WATERLOO - The City Council voted more than 10 years ago to establish an enterprise zone in Waterloo's downtown and surrounding neighborhoods.

On Monday, members of a commission set up to oversee it asked current council members if the zone, initially established to encourage infill development in blighted neighborhoods, should be enlarged to include several outlying areas, including Crossroads Center.

"When we started, we wanted to incent people to come in there and do infill (construction) and help those areas that needed the most help," said Joe Vich, chairman of the Waterloo Enterprise Zone Commission, during a joint meeting of the council and the commission.

But expanding the zone "sets some interesting precedents that we as an enterprise zone commission didn't feel comfortable doing" without council input, Vich added. Primarily, commission members worry expanding the zone could remove the incentive for downtown and east-side development.

Iowa lawmakers developed enterprise zone legislation in the 1990s, allowing cities to carve out areas meeting poverty guidelines as zones where developers of housing and nonretail businesses could get investment tax credits, jobs training dollars and sales tax refunds for their projects. Such zones were limited to 1 percent of the total county, making Waterloo's choice of the older, central city obvious.

But lawmakers lifted the 1 percent limit during the last session, which opens up additional areas in Waterloo that could be added to the enterprise zone, including the Northeast Industrial Park, Gates Park area and Burton Avenue industrial area, generally around the Omega Cabinets site. The other area is Census Tract 9, which runs along the west side of the Cedar River from downtown and through the Riverview Neighborhood before curling back to include much of the Crossroads Center retail district.

Community Planning and Development Director Don Temeyer notes the Crossroads area clearly isn't blighted or low income. But it is qualified for enterprise zone inclusion when the demographics from the rest of the census tract are included.

Temeyer opposes expanding the zone, which he believes could detract from the city's programs which have had success drawing development to the city's center and blighted neighborhoods. "I'm very afraid of what it will do to our existing programs," he said.

But City Planner Noel Anderson disagrees with his boss.

"The new housing, the new businesses are positives that are going to help these other areas," Anderson said. "The original mission of the enterprise zone was for infill development. Should the mission change to simply bringing more development?"

Anderson noted the enterprise zone benefits do not apply to retail businesses, so much of the Crossroads Center activity would not qualify. But he believes expanding the zones to include undeveloped areas would attract a large-scale housing developer and even help by setting up another layer of benefits in the Northeast Industrial Park.

The two councilmen who represent east-side wards were concerned about the expansion.

"I'm opposed to expanding the enterprise zone," said Ward 3 Councilman Harold Getty. "I want to see it stay the way it is now."

Ward 4 Councilman John Kincaid said he didn't necessarily oppose the zone expansion. But he needed to be convinced the expansion would lead to more affordable homes in his area of the city and that Crossroads' inclusion wouldn't hurt the growth the city is seeing around Logan Plaza.

Other council members supported the large zone.

"I think we should expand," said Ward 1 Councilman Reggie Schmitt. "The whole idea is growth."

Ward 5 Councilmen Ron Welper and At-large Councilman Bob Greenwood also endorsed adding more area to the enterprise zone. Council members Eric Gunderson and Carolyn Cole were absent.

Welper said he believes the downtown area is well on its way to success with Riverfront Renaissance, Vision Iowa projects and other development and should not be threatened by other areas getting similar incentives for housing and office building construction.

"I believe the downtown is going to flourish anyway," he said.

The final decision ultimately is up to the enterprise zone commission members, who are expecting to make their decision by the end of October.

Sagamore Development, of Iowa City, is watching the decision closely. The company is hoping to get enterprise zone benefits for its planned assisted living center on Flammang Drive, between GMAC Mortgage and Menards home improvement store.

In other business, council members approved placing a speed hump in the 600 block of Dawson Street at the request of residents living there.

Contact Tim Jamison at (319) 291-1577 or tim.jamison@wcfcourier.com.