A new tax-increment financing (TIF) district in Polk City is paving the way for development.

Polk City Dental LLC, which is managed by Paul Koester of Koester Construction Co. Inc., is developing an approximately 8,000-square-foot office building at 1010 S. Third St.

Last month, the city approved the TIF district, which City Administrator Gary Mahannah said was created specifically for the new development and will provide Polk City Dental with up to $500,000 in tax rebates over a period not to exceed 20 years.

“The developer took that to the bank,” Mahannah said. “That bank then used that for leverage for the borrowing.”

On May 12, Polk County Dental secured a $935,000 mortgage from Luana Savings Bank for its project in Polk City Business Park, which is located east of Saylorville Lake’s Mile Long Bridge.

According to the Polk County assessor’s website, Polk City Dental acquired the semi-improved land from Marina Development LLC on June 4 for $100,000.

Mahannah said the city’s development agreement with the company stipulates that any improvements made on the site must support the TIF district, which is situated in an active urban renewal area.

“They are the ones that are actually utilizing (the TIF district) as a mechanism for future development dollars,” Mahannah said. “If they stumble, they fall.”

Mahannah said the two-story building is expected to house four or five office users, including Polk City-based Cornerstone Dental Iowa and a medical doctor.