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Questions about the total cost and development fees prompted the ÃÛÑ¿´«Ã½ Development Corporation board to table a proposal from ÃÛÑ¿´«Ã½ Grocery Group LLC seeking another $3 million in New Markets Tax Credits .

, the questions signaled growing skepticism at the mounting tally of subsidies and the complex financing structure needed to build the grocery store and gas station near the Stan Musial Veterans Memorial Bridge. The city hopes to jump-start development in the low-income area as it prepares a huge nearby site for the National Geospatial-Intelligence Agency and the spy agency’s 3,100 employees.

The development board, which controls the city’s allocation of the federal tax credits, had toward the project in August.

This time, the board questioned the nearly $20 million cost to construct a 20,000-square-foot grocery branded as the GreenLeaf Community Marketplace and a 6,500-square-foot Zoom gas station and convenience store near the intersection of Tucker Boulevard and Cass Avenue.

“That’s north of $500 a square foot,� Alderman Stephen Conway, an SLDC board member, told the development group. “Why is the construction cost so high?�

Minerva Realty Capital Managing Director Russell Caplin, representing the development group, said the total cost includes infrastructure improvements and “significant� roadway improvements. It also includes $1.9 million in initial inventory costs for the stores.

The group needs New Markets because the lender, Cedar Rapids Bank & Trust of Iowa, wanted an extra reserve fund in order to make a $10 million loan for the project, Caplin said. “It would be very difficult for us to move forward without it,� Caplin said of the additional New Markets credits.

The extra $3 million in New Markets Tax Credits would come from a $5 million allocation the city granted to a small hospital McKee planned within the 1,500-acre NorthSide footprint.

The city would no longer commit those credits to the hospital project and use $2 million of that commitment elsewhere.

Darryl Piggee, an attorney for McKee, said the hospital project is still advancing and can use other tax credits if the city opts to withdraw its New Markets commitment to the medical center.

TIF and equity

Last year, the ÃÛÑ¿´«Ã½ Board of Aldermen approved for the project. It would be the first assistance from a much larger TIF district established for McKee’s NorthSide plans in 2009.

Under questioning from commissioners, Caplin said the developers would replace the only owner equity going into the project using funds raised from TIF notes.

“So the owner will have no equity when that occurs?� SLDC board member Wendy Timm said.

Timm said the “lack of permanence� of developer equity gave her pause. She also wanted more details on over $1 million in management fees as well as provisions making the fees “more contingent on delivering.�

Chris Goodson, another board member, said he wanted to support the project because it would provide “food service in a food desert,� but that he had questions about the total cost.

“I’m just having a hard time with that north-of-$500-per-square-foot project cost,� he said.

Asked whether the project could accommodate the board’s requests, Caplin said: “We’ll need to have further discussions, but we look forward to working with the board on a solution.�

NorthSide fees

SLDC chief Otis Williams emphasized that the agreement bars proceeds from the additional New Markets credits from being distributed as fees to NorthSide Regeneration LLC, the main entity McKee has used to acquire hundreds of acres north of downtown.

However, the larger deal anticipates spending $3.4 million to acquire property for the development, much of which is owned by NorthSide Regeneration and another company, 1312 LLC. That company’s registered agent, Fred Lafser, has worked with McKee on NorthSide.

Piggee said the land price is due to a property lien from Bank of Washington, . “That’s the release price from the lender,� he said.

In an initial report from SLDC, the city listed Rodney Hubbard as one of the owners of ÃÛÑ¿´«Ã½ Grocery Group LLC. McKee attorney Steve Stone said that referred to Rodney Hubbard Jr., a member of , but that Hubbard’s interest had been bought out and the SLDC report was “a misprint.â€�

Alderman Tammika Hubbard, Hubbard Jr.’s sister, had sponsored the bill to allow TIF funding for the project last year. Stone said Hubbard Jr. was “long gone before any ordinances� were introduced.

Williams said the final report removed the reference to the ownership group after McKee’s lawyers informed him Monday that Hubbard Jr.’s interest had been purchased. Williams said he didn’t know when Hubbard Jr. had been bought out.

Tammika Hubbard did not respond to a message left at a phone number listed for her Tuesday.

If the tax credits ultimately go through, construction could start about 45 days after that, Caplin said.