HomeMy WebLinkAbout03-10-2006 Council Economic Development Committee
AGENDA
City of Iowa City
City Council Economic Development Committee
Friday, March 10, 2006
9:00 a.m.
City Hall
City Manager's Conference Room
410 East Washington Street
1. Call to Order
2. Approval of Minutes - February 16, '2006
3. Discussion of future role of City in economic development
4. Set tentative date of visit to Nucleus Retail Incubator, Cedar Rapids
5. Adjoumment
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CITY OF IOWA CITY
MEMORANDUM
Date:
To:
February 23, 2006
From:
Economic Development Committee
Karin Franklin, Director,
Re:
Meeting on March 1 0
Economic development discussion
With an opening in the Economic Development Coordinator position, I believe it is appropriate to
revisit the role Iowa City government plays in economic development and consider any changes
to our approach. The purpose of our meeting on the 10th is to have such a discussion. I have
enclosed two pages from our current Comprehensive Plan that address the general position of
the City relative to economic development, goals that have been adopted for the city's economic
well-being, and strategies to meet those goals. These were adopted in 1997. These pages are
submitted as a point to start the discussion.
With input from the Committee and others, the City Manager and I will proceed with
organizational changes, if any, and addressing any personnel needs.
Incubator visit
Please come to the meeting with available dates over the two weeks following our meeting
(March 13-March 24) to visit the Nucleus Retail Incubator in Cedar Rapids. The visit should
take approximately 2 hours including travel time.
Cc City Manager
40
The economic well-being of the residents of Iowa City is enhanced
by:
· Creating and fostering an economic environment which
enhances the community's character where cultural, rec-
reational, and educational activities thrive and in tum pro-
vide economic opportunities;
· Encouraging the diversification of the community's economic
base to maintain a vibrant economy through changing ec0-
nomic conditions, while providing quality employment op-
portunities for all work force skills and educational levels;
· Encouraging linkages among new and existing businesses
to create networks in which businesses may find materials
and markets in the local economy;
· Sustaining and enhancing fiscally responsible and socially
relevant local govemment services, which include support-
ive services for the local work force; and
· Maintaining a vibrant economy consistent with environmen-
tal health of the community, by stimulating energy and re-
source conservation and promoting clean, non-polluting
industries.
fCONOMIC
WEll-BEING
ECONOMIC
WELl-B EI N G
GOAlS
& SIR ATEUI ES
IOWA [llY
B[YOND 2000:
HOJ'l f)O Iff uf! DIfflf?
41
Diversify and Increase the property tax base by (1) encouraging
the retention and expansion of existing Industry and (2) attracting
Industries that have growth potential and are compatible with ex- . .
isting businesses.
· Identify Industry groups that are compatible with community goaJs
and toward which the community should target lis economic de-
velopment efforts.
· ProvIde an attractive environment 10 businesses involved in envi-
ronmental technology and services.
· Encourage the development and expansion of businesses whicb
use infonnation technologies by making public right-of-way and
land available for infrastructure such as fiber optics lines and
wireless communication facilities.
Increase employment opportunities consistent with the available
labor force.
· Identify local labor force skills and the types of jobs compatible
with the local labor force.
· Identify work force skills required by targeted industries and
identify education and training needs and resources such as
the Region 10 Workforce Development Board.
· Provide opportunities for the IoWa City work force 10 live close 10
their place of employment
· Encourage small businesses as employment opportunities for
the available laborforce.
Provide and protect areas suitable for future industrial and com-
mercial development.
· Provide for the extension of infrastructure which will encourage
development in areas designated for industrial and commercial
growth.
· Promote awareness of the city's economic development policies
through publicfonJms.
Cooperate with local and regional organizations to promote eco-
nomic development within Iowa City.
· Continue to use the Iowa City Area Development Group as the
lead economic development agency in the area.
· Continue 10 coordinate with the UI.
· Enhance communication between entrepreneurs, businesses.
govemment, labor, consumer and citizens groups, and educa-
tional institutions.
Improve the environmental and economic health of the community
through the efficient use of resources.
· Encourage commercial activity to take place in existing core
areas or neighborhood commercial centers; discourage the pro-
liferation of new major commercial areas.
· Continue and enhance downtown revitalization.
· Establish programs 10 encourage businesses to use resources
more efficiently.
· Encourage the creative reuse of existing commercial sites that
are vacant or underutilized.
Consider financial incentives and programs to facilitate achieving
the above goals.
· Focus incentives on infrastrudure development, work training
and retraining; and an efficient, timely and fair development re-
view process.
· Develop criteria to use whenever considering financial incen- .
tives for economic development projects.
· Monitor local financial markets to determine if they meet the
needs of local commercial and industrial ventures.
· Provide for and facilitate the timely review by the City Council of
requests for financial incentives.
MINUTES
CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE
FEBRUARY 16, 2006
CITY MANAGER'S CONFERENCE ROOM
Members Present: Regenia Bailey, Connie Champion, Bob Elliot
Members Absent: NONE
Staff Present: Steve Nasby, Tracy Hightshoe, Karin Franklin
Others Present: Victor Tichy, Lucille Gregory, Rebecca Neades,
CALL MEETING TO ORDER
Chairperson Bailey called the meeting to order at 1 :30 PM.
APPROVAL OF THE MINUTES FROM JANUARY 18.2006
Motion: Elliot moved to approve the minutes from January 18, 2006 meeting as written.
Champion seconded the motion.
Motion passed 3:0.
REQUEST FOR CDBG ASSISTANCE - GENIUS IN DIAPERS CHILD DEVELOPMENT
CENTER
Nasby said that the proposed project anticipates the creation of 11.88 FTEs and is requesting
$99,880 in CDBG assistance. He said that the applicant is proposing a business start-up, located
at 722 East College Street, in space leased from the Christian Science Church. Nasby said that
the proposed budget shows that $78,400 of the CDBG funding would be used for site
improvements to that property.
He stated that CDBG regulations require that monies must be used for non-secular activities,
and the applicant is aware of this requirement that the uses of the child care and church must be
separated. Nasby said the Genius in Diapers Child Development Center will be the only users of
the leased space and beneficiaries of the proposed site improvements.
Nasby said that currently the applicant is working with Housing and Inspection Services on a
minor modification and parking issues. He stated that if the required parking spaces cannot be
provided on-site a Special Exception will be needed to allow for off-site parking. He added that
Genius in Diapers Child Development Center is requesting $99,880 in CDBG assistance as a
grant or forgivable loan. Nasby said that Tichy is providing an equity investment of $23,900, but
no other private funds have been secured.
Elliot asked how the improvement of the parking lot would not affect the use of church. Nasby
said that the church would not use the lots unless the day care is not in service which would only
be one day per week. Tichy said that parking is not required for church as it is 'grandfathered in'
and the church has been using on-street parking for years. So, the improvement of the parking
lot will only be a coincidental benefit as the church does not need it to operate.
Tichy said that the center is called Genius in Diapers based on Einstein's words "every child is
born a genius." He said the center will serve mothers from the second trimester of pregnancy and
children from birth to two years old. He said that it will be a child development center designed
to stimulate infants' and toddlers' minds while also developing their emotional, physical, and
social abilities. He said that babies will be stimulated with poetry, reading, foreign languages,
sign language, and visual math. Tichy said that out of the 200+ phonemes used in all languages
of the world, children can discern only those 80 to which they were exposed in the first nine
months of their life by interaction with their caretakers. He added that two- month- olds have the
ability to discern all of the phonemes, and therefore children will be natural speakers of as many
languages as they are exposed to during the first nine months of their lives.
Elliot asked how many days a week will the day care operate. Tichy said they would operate at
least 5 days, but preferably 6 days a week. .
Bailey asked if funds were requested from banks. Tichy said they had preliminary discussions
with banks. However, he said, usually daycares lose money on babies, break even with 3-4 year-
olds, and make profit when providing care for children over 5 years old. As such, the cash flow
would not be sufficient to have debt service with interest. He said that in order for the program
to work with the age group he is targeting he will need to have 1 care provider for 3-4 babies,
which is very expensive.
Bailey asked how strong the competition for such programs is. Tichy said that there are programs
for babies, but usually in conjunction to preschools.
Elliot said the proposal is targeted to high-income families and therefore it might not qualify for
funds. Nasby said that the criterion for qualification in this case is based on the number and
quality of jobs created for low-moderate income persons as it is an economic development
project. Tichy said that the price of child care for those with high income would be $300 a week.
Tichy added that those with lower income can enroll the baby and work for the center, taking
care of their baby, making additional money, and learning the skills to open their own center.
Elliot said that in order to have such a project going the philosophy of the day care would have to
appeal to higher income in order to create the financial basis for the activity.
Tichy said that mothers could work three days a week and spend quality time with their child.
Bailey said that if mothers have time to work in a day they would not need such a service. She
added that those working in day cares receive low paychecks and no benefits. Champion said
that health insurance is typically, at least, partially paid by the employers.
Gregory said that she was with the church. She added that she was lucky to be a stay at home
mom and did not have to put her kids into a daycare. She added that this program will attract
mothers who can afford it. She added that the program offers easy access to the child and at the
same time is an opportunity for low income families who can't afford such a high level of
daycare to enroll their child and work for the center a few days a week.
Bailey said that the plans sounds great, but is not sure that it.should be funded with public funds.
Elliot said the goal in allocating the funds is to attract workers for whom a good salary and
benefits will be provided or to increase the Iowa City tax base. Tichy said that both criteria are
met. He said that people who would work in the center would get $10 per hour, while the rest of
the parents will work in their professions which will generate taxes. Gregory added that it will be
an opportunity for parents to work while taking care of their child. She said that the payment per
hour is higher than the wage provided by other daycares. Tichy said that he would also
encourage mothers to open their own day care after learning good practices by working at the
center.
Elliot said the project is based on a wonderful concept, but is hesitant in involving tax money
into it through CDBG. He said that an Angel investor might be interested in providing help for
this business start-up.
MOTION: Champion moved to not recommend CDBG assistance for Genius in Diapers
Child Development Center. Elliot seconded the motion.
Motion passed 3:0.
DISCUSSION - AMMENDMENT TO UNITED NATURAL FOODS. INC. TIF
DEVELOPMENT AGREEMENT
Nasby said that during the 2005 TIF Certification Process staff verified that the capital
improvements have been completed and the wage thresholds are being met, but identified a
deficiency in the number of jobs that were to be created by United Natural Foods, Inc. (UNFI).
He said that staff contacted UNFI regarding this matter and the response was that the initial
estimate for employments was too aggressive given the time frame outlined in the application to
the City and State. Nasby said that in the City's TIF agreement the employment threshold was to
be 300 full-time jobs. He added that at the time of certification, inNovember 2005, the
employment level was 248. He noted that to move forward with the project and provide time for
a resolution of this matter the TIF certification was made to Johnson County.
Nasby said that staff is recommending that the TIF Development Agreement between the City of
Iowa City and UNFI be amended to allow UNFI until June 1, 2007 to reach the employment
threshold of 300 required by the TIF Agreement. He said that if UNFI does not reach the 300
employment threshold by June 1,2007 the TIF tax rebate would be reduced through a 'claw
back' provision in the Agreement. Nasby said that the amount of the reduction per job could be
based on the project's goals. He said that the full amount of the TIF rebate would be up to
$1,000,000 and since UNFI had meet the capital investment and wage thresholds, but not the
number of jobs one option would be to prorate the recapture. The following formula was
proposed by staff:
$1,000,000
X 50%
$500,000
Divided by 300
= $1,666.67 \job
Maximum TIF Tax Rebate
Job Creation worth 50% and Capital Investment worth 50%
TIF value for Job Creation Requirement
Number of Required Jobs
Champion asked if there was another term other than claw back. Nasby said it was a common
term in economic development. Champion said that she would also round the reduction per job
to a whole dollar figure.
Eliot said he will be in favor of giving United Natural Foods time to meet the threshold.
Bailey asked how often such contracts are amended. Nasby said that this would be the first tax
rebate one formally amended.
MOTION: Elliot move to amend the TIF Development Agreement between the City of
Iowa City and UNFI until June 1, 2007 as proposed. Champion seconded the motion.
Motion passed 3:0.
DISCUSSION OF FUTURE COMMERCIAL! INDUSTRIAL AREAS
Franklin said the Planning Department continues to look at expansion of the industrial park in
the Southeast District. She added that some capital improvements are needed for such an
expansion, one of which would be the expansion of sewer line. She noted that another challenge
relates to providing an appropriate transition between industrial and residential properties.
Franklin said that there are no large tracks of land available for industrial development. She
added that landowners prefer housing developments because they provide a higher return per
acre. She added that industrial land typically has a lower market price and longer time of
development. She said that the city has not had the option of purchasing land to save it for
industrial development. She added that even if land was owned by the city, a negative perception
of competition with the private market might arise.
Bailey said that one of the realities in Iowa City is that owners come for rezoning, and their
vision might not be in line with the broader economic development visions of the community.
She added that there is also the perception that there is a competition between City and private
land owners which impedes the City from purchasing available industrial lots for further
pursuing the economic development goals. Elliot gave an example of an individual owning land
that wants to sell his property to a big corporation, but the corporation is buying City land. Elliot
said that in this case the competition between City and individual owners is visible. He added the
City bought the land with tax money, and are selling in competition with the individual owner
who actually contributed to part of the taxes.
Franklin said the City was careful to not undercut the market when it sold land at the Aviation
Commerce Park. She added that the first step in development of the next phase of the Aviation
Commerce Park (Aviation Commerce Park South) is getting FAA approval for the Mormon
Track extension. She said that the area is not needed for navigational purposes, which enables
the Airport Commission and the City to decide on ways to utilize the property for its best use.
Bailey asked what the time line for FAA approval is. Franklin said that it would take at least six
months from the date they receive the plan. In response to a question on retail Franklin said that
as a matter of policy the City has not aggressively gone after commercial retail development.
Elliot asked how the City works with people that would want to locate retail in the downtown
area. He said that it is a stated goal to expand the retail area downtown to something more than
bars and restaurants. He asked how help can be provided without being unfair to those who
started their businesses without any help from the City. Franklin said that currently the business
development in downtown is directly correlated to the rent for retail in the area. Champion said
that businesses would not locate based on rent alone but based on where they feel they would
succeed. She added that downtown is like a micro business, where things easily rent. She said
she is satisfied with the current downtown.
Elliot said that downtown area offers very large spaces for rent, and does not allow for a starting
business to develop and grow due to high rents. Franklin said that theoretically when a new
business is started it will go to a lower rent area and move towards downtown as they grow.
Champion disagreed saying that new business will go where they feel will be successful. She
added that by choosing to locate where the rent is lower they will more likely fail.
Franklin said that other communities have tried the Main Street program. She said that the
program assumes collaboration between different entities, similar to what it has been done in the
downtown Iowa City strategy. She added that nothing has been done in the direction of
regulating who locates in the downtown area.
Elliot asked for Neades' opinion on the subjects of discussion. Neades said that it might be a
good opportunity to create a joint position with the Chamber of Commerce to encourage
economic development. Bailey said the retail incubator in Cedar Rapids is an interesting concept.
Neades said that downtown Cedar Rapids houses a retail incubator which works based on an
interesting model. Bailey said that someone proposed a retail artist incubator for downtown. She
said that this would be appropriate for a cultural district. Franklin said that the incubator could be
supported with CDBG funds. Bailey said that a lot of artists could use additional business skills
or access to people who will do the business part of the arts for them. She added that this is in
tune with what Iowa City does, and has the potential of keeping people who might otherwise
move to other places.
Champion said that the discussion should not be concentrated only on bars. She said there were a
number of businesses that opened in the downtown area in the past years. She said that the
downtown is evolving.
Neades said that the Chamber of Commerce recognizes downtown as the living room of the
community, the place everyone comes back to. Elliot said that they should try to support the
downtown association to become a more viable entity and playa significant role in the
downtown area, which in return would help the entire community.
Franklin said that a fayade renovation should be pursued for the downtown area. Bailey said that
historic or rehab tax credits could be use for the project since most of the downtown buildings
are classified as historic structures.
Bailey asked what happened in Pepperwood Plaza. She said that Big Lots and The Rack have
ceased business. Nasby noted that the TIF agreement is with Southgate and not with individual
businesses. He added that it is up to Southgate to make sure that the required number of square
footage is being leased and operational. Champion said that the Rack was funded by CDBG and
they did not have the tools to run a business. She added that if businesses are funded it has to be
determined a way to help the businesses succeed. Elliot said that the town has a lot of young
retired residents, and the Chamber of Commerce could put together a volunteer group to provide
help for businesses. Bailey said that it should be required ongoing business education for firms
that are funded.
SET NEXT MEETING DATE
The next meeting will be set up as needed.
ADJOURNMENT
The meeting adjourned at 3:00 PM.
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