HomeMy WebLinkAbout07.12.1999COUNCIL WORK SESSION
July 12, 1999
4:30 p.m.
Council Chambers
Members present: Mayor Rooff, Getty, Jordan, Krizek, Gronen, Collier, Anders, Murphy.
Moved by Jordan, seconded by Krizek that the Agenda, as proposed, be approved. Ayes: Six.
Absent: Murphy. Motion carried.
Randy Pilkington, Director of Institute of Decision Making at University of Northern Iowa,
reviewed Graham Toft on economic development and incentives. An incentive is nothing more
than changes in the costs and benefits intended to influence choices. Incentives in the 1930s
focused on marketing and business attraction, inward investment. In the 1980s incentives focused
on small business and entrepreneurship (growth within). Then there was customer focus with the
state as a wholesaler empowering local groups to take charge of their destiny. In the 1990s, the
focus was on collaboration and asset building, with more focus on industries as opposed to
individual businesses.
Mr. Pilkington reviewed the following principle of incentives:
1. Incentives are no substitute for competitive business climate and superior quality of
life.
2. Incentives are not fair, they are strategic.
3. Smart incentives build assets (infrastructure, human capital, industry alliances). Avoid
up -front give aways.
4. Incentives that work are investments. Incentives that fail are transfer payments.
5. Make a formal development agreement.
6. Award incentives based on performance, not inputs. Set baselines for minimum
performance. The higher the performance, the greater the incentive. Monitor
progress.
7. Negotiate as each project is unique. Incentives do not need to becomparable across
projects.
8. Include clawbacks for worst case scenarios. Clawbacks are important signals that
performance is expected.
Murphy now present at 4:49 p.m.
Don Temeyer, City Planner, reviewed the incentive policy for the city as proposed in the
Economic Development Plan. Under the proposed incentives, new or existing manufacturing,
distribution or services company with $1 million value and/or 20 new jobs would be provided land
subsidy when necessary, five year tax rebates, State of Iowa programs as applicable and site
infrastructure as necessary. A project of less than $1 million will not qualify for both land subsidy
and tax rebates/abatements. A combination of new jobs and assessed value may be used in
reaching the minimum values for both rebates and land subsidy.
Mr. Pilkington reported that the trend is getting away from giving free land. More cities are
looking at service business rather than manufacturing which will require cities to look at different
incentives. When looking at businesses that provide services, cities will have to look at their
return of investment to the local community not so much as taxes that will be paid by a company.
Service companies do not generate a lot of taxes, but there is a high return to the community.
Mr. Temeyer noted that it is important to know that the return of investment will make a
difference in different areas of the town.
Mr. Pilkington noted that when looking at the city's incentives over the past four or five years, the
city has made good decisions. Mr. Pilkington commented that the city needs to continue with the
development agreements and to use the principles discussed tonight when drawing up incentives
for companies. Mr. Pilkington stated that when looking at incentives in luring a business to town,
the city needs to look at what other cities are doing and then fill in the gaps.
Council Work Session
July 12, 1999
Page 2
Mr. Temeyer will revise the section on net return and make a few other minor changes to the
Economic Development Plan and then place it on the council agenda for approval.
With no further business before the council, it was moved by Getty, seconded by Gronen that the
meeting be adjourned at 5:18 p.m. Ayes: Seven. Motion carried.
Nancy Eckert
City Clerk