack of new housing developments in Ottumwa. He doubts many developers would come to Ottumwa without an incentive. “For somebody to build something here, the rent they would get, the sale prices they would get, are not very competitive with larger communities.”

JBS Ottumwa’s General Manager Joseph Mach agrees, especially as the plant has over 200 openings, and not many places to put new employees aside from hotels. And, to Mach, that’s not a permanent solution. “It’s hard to relocate a family to Southeast Iowa when they have to live in a hotel for 6 to 8 weeks or longer.”

The Bonita Avenue residents recognize the housing shortage as well. Julia Blunt agrees Ottumwa needs housing. “We need affordable housing. I’m just not sure that...an apartment complex is necessarily the solution. Definitely not an apartment complex with a 20 year TIF.”

In the 2020 census, Ottumwa saw a slight rise in population, but Rath worries a lack of housing development could stagnate population growth. “Our housing shortage is, I’m afraid, very shortly becoming a housing crisis,” Rath says.

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