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HomeMy WebLinkAbout10-17-2006 Council Economic Development Committee AGENDA City of Iowa City City Council Economic Development Committee Tuesday, October 17, 2006 9:00 a.m. City Hall Lobby Conference Room 410 East Washington Street 1. Call to Order 2. Approval of Minutes - Sept. 11,2006 & Sept. 19,2006 Economic Development Committee' Meetings 3. Activity Report - August 30 - October 10 4. Discuss Draft Memo of Understanding - Iowa City Area Development 5. Review of CDBG Economic Development Fund - Tracy Hightshoe 6. Discussion of Economic Development Strategies, Policies 7. Committee time 8. Adjournment NEXT REGULAR MEETING DATE: November 21,2006 MINUTES CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE SEPTEMBER 11, 2006 LOBBY CONFERENCE ROOM Members Present: Members Absent: Staff Present: Others Present: Regenia Bailey, Connie Champion, Bob Elliot NONE Karin Franklin, Wendy Ford Kevin Digmann, Mike Hodge CALL MEETING TO ORDER Chairperson Bailey called the meeting to order at 9:02 AM. APPROVAL OF MINUTES - Sept. 5. 2006 Bailey noted the word ladder should be changed to lever on page three of the Sept. 5 minutes. MOTION: Champion moved to approve the September 5, 2006 minutes as submitted. Elliot seconded the motion. The motion passed 3:0. DISCUSSION OF APPLICATION FOR TIF REBATE FOR A DEVELOPMENT PROJECT - HIERONYMUS SQUARE ASSOCIATES Ford noted changes made to the agreement over the last week include a) that the project will be certified energy efficient with LEED or a utility company, creating an incentive to be energy efficient, b) that the project will include three floors of commercial space and c) the developer's best efforts to include a minimum 40 unit hotel in the project. Bailey said LEED is the architectural standard and asked what programs are offered by the energy company. Ford offered file information on MidAmerican's Energy Advantage corporate energy efficiency programs. Champion said that MidAmerican has good programs for residential and larger scale projects. Bailey said that LEED is the standard the committee should promote and use as the standard for future developments. Kevin Diamann said their concern with LEED certification is how the mix of uses within the project may affect their ability to qualify for LEED points. Franklin said that LEED encompasses more elements of energy efficiency than MidAmerican energy, citing the example of points attainable for the use of energy efficient vehicles during the construction phase by contractors. She estimated the project could fairly easily attain enough points to be certified. Digmann said that they are interested in becoming certified, but do not want to get in the position where it would be cost prohibitive. Bailey said that if they do become LEED certified it could be promoted as a marketing tool to attract building tenants and for future development of the downtown. Discussion ensued about related parking needs with an increase in commercial space in the project. Digmann and Hodge reported on a meeting they had earlier in the week with Joe Fowler about securing an additional 50 parking spaces to accommodate the additional commercial space in the building. Fowler had agreed to the amount. Champion said she as comfortable with the new changes. Elliot said he would like to see more than three levels of commercial space. He noted he would like to see most of the building built for commercial. Hodge said that the addition of another floor of commercial and their best effort to establish a hotel means that at least the majority of 6 floors of the building would be commercial. Digmann said they, too, would like to have more commercial floors but that it is difficult to get commercial tenants to occupy space above second floor, citing an example of other property they own -- new 3rd floor office space with on-site parking that has remained unoccupied for some time. Champion said she does not like the idea of granting financial assistance for condominiums, however, the project would be grand scale and net a lot of new property tax for the community in a relatively short period of time. Economic Development Committee Minutes September 11, 2006 Page 2 Hodge said that they have done extensive financial analyses of the project and that without an economic development grant of TIF rebates, the project does not break even for the developer, and thus, they could not go forward with it. Digmann reported sharing project proformas with the staff. Elliot inquired if the staff was comfortable with the numbers and certain the project could not go through without TIF funds. Franklin and Ford confirmed that the documents shared showed that additional funds are required for the project to realize a positive cash flow. Bailey said she is feeling more comfortable with six potential floors of commercial. She added the LEED certification or energy efficiency certification is really important and should be encouraged for further projects. In answer to Elliot's question about the history of the development site, Franklin said that for the years Frieda Hieronymus owned the property, she always said she would never have a building with a bed in it. Franklin added that nothing ever happened there because she could not get a tenant. Franklin said that this is the difficulty of doing downtown urban projects without assistance or residential components. MOTION: Champion moved to recommend to the council that the TIF agreement with the Hieronymus Square Associates be approved. Elliot seconded the motion. Motion passed 3:0. COMMITTEE TIME NONE ADJOURNMENT The meeting adjourned at 9:42 A.M. NEXT MEETING DATE: Sept.12, 2006 at 7 P.M. s/pcd/minutes/ecdev/2006/9-11-06.doc MINUTES CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE SEPTEMBER 19, 2006 LOBBY CONFERENCE ROOM Members Present: Regenia Bailey, Connie Champion, Bob Elliot Members Absent: NONE Staff Present: Karin Franklin, Wendy Ford Others Present: Raso, Nancy Quellhorst, Tannin Fuja CALL MEETING TO ORDER Chairperson Bailey called the meeting to order at 9:02 AM. DISCUSSION OF APPLICATION FOR CEBA FUNDS-NATIONAL GENECULAR INSTITUTE Dr.Tannin Fuia gave an overview of the proposed project. He said Dermacia, parent company of the applicant company NGI, is a customized pharmaceutical company specializing in skin care products and post surgical skin treatments. National Genecular Institute (NGI) is a fully owned research and development (R&D) subsidiary of Dermacia. He noted that Dermacia is headquartered in Newport Beach, California, and seeks to locate NGI in the Iowa City/Coralville area. Fuja said Dermacia markets themselves via info-commercials, direct solicitations and physician's offices. Fuja stated they have two product lines. One is a prescription and one is an over-the-counter version of the same. He noted they have an established distribution line in Dermacia. He added that as NGI develops skin-related products, there will be an instant interested party to license the products, and a way to get their products to market faster than most R&D companies: through Dermacia. Fuja said they are working with the City of Coralville and the University of Iowa to construct a facility they would lease at the Oakdale Research Park. He noted that they are also seeking to buy land in Iowa City to build a second facility that will house a biobank and more facilities for cell research and administrative functions. Fuja said they are looking at the property located in the Northgate Corporate Park, and are also securing an option to buy 30+ acres of adjacent land. He stated that NGI has already developed products that are licensed to Dermacia and that they have just entered into clinical trials on a face wound healing product. Fuja said they focus on devices, research and nano delivery which will be located in the Oakdale Research Park, as well as biobanking which will happen in Iowa City. Fuja explained that a biobank is a depository of genetic and cellular materials which are linked to updated medical history of donors. He said the future of customized medicine is based on having biological samples of people for whom a customized product is developed. Fuja said a biobank is tremendously important from a research standpoint and from the development of customized pharmaceuticals. Fuja said the largest biobank in existence is located in the UK. He added that they have studied the UK facilities and will build theirs to surpass them in size and in scope. Fuja said NGI has developed a system to immortalize cells. He explained that when a sample is collected, it can be used until it is exhausted. He said that in culture, cells typically continue to divide for a series of cycles and then stop dividing. With the immortalization of a cell system, as NGI plans to create, the cells continue to divide without incorporating genetic anomalies, and thus, produce an infinite source of cellular and genetic material. Fuja said they have a fully automated process which allows them to bank hundreds of thousands of samples. Fuja said that they will be providing genetic material for other biotech companies as well as for NGl's research. He said they have a number of pharmaceutical companies that are very interested to see the success of the biobank. He said that without the ability to immortalize the cells the biobanks are not attractive enough to pharmaceutical companies for investment because of the finite resources of cells available. However, with the ability to immortalize cells and link with updated medical histories, the biobank becomes an important key to the scientific processes. Economic Development Committee Minutes September 19, 2006 Page 2 Fuja said that in January 2007 they will occupy an interim space made available by the University of Iowa until the new Oakdale building is completed. He said within the same time frame they will be purchasing the land in the Northgate Park and building the biobank. He said the facilities need to work jointly; one can not exist without the other. Fuja said that it is a unique opportunity to involve both the City of Coralville and City of Iowa City in this project. He noted that they will create a total of 178 jobs, out of which 36 will be in Iowa City. Fuja said the cost for the Iowa City portion of the project is expected to be around $11 million dollars and that they seek a $1.2 million economic development grant from Iowa City is in the form of TIF rebates. Elliot asked about tax credits Fuja had mentioned and Raso explained the state of Iowa's high quality job creation program allows for the rebates of sales and use tax spent on the construction of the facility. Elliot asked why the company is choosing to locate in the state of Iowa and specifically in the Iowa City! Coralville area. Fuja said the University of Iowa is the main draw for locating to the area. He said they have developed a positive relationship with the University. Ford asked if the company is considering other locations and Fuja said they are, but if they have a positive response from the state of Iowa on their CEBA application, they are prepared to move forward in Iowa. Bailey inquired about animal research and asked Fuja to describe the extent of and security for such research. Fuja said they employ the highest security standards and said their research calls for the use cell samples from rabbits, mice and dogs. Bailey asked about the creation of high quality jobs. Ford said the draft TIF agreement requirements includes the creation of 36 jobs in Iowa City by the end of the third year of operation, as outlined in the CEBA application. Raso said that all state-approved applications meet or exceed the benefits requirement of the City. Ford said the requested $1.2 million economic development grant in the form of TIF rebates on a $6 million building would amount to $188,940 per year and be completed within seven years from the first rebate. Bailey asked when the valuation date would be. Ford said she will confirm, but November 2008 will be the initial valuation date, with the first assessment in January, 2009 and the first rebate paid in June, 2010. MOTION: Champion moved to recommend the council approve the development agreement. Elliot seconded the motion. . Responding to Champion, Raso said there is always an element of risk involved in supporting a new company, however Iowa City is mitigating their risk because the company has to fulfill its obligations before they are eligible to receive any benefit. Raso said that the State of Iowa and the City of Coralville will be providing dollars "up front" and therefore are taking a much greater risk. Answering a question posted by Elliott, Fuja said Dermacia is 7 years old. He said the company started with a product called Lipo gel that allow for healing for post cosmetic surgery. He noted that the success of the product propelled the company forward. Fuja stated that at present the company is doing about $1 million a month in revenue. The motion passed 3:0. MOTION: Elliot moved to recommend the council to support the CEBA application. Champion seconded the motion. Motion passed 3:0. Raso said that any documentation from the current meeting should be sent to Mike Farley as quickly as possible. He added that the IDEO board wanted to see the Committee's approval and recommendation to the Council. Economic Development Committee Minutes September 19, 2006 Page 3 COMMITTEE TIME NONE ADJOURNMENT The meeting adjourned at 9:31' AM. NEXT MEETING DATE: October 17, 2006 at 9 AM. Minutes submitted by Bogdana Rus. s/pcd/minuteslecdev/2006/9-19-06.doc Economic Development Coordinator Activities August 30 - October 10 Outreach & Contacts Meetings & Events ICAD Annual Lunch Iowa City (Chamber) Committee Lunch (9-5, 9-25) Local Government Committee Meeting (9-14) Chamber-hosted TIF seminar with Bob Josten (9-15) Foster's CrossinglPeninsula lunch event (9-19) Chamber Legislative Committee meeting (9-20) National Genecular Institute Press Conference (10-2) Attended International Downtown Association Conference (10-7 through 10-10) Public Relations Dottie Ray show (9-20) Wrote TIF information guest opinion(s) Updated TIF informational slides (to be posted on web) Contacts Met with JeffDisterhoft, ICAD Chair, President ofUICCU Met with Downtown Association staff person Met with Jim Davis, Developer Met with Greg Theis, Mid American Energy Economic Development Director Met with Tom Cilek regarding Everyone's and Entrepreneur Event Met with Nancy Quellhorst, Chamber Met with Joe Raso, ICAD In House Developed FY 08 ED Budget Continued gathering information for Community Profile Interviewed, hired Intern for Economic Development Attended LEED certification information session Met with County Auditor, Mark Kistler re: TIF district certification process Economic Development Projects - Meetings Hieronymus Square TIF agreement (9-7, 9-11,) National Genecular Institute meetings (8-30, 9-27, 9-29) Responded to various inquiries, including specialty bar, non-profit start-up, pet grooming business, insurance agency building. City of Iowa City and Iowa City Area Development Group Memorandum of Understanding for Services Provided by ICAD Group to City of Iowa City of Iowa City The City of Iowa City is committed to investing $100,000 during ICAD Fiscal Year 2007. The services to be provided for this investment will include, but are not limited to the following items. 1. Provide aerial photos of industrial, office parks, and other substantial commercial site in Iowa City. Additional fees may be associated with photos of sites not linked with the core work associated with ICAD Group (i.e., residential, retail, etc.). It is expected that these photos will be completed in the spring of2007. 2. ICAD Group will interview all of their clients residing in Iowa City as part of the existing business services program (Synchronist). 3. ICAD Group will continue to visit the corporate headquarters of companies with operations in Iowa City and will provide a verbal report related to issues pertaining to city services or areas in which the city can provide resources to improve general business conditions or specific company needs. 4. The ICAD Group President will provide a general organizational update to the city council in the spring of 2007. Other presentations, such as company expansion/location opportunities, or on special request by council will also be granted. 5. ICAD Group will engage the City ofIowa City and other city investors, as it redevelops the content of its prospect packets, including site and building formats. 6. ICAD group will continue to work with city officials and area leaders on the development of the commercial and industrial zones: Northgate Corporate Park, Scott Six, Lower Muscatine Road and Highway 6, Industrial Park Road, Heinz Rd. and Highway 6 Commercial Urban Renewal Areas. 7. ICAD Group will provide a year-end report on the progress made on the above action items. Joe Raso date Steve Atkins date Iowa City CDBG Economic Development Fund Purpose: Stimulate private sector investment that results in the creation and/or retention of permanent, private sector jobs for low-to-moderate income persons. Referral Sources: Referrals generated by private financial institutions, Small Business Development Center, and the public. If the applicant is referred by a financial institution or the Small Business Development Center, Community Development staff will work with the private lender or technical assistance provider to review the application, the underwriting analysis for the project, and work with the private lender on a financial package that makes the project viable. All applicants are encouraged, however not required, to apply to a financial institution for financing. If applicant does not apply for funding through a financial institution, the applicant must explain why. Process: 1) Referral received from a financial institution, SBDC, or directly from the business 2) Applicant meets with staff/staff completes preliminary review. If referred by a private lender, meet with lender to review project. 3) City Council Economic Development Committee approval 4) Council action/approval 5) CDBG agreement executed 6) Business mentor shall be established and maintained during life of CDBG agreement if applicant not working with a private lender through a party approved by the City. If not working with a private lender and receiving business assistance through the Small Business Development Center, this relationship must be maintained during the life of the CDBG agreement. 7) City monitoring and compliance Review Criteria for the Economic Development CDBG Fund Application will be evaluated based on the City of Iowa City Financial Assistance Guidelines established on 9/24/1996, amended 2001, as applicable. 1) Meets all CDBG requirements and creates/retains employment opportunities for low-to-moderate income persons 2) Applicant's financial contribution to the project 3) Quality of jobs created (federal poverty wage rate, 30% of area median income, for a family of four in Iowa City is $1 0.48/hour as of 3/8/2006) 4) Economic Impact - potential for future growth 5) Consistency with the City's Comprehensive Plan 6) Environmental Impact 7) Community Involvement Draft 10/4/06 Business Plan (new businesses): . Plan must demonstrate the feasibility of the business venture . Creditworthiness of the business/applicant . Reliability of the job creation and financial estimates . All private financing options considered . Business plan MUST be readable (font 11 or larger) The City may verify the following (To verify some of these items, the City may be required to ask the applicant's birth date and/or social security number.): . Credit history - Applicant Credit Score . Past employment . Current references . Financial institution - verify if assistance approved or denied. If denied, primary reasons the institution denied the request. If approved, review private lender's underwriting analysis. . Any other information as supplied by the applicant on the application and business plan to assist in evaluating the proposal . Special considerations of the CDSG Economic Development Fund: . The City will not shop banks. . The City will encourage applicants to seek private financing, but will not recommend institutions. . A business mentor relationship must be established for those applicants who do not obtain private financing. . Job creation/retention by low-to-moderate income persons is a federal requirement for COBG assistance. City will take all enforcement measures for repayment if business fails to create or retain the jobs required by the Agreement the applicant enters with the City. . The COBG EO fund is not meant to compete with private lenders but to provide incentives that lower private sector risk and leverage private sector dollars in order to expand the amount of capital available to small businesses. Draft 10/4/06 Business Financial Assistance Application for Iowa City COBG Economic Development Funds Prior to submitting your Business Financial Assistance Application, please make sure to do the following: . Fill out the application completely. If any questions are left unanswered or required attachments are not submitted, an explanation for the omission must be included. . Should you have any questions while completing the application contact Community Development staff at 319.356.5230 or by email at tracy-h ightshoe@iowa-city.org. . Sign the application. . Application Deadlines: The City Council Economic Development Committee typically meets the third Tuesday of the month. Completed applications for Business Financial Assistance projects should be submitted to the Community Development Department two weeks prior to the meeting at which the applicant wishes to have the Committee review the application. However, under special circumstances the Economic Development Committee will call special meetings to review Business Financial Assistance Applications. Prior to completing an application an applicant is strongly encouraged to contact the Iowa City Community Development Department to discuss the project for which they are requesting funding. Have your application and related materials delivered to: City of Iowa City Community Development Department 410 E. Washington Street Iowa City, IA 52240 Phone (319) 356-5230 Fax: (319) 356-5217 Iowa City CDBG Economic Development Funds Application for Business Financial Assistance Business Requesting Financial Assistance: Individual Home Address Name of Applicant Business Full Street Address of Business Phone Number & Email Address Tax 1.0. No or SSN: DUNS Number (If awarded funds, applicant must obtain a DUNS number): Type of Business Date Business Established Bank of Business Account and Address (if applicable): NOTE: The City will not provide assistance in situations where it is determined that any repre- sentation, warranty or statement made in connection with this application is incorrect, false, misleading or erroneous in any material respect. If assistance has already been provided by the City prior to discovery of the incorrect, false or misleading representation, the City may initiate legal action to recover City funds. October 2006 Draft Section 1: Description of Business and Proposed Project 1.1. Describe the proposed "project" (for example, company relocation, building expansion, remodeling, new product line, number of new jobs, amount of investment in machinery and equipment) and the expected benefits it will receive from the financial assistance requested: 1.2. Provide a brief history of your company: 1.3. Describe the organizational structure of the business: 1.4. Management (Proprietor, partners, officers, directors, all holders of outstanding stock, 100% of ownership must be shown) Name & Positionrritle Complete Address % Owned Attach a brief description similar to a resume of the education, technical and business background for all the people listed under Management. 1.5. Will the project involve a transfer of operations or jobs from any other Iowa City or Johnson County facility or replace operations or jobs currently being provided by another Iowa City or Johnson County company? If yes, please indicate the facility(s) and/or company(s) affected. October 2006 Draft 2 Section 2: Financial Contributions to the Proposed Project 2.1. Use of Proceeds USE OF Proceeds Loan Requested (Enter gross dollar amount rounded to Activity the nearest hundreds) Land acquisition $ New Construction/Expansion Repair $ Acquisition and/or Repair of Machinery $ and Equipment Inventory Purchase $ Working Capital (including accounts $ payable) Acquisition of Existing Business $ All Other (provide description) $ Total Loan Requested (All Sources): $ 2.2. Terms of Proposed Financing (Sources) Proposed Financing Financial Institution: $ Financial Institution : $ Other : $ Iowa City CDBG Economic Dev. Fund $ TOTAL: $ Amount Monthly Payment Type(1) Rate Term (1)For example: forgivable loan, direct loan, or grant. 2.3. Explain why assistance is needed from the City, and why it cannot be obtained elsewhere. If the applicant did not apply for a loan through a private financial institution, please explain why. If denied assistance through a financial institution, please attach the letter of denial. October 2006 Draft 3 2.4. Indicate the owner's contribution (cash, assets for the operation of the business, etc.) to this project. 2.5. Identify all agencies or institutions involved in the project (financial, technical assistance, etc.) and what their involvement is: 2.6. What type of security will the assisted business provide the City? If no security or less than the dollar amount requested is offered, an explanation must be provided. o Corporate Guaranty o UCC Financing Statement o Irrevocable Letter of Credit o Personal Guarantee o Surety Bonds o Mortgage on Real Estate o Escrow Account o Other: Before execution of a CDBG agreement, if the collateral consists of machinery and equipment, inventory, or other, the applicant must provide an itemized list that contains serial and identification numbers for all articles that had an original value of greater than $5,000. Include a legal description of real estate offered as collateral. 2.7 If the City did not provide financial assistance, could the project proceed? Section 3: Jobs to Be Created/Retained Special Note: The Community Development Block Grant (CDBG) program requires that at least 51% of the jobs created or retained must be held by or made available to low- moderate income persons. The business acknowledges that if it fails to create and/or retain the jobs identified below by the end of the project period and maintain them for a period of time (usually 12 months from the date of the award); it may be required to reimburse City funds for the employment shortfall. 3.1 If an existing business, how many employees are currently employed at your Iowa City location? Please attach a copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. October 2006 Draft 4 3.2 Complete the following chart identifying the number of jobs to be created and/or retained based on this specific project. Type of Job and Hourly Rate for Created and/or Retained Positions in First 12 Months of Project Award (please see attached Job Category Definitions) # of Jobs # of Jobs No. Hours Hourly Fringe Created Retained Type of Job Per Week Rate of Pay Benefits* Officials & Managers Professional Technicians Sales Office & Clerical Craft Wokers (Skilled) Operatives (semi-skilled) Laborers (unskilled) Service Workers *If fringe benefits are provided, please attach a description of all employee benefits provided by and paid for (in full or in part) by the business. 3.3 What is the estimated annual payroll for the new employees resulting from this project? 3.4 If an existing business, will any of the current employees lose their jobs if the project does not proceed? If yes, how many? Explain why: Section 4: Economic & Environmental Impact 4.1. What other Johnson County companies could be considered to be your competitors? 4.2. How will this project benefit the City/County? 4.3. Please describe the energy and resource efficiency programs, waste reduction, waste exchange, and recycling programs at your Iowa City operation. October 2006 Draft 5 Section 5: Community Involvement, Compliance with Law 5.1 Please describe your business' history of contributing to the community through volunteer work, financial contributions, or other means. If a new start-up business, please describe commitment to becoming involved in the community. 5.2 Has the business been cited or found to violate any federal or state statute or regulation within the last five years (including, but not limited to environmental regulations, payroll taxes, Occupational Safety and Health Administration laws, Fair Labor Standards, the National Labor Relations Act, the Americans with Disabilities Act)? If yes, please explain the circumstances of the violation(s). 5.3 Has the company or any officer of your company ever been involved in bankruptcy or insolvency proceedings? If so, please provide the details. 5.4 Are you or your business involved in any pending lawsuits? If yes, provide the case name of the lawsuit, docket number, and city and state where it is pending. Section 6: Summary of Required Attachments Check off each attachment submitted. If not submitted, explain why. [] Business plan (if start-up business) [] Balance Sheet (3 year historical if an existing business. Start-ups must provide a pro- forma balance sheet) [] Profit and loss statements (3 year historical if an existing business) [] Cash Flow Statement (one year) [] Description of fringe benefits provided to employees, if applicable [] Brief description of the education, technical and business background for all the people listed under Management as well as the Social Security number for all those included in Question 1.4. October 2006 Draft 6 [] If an existing company, copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. [] Construction loans only: Cost estimates for construction and a statement of the source of any additional funds [] Include a list of any machinery or equipment or other non-real estate assets to be purchased with the financial assistance and the cost of each item as quoted by the seller. Include the seller's name and address. Upon review of a submitted application, the City reserves the right to request additional information in order to assist the City with its evaluation of an application. Release of Information and Certification NOTE: Please read carefully before signing I hereby give permission to the City of Iowa City (the City) to research the company's history, make credit checks, contact the company's financial institution, and perform other related activities necessary for reasonable evaluation of this proposal. I understand that all information submitted to the City relating to this application is subject to the Open Records Law (1994 Iowa Code, Chapter 22) and that confidentiality may not be guaranteed. I hereby certify that all repre- sentations, warranties or statements made or furnished to the City in connection with this application are true and correct in all material respects. I understand that it is a criminal violation under Iowa law to engage in deception and knowingly make, or cause to be made, directly or indirectly, a false statement in writing for the purpose of procuring economic development assistance from a state agency or political subdivision. If applicant is a proprietor or general partner, sign below. By: Date: If applicant is a Corporation, sign below: Corporate Name and Seal Date By: Signature of President Attested by: Signature of Corporate Secretary October 2006 Draft 7 ,~ 1 -~= -....!t ,.....-----.... t~~!! ~ ~aDl~ ~~ CITY OF IOWA CITY MEMORANDUM Date: October 11,2006 To: Economic Development Committee From: Wendy Ford, Economic Development Coordinator Re: Economic Development Strategies, Policies Discussion, Part I: Goals For Agenda Item 7, Discussion of Economic Development Policies, Strategies, I suggest we begin by looking at the last Economic Development Strategy Document, from April 2004. Further, let's focus on the first two pages of that document. This is the last economic development "situation analysis" and provided the backdrop for the strategies and policies set forth in 2004. We need to do that again because substantiating the reasons for doing what we do naturally leads to a discussion of goals. It is quite possible that other factors may now influence or change our situation and goals, and require different strategies. Following our discussion of goals, we will move to a discussion of strategies to achieve those goals. That discussion most likely will occur at the next Economic Development Committee meeting, currently scheduled for Nov. 21, 2006. 2004 Economic Development . Strategy ~~- CITY OF IOWA CITY April 2004 Economic Development Strategy Over the last two years the State of Iowa has drastically cut funding for cities by eliminating local government aid, reducing funding for programs, rolling back taxable values, and retaining revenues formerly shared with local governments. These actions have had a great impact on the City's ability to deliver services as many of the City's services to its citizens are financed from the General Fund. In addition, citizen expectations for our existing services are high and consequently the City is continually under pressure to expand, modernize or offer new products even as local and state budgets are shrinking. The options the City has to obtain the revenues necessary to meet these needs and desires of Iowa City residents is limited by State law regarding taxation. The primary revenue source that is available to cities is property taxes. Even if a City Council was willing to raise property taxes, for all practical purposes this is not possible due to State regulated property tax levy limits. Because of the structure of the Iowa property tax system, commercial and industrial development is the most fiscally advantageous development for local governments. This document proposes a policy for sustaining the actions the City has started and instituting a more aggressive, targeted and proactive role on the part of the City government to encourage and facilitate commercial and industrial development in Iowa City. To build upon the successes of the last few years, and to continue development within the commercial and industrial sectors, it is important to strengthen and enhance the Economic Development Strategies put forth in 1999 and enable growth for the future. Prioritizing economic development within City government is not a suggestion to pursue "expansion at any cost" policies but to approach commercial and industrial growth in a managed way. This document addresses economic development opportunities from the perspective of three of the most common strategies of economic development: business retention & expansion, business attraction, and entrepreneurship (others opportunities being: tourism/conventions, downtown development, and workforce development). Focusing on business retention & expansion, business attraction, and entrepreneurship will provide Iowa City with the highest degree of success and return on investment. Prior to developing an action plan for these specific areas, we need to evaluate progress made on three issues that impact the success of our economic development efforts. These issues are the relationship between ICAD's economic development activities and the City's economic development goals; perceptions of the City's business-friendly attitude; and the resources directed toward economic development activities. Iowa City Area Development Group. The City's partnership with ICAD has been greatly enhanced since 1999. ICAD is doing an excellent job of promoting the greater Johnson County area. Since ICAD serves more than one community in Johnson County, ICAD cannot promote one specific area over another. When a prospect considers sites in more than one Johnson County community, ICAD does not advocate only for Iowa City. Over the last few years a different relationship with ICAD has emerged in which information is shared and joint activities are commonplace. Depending on the circumstance, either City staff or ICAD can assume the role as the lead economic development agency when working with a business expansion or a new prospect. Working with prospective new businesses and expanding existing businesses currently reflects the City's more active role. A Business Friendly Community. A continued perception exists locally that Iowa City could be more business friendly. This perception is disputed by a number of nationally recognized sources which have repeatedly named Iowa City as one of the best small cities in America to do business. This is evidenced by the 2003 Milken Institute Study that ranked Iowa City the #1 Small Metropolitan Area in the United States for Business and Career Growth. In July 2003, Expansion Magazine ranked Iowa City as the 11th best metropolitan area in the nation for companies looking to expand. It is clear that we should focus on marketing Iowa City and promote our successes to reverse the perception that Iowa City is not a "business friendly community". Quality of life is an important factor for locating or expanding businesses and Iowa City's reputation for being a leader in this area is beneficial. For Iowa City to keep its high quality of life and remain competitive as a community people choose to live in, we must be constantly reminded of the need to grow the commercial and industrial sectors to expand the tax base in order to be able to afford the amenities and services our residents desire and provide jobs. Expanding the commercial and industrial tax base does not mean the community will lose its unique character as long as the new development occurs in a way that is consistent with and respectful of existing development and meets the goals of the community as expressed in the Comprehensive Plan. By undertaking and promoting the planning process we are continually keeping community quality and economic development issues before us as important issues. According to the Iowa City Business Survey that was completed in 2001, municipal regulations and their implementation by city staff needed to become more sensitive to facilitating and regulating new development in the community. Some of this will be done with the adoption of the new development code in 2004. We must continually review how we approach development in the community to balance the goals of a quality community and industrial and commercial development. The City Council and the Economic Development Committee have worked to set the tone for a new approach to encouraging development. This has been successful and a number of new projects have been approved. Resources Available for Economic Development. The City of Iowa City has a number of tools available to assist economic development efforts. These tools include Tax Increment Financing (TIF), Tax Exemptions or Tax Abatement, CDBG Funding, bonds or other city funding resources. Marketing and using these tools to assist business growth is key to furthering the City's economic development efforts. As such, an expanded proactive and more aggressive economic development program will require additional resources to implement an expanded program. Actions for a Stronger Economic Development Role for the City The following lists actions we can reasonably take in selected, key areas of economic development to implement a more aggressive approach to economic development and to build the City's future tax base: Retention & Expansion . ICAD will conduct business retention surveys and gather information about existing businesses. Iowa City staff will work with ICAD to evaluate the satisfaction with governmental and area support services, explore company growth plans, and offer assistance where appropriate. . Complete and implement the new City Development Code. . As needed, consider changes to the City's regulatory process. . Propose redevelopment plans and/or invest in public spaces in areas of the community, such as South Riverside Drive, Towncrest, South Gilbert Street, North Dodge Street and the Muscatine\First Avenue commercial areas. . If approved, support the SSMID and encourage identification of potential market niches in the downtown. . Refine a comprehensive package of tax incentives and/or a revolving loan fund for low-interest loans for economic development projects. . Continue to utilize tax or other incentives to increase the tax base through new construction of facilities and/or additions to existing improvements. . Promote quarterly business breakfasts, hosted by the City or with other partners. Business Attraction . Prepare materials that specifically market and promote Iowa City as a place to do business and live. . Continue to participate with economic. development partners (e.g. ICAD, Chamber of Commerce, MidAmerican and University of Iowa) to post site information on commercial and industrial spaces in Iowa City. . Upgrade the City's ability to provide site and other information electronically to prospective companies. . Proactively work with realtors to make them aware of Iowa City's positive economic climate. . Increase Public Relations to promote Iowa City through mailings, press releases, web and other avenues. Promote Economic Development success stories and activities. . Continue to utilize tax or other incentives to increase the tax base through new construction of facilities and/or additions to existing improvements. . Support educational and outreach efforts to youth so they will remain in the area. Market job opportunities to post-secondary students, GenXers and others. . Build and enhance the City's relationship with commercial and industrial developers and property owners in order to improve opportunities for development projects within Iowa City. Work pro-actively with landowners and developers to solicit and plan for commercial\industrial\office growth. . Plan, zone and/or annex land for future industrial park land in southeast Iowa City and near other major transportation corridors (e.g. 1-80, Hwy 218, Hwy 6 and Hwy 1). . Work with the IDEO, lOOT and the railroad(s) to extend rail spurs within existing or new industrial areas. . Encourage expansion of office and/or office research park space through zoning and/or annexation in NE Iowa City. . Market the availability of new commercial\industrial properties along the Mormon Trek extension and the Aviation Commerce Park. . Construct an industrial speculative building independently or with a private sector partner. . Take an increasingly active role in marketing and promoting Iowa City through cooperative efforts with ICAD, Chamber of Commerce, CVB, IDEO, and MidAmerican Energy and other regional economic development interests. . Proactively pursue federal and state funding for economic development projects and infrastructure. . Evaluate the need and, if necessary, plan for new commercial cores in the community in coordination with the district planning process. Entrepreneurship . Continue financial assistance programs for start-up businesses or small business expansion by u~ing CDBG funds. . Help develop a privately funded low-interest loan program for targeted businesses. . Periodically re-evaluate the incubator concept, and when appropriate, pursue development. . Discuss with the University of Iowa the possibilities of developing a commercial\industrial\research park based on the "Oakdale" model. . Work with the Small Business Development Center, Institute for Social and Economic Development and the Pappajohn Center to facilitate the creation of new businesses. . Develop relationships with the University of Iowa Office of Research to collaborate on activities related to technology transfer and commercialization. . Partner with ICAD regarding relationships with businesses at Oakdale and the University's Technology Innovation Center (TIC) and determine spin-off business opportunities in Iowa City. Future Economic Development Work Program City of Iowa City Economic Development Division Retention & Expansion Work with ICAD to evaluate and coordinate information collected through their annual business retention survey. Continue to evaluate satisfaction with governmental and area services, explore company growth plans, and offer assistance where appropriate. . Partner with ICAD on their business retention surveys and interviews. Summarize findings and act to address outstanding issues. . Follow-up on issues of concern to Iowa City businesses. . Maintain outreach to businesses through one-on-one site visits by the Council Economic Development Committee and staff. . Periodically, conduct a business retention survey process ($2,500-$3,000). Implement the City's New Uniform Development Code . Maintain an on-going evaluation and consideration of changes to the City regulatory process dealing with commercial and industrial projects. . Reduce "red tape" and streamline processes. Develop area redevelopment plans and/or invest in public spaces in areas of the community, such as South Gilbert Street, North Dodge Street, S. Riverside Drive, Muscatine\First Avenue and the Towncrest areas. . Conduct meetings with property owners and tenants in these areas to determine the level of redevelopment and/or investment in public spaces. . Review current zoning and land use patterns. Rezone property if needed. . Consult with public works staff to prepare public improvement design plans or redevelopment concepts and plan for such projects within the Capitallmproverrients Plan. . As needed, construct physical public improvements\infrastructure. . Consider applying for Vision Iowa, Community Attraction & Tourism and/or other funds from the State of Iowa. Support a retail and office market analysis to identify potential retail and office market niches in defined commercial areas. . If approved, support the CB-10 SSMID and encourage the identification of potential market niches in the downtown. . Work with the Chamber of Commerce, business and property owners in retail/office areas to convey information from market study and develop strategy to act on results. Establish a comprehensive package of tax incentives and/or a revolving loan fund for low interest loans for economic development projects. . Continue to utilize tax or other incentives to increase the tax base through construction of new facilities and/or additions to existing improvements. . Encourage the use of existing tax exemption areas downtown to assist owners with renovations or redevelopment that will increase the tax base. . Pursue the development of a fayade renovation low-interest loan program for buildings in targeted areas and support the use of State and Federal resource that may be available including Historic and Rehabilitation Tax Credits. Business Attraction Prepare materials that specifically market and promote Iowa City as a place to do business and live. . Meet periodically with ICAD/CVB/Chamber of Commerce to review materials already available to determine what supplemental materials are required. . Prepare supplemental marketing materials specifically promoting Iowa City and why it is a good place to do business. ($2,000-3,500) . Update and link the City's web site to provide additional information, and promotional items to highlight the City's economic development activities. Enhance the City's relationship with commercial and industrial developers and property owners in order to improve opportunities for development projects within Iowa City. . Develop contacts with area commercial/industrial developers and property owners. . Host a workshop for area commercial/industrial developers and property owners (modeled after the District Planning process) to engage them in proactive planning for commercial and industrial areas. Plan for new future industrial parks adjacent to major transportation corridors and the expansion of the $cott-Six industrial park in southeast Iowa City. . Identify potential industrial sites, contact property owners and begin preliminary discussions. . Consider acquiring land for future city-owned or public-private partnership in an industrial park. . Identify development costs and resources for new or expanded infrastructure capacities in industrial areas. . Work with property owners, the railroad and state agencies to extend rail spurs in Iowa City. Construct a speculative industrial building. . Identify a location for speculative building. . Prepare a proposal for a city/private sector partnership or partnership with the University of Iowa. . Construct a speculative building of 20,000 square feet or larger. ($1.5-$1.75 million) Develop a plan for new or expanded future office and research park land in northeast Iowa City. . Utilize existing transportation infrastructure (1-80, Highway 1, Scott Blvd and First Avenue) to identify potential sites begin discussions with property owners. . Identify development costs of needed infrastructure for new office\research areas. . Explore the possibilities of extending fiber optic, wireless or other communication enhancements to facilitate the location and expansion of information based companies. Continue an active role in marketing and promoting Iowa City through cooperative efforts with ICAD, IDED, the University of Iowa and MidAmerican Energy. . City staff to participate with ICAD, the State of Iowa and others in the development of prospect proposals and prospect site visits. . . Plan and host regular meetings with UI officials (e.g. Business College, Medical School, Pharmacy, Research and Technology). . Use MidAmerican programs and incentives to enhance Iowa City's marketing and other economic development efforts. · In conjunction with ICAD, include Council Economic Development Committee members to visits with major employers in the community as requested. . Participate in "Sell Iowa" trips with the Iowa Department of Economic Development ($2,000- $3,000). Evaluate the need and plan for, if necessary, new commercial cores in the community. . As part of the retail\office market analysis, comprehensive planning and/or district planning processes, identify need for future commercial cores. · Development of redeveloped or expanded commercial cores at Towncrest and North Dodge Street. . If necessary, rezone property for future commercial cores. Entrepreneurship Encourage the development of a Business Information Center through exploring the creation of a one-stop business development facility. . Encourage co-locating a Business Information Center with the Small Business Development Center, Institute for Social and Economic Development, SCORE, and other business development groups . Preferably locate in a high-visibility street level location. Develop a financial assistance program for start-up businesses using CDBG funds and develop a low-interest loan program for targeted businesses. . Continue and promote the CDBG Economic Development Fund. . With assistance from the Small Development Business Center and the Institute for Social and Economic Development, work with area banks to create a privately funded low interest loan program to promote the creation and expansion of small businesses. Periodically re-evaluate the incubator concept, and when appropriate, pursue the development of one in Iowa City. . Upon direction from the Council Economic Development Committee, explore the incubator concept. . Work with the University of Iowa to develop a high tech inventor incubator on campus. . Perform a feasibility study outlining the framework for establishing an incubator, if the decision is to proceed. Develop a relationship with the businesses at the TIC Center and directors at the National Advanced Driving Simulator to determine spin-off business opportunities in Iowa City. . Periodically contact the TIC Director to discuss Iowa City's role in working with the TIC Center businesses. Hold individual meetings with TIC businesses as needed. . Prepare marketing materials specifically targeted towards TIC businesses and NADS spin-off businesses. This work program outlines numerous activities and projects that may be undertaken. However, if the City budget mandates the continuation of a .5 FTE Economic Development Coordinator, the tasks will have to be prioritized by the Council Economic Development Committee and City Manager. Please note that on-going reporting and other efforts related to past economic development activities (e.g. TIF projects) must also be maintained. The work plan also assumes contracting for specialized work such as drafting redevelopment plans, market analyses, design work for capital projects, and development of marketing materials\web enhancements. City Council Economic Development Policy Committee To implement an active economic development strategy and create a high profile policy, the City Council Economic Development Committee was established. We believe the economic development activities and policy to be very important to our economic future. Please note that in order to implement the economic development strategies effectively we will need to be flexible, able to reach a decision in an abbreviated timeframe, and be creative with our resources. In addition, we will be looking at ways to target federal and state funds for these efforts. This approach will likely involve greater interaction for staff and/or Council with federal\state agencies and our federal\state legislators. April, 2004