Hotel Maytag’s request for tax rebates splits council, fails to pass

Newton City Council was split over a request from Hotel Maytag Investors, LLC to amend its agreement with the city for what would have been the ninth time.

However, growing concerns over the development group’s ability to pay back the Iowa Finance Authority loan and council’s unwillingness to provide 100 percent of the property tax rebates for Hotel Maytag — which underwent a massive $16 million renovation — ensured the resolution failed on Dec. 18, 2023.

In a 3-3 vote, the council effectively turned down the request from Hotel Maytag Investors to provide a property tax rebate instead of the originally agreed upon tax abatement. The agreement had initially stipulated the developer would pay the entire tax liability of the base value of $515,370.

Anything over that base value would be abated through fiscal year 2031. But the assessment of the property unexpectedly increased beyond the benefit of the tax abatement. According to council agenda documents, at the time the development agreements were approved, minimum assessments never increased.

For most commercial properties in Newton in the 15- to 20-year period prior to the Hotel Maytag project, there were little to no increased assessments. So the council never expected to receive taxes above the base of $515,370, which the city noted the developer would have still paid under the amended agreement.

Hotel Maytag Investors wanted property tax rebates not to exceed $400,000 for fiscal years 2025 through 2034; the rebate schedule would be at 100 percent. The developer would have required to pay the taxes in full before receiving the TIF rebate, which would not include debt service from local government entities.

Again, the city stated the original intent was that Hotel Maytag Investors would not pay property taxes over the base value of $515,370. Extending the developer a TIF rebate would be a compromise solution to address the unforeseen increase to the minimum assessment.

The renovation of Hotel Maytag is unique in that the city employed tax abatement as one of the main economic development incentives for the project. But since then the city council has amended the Citywide Urban Revitalization Plan to move away from abatements and towards partial TIF rebates.

Council member Vicki Wade commended developer Jack Hatch for investing in Newton, but she struggled with the request and worried about setting precedent. Mayor Evelyn George, who was still an at-large council member at the time of the meeting, said the city wants projects to be successful to attract more investors.

Randy Ervin, who was still serving as the at-large council member at the time, was ultimately opposed to the request. While he acknowledged Hotel Maytag as a cornerstone in the downtown square and praised Hatch for renovating the building, he lamented just how many times the agreement had been changed.

“This is the ninth time we’ve went back and make adjustments,” Ervin said. “And how many times have we seen somebody from Maytag (Investors) LLC. I’m a little bit confused. I said this in a meeting with Matt the other day: Why are we doing this? Sometimes he doesn’t even return our calls for a series of times.”

When asking city staff who started the conversation, Newton City Administrator Matt Muckler said it began between a contact from the development group and the city’s finance officer. Then the request came to council in October in the form of a public hearing, but any subsequent action was tabled.

Earlier in the meeting, Ervin had asked the audience if anybody from Maytag Investors LLC was present to speak with council. There was no answer.

“Of all the things we’ve talked about in the past four years, this is probably the one most negative thing I’ve heard,” Ervin said before reciting resident questions. “‘Are we going to give in to Jack again? Are we giving more money to Jack? Are we giving more money to the project? Why does the city keep doing that?’”

Ervin said he knows a lot of businesses in the community that took “a heck of a beating” during the COVID-19 pandemic. In addition to higher assessments for those commercial property owners, he questioned where council draws the line and how they can excuse Hatch but not them.

“How do we look at them and say, ‘Suck it up and pay it, buttercup,’” Ervin said. “…Even though he’s not here or anybody from his group is here tonight to talk to us about this or to ask us for help, how do we just continually give this gentleman money? I’m really against this one because I think it’s been handled poorly.”

Council member Mark Hallam proposed the city meet somewhere in the middle. Ervin agreed, but he argued such negotiations were not possible with no one from the group present to interact or negotiate with council. Ultimately, Muckler said city staff would follow the director of council.

“The city staff will be happy to implement whatever decision the city council makes on this,” Muckler said. “Having said that, I would just mention that this was a promise we made to this developer at the beginning of this project because assessments didn’t change for 15 years in this town.”

Still, Muckler sympathized with council members’ feelings and said that officials gave Hatch direction when he requested they postpone his loan payments.

“We asked for a business plan on how he was going to turn things around,” Muckler said. “And I think if there’s a place that you want to hold this developer accountable, I think that is a more appropriate place to look rather than the action that’s in front of you this evening.”

Council members who voted in favor of the resolution include Melissa Dalton, Evelyn George and Craig Trotter. Those who voted against were Randy Ervin, Mark Hallam and Vicki Wade. Since the council could not secure four votes in favor, the resolution failed.