HomeMy WebLinkAbout04-04-2006 Council Economic Development Committee
AGENDA
City of Iowa City
City Council Economic Development Committee
Tuesday, April 4, 2006
9:00 a.m.
City Hall
*Planning Conference Room *
410 East Washington Street
1. Call to Order
2. Approval of Minutes - March 15, 2006
3. Discussion of regular meeting schedule.
4. Discussion of protocol for review of financial assistance applications.
5. Discussion of next steps regarding retail incubator.
6. Discussion of impacts of other development in the County on Aviation Commerce
Park South.
7. Adjournment
MINUTES
CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE
MARCH 15, 2006
LOBBY CONFERENCE ROOM
PRELIMINARY
Members Present: Regenia Bailey, Connie Champion, Bob Elliot
Members Absent: NONE
Staff Present: Karin Franklin, Tracy Hightshoe, Steve Atkins
Others Present: Cleo McConnell
CALL MEETING TO ORDER
Chairperson Bailey called the meeting to order at 3:00 PM.
APPROVAL OF THE MINUTES FROM MARCH 10.2006
Motion: Elliot moved to approve the minutes from March 10, 2006 meeting as written. Champion
seconded the motion.
Motion passed 3:0.
DISCUSSION OF APPLICATION FROM MCCONNELL REVENUE CYCLE SOLUTIONS, INC. FOR CDBG
ECONOMIC DEVELOPMENT FUNDS
Franklin said that Cleo McConnell from McConnell Revenue Cycle Solutions, Inc. has applied for CDBG
Economic Development Funds.
McConnell said that for the past three years she worked at the University of Iowa Hospitals and Clinics. She
said she was employed by a company from Houston, Texas which performed billing services for hospitals. She
said she was hired to work as on site project manager. McConnell said her proposed business will perform
billing services for hospitals. She noted that billing has become an overwhelming task for hospitals to do
themselves. McConnell said hospitals need the expertise of companies that focus solely on billing and coding
requirements.
Franklin asked why the focus of the business is solely on billing for hospitals, and not for individual medical
practices. McConnell said that billing practices are different for hospitals versus physician's offices and her
expertise is in hospital billing.
Champion said that she would like to see 20% of McConnell's personal money go into the business start-up.
She added that it is unusual to have a $60,000 start-up salary at the beginning of the business. She said that
she would have an issue with the city funding that guaranteed $60,000 salary. Champion said that starting a
business involves some risk that has to be taken by the proponent.
Elliot said that he would like to know more about McConnell's experience. He said he would like to see a
timeline for employment. He said he would also want to know what happened with the Houston based firm, and
the reasons for stopping employment with them.
McConnell said she left in May 2005 to start her own billing company. She said that she had three bosses
throughout the time frame they were contracted with the hospital. She added that one boss left without letting
her know. She said that one day a person flew in from Texas and introduced himself as the new boss and asked
her to write everything she has done since employed with the company. McConnell said that three weeks later
the new boss flew back, met the staff, and said they needed to separate employment, meaning she and the staff
had to go. McConnell added that the contract with the hospital was terminated at a later date.
Elliot asked how long she was on site project manager. McConnell said she was on site project manager for 3
years from 2002-2003. She noted that she had had her own business from 2001-2002 doing billing services
from home while also maintaining a full time job with Johnson County Mental Health.
Bailey asked McConnell to discuss the business budget. McConnell said that as noted in the budget plan she
would like to start with fewer employees and get enough funding for operating expenses for at least a two month
period because the company will start to internally fund thereafter. She said that when starting billing the
Economic Development Committee Minutes
March 15, 2006
Page 2
payment is received two months after the initiation of process. McConnell said the budget comprises the
salaries of people required based on the size of the account, rent for space, insurance costs, copy machines
and computers. McConnell said there are facilities and professional fees. She noted that the budget is based on
essentials until receiving first receipts.
McConnell noted that she looked for a software company that could do all that was needed. She added that she
found a company which was selling software called Papers. She said the software was very expensive.
However, she said she found a new company with a much lower price. She added she was able to speak with
their clients. She noted speaking with a client from Alabama who was very open to discuss the software
capabilities and about the start-up steps as well. McConnell said the company gave her an option to use a host
system. She said the host is maintained by the software company, and she would need to pay a monthly fee to
connect and use the software. She noted the cost is highly reduced through this option.
Elliot asked if she spoke with any other customers. McConnell said she discussed with two other clients,
however the person from Alabama took it one step further by advising on start-up steps and experiences. She
added that she proposed he become her consultant, but he said he will help her for free.
Champion asked if she approached any small hospitals. McConnell said that small hospitals need billing help.
She added that one of the advisory board members Sarah Voulterback is the vice-president for the human
services for the Iowa Health System Network. McConnell said that Voulterback gave her a list of contact details
for 14 hospitals which came to the Iowa Health System Network asking for billing services. She added the
Network could not take them due to overload of activity. She added that Voulterback contacted all CEOs of
these hospitals who contacted their CFO saying there is a new Iowa based company starting in Iowa City that
can take their account and do the billing service for them. McConnell said she does not have any letters of
intent, but is actively bidding on one contract in Knoxville. She added that she will have meetings with two more
hospitals in April.
Elliot said that the key is that the hospitals know they have a need for billing experts. He asked how many hours
will be worked in a one year period. McConnell said she plans on having 40 hours per week, multiplied by 52
weeks results 2080 hours per year.
Elliot asked how she calculated the salary budgets because based on his calculations there are a few of
employees receiving less than $7 per hour. McConnell said that with the exception of the receptionist no one
receives less than $12 per hour. Hightshoe said she had similar results s those of Elliot. McConnell said that she
computed the salaries monthly, but she made an error when adding them annually.
Elliot said that one criterion for the Committee is the provision of good employee salaries and work environment,
in addition to what the company means for the City and the tax base expansion that it would provide. He said he
would like to see a compensation figure.
Hightshoe asked how much time will be needed to buy all needed equipment to start the business. McConnell
said the company can become operational in 48 hours.
Franklin said that she saw the letter from Hills Bank and asked if they were willing to reconsider the application
for a lower amount. McConnell said they will not reconsider the application. She added that she has no assets at
this point. She noted that she did not have a salary from May 2005 and she is living on savings.
Elliot asked if she has a location for the business. McConnell said she has a location that she moved in. Elliot
said there will be an 80/20 split on medical and dental insurance and asked what other benefits will be offered.
McConnell said that Pella Regional will take care of 401 K benefits. In addition, she said, there will be vacation
time, sick leave as well as gift certificates.
Champion said the plan shows a very viable business. Bailey said that it makes sense to have an Iowa based
company to serve the local hospitals. McConnell said there is no Iowa based billing services company. She said
she has the right expertise and support from her advisory board.
Elliot asked if the employees will work in an office or have the option of working at home. McConnell said that
working with hospitals requires office work. She said that in addition to offering billing services to hospitals she
would like to offer coding directions for staff to allow for more claims processed in the first round. She added that
each time a claim is denied the reimbursement amount fails. She added that this can be avoided by training
Economic Development Committee Minutes
March 15, 2006
Page 3
hospital staff how to code correctly. She added that she discussed with Kirkwood Community College the
addition of curriculum for hospital billing. She noted that she is helping them develop the curricula. She added
that they could put together an externship for students to work in her office, and if it works well at completion of
study they could be hired as the company grows.
Franklin asked what type of funding is requested. McConnell said she is asking for a grant or a low interest loan.
Bailey requested comments from her fellow Committee members on a decision regarding this request. Elliot
said the business will provide good solid compensation, has the potential for growth and providing a tax base,
and will be in favor of funding the project. Bailey said this was one of the best micro enterprise applications
received and is in favor of providing funding. Champion said she is also in favor of funding the application. She
said the jobs will be good and the business has the potential to grow. Franklin suggested the loan be granted
contingent on the first contract being obtained. Elliot said they would have to do a contingency type statement.
MOTION: Champion moved to approve a $60,000 loan at 2% interest for 7 years with granting of the loan
being contingent on the first contract. Elliot seconded the motion. .
Motion passed 3:0.
Hightshoe said that McConnell can not order any supplies until the funding agreement is signed because based
on federal regulations it will be considered prior expenses and will not be covered by the allocated funds.
DISCUSSION OF JOB DESCRIPTION FOR ECONOMIC DEVELOPMENT COORDINATOR
Franklin said that she worked with the City Manager, Steve Atkins, to compile a list of priorities for the Economic
Development Coordinator position. She noted that the list includes all responsibilities the last full time economic
development person had as well as new, more specific responsibilities.
Elliot asked where this position will fit in within the City organization. Franklin said the position will be equivalent
to a division head position with a salary range of $52,000-$80,000. Champion said that she is willing to try to
have the position approved as proposed.
Champion said she is a great believer in having a great title for the position. Elliot asked if there is any reason
why the position can not be considered a director of economic development. Atkins said that the director is a
title generally reserved for department heads and connotes a certain placement in the organization with
significant supervisory responsibilities. Atkins said they could recruit in that salary range.
Bailey said that having the wrong person would be very expensive for this position. Franklin said that even after
interviewing they can revisit their decision.
Franklin asked the committee to look at the list of responsibilities do determine if it is on the right track for the
Council's expectations for the position.
Atkins said that in the general budget the position is funded part-time, but is currently proposed to go full-time.
He said he would like to charge half time to water and sewer accounts since the position will generate new
water and sewer customers. He added that the airport should also be included.
All the committee members were in favor of advocating for the position.
DISCUSS DATES FOR VISIT TO NUCLEUS RETAIL INCUBATOR. CEDAR RAPIDS
Franklin noted March 23rd and March 24th as possible days for the visit. The Committee decided to visit
Nucleus Retail Incubator, 207 2nd Avenue SE, Cedar Rapids, on March 23rd at 2 PM.
ADJOURNMENT
The meeting adjourned at 4:12 PM.
Minutes submitted by Bogdana Rus
s:/pcd/minutes/ecodev/2006/03-15-006.doc
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