Keokuk council approves development agreement to transfer SID Center with up to $1.283 million in city incentives

Keokuk City Council voted to approve a development agreement that will convey the city-owned SID Center in the Twin Rivers urban renewal area to MM Real Estate LLC, allowing the developer to convert the underused facility into multifamily housing.

Mayor Smith opened a public hearing where the developer, identified in the meeting as Mr. Morfeld, outlined plans for a minimum of 30 one- and two-bedroom apartments (with capacity to expand to about 40 units depending on a tenant lease), demolition of two adjacent buildings to provide off-street parking, and an overall project that the developer estimated would require roughly $4 million of private investment. "Our total investment in the project is going to be roughly $4 million ... 4 million of that is going to be our personal investment. You're the city contribution just shy of 1.3 million," the developer said.

Council and the public pressed for detail on financing and risk. Public commenter William Banis called the SID Center a "boondoggle," asked whether the city would get its money back and questioned which funds would cover the payment. Council members and staff summarized the city's fiscal exposure: the site received a $1 million EDA grant in 2017 that carries use obligations through 2032 unless a buyout is executed, the center has historically operated at an annual deficit of roughly $80,000–$100,000, and the city still holds a lease with tenant Roette that runs through January 2029. Staff said the EDA buyout figure discussed in the hearing is roughly $69,000 to remove EDA restrictions, but noted that the city would continue to carry operating costs until a conveyance and project completion shifted responsibility.

The proposed city contribution is structured as progress-based reimbursements tied to construction draws rather than a lump-sum payment; staff noted reimbursements would generally be limited to a percentage of documented construction costs paid as the project reaches milestones. The developer said the proposal relies on obtaining Iowa Workforce Housing credits and grayfield or other incentives; he described a funding gap the credits would help close.

After extended discussion about the long-term liabilities, lease obligations, and potential benefits — including removing a longstanding operating loss from city books and adding housing supply downtown — council voted to approve the resolution to move forward with the development agreement.

Next steps: the agreement contains contingencies tied to the developer securing tax credits and other financing; construction would not start until the financing and required approvals are in place, with an anticipated design/permitting phase this fall and possible winter construction start if credits are awarded.