WATERLOO - A proposed 60-unit elderly housing project is seeking "enterprise zone" status to improve its chance of landing federal tax credits.

But developers of the Whitman Point assisted living center must first convince Waterloo city officials to declare their site near Crossroads Center as economically depressed.

Sagamore Development, of Iowa City, asked the Waterloo Enterprise Zone Commission Monday to endorse expanding the city's current enterprise zone to include the vacant lot on Flammang Drive, between GMAC Mortgage and Menard's home improvement store.

Despite getting a chilly response, the proposal was tabled by the commission for further discussion next month.

"What's depressed about that?" asked commission member Jerry Northey. "If we (expand the zone) for that area, who would we say no to?

"I don't have a problem with the project; I have a problem with expanding the enterprise zone for it," he added. "I'd be hard-pressed to get anybody in town to say that's a blighted area."

Iowa legislators in 1998 allowed cities to designate areas in depressed census tracts as enterprise zones, making non-retail businesses and large-scale housing projects eligible for investment tax credits, sales tax refunds and other incentives designed to encourage construction. Waterloo's current zone covers the downtown and surrounding neighborhoods.

Community Planning and Development Director Don Temeyer said the Whitman Point area qualifies for inclusion in the enterprise zone only because it is in the same census tract at the Riverview Neighborhood and downtown riverfront areas, which have high poverty rates and low household incomes.

Temeyer suggested allowing enterprise zone benefits near Crossroads would hurt efforts to develop the city's older neighborhoods and east side - areas the zone was originally created to help.

"Personally I do not support this," Temeyer said. "We want that state money to be used to encourage development in older neighborhoods."

Architect Bob Burns, representing Whitman Point, said his company chose the location based on market studies and its proximity to Covenant Medical Center, which would be a partner in providing care to the center's residents.

"We are not going to change our site, because we think it's the correct location," Burns said. "We are not asking for any other incentives or benefits from the city. We are doing this all on our own."

Whitman Point applied for low-income housing tax credits through the Iowa Finance Authority last year, and received an endorsement from the Waterloo City Council. But the application failed to score well enough in IFA's process to receive the credits, in part because it was not in the enterprise zone. Conversely, the ROSE of Waterloo, a similar project under construction at Franklin and Oak streets, was in the enterprise zone and won the IFA credits.

While commission members and city staff uniformly agreed the project would be a positive improvement at the proposed location, they were leaning against expanding the enterprise zone for it.

"It doesn't fit the initial purpose," said commission chairman Joe Vich. "I think it creates a very dangerous precedent that could really be anti-productive for what we're trying to do."

Before the request returns to the commission, city planners were expected to gather additional information about areas in the city that would qualify, based on census data, to be included in the enterprise zone.

But Temeyer said he would be inclined to recommend areas on Highway 63 north for inclusion before recommending carving out areas near Crossroads Center.

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