Surf asks City to extend property tax rebate agreement

by Marianne Gasaway

The Clear Lake City Council will meet in special session Monday to consider extension of a property tax rebate agreement with the North Iowa Cultural Center & Museum, operators of the Surf Ballroom.

The City and NICC&M initially inked a three-year agreement in January 2009. In February 2011, the agreement was extended for a second time— this time for a five-year term.  An additional five-year agreement was entered into in November 2016, lasting until June 2021.  

The Board of Directors of the NICC&M has now asked the City  to extend the property tax rebate agreement.  The proposed renewal would involve the city portion of the property taxes paid on three properties — the ballroom, the adjoining ballroom dressing room annex at 464 North Shore Dr., and the Surf Ballroom Music Enrichment Center at

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509 Buddy Holly Pl.  The tax rebate would be in an amount not to exceed $90,000 over a five-year period. The property tax repayments happen twice a year with each payment being approximately $4,000.

Jeff Nicholas, president of the NICC&M, spoke with the City Council at its regular meeting Nov. 16.  He told the group the organization has cut its expenses and applied for pandemic aid, but is “struggling” with no events in the building due to COVID restrictions.

“Our promise to you is that when this pandemic is over, we will make the Surf what it was and even more,” said Nicholas.  

He noted the Surf has announced its lineup and plans for its annual Winter Dance Party Feb. 3-6.

“We know the importance of that event economically and culturally for this community, and we are going to do our very best to pull it off,” said Nicholas.  “We will have much smaller numbers, but we’re going to do it.  We feel like we need to have that event to continue on with the legacy of that event and obviously the Surf Ballroom.”

Monday’s public hearing on renewing the agreement will be held at 10 a.m. at City Hall. City Administrator Scott Flory explained that in order for the agreement to be included in the fiscal year 2022 tax-increment financing certification request to the county, the resolution approving the agreement must be approved and filed by Dec. 1.

Development agreements

The City currently has various Development Agreements that contain an “annual appropriations clause.”  In order to obligate funds for payment in the 2022 fiscal year, the City must certify the projected debt estimate to the County Auditor’s Office by Dec. 1 (Dec. 1, 2020 for collection in fiscal year 2022).  These payments are from the Tax-Increment Fund and are a portion of the property taxes paid by the company or business itself, not from general property taxes otherwise received by the City.

Flory explained the City entered into a Development Agreement with Windmill Realty LLC in February 2014, which was later assigned to McKesson Corporation in April 2015.  The City estimates a property tax rebate payment of $530,000 in fiscal year 2022.  The fiscal year of the final rebate payment is 2032.

The City entered into an original Development Agreement with Titan Pro SCI in 2010, which was later amended in March 2012 to provide for additional incentives based on an increased physical expansion of the business.  The initial property rebate payment was made in November 2012 and the Agreement continues through June 2022, or until total rebate payments of not to exceed $1.1 million have been made.  The City estimates the property tax rebate to the company for fiscal year 2022 to be $113,000.

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