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Cedar Rapids City Council approves tax incentives for $108.6m FedEx building


Rendering of the 479,000 square foot FedEx warehouse and distribution center that will be built at 1035 Commerce Park Dr SW in Cedar Rapids. — courtesy of the City of Cedar Rapids

The Cedar Rapids City Council approved tax incentives that will be part of a development agreement for a new FedEx warehouse and distribution facility in the city. According to FedEx, the new complex will cost $108.6 million and create 434 jobs in Cedar Rapids.

The tax incentives are part of a deal with FedEx Ground Package System and Scannell Properties. Indianapolis-based Scannell Properties will build the new 479,000 square-foot facility at 1035 Commerce Park Dr SW.

The new facility will expand FedEx’s ground service, according to Caleb Mason, the economic development analyst for the city. It will also provide direct support to FedEx’s hub facility in St. Paul, Minnesota.

All of the jobs created as a result of the warehouse and distribution facility will be new to the state, Mason told the council on Tuesday. The positions are not transferred positions from Minnesota or other Iowa locations, he added.

More than 80 percent of the jobs — a total of 359 — will be part-time. The remaining 75 of the 434 jobs will be full-time. Mason estimated that the total payroll budget for both full- and part-time positions would be around $20 million.

The city will provide a 50 percent reimbursement on increased taxes generated by the facility for 10 years, the standard level of tax incentives the city offers for major new developments. According to city council documents, the project is estimated to generate $16.3 million in total taxes over 10 years, of which $6.1 million would be rebated to the company.

The city also agreed to make off-site road improvements to accommodate traffic generated by the project. Mason said the city is still working to define the scope of the improvements but they would primarily be done to Sixth Street SW and Welford Road.

Councilmember were unanimous in praising the new FedEx development.

Councilmember Scott Overland called the project “a new chapter of growth in the commercial and logistics area in Cedar Rapids.”

“As time goes on, I expect further logistics-type businesses to be attracted to Cedar Rapids and our location,” Overland added. “We’ve got our high-quality airport, as well as our rail and highway system. The ability for Cedar Rapids and our economic development team to get FedEx here, as well as using our standard economic package, I think is a testament to the kind of results that our economic team is able to give for us.”

Rendering of the 479,000 square foot FedEx warehouse and distribution center that will be built at 1035 Commerce Park Dr SW in Cedar Rapids. — courtesy of the City of Cedar Rapids

Councilmember Ann Poe praised the city team and expressed her enthusiasm for what this project means for Cedar Rapids residents.

“I’m just blown away,” Poe said. “This is quite a facility and certainly $20 million in payroll that goes back into our community. I’m excited about that. What a great facility, and I would like to thank FedEx Ground for putting your confidence in our wonderful city of Cedar Rapids.”

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Councilmember Ashley Vanorny, who represents District 5 where the facility will be located, echoed Poe’s comments about the salary and benefits that will be available to employees, especially in light of some companies in the city leaving.

“I think it’s great knowing that we’ve got such a net positive of all these new jobs coming to Cedar Rapids that weren’t here before in an expanding district, let alone with livable wages that come with benefits, whether it works better for somebody to be part time or full time is something that we can really celebrate and be proud of,” Vanorny said.

Toyota Financial Services announced in March they will be relocating their Cedar Rapids customer service center that employs 600 people. At the start of the year, Collins Aerospace had its third round of layoffs due to the pandemic.

Mayor Brad Hart highlighted that the city has had nine ribbon-cuttings and groundbreaking events in the month of June.

“[This is] another huge investment in our community by a well-known company,” Hart said. “We got to keep growing our workforce.”

Last summer, the council approved a deal with aerospace company BAE Systems to build a $139 million aerospace facility. BAE Systems, which is based in the United Kingdom, purchased Collins Aerospace’s military Global Positioning System business last year.

The aerospace facility is expected to keep 650 jobs in Cedar Rapids. City Manager Jeff Pomeranz told the Gazette last year that state economic agencies classify the jobs as “new,” but the majority of the employees already work for the company and live in the area.

Mason anticipates a final development agreement for the FedEx warehouse and distribution facility to be brought to council in August for consideration and approval. Construction is expected to begin by Aug. 1 and be completed by Sept. 30, 2022, according to council documents.

Jordan Sellergren/Little Village

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