Sep 26, 2022 - Business

Des Moines sweetens its Market District incentive

A drawing of the Market District in Des Moines.

Market District is located near East 4th and East Market streets, adjacent to Martin Luther King Jr. Parkway on the south and near the Des Moines river on its western edge. Rendering courtesy of JSC Properties via the city of Des Moines

Market District developers will receive up to 100% of the new taxes generated from their projects over the next 20 years.

  • It will help subsidize construction, according to an agreement approved last month by the Des Moines City Council.

Why it matters: It's potentially millions of dollars more in taxpayer incentives.

  • A previous agreement capped an incentive known as Tax Increment Financing (TIF) at 93%.

Context: The Market District is a 10-block, 39-acre area near downtown's East Village that was previously used by industrial businesses.

  • A conceptual plan to transform the area into a downtown urban neighborhood with thousands of residential units, hotels, offices and entertainment venues was approved by city planners about two years ago.
  • Redevelopment and new construction could exceed $1 billion.

State of play: Much of the area has been cleared for redevelopment and some streets are constructed and ready for new buildings.

  • But developers worry that rising interest rates and construction-related costs could stymie progress.

What's happening: The boosted incentive is available to Market District projects that start by the end of 2027.

  • Developers of projects that begin later will receive the lesser TIF incentive.

What they're saying: The additional incentive would likely lower a project's overall costs by a few percent points and could be important in maintaining construction progress in the district, developer Paul Hayes told Axios last week.

Of note: The development agreement prohibits the use of residential tax abatement.

  • That leaves TIF as the primary local incentive in the Market District, Ryan Moffatt, an economic development coordinator for the city of DSM told Axios.

Bottom line: The district faces market challenges.

  • The city is trying to offset some of the pain to keep the project's momentum.

What's next: There is likely to be a few building projects that come forward in the next year, Hayes said.

A photo of the market district
Sites like this near Southeast 4th and Raccoon streets are being cleared to make room for Des Moines' new Market District. Photo: Jason Clayworth/Axios

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