07
Jan
2003
The names have a fitting plainness: River/Gulf Grain and Builders Sand & Cement Company. These two industrial businesses occupy roughly 240,000 square feet on the Davenport riverfront east of the Government Bridge and, as their names suggest, don't provide much in the way of green grass, trees, or a river view. They also present safety risks (because of large trucks pulling out into fast-moving traffic on River Drive) and cause pollution (in the form of airborne dust).
For years, these things have been facts of life for the City of Davenport. Getting these businesses off the city-owned levee - thus making way for more attractive riverfront development - has been a formalized city goal since 1987, but in the past 15 years, the status quo has held firmly. In 1997, in fact, Mayor Pat Gibbs pushed through 15-year leases - five years with the option of two five-year renewals - that seemed to ensure that River/Gulf Grain and Builders would be fixtures on the levee through at least 2012.
That changed this past fall, though. Both businesses missed the September 1 deadline for extending their leases another five years. When the city rejected requests from both businesses to accept their late lease renewals, River/Gulf Grain and Builders were left without leases, and without any leverage with the Davenport Levee Improvement Commission and the city council.
"They forfeited their option to re-negotiate their leases," said Karl Rhomberg, a member of the Levee Improvement Commission. At that point, the commission could have - in theory - evicted the businesses off the levee. Instead, it re-negotiated their leases with terms more favorable to the city. Even though Rhomberg and other commissioners favored three-year leases, the commission in the end signed off on five-year leases.
The city council's Community Development Committee will discuss the leases at its January 9 meeting and most likely pass them along to the full council for consideration at its January 15 meeting. Yet while the leases have incentives for River/Gulf Grain and Builders to move and don't allow for automatic renewal, there's no guarantee that the city won't be re-visiting this issue again in the next five years. "I'm quite concerned about that," Rhomberg said.
Mayor Charlie Brooke dismisses such concerns. "I'm confident they're leaving," he said.
Yet Brooke espouses a philosophy that he wants "to accommodate when we can" and "to cooperate with citizens, whether they're individuals and businesses." Furthermore, he said he worries about losing jobs. "I am concerned anytime we displace" an employer, he said.
There's a lot at stake for a city whose main attraction is arguably its riverfront property. The fate of the currently industrial area where River Drive meets Third and Fourth streets will show the city's commitment to beautifying the riverfront or how far it will go to accommodate business owners. History suggests the city will bend over backwards for the businesses.
Stuck on the Shelf
The city's movement now to push River/Gulf Grain and Builders off the levee could be called long overdue. If the businesses move when the leases expire in 2007, Davenport will still be 10 years late in achieving its policy.
In the July 1986 Davenport Riverfront Conceptual Development Plan, the Oneida Landing area - where River/Gulf and Builders are - is targeted for re-development. "This area should be developed for commercial and recreational uses in the long term as a linkage to the Village [of East Davenport] and Arsenal Island," the report says. "During the short- and mid-term periods, existing industries are to be made more visually attractive, and public riverfront access (via the River Trail) should bypass potentially hazardous industrial operations occurring at the river edge."
That plan - which covers the entire Davenport riverfront - was adopted by the city council in October 1987. While future uses were not specified in the adopted resolution, the policy is clear about one thing: "The re-location of heavy industry adjoining the riverfront in the Oneida Landing area to another location in Davenport should be required by November 30, 1997 (the expiration date of the current ... leases)."
That policy, obviously, hasn't been followed. "It was promptly stuck on the shelf and ignored by the planning department," Rhomberg said.
Kathy Wine, executive director of River Action, disagreed somewhat. "It went through, and there was a lot of interest in it," she said of the policy. But new city council members "have not been informed" about the plan, and while still policy, the document has not been followed.
That plan became even more of a moot point after River/Grain and Builders signed the 15-year leases in 1997.
"We worked hard to make those short-term leases," Wine said. But the Levee Improvement Commission and Gibbs pushed through the longer leases. "We just didn't prevail," she said.
Only the missed lease-renewal deadline in September has allowed the city to re-visit the issue now.
Originally, a majority of the Levee Improvement Commission supported three-year leases for the businesses, possibly with two one-year extensions. But Rhomberg said pressure from city staff and Brooke (who sits on the commission) prevented that from happening. "Three years would have been more than fine," he said. "The staff was completely opposed."
Wine agreed that three-year leases make more sense; the longer leases before the council diminish the sense of urgency. "You don't get the interest of developers with five-year leases," she said.
Brooke called the five-year leases a compromise between people who want to see the businesses off the levee today and those who don't want them to ever leave. Three years, he said, "was too short a time for them to be gone."
So the commission eventually supported five-year leases. "We are volunteer commissioners," Rhomberg said. "To have to fight our way uphill against the city legal department, the city planning department, and ultimately the mayor and the city administration - it's awful hard." But commissioners were able to add some clauses to the leases to give the businesses an extra push.
The biggest change is that these leases are nonrenewable. "There's no option," said Curtis Beason, a Davenport attorney representing River/Gulf Grain. "There's nothing in there that gives River/Gulf any rights after five years."
"That's not to say a new lease could not be re-negotiated," Rhomberg said. If either business wants to stay longer than five years, it's going to have to start from scratch with both the levee commission and the city council.
And most people involved in the process are hedging their bets at least a little about whether this will be the final lease with these businesses. "It could happen again or it could not happen again," said Charles Heston, a project manager with the city's Department of Community & Economic Development.
Beason stopped short of guaranteeing that the company would not return for a new lease. "We have no intention of coming back," he said. (Wayne Lawson, vice president of Builders, did not return two phone messages seeking comment.)
The other major feature in the leases is increased rent, and the way that money could be used for the businesses to offset re-location expenses. The annual lease rate jumps from the current 28 cents a square foot to 50 cents a square foot in the first year, and it increases 10 percent each year thereafter. In the fifth year, both companies would be paying 73.3 cents per square foot. River/Gulf Grain's first-year rent would total $47,738.50, and by year five that amount would be $69,984.64. Builders Sand & Cement Company's first-year payments would total $71,318.50, and that would grow to $104,552.92 in the final year of the agreement.
There's an inherent incentive in these lease rates, Beason said. The levee property was appraised at 37 cents a square foot, and similar improved real estate would fetch about the same price, he said. The first-year lease amount is more than one-third greater than that market rate, and the fifth-year rate is nearly twice the appraised rate. Rob Lamb of the Quad City Development Group said the price of industrial land will vary based on the size and configuration of the land, buildings and their conditions, the adaptability of a site and its buildings, access to transportation, and the maintenance of the property. "There are so many variables that come into play," he said.
The leases include another incentive, as well. The increment - whatever the businesses pay above the 50-cent level - can be rebated to the businesses as an incentive if they re-locate before the beginning of the fifth year. (The rebate applies to actual re-location costs.) For River/Gulf Grain, that would be a maximum payback of just more than $30,000, while the amount for Builders Sand & Cement Company would be just less than $46,000. If the companies don't move in the first four years, that extra money is kept by the Levee Improvement Commission.
Will the Incentives Work?
While the rebate incentive makes some sense, it could backfire. The lease rebates only apply in the second, third, and fourth years. In the first and fifth years of the lease, the businesses are given no financial assistance in moving.
John Martin , assistant corporation counsel, said the lease clause is structured the way it is as "an incentive to help them move sooner. ... If they move in the last year, it's like they were there the whole time," he said.
But it's important to note that the primary goal of the lease is to get the two businesses to move sometime within the next five years; the secondary goal is to get them to move sooner. By eliminating the incentive in the fifth year, the city might be making it more likely that either or both businesses will be back asking for a new lease.
Furthermore, if the city truly wants the businesses to move sooner, it would front-load the incentives so that they diminish as time goes on. But that would require the Levee Improvement Commission to commit some of its own resources instead of just holding the increment in escrow.
Others who've been involved in the process downplay the role of the incentives. Beason suggested they were primarily symbolic, "to convey the sense of urgency ... to demonstrate to the public that the companies couldn't just sit there."
And Brooke said the only factors that will determine whether and when the companies move are the suitability of a new property and its price. "I don't think our incentives are going to make a difference," he said.
The leases also require the two businesses to submit "alternative site requirements and re-location costs" to the city, which both have done. (Heston said Builders' report was complete but confidential, and River/Gulf Grain's was incomplete.) In addition, by the end of January, River/Gulf Grain and Builders are supposed to submit a landscaping plan to make their properties more attractive - something that was outlined in the 1986 study. Those improvements are supposed to be made by the end of June 2003.
Those are certainly improvements to the expired leases, but they still don't erase the uncertainty about the future.
One cause of concern is that while the current city council is clear in wanting the two businesses off the levy, there's no guarantee that the body will have the same feeling in four of five years, with three city elections during the term of the leases.
And there's also the question of what the city wants to do with the levee land. "What's been talked about recently is open space," Heston said. But there's nothing in writing. While the 1986 study described possible scenarios for the land, they weren't codified. "The policies do not speak to a future use," he said.
"I don't really have a vision for it," Brooke said. He mentioned several possibilities: greenspace, condos or loft apartments, commercial and retail development, or a railroad museum. But there's not even a planning process in place yet. "That hasn't even come up yet," Brooke said.
Wine said the city should update the 1987 policy and the study that preceded it, and put out a Request for Proposals as soon as possible to re-start the planning process. "Asking the public for ideas would be an excellent idea," she said.
For years, these things have been facts of life for the City of Davenport. Getting these businesses off the city-owned levee - thus making way for more attractive riverfront development - has been a formalized city goal since 1987, but in the past 15 years, the status quo has held firmly. In 1997, in fact, Mayor Pat Gibbs pushed through 15-year leases - five years with the option of two five-year renewals - that seemed to ensure that River/Gulf Grain and Builders would be fixtures on the levee through at least 2012.
That changed this past fall, though. Both businesses missed the September 1 deadline for extending their leases another five years. When the city rejected requests from both businesses to accept their late lease renewals, River/Gulf Grain and Builders were left without leases, and without any leverage with the Davenport Levee Improvement Commission and the city council.
"They forfeited their option to re-negotiate their leases," said Karl Rhomberg, a member of the Levee Improvement Commission. At that point, the commission could have - in theory - evicted the businesses off the levee. Instead, it re-negotiated their leases with terms more favorable to the city. Even though Rhomberg and other commissioners favored three-year leases, the commission in the end signed off on five-year leases.
The city council's Community Development Committee will discuss the leases at its January 9 meeting and most likely pass them along to the full council for consideration at its January 15 meeting. Yet while the leases have incentives for River/Gulf Grain and Builders to move and don't allow for automatic renewal, there's no guarantee that the city won't be re-visiting this issue again in the next five years. "I'm quite concerned about that," Rhomberg said.
Mayor Charlie Brooke dismisses such concerns. "I'm confident they're leaving," he said.
Yet Brooke espouses a philosophy that he wants "to accommodate when we can" and "to cooperate with citizens, whether they're individuals and businesses." Furthermore, he said he worries about losing jobs. "I am concerned anytime we displace" an employer, he said.
There's a lot at stake for a city whose main attraction is arguably its riverfront property. The fate of the currently industrial area where River Drive meets Third and Fourth streets will show the city's commitment to beautifying the riverfront or how far it will go to accommodate business owners. History suggests the city will bend over backwards for the businesses.
Stuck on the Shelf
The city's movement now to push River/Gulf Grain and Builders off the levee could be called long overdue. If the businesses move when the leases expire in 2007, Davenport will still be 10 years late in achieving its policy.
In the July 1986 Davenport Riverfront Conceptual Development Plan, the Oneida Landing area - where River/Gulf and Builders are - is targeted for re-development. "This area should be developed for commercial and recreational uses in the long term as a linkage to the Village [of East Davenport] and Arsenal Island," the report says. "During the short- and mid-term periods, existing industries are to be made more visually attractive, and public riverfront access (via the River Trail) should bypass potentially hazardous industrial operations occurring at the river edge."
That plan - which covers the entire Davenport riverfront - was adopted by the city council in October 1987. While future uses were not specified in the adopted resolution, the policy is clear about one thing: "The re-location of heavy industry adjoining the riverfront in the Oneida Landing area to another location in Davenport should be required by November 30, 1997 (the expiration date of the current ... leases)."
That policy, obviously, hasn't been followed. "It was promptly stuck on the shelf and ignored by the planning department," Rhomberg said.
Kathy Wine, executive director of River Action, disagreed somewhat. "It went through, and there was a lot of interest in it," she said of the policy. But new city council members "have not been informed" about the plan, and while still policy, the document has not been followed.
That plan became even more of a moot point after River/Grain and Builders signed the 15-year leases in 1997.
"We worked hard to make those short-term leases," Wine said. But the Levee Improvement Commission and Gibbs pushed through the longer leases. "We just didn't prevail," she said.
Only the missed lease-renewal deadline in September has allowed the city to re-visit the issue now.
Originally, a majority of the Levee Improvement Commission supported three-year leases for the businesses, possibly with two one-year extensions. But Rhomberg said pressure from city staff and Brooke (who sits on the commission) prevented that from happening. "Three years would have been more than fine," he said. "The staff was completely opposed."
Wine agreed that three-year leases make more sense; the longer leases before the council diminish the sense of urgency. "You don't get the interest of developers with five-year leases," she said.
Brooke called the five-year leases a compromise between people who want to see the businesses off the levee today and those who don't want them to ever leave. Three years, he said, "was too short a time for them to be gone."
So the commission eventually supported five-year leases. "We are volunteer commissioners," Rhomberg said. "To have to fight our way uphill against the city legal department, the city planning department, and ultimately the mayor and the city administration - it's awful hard." But commissioners were able to add some clauses to the leases to give the businesses an extra push.
The biggest change is that these leases are nonrenewable. "There's no option," said Curtis Beason, a Davenport attorney representing River/Gulf Grain. "There's nothing in there that gives River/Gulf any rights after five years."
"That's not to say a new lease could not be re-negotiated," Rhomberg said. If either business wants to stay longer than five years, it's going to have to start from scratch with both the levee commission and the city council.
And most people involved in the process are hedging their bets at least a little about whether this will be the final lease with these businesses. "It could happen again or it could not happen again," said Charles Heston, a project manager with the city's Department of Community & Economic Development.
Beason stopped short of guaranteeing that the company would not return for a new lease. "We have no intention of coming back," he said. (Wayne Lawson, vice president of Builders, did not return two phone messages seeking comment.)
The other major feature in the leases is increased rent, and the way that money could be used for the businesses to offset re-location expenses. The annual lease rate jumps from the current 28 cents a square foot to 50 cents a square foot in the first year, and it increases 10 percent each year thereafter. In the fifth year, both companies would be paying 73.3 cents per square foot. River/Gulf Grain's first-year rent would total $47,738.50, and by year five that amount would be $69,984.64. Builders Sand & Cement Company's first-year payments would total $71,318.50, and that would grow to $104,552.92 in the final year of the agreement.
There's an inherent incentive in these lease rates, Beason said. The levee property was appraised at 37 cents a square foot, and similar improved real estate would fetch about the same price, he said. The first-year lease amount is more than one-third greater than that market rate, and the fifth-year rate is nearly twice the appraised rate. Rob Lamb of the Quad City Development Group said the price of industrial land will vary based on the size and configuration of the land, buildings and their conditions, the adaptability of a site and its buildings, access to transportation, and the maintenance of the property. "There are so many variables that come into play," he said.
The leases include another incentive, as well. The increment - whatever the businesses pay above the 50-cent level - can be rebated to the businesses as an incentive if they re-locate before the beginning of the fifth year. (The rebate applies to actual re-location costs.) For River/Gulf Grain, that would be a maximum payback of just more than $30,000, while the amount for Builders Sand & Cement Company would be just less than $46,000. If the companies don't move in the first four years, that extra money is kept by the Levee Improvement Commission.
Will the Incentives Work?
While the rebate incentive makes some sense, it could backfire. The lease rebates only apply in the second, third, and fourth years. In the first and fifth years of the lease, the businesses are given no financial assistance in moving.
John Martin , assistant corporation counsel, said the lease clause is structured the way it is as "an incentive to help them move sooner. ... If they move in the last year, it's like they were there the whole time," he said.
But it's important to note that the primary goal of the lease is to get the two businesses to move sometime within the next five years; the secondary goal is to get them to move sooner. By eliminating the incentive in the fifth year, the city might be making it more likely that either or both businesses will be back asking for a new lease.
Furthermore, if the city truly wants the businesses to move sooner, it would front-load the incentives so that they diminish as time goes on. But that would require the Levee Improvement Commission to commit some of its own resources instead of just holding the increment in escrow.
Others who've been involved in the process downplay the role of the incentives. Beason suggested they were primarily symbolic, "to convey the sense of urgency ... to demonstrate to the public that the companies couldn't just sit there."
And Brooke said the only factors that will determine whether and when the companies move are the suitability of a new property and its price. "I don't think our incentives are going to make a difference," he said.
The leases also require the two businesses to submit "alternative site requirements and re-location costs" to the city, which both have done. (Heston said Builders' report was complete but confidential, and River/Gulf Grain's was incomplete.) In addition, by the end of January, River/Gulf Grain and Builders are supposed to submit a landscaping plan to make their properties more attractive - something that was outlined in the 1986 study. Those improvements are supposed to be made by the end of June 2003.
Those are certainly improvements to the expired leases, but they still don't erase the uncertainty about the future.
One cause of concern is that while the current city council is clear in wanting the two businesses off the levy, there's no guarantee that the body will have the same feeling in four of five years, with three city elections during the term of the leases.
And there's also the question of what the city wants to do with the levee land. "What's been talked about recently is open space," Heston said. But there's nothing in writing. While the 1986 study described possible scenarios for the land, they weren't codified. "The policies do not speak to a future use," he said.
"I don't really have a vision for it," Brooke said. He mentioned several possibilities: greenspace, condos or loft apartments, commercial and retail development, or a railroad museum. But there's not even a planning process in place yet. "That hasn't even come up yet," Brooke said.
Wine said the city should update the 1987 policy and the study that preceded it, and put out a Request for Proposals as soon as possible to re-start the planning process. "Asking the public for ideas would be an excellent idea," she said.
