Mayor Don DeWaard addressed concerns over the City of Pella’s involvement in the Smash Park Pella development at Tuesday’s special council meeting after the restaurant and entertainment complex closed indefinitely on Monday.
An agreement for the facility was approved by the Pella City Council in 2021, and included significant financial incentives to open. In September of that year, the council ultimately approved a $1.5 million construction grant for RDP Holdings within 150 days of a certificate of occupancy and if certain conditions were met. Part of the ownership of the development was transferred from RDP Holdings to Pella Entertainment Group, LLC, specifically as it related to the ultimate construction of what is now Smash Park Pella.
DeWaard says the money is repaid through property taxes by tax increment financing. He says the grant funds are tied specifically to the property itself, even if the building is not operational. The city’s development agreement required the developer to pay property taxes on a minimum assessed value that was agreed upon in the resolution related to the incentives. The minimum assessed value for the Smash Park property is $5 million, with a two percent increase annually.
During a policy and planning session on December 6th, 2022, staff was directed to proceed with the grant to Pella Entertainment Group. One of the components of the agreement was that the facility was to be operated “in accordance with requirements of the City’s development agreement.” The grants were to be issued as tax increment rebates.
DeWaard also stated that while the business itself and Pella Entertainment Group, LLC, is closing, the original developer RDP Holdings remains ultimately responsible for repayment of the bond issued as part of the development incentive, which will be collected as property tax.
“There’s very, very little risk to the City of Pella,” DeWaard said. “In this particular case, the original grant agreement was with RDP and they later assigned it to the Pella Entertainment Group, but later, the City of Pella kept RDP ultimately responsible for the payment of property taxes if the owner of the building went bankrupt.”
“I would say the risk to the taxpayers of Pella is as minimal is as you can possibly get.”
DeWaard did not have comment about any potential options going forward for the space during his opening statement.
FULL AUDIO STATEMENT FROM DEWAARD ABOUT SMASH PARK:
December 7, 2021 agreement details
December 6, 2022 policy and planning
DeWaard expressed sympathy to the owners of Smash Park, saying that operating businesses always comes with risk.
“Sometimes, it doesn’t work out,” he says. “If you look at the statistics, it’s a high percentage of small businesses that start out and don’t survive. Unfortunately, that happened in this case. I think we, as a city council, felt like this was going to be a great amenity for the community.”
He then thanked all local business owners for their contributions.
“I do want to show, or at least speak about, appreciate for all of our small business owners,” he says. “In Pella, our business community is what has contributed and made this the community that it is. If you think about Pella Corporation and Vermeer — those started as small businesses, and obviously they grew. If you walk the streets of Pella, downtown you see all sorts of small businesses.”