HomeMy WebLinkAbout06-27-2006 Council Economic Development Committee
REVISED AGENDA
City of Iowa City
City Council Economic Development Committee
Tuesday, June 27,2006
9:00 a.m.
City Hall
City Manager's Conference Room
410 East Washington Street
1. Call to Order
2. Approval of Minutes - March 30, 2006 and April 4, 2006
3. Discussion of application from Habitat for Humanity ReStore for CDBG Economic
Development Funds
4. Discussion of Iowa Advantage Fund proposal
5. Discussion of wage criteria for financial assistance
6. Businesses with tornado damage--update & potential assistance
7. Committee time
8. Adjournment
NEXT MEETING DATE: July 18, 2006
MINUTES
ECONOMIC DEVELOPMENT COMMITTEE
MARCH 30, 2006--2:30 P.M.
N.UCLEUS RETAIL INCUBATOR, CEDAR RAPIDS
PRELIMINARY
Members Present: Regenia Bailey, Connie Champion, Bob Elliot
Members Absent: None
Staff Present: Karin Franklin, Tracy Hightshoe
Others present: Jim Miller, et al
Miller, Committee members, and staff toured the facility. Miller explained the
history and operations of the incubator.
The incubator is located at 207 Second Ave. SE, the previous location of Osco
Drug in downtown Cedar Rapids. The property is owned by the Dows
Corporation and is affiliated with Four Oaks. With vacation of the building by
Osco, a collaboration with the Downtown District, which is a self-supporting
municipal improvement district (SSMID), was begun to facilitate the location of
retail tenants in the downtown. The incubator is approximately 12,000 square
feet and is now divided into modules that can be leased at below market rent
(market rent equals $8-15/sq. ft.) for periods of one to three years. Expectations
are that a tenant will move out in three years and locate in one of the nearby
vacant downtown retail spaces.
Leases are triple net and include basement storage as well as mentoring through
the Cedar Rapids division of SCORE (Senior Corps of Retired Executives).
The facility was designed by Shive-Hattery who contributed their design work.
The Gazette has partnered with the District to provide discounted advertising.
The cost of the improvements to the Dows building equaled $240,000; there are
approximately $110,000 in additional in-kind costs. The City of Cedar Rapids
provided additional- funding for fayade renovation at a certain dollar amount per
lineal foot. In addition, parking has been discounted with permits being one-half
the usual price for two years, or $22.50/month rather than $45/month.
The goal of the incubator project is to attract small businesses to the downtown
that are not duplicative of those retail uses already found downtown. Current
tenants include a drug store, a salon, a candle shop, and a convenience grocery
store. The grocery store has been attractive to downtown residents, bringing in a
steady stream of customers. Outreach has been done or is being done to area
colleges and the "under-served" to recruit potential tenants.
1
With the departure of the director, Jim Miller, the business of the incubator will be
carried on by Wells Fargo (?) bank personnel and executives from SCORE.
See attached sheet for further explanation of the operations of the incubator.
Meeting adjourned at 3:15 P.M.
Submitted by Karin Franklin.
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MINUTES
CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE
APRIL 4, 2006
LOBBY CONFERENCE ROOM
PRELIMINARY
Members Present:
Regenia Bailey, Connie Champion, Bob Elliot
Members Absent:
NONE
Staff Present:
Karin Franklin, Tracy Hightshoe
Others Present:
Inga Beyer
CALL MEETING TO ORDER
Chairperson Bailey called the meeting to order at 9:00 AM.
APPROVAL OF THE MINUTES FROM MARCH 15.2006
Motion: Elliot moved to approve the minutes from March 15, 2006 meeting as submitted.
Champion seconded the motion.
Motion passed 3:0.
DISCUSSION OF REGULAR MEETING SCHEDULE
Franklin said that it would be productive for the Committee to have a regular meeting time. She added
that if there is nothing on the agenda the committee will not meet that month. She noted that there was
some discussion with the last configuration of the committee, and time was set aside at 8:30 on the third
Tuesday of each month as a regular meeting time.
The committee decided to have the regular meeting time at 9:00 AM on the third Tuesday of each month.
Franklin said that the new meeting time will be in effect starting May 2006.
DISCUSSION OF PROTOCOL FOR REVIEW OF FINANCIAL ASSISTANCE APPLICATIONS
Franklin said that the protocol is focused mostly on CDBG funds which are usually awarded for micro
enterprises. Franklin said that the guidelines are as applicable.
Bailey asked if before the proposal gets in front of the committee there are meetings with staff. Franklin
said there are meetings with staff previous to the committee meeting. Bailey said that it would be
beneficial to note in the application that the application will be verified by staff prior to the committee
meeting.
Bailey said that when an application is considered she carefully looks at proformas numbers and asked if
it can be required that those calculations are readable. Franklin said they are working as an organization
on trying to determine a good format for proformas. She added they will require people to bring materials
to them that have to be of a certain size font.
Franklin asked if there are any changes or additions that the committee has to the application. Bailey said
that in the degree verification section of the application they should make it clearer that it is not expected
that everyone have a degree. Champion said that instead of degree verification they should use the term
verification of qualifications. Elliot said that the experience of the applicants needs to be verified.
Champion said the degree verification section should not be in the application.
Hightshoe said that providing references is not currently required but it might be beneficial to be included.
Elliot said that pertinent information needs to be verified.
Hightshoe said that she had a discussion with the small business center regarding business mentoring.
She noted they had a very small staff and the small enterprises that typically apply for public funds are
not their target market. However, she said, it would be possible to have MBA students assigned as
mentors for small start-up firms. Concern was expressed that the students would not have had any actual
business experience. Hightshoe noted she had also tried to contact the local chapter of SCORE but had
received no response yet. Hightshoe indicated she and Franklin had discussed the possibility of working
into any financial assistance a percentage for compensation of a mentor; this compensation would be
Economic Development Committee Minutes
April 4, 2006
Page 2
fairly minimal. The mentor would be expected to be "on-call" for the business for at least the first couple
of years of a start-up.
Bailey asked what City's expectations for ongoing technical support are. Hightshoe said that if there is
federal money awarded they have to do annual monitoring of the project.
Franklin said that Hightshoe and Long monitor all CDBG projects, but they do not mentor these
businesses. She said that she would like to see someone with experience in running a business to
mentor new starters. Champion said that mentoring will be very important and "The Rack" is a very good
example that might have been successful if they had guidance. Elliot said that he would like to find ways
to tie in the Chamber of Commerce more directly in supporting small businesses.
Champion asked if there might be business people in the community willing to mentor. Franklin will try to
find if there is any avenue for mentoring through the Chamber of Commerce.
DISCUSSION OF NEXT STEPS REGARDING RETAIL INCUBATOR
Franklin asked what the Committee would like to do next after visiting the Cedar Rapids incubator. Eliot
said that it would be nice to have more of a focused incubator rather than an incubator where everyone is
open. He noted the focus for Iowa City needs to be something realistic like an artistic focus.
Champion said that she liked the huge space being divided into smaller spaces, but does not believe that
the City can get into an activity like that because there is no such great need in Iowa City. She said she
would like to see a private individual doing an incubator, which will be a great micro-enterprise initiative.
Elliot said the City will have to take some leadership towards the development of an incubator. Champion
said that the City could give some tax benefits to a business to do the incubator, but does not believe the
City itself should do it. Champion said Iowa City is in a different situation than Cedar Rapids. She added
that the spaces in the downtown fill up very easily.
Bailey said that the City should conduct a study regarding the mix of downtown businesses. Franklin said
that they would need some public policy argument for why the City would be involved in the mix of
businesses in the downtown. Bailey said the Cultural District comes to mind. She said the public policy
question is, given the designation, how can the City support this as a destination for people coming to
Iowa City and how can the City help the concept of the District thrive. Elliot said that what are needed
downtown are smaller spaces. He asked if there is any way the City could assist private people to
purchase places and divide them into smaller spaces.
Franklin said that one way could be to discuss the concept with the owners of a building like Bremers and
express the City's interest in seeing what it will take for them to move in that direction. She added they
can identify opportunities like the former Hills Bank and Discount Records store. Champion said Hills
Bank is not suitable for retail because of its facade. She noted that the location is ideal but would need to
be modified. Bailey said they should contact the property owners and determine why the places are not
rented out.
Bailey said that another public policy that could be considered is street level windows, and getting the
businesses closer to the people. Champion said it is very important to see in the store. Bailey said this is
a public policy that can be implemented.
Champion said that the downtown bar situation is exaggerated. She said she does not believe that more
bars will open; instead as one opens another one closes.
In terms of the incubator, Bailey said that the consensus seems to be that one is not currently needed.
Franklin said that work seems to be needed towards the mix of uses in downtown.
Elliot said there was a problem in the past regarding complaints on why money is put in businesses
downtown, when businesses are all over the town. Elliot said that if they loose the downtown they loose a
big portion of Iowa City, therefore the downtown must remain viable. Bailey said that downtown is the
heart of the city and is changing more rapidly than the rest of the city. She added that the City had helped
businesses in other parts of the city and not only in downtown.
Economic Development Committee Minutes
April 4, 2006
Page 3
Elliot asked if staff will discuss with the owners of retail spaces, or if the committee members should do it.
Franklin said that it would be beneficial in having the committee members discuss with property owners
regarding the interest in the space, seeing the available downtown spaces used successfully, and also
determining their plans, and impediments for successfully leasing their space. Franklin said that she
would also like the group to ask if the owners have a goal of what will fit the space aside from general
retail. Franklin asked if there is a desire to foster through incentives things that will feed in to the cultural
district. Elliot said they have significant destination events in Iowa City, and believes people will like to see
more art related stores. He noted that arts could be a way of promoting the cultural district.
Franklin asked if the committee suggests that money be devoted to an evaluation of the downtown
market and what the best mix of businesses would be for Iowa City. Champion said that if an evaluation is
done it could be published and marketed. Bailey said they could also have priorities and incentives from
some of the results of the study. She said she is not willing to have the City do the study itself, but in
partnership with the Chamber of Commerce and DT A.
Bailey asked what the study would be called. Franklin said that it will be a Market Mix Analysis. Champion
said that she likes the idea of small entrepreneurship and the study to be done in downtown. Elliot said
that people that win revolutions know how to win wars but often do not know how to run governments. He
said that people who have great innovative ideas for something that others might like don't often have the
business equipment that they need. He noted that's why the city needs to partner with the Chamber of
Commerce, the Downtown Association and the College of Business. Champion said she likes the idea of
local people volunteering to help local businesses.
Elliot said that as they go out and discuss with owners and possible partners there should be a central
person for all information to run through. Franklin said that Bailey as chair of the committee should be the
one to centralize the information. Franklin said that the role of the committee is to get the collaboration
going politically to focus on the possibilities in downtown.
DISCUSSION OF IMPACTS OF OTHER DEVELOPMENT IN THE COUNTY ON AVIATION
COMMERCE PARK SOUTH
Bailey said that she proposed this item to be on the agenda because there is a proposed agricultural hog
farm development directly south of the Iowa City Airport. She said that the agricultural development might
have an impact on the kind of development going in the Aviation Commerce Park.
Franklin said the location of the development is ambiguous. She said that if is 4 miles south of the airport
as noted in the newspaper it will be out of the Iowa City fringe area. Bailey said that it is close to the
Regency Mobile home park, about 1 ~ miles from the airport. She added that the project is governed by
DNR and there is no local control above it. She noted there is no needs for a building permit for the
project because it is agricultural related. She said that Lackender will be the owner of the development.
Franklin asked what the committee would like to do if the hog farm is within the city fringe area. Elliot said
they should determine exactly where the development will be prior to deciding on any action. Bailey said
that depending on the closeness and the management of the hog farm it could be a challenge to attract
office parks within the Aviation Commerce Park. Franklin said that if it is at the entrance of Iowa City
attracting office parks will indeed be problematic. Bailey said they could come with a different zoning mix
for the Aviation Commerce Park.
Elliot said that they have to remember that Iowa is still an agricultural state. Franklin accessed the
property information on-line and reported the property is located east of Dane Road and west of Highway
218 and south of Poweshiek Road.. She noted that the farm will not be in the direction of prevailing
winds, and added that she does not believe it will have a major impact on the aviation park.
Elliot said they should visit the site and determine the likely impact it is going to have.
Franklin indicated the next committee meeting will be on May 16 at 9:00AM, unless an application for
assistance is received in the interim.
ADJOURNMENT
The meeting adjourned at 10:15 AM.
Economic Development Committee Minutes
April 4, 2006
Page 4
Minutes submitted by Bogdana Rus
s:/pcdlminutes/ecodev/2006/04-04-06.doc
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Preliminary Review 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.
Review:
1) Meets all CDBG requirements and creates 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 $10.48 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
Business Plan:
· Plan must demonstrate the feasibility. of the business venture
· Creditworthiness of the business/applicant
· Reliability of the job creation and finan.cial estimates
. All private financing options considered
· Business plan MUST be readable (font 11 or larger)
Based on a favorable, preliminary review the City may verify the following:
. Credit history - Applicant Beacon Score
. Past employment
. Current references
· Financial institution - verify if assistance approved or denied. If denied,
primary reasons the institution denied the request.
· Any other information as supplied by the applicant on the application and
business plan to assist in evaluating the proposal
To verify some of these items, the City may have to ask for the applicant's home address, birth date
and/or social security number.
Proposed Process:
Applicant meets with staff/staff completes preliminary review
City Council Economic Development Committee approval
Council action/approval
CDBG agreement executed
Business mentor established and maintained during life of CDBG agreement
City monitoring and compliance
(over)
Approved 4/4/06
Existing language in the Financial Assistance application authorizing the
City to evaluate and verify applicant information and stating the
consequences for misleading or false representations:
Authorization on application to research the company/business proposal:
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 representations,
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.
Consequence Statement of false or misleading statements:
The City will not provide assistance in situations where it is determined that any
representation, 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.
Approved 4/4/06
Existing language in the Financial Assistance application authorizing the
City to evaluate and. verify applicant information and stating. the
consequences for misleading or false representations:
Authorization on application to research the company/business proposal:
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 aI/ 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 aI/ representations,
warranties or statements made or furnished to the City in connection with this
application are true and correct in aI/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.
Consequence Statement of false or misleading statements:
The City will not provide assistance in situations where it is determined that any
representation, 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.
Approved 4/4/06
PRELIMINARY STAFF REVIEW OF HABITAT RESTORE
BUSINESS PROPOSED:
Retail business that accepts donated surplus new or gently used construction materials for
resale to the general public. Iowa Valley Habitat for Humanity will operate the ReStore
to divert construction and demolition waste from the landfill, provide a source of
materials and funding for Iowa Valley Habitat for Humanity, and provide meaningful
volunteer opportunities. Applicant requests a $70,000, 0%, five-year loan. (Financial
forecast shows reduced payments the first 12 months.)
GUIDELINES
CDBG REQUIREMENTS
The project meets a CDBG national objective: project will benefit low-to-moderate
income (LMI) persons by creating and or retaining employment opportunities. At least
51 % of the jobs created or retained will be held by or be available to LMI persons.
Ther~ is a CDBG limitation regarding the amqunt of assistance. CDBG assistance can't
exceed $35,000 per FTE. The CDBG Economic Development Fund has averaged $8,109
per FTE since the inception of the fund in July 2002. This project meets the CDBG ratio
for award to job, but exceeds what has been the practice of the City for use ofCDBG
economic development funds.
APPLICANT'S FINANCIAL CONTRIBUTION TO THE PROJECT
Applicant states they will invest $12,000 for new telephone, lighting, and a security
system. The financial statement states applicant will contribute $40,000 in owner equity.
This figure represents 3 vehicles ($22,000), computers ($8,000), forklift ($5,000), and
racking ($5,000) that will be available for ReStore use.
Habitat will lease the building from the City for the value of taxes that would have been
paid by a private entity. It is a 10-year lease with three successive five-year options to
renew. The City will provide the building and land at no cost to the applicant besides the
tax value indicated.
QUALITY OF JOBS CREATED
Applicant requests $35,000 per each FTE created. The project application states two
FTES will be created within the first 12 months. Applicant states they are in the process
of hiring a ReStore manager now and will hire a part-time assistant during the summer
and shift that position to full-time by fall.
The two planned FTEs consist of the ReStore manager $15.38 per hour ($32,000/year)
and the assistant manager $10.00 per hour ($20,800/year). The application states an
annual payroll of $64,000. The $64,000 includes the wages and an additional 20% of
wages toward a benefit package where the employee may use the additional funds for
health insurance, retirement, disability, etc. The assistant manager position wage is
below the current county average wage of$13.85/hour, even with the additional 20% in
benefits.
ECONOMIC IMPACT
The project is an existing business, operated by Iowa Valley Habitat for Humanity that
will relocate to Iowa City where it is anticipated that the move will facilitate community-
wide recycling of building materials. It will also be a part ofIowa City's eastside
recycling center. The proceeds of ReStore will benefit Iowa Valley for Habitat for
Humanity, an organization that builds affordable housing for low income households.
The building is owned by the City; as such any future additions or growth will not
directly increase the City's tax base.
CONSISTENCY WITH THE CITY'S COMPREHENSIVE PLAN
The project does not require additional public infrastructure. The business will lease an
existing building owned by the City. Use of the building for recycling and for a
commercial enterprise is consistent with the City's land use plan and goals for reduction
of materials placed in the landfill.
ENVIRONMENTAL IMPACT/COMMUNITY INVOLVEMENT
The project will complement and be a vital component of the City's planned eastside
recycling center. The project will recycle construction material to the general public that
would otherwise go to the landfill. Vista and community volunteers will be used
extensively.
RELATED QUESTIONS/CONCERNS
Applicant states there are three bankers on the Habitat Board. The banks would loan
money at an 8% adjustable interest rate over three years. This interest rate and term
would make it much less affordable for Habitat and the banks would also require some
security interest. Applicant states it would be difficult for Habitat to provide security on
. most of their assets.
There is no collateral available. If the business fails to create and/or retain two FTEs
(51 % of the jobs must be held by or available to LMI persons), there is limited recourse
to get the funds reimbursed. Habitat is willing to pledge a percentage of sales if they fail
to meet the job creation goal and requirements.
The lease requires Habitat for Humanity to operate six days a week from 9 AM to 5 PM.
Habitat will relocate their administrative offices to this facility, but will initially operate
ReStore 3 days per week and anticipates operating ReStore 5 days per week by late 2006.
The expansion of ReStore hours will take place as traffic flow is determined.
The ReStore is a great fit for the community's recycling efforts. It is a vital component
of the eastside recycling center. In exchange for the building and land, the business will
monitor the site, maintain the grounds, and receive and receipt donation items for
different recycling programs as well as operate the ReStore. In its first year of operation,
ReStore diverted 40 tons of construction materials from the landfill.
As a business, the one-year financial statement shows an operating loss. Applicant states
their goal is to be self-sufficient by the end of their second year; however, first year
financials show only 1.5 FTE (second employee earning $10.00/hour). The business
plan and application are not consistent with the first year financial forecast of operating
expenses. Applicant estimates ReStore must generate $120,000-$150,000 to be self-
sufficient. $53,000 in sales was generated during the first year of operation. Application
states heavy construction in the area of the store's current location reduced donations and
sales. ReStore expects sales and donations to increase substantially at the new location.
The business will be primarily run through volunteer efforts and a volunteer board,
including the treasurer position. Applicant states they use QuickBooks Professional and
the new ReStore manager has managed a retail business previously, however it is not
apparent in the resume attached to the business plan. Applicant states ReStore will
contract with an accounting firm for consulting and their annual audit.
The project does not increase the tax base, may not be viable without substantial
volunteer efforts and City contribution, and the number of jobs created is small. If the
ReStore manager has been hired, then technically the application consists of tbe retention
of one FTE and the creation of one FTE (.5 FTE August 2006 to June 2007 according to
the financial forecast). The amount necessary to create or retain each job is substantially
higher than any previously funded CDBG project. The estimated annual payroll is
$64,000 for these two positions; however the applicant requests $70,000 to create and/or
retain the positions.
.-.
City of Iowa City Application for Business Financial Assistance
Business Requesting Financial Assistance:
Busine$s Name:
Iowa Valley Habitat for Humanity
Name of Authorized Person to Obligate the Business: Mark Patton
Business Address:
P.O. Box 1241, Iowa City, IA 52244
Business Contact Person:
Mark Patton Title: Executive Director
Telephone: 319.337.8949
Fax: 319.354.3527
E-mail Address:markpatton22@gmail.com
Business Federal ID#: 42-1410210
Date of Application Submittal: May 30, 2006
Release of Information and Certification
NOTE: Please read carefully before signing
I hereby give permission to the City ofIowa 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 representations, warranties or statements made or
furnished to the Cityin 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.
SIGNATURE OF COMPANY OFFICER AUTHORIZED TO OBLIGATE BUSINESS:
/!~i
fA1Lr1dA J
~
NOTE: The City will not provide assistance in situations where it is determined that any
representation~ 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.
Section 1: Description of Business and Proposed Project
1.1. Describe in detail the proposed "proi ect" (for example. company relocation. plant
expansion. remodeling. new product line. size of building expansion. number of new
jobs. amount of investment in machinery and equipment etc.):
Iowa Valley Habitat for Humanity is moving its ReStore operation and offices to 2401
Scott Blvd. inlowa City to better facilitate community-wide recycling of building
materials. New and used building materials are donated to ReStore. New items are used
in the building of Habitat homes and the remaining materials are made available for sale
to the public at 10%-40% the cost of new items. The space to which ReStore is moving
is 45% smaller than current space in Coralville and an addition is needed to accomodate
donations, sales and storage of donated items.
We propose adding 2800 SF of indoor display space, handicap accessible restrooms,
upgrading exit doors to meet fire egress standards, and covering approximately 4000 SF
of space for unheated outdoor storage.
We will be creating a minimum of two new jobs (likely to be more over time). We will
also be putting in a new telephone, lighting, and security system, estimated to cost
$12,000. Significant cleaning, painting must take place before moving the facility.
1.2. Provide a description and history of business:
Iowa Valley Habitat for Humanity was incorporated in 1992 and built its first homes in
1994. To date, 39 homes have been constructed using a mix of volunteer labor, private
donations and limited government funding. All partner families donate up to 450 hours in
"sweat equity" to help build their own and others' homes. As a result they purchase a
home from Habitat at cost and with a no interest loan.
The ReStore was begun in February, 2005, in loaned space in Coralville. Due to heavy
construction in the area, donations and sales have been hurt. The majority of the time
there was no legal street entrance to the facility. However, in the first year of operation,
more than 40 tons of building materials were diverted from the landfill and more than
$53,000 in sales were realized. The Iowa Dept. of Natural Resources granted the ReStore
a one-time grant of $78,000 to purchase a truck, pallet jacks, racking, advertising and
offset salaries for the start-up.
More than 150 ReStores exist around the country. Most show a pattern of growth of
doubling the preceding year's business the first three years of operation.
1.3. Describe the organizational structure of the business, including any parent
companies, subsidiaries, sister companies, etc.
Iowa Valley Habitat for Humanity is the parent 501 (c) 3 non-profit organization. It was
incorporated in 1992 in Iowa.
1.4. List the names of the business owners and the percent of ownership held by each.
As a non-profit organization, there are no individual owners. However, there is a
seventeen member board of directors consisting of four bankers, an attorney, a
veterinarian, a human resource professional, a professional management employee of the
city and a number of retirees.
1.5. List the business' five-digit and six-digit North American Industry Classification
System.
(NAICS) codes or the primary and secondary Standard Industrial Codes, (SIC codes)).
NAICS: 423390
1.6. 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 companv? If yes. please indicate the facility(s) and/or
company(s) affected.
No transfer of jobs will take place. Currently two Vista volunteers run the ReStore. In
June 2006, a full-time professional manager will start work and soon thereafter, another
person will be hired to assist. This position will start as 1/2 time and evolve into full-time
within 6-9 months.
1.7. What date will the project begin? June 2006. Be completed? December 2006.
1.8. Has any part of the project been started? If yes. please describe.
No. However, due to a tight timeframe to move out of the Coralville facility by the end
of June, some aspects of the project need to start as soon as possible.
Section 2: Financial Contributions to the Proposed Project
2.1. What type and amount of financial assistance are you requesting from the City (for
example, grant, forgivable loan, loan, property tax exemption, tax increment financing
rebate,
etc.)?
We are applying for a zero interest, five year loan of $70,000.
.
2.1 a. If Community Development Block Grant Funds are being requested. please describe
how the proposed project addresses the priorities, strategies. and goals cited in CITY
STEPS 2001-2006.
The building materials going through the ReStore will help reduce blight and substandard
housing in the community.
2.2. Explain why assistance is needed from the City. and why it cannot be obtained
elsewhere. (Specific supporting documentation evidenced by cash flow statements.
income statements. etc.. is requested.) If the City did not provide financial assistance.
could the project oroceed?
The project will be started without city funding and a limited operation will be
undertaken. Handicap accessible restrooms, a common receiving area (for three
organizations) and increased energy efficiency (heating and lighting) will not be able to
be put into place until funding is approved.
2.3. In what form is the business contribution to the project? Please explain clearly (for
examole. sale of stock. equity investments. subordinated debt. etc.).
ReStore will watch over, monitor, and police the entire recycling site for the city, receive
and receipt for donations of items to the Furniture Project and the Friends of Historical
Iowa City groups.
2.4. Identify all agencies or institutions involved in the project (financial and otherwise)
and what their involvement is:
City of Iowa City: owner and lessor; creation and operation of recycling site.
Iowa Valley Habitat for Humanity: site manager.
Furniture Project: to become a drop-off and pick-up site.
Salvage Barn: to become a drop-off and shopping site.
-.
2.5. What type and amount of security will the assisted business provide the City? If no
security is offered. an eXl'lanation must be provided. Note: as a general rule. for those
businesses not publicly traded. personal guarantees are required in addition to other
pledged business assets.
Mortgage $
What seniority or position?
Lien on $
What seniority or position?
Personal guarantee $
Other $
None (if none. please explain).
The City will be the owner of the property and all improvements will accrue to them.
The City will be loaning the money on property that they will own.
2.6. Summary ofProiect Costs and Proposed Financing Sources
USE OF FUNDS .
SOURCES (Summarize All Sources From Question 2.7)
Activity
Cost
A
B
c
D
Land acquisition
.-.
Site preparation
Building acquisition
Building construction
$54,800
Building addition
Building remodeling
$5,000
$6,500
$4,200
Light upgrades
Handicap bathroom installations
Heating system installation
$15,200 subtotal
Machinery & equipment
Furniture & fixtures
Permanent working capital
. (detail:)
Other
TOTAL:
$ 70,000
2.7. Terms of Proposed Financing
Code Source (include all sources in Question 2.6)
Amount $70,000
Type( 1) Loan
Rate 0% interest .
Term 5 years
Source A: City ofIowa City, CDBG Economic Development Loan Fund
Source B:
Source C:
Source 0:
Total:
$ 70,000
(1 )For example: forgivable loan, direct loan, grant, equity, tax abatement, etc.
2.8. Generally a decision by the City on this application can be expected within 30 days
of receipt of the application. If there is an urgent need for a more immediate decision on
this application, please indicate the desired timeframe and the reason for the urgency.
We are having to move in the new facility by the end of June to be open to the public by
mid-July. The handicap restrooms are needed immediately, while the other
improvements can wait.
Section 3: Quality of Jobs to Be Created
3.1. How many employees are currently employed by the company worldwide (total
em{>lovrnent including all locations, subsidiaries, divisions, affiliates, etc.)?
Currently there are 3 full-time, 3 part-time and four Vista/AmeriCorps workers. All are
based in the Coralville facility.
3.2. If an existing Iowa City business, how many total individuals have been employed
by the company at the Iowa City facility during the past year?
N/A
.-
3.3. If awarded funds. how many new full-time employees will you add to the payroll at
the Iowa City facility within 12 and 24 months of the award date? The business
acknowledges if it fails to create the iobs pledged below by the end of the proiect period
and maintain them for a period of time (usually 36 months from the date of the award). it
may be required to reimburse City funds for the employment shortfall. if the loan/~rant
was based on job creation.
Full-Time:
Part-Time:
12 months -2
12 months
Full-Time:
Part-Time:
24 months
24 months
Note: Jobs created or retained using Community Development Block Grant Funds must
be "held by" or "available to" low- or moderate-income individuals.
3.4. What is the estimated annual payroll for the new employees resulting from this
proiect?
$64,000
3.5. What is the starting average hourly wage rate (not including fringe benefits)
projected to be: . .
For the new employees?
$14 per hour
FQf existing employees? N/ A
For existing and new employees?
$14 per hour
.....
3.6. In the following table, list positions and hourly rates for each iob classification to be
created and retained.
List of Positions and Hourly Rate for Created and Retained Positions (use additional
sheets if needed)
\<./J,)~
Create: ReStore Manager. Salaried $32,000 per year ($16/hr equivalent), Fff
Assistant Manager. $10/hr plus 20% benefits, Fff
Retain
Position Title
No. Hours
Per Week
Hourly
Rate of Pay
Note: Every applicant should provide average hourly wages fo~ all new and existing jobs
which meet or exceed the average county wage rate by industry. Ninety percent of the
project positions should have a wage greater than the federal poverty wage rate for Iowa
City (30% of median income for a four person household in Iowa City). Under special
circumstances, consideration will be given to those companies who cannot meet this
requirement. (Contact the Economic Development Coordinator at the City for current
figures.)
3.7. Will any of the current employees lose their iobs if the proiect does not proceed? If
yes. how many? Explain why:
No.
3.8. Please describe the tyPes of worker safety programs that would be available for your
employees.
There will be a lifting and forklift safety instruction as well as a CPR and first aid
offering.
3.9. Does the business provide standard medical and dental insurance for full-time
employees? If so, what percentage of the standard medical and dental insurance packa~e
expense does the company provide?
As we are too small to offer good health insurance, we offer a 20% benefit package
where the employee can use an additional 20% of wages toward health insurance,
retirement or disability as they see fit.
Section 4: Economic Impact
4.1. Please document how much of your operating expenditures (raw materials,
supportive services, machinery, equipment, and labor) will be spent within Johnson
County.
95-100% of the operating expenditures will be spent in Johnson County. The only
exception is if we have to buy a forklift or specialized shelving outside the county.
4.2. -What Johnson County companies do you expect to sell to that currently buy from
non-eastemlowa companies? What percentage of your sales will fall into this category?
We expect that Johnson County residents who own mobile homes, homes, as well as
landlords and small construction companies will be our primary shopppers.
4.3. What other Johnson County companies could be considered to be your competitors?
At the current time there is only one individual and one company (Sharpless Auctions)
who takes in used building materials for resale.
4.4. How will this project benefit the City/County?
It will reduce by more than 100 tons per year the construction debris going to the landfill,
it will give the public a chance to recycle building materials for tax purposes, and the
proceeds from sales will build more Habitat homes in the area.
4.5. How will this project grow the property tax base onowa City?
It will help lower income homeowners and landlords to upgrade their properties without
having to pay full commercial price for improvements.
4.6. Beyond the present project. what future growth potential is there for the Iowa City
operation?
We know we will be assisting the Furniture Project, Salvage Bam and the city operate the
site in exchange for a reduced rent. All of the efforts will diminish even further the
amount going to the landfill.
Section 5: Environmental Impact
5.1. Please describe the energy and resource efficiency programs. waste reduction. waste
exchange. and recycling programs at your Iowa City ope~ation.
The entire project is related to reducing waste. In our first year of operation, more than
40 tons of waste was diverted from the landfill. In addition, we expect to offer classes in
waste reduction and do outreach to contractors to cut down on their waste.
5.2. Do you use recycled materials in the production of any products or through the
provision of any services at your facility? If so. please describe.
All items available at the ReStore are eitl}er not needed or wanted any longer. Used
building materials are the heart of our operation.
5.3. Will YOU be treating. transporting. storing. and disposing above ground. on or about
your business premises. in tanks or otherwise. for any length of time or for any purpose:
petroleum products. agricultural or other chemicals. waste oil or other liquid waste. or
any other inflammable. corrosive. reactive, or explosive liquid or gas? If yes. please
specify.
No.
5.4. Will the Iowa City operation develop renewable energy resources or products that
conserve energy? If so. please describe.
We will not manufacture items, but enable quality building materials (Le. insulation,
better windows, etc) to be put into homes to make them more energy efficient.
Section 6: Community Involvement; Compliance with Law; Repayment Agreement
6.1. 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.
Habitat for Humanity is based on using volunteers: on our board, on our committees and
in all of our builds. We also have to raise all the money to build homes from the
community. We expect to continue to do the same; this venture will help supplant the
money raised in the community and expand our volunteer base significantly.
6.2. Has the business been cited or convicted for violations of any federal or state laws or
regulations within the last five years (including environmental regulations. Occupational
Safety And Health laws, Fair Labor Standards, the National Labor Relations Act. the
Americans With Disabilities Act)? If yes, please explain the circumstances of the
. violation(s).
No.
6.3. Financial assistance from the City ofIowa City requires a repayment clause in the
loan agreement with the City. The repayment clause requires a prorated repayment of the
financial assistance if the company does not meet its iob attainment obligation and other
obligations of this agreement. Is the company willing to enter into a loan agreement that
contains a repayment clause?
Yes.
Section 7: Required Attachments
Check off each attachment submitted. If not submitted. explain why.
[x] Business plan (if new business)
[x] Profit and loss statements (3 year historical and 2 year projections): We have
included our most recent audit.
[x]. Balance sheets and Cash Flow Statement - Balance sheets (3 year historical if an
existing business) and 2 year projections using the forms provided herein. One year of
projected cash flow (using the format provided herein). .
[x] Letters of commitment of project funds (from banks, applicant, etc.). (see board
action below)
[x] Description of fringe benefits provided to employees. (described in the narrative)
[x] Copies of the company's quarterly Iowa "Employer's Contribution and Payroll
Report" for the past year and a copy of the most recent monthly payroll register.
[x] Map indicating the location ofthe project within the community.
[x] Cost estimates for construction, machinery/equipment, permanent working capital,
and purchases. (see narrative)
[] Certificate of Good Standing from the Iowa Secretary of State or an authorization to
conduct business in Iowa. (we are waiting on the Secretary of State)
[x] Certificate of Incumbency listing the current board of directors and current officers if
a corporation or a listing of the general partners if a partnership
[x] Corporate resolution authorizing the application for City funds
[x] Corporate signatory authorization naming an officer to execute the City application
and City loan documents, if approved.
[ ] Other
Explanation/other comments:
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.
. --
--
. Business Plan
for
Iowa Valley Habitat for Humanity
ReStore
MAY 2006
/1
J'
I. Business description
Function, size, location
Iowa Valley Habitat for Humanity is moving the Habitat R~Store, a retail business where
surplus new and gently used building and construction materials is diverted from the waste
stream and sold to the general public. The 9,100 square foot ReStore, to be located in Iowa City,
will provide a place for retail and wholesale building supply stores, contractors and homeowners
to donate useable but unwanted building products, thereby diverting tons of construction and
demolition waste from local landfills. At the same time, non-profit organizations, homeowners,
landlords, and contractors will find the Habitat ReStore to be a source of low cost, quality
building materials. The availability of these building materials, sold at 10-50% of retail prices,
will facilitate the upkeep of homes, and instill and maintain pride in Iowa City area
neighborhoods. Proceeds from the Habitat ReStore will provide funds for use by Habitat for
Humanity to offset the overhead/administrative costs of creating local, national and international
housing projects.
Employees under the direction of the Executive Director and Board of Directors of Iowa
Valley Habitat For Humanity will manage the Habitat ReStore. However, it will rely heavily on
volunteers for staffing the day-to-day operation.
How the idea began
The impetus for conceiving the ReStore was twofold: a) the model has been used very
successfully by Habitat groups elsewhere in the United States; and, b) the local desire for waste
reduction through reuse and for general environmental stewardship.
Though great strides have been made to reduce the stream of material being landfill ed,
materials with considerable remaining life are- daily fed into landfills as our society's appetite for
new and remodeled homes and businesses is satisfied. The ReStore will provide an option for the
many environmentally responsible contractors, businesses and homeowners who wish to find a
constructive use for their good (but no longer wanted) building products. The community served
by the ReStore will benefit from increased landfill life when the store diverts tons of construction
materials from the waste stream. This rescue of useable sinks, doors, windows and other building
products will reduce or postpone the need to create new products, thereby contributing to the
conservation of the planet's limited resources.
Though the environmental aspect would be reason enough for establishing a ReStor~, this
is far from the only objective. As a not-for-profit enterprise, under the auspices ofIowa Valley
Habitat for Humanity, the ReStore will generate income to support Habitat's building efforts
both locally and abroad. The local Habitat affiliate already finds itself as the recipient of
generous donations of building products. Some of these materials are used in Habitat homes.
Community market
Iowa City is a growing and thriving business community with a highly educated workforce.
Currently more than 111,000 people call this region home:
Population of Johnson County Municipalities.
. (Incorporated Places)
CoralVille 6,130 7,687 10,347 15,123
North Uberty 1,055 2,046 2,926 5,367
Oxford 666 676 663 705
Hills 507 547 662 679
lone Tree 834 1,040 979 1,151
Solon 837 969 1,050' 1,177
Swisher 417 654 645 813
Shueyville 154 287 223 250
Tiffin 299 413 460 975
University Heights 1,265 1,069 1,042 987
Johnson County Incorporated 69,014 65,896 78,735 89,447
Johnson County Unincorporated 13,113 15,821 17,384 21,559
Johnson County Total 72,127 81,717 96,119 111,006
Source: U.S. Department of Commerce, Bureau or Census, Census of PopUlation, 1990 & 2000. On December 6, 2001 the Census
Bureau issued an officIal statement revising tile total population count for Iowa City
While situated firmly in the Corn Belt, the community supports large and small industry,
educational institutions and tourism. The area is quite progressive in terms of waste disposal and
environmental stewardship issues. Recycling is well established and yard waste is collected for
compost.
--
However, until early 2005 the Iowa City area did not have a facility to collect surplus
general building supplies and materials from contractors, manufacturers, and building material
suppliers for the purpose of reuse. Consequently, the landfill has often been the recipient of
these materials. . Iowa City does have limited collections of historical building materials,
operated on a limited schedule and using primarily volunteers.
In July, 2006, the ReStore will move from donated warehouse space in Coralville and
will open up at 2401 Scott Blvd. in Iowa City. The new site will be the center of a city-owned
drop-off recycling center for the public. ReStore will watch over the site for the City in exchange
for a reduced rent.
Description of service, character, leadership
The Habitat ReStore plans to be open to the public 5 days per week after the first 24
months of operation. Initially, however, the business is operating on a 3 day/week schedule
(Thurs-Sat), and will go to 5 days/ week (Tues-Sat) by late 2006. Because only one FIT paid
staff person and two VISTA workers will be utilized for start up and initial operation of the
ReStore, much of the day-to-day operation will rely on a generous cadre of volunteers. A gradual
increase in the number of store hours will allow for an orderly store ramp up, staff development
and volunteer recruitment and training. One half-time staff will be addedin the fall and this
position will evolve into full-time by spring, 2007.
The founders of the Habitat ReStore have combined experience that encompasses more
than 20 years of work in non-profit organization management, manufacturing, business
management and construction. More than 200 hours have been spent visiting other donated
building supply sites, building alliances; writing grants; obtaining donations of materials and
services; and developing a business plan.
While a building material reuse facility of the nature and on the scale of the Habitat
ReStore will be new to the Iowa City area, this type of business has been hugely successful in
numerous communities nationwide. The Quad Cities' Re-Store has been in operation three
years and has been very successful operation to date. Habitat for Humanity alone operates more
than 120 ReStores in the US and Canada. The ReUse Development Organization (ReDO), which
was established in 1995 to promote reuse as an environmentally sound, socially beneficial, and
economical means of managing surplus and discarded materials, maintains a database of 160
building materi~ls reuse centers. ReDO does not profess knowledge of all reuse facilities, as new
centers are opening all the time. The eastside Iowa City location will complement existing
recycling sites in the county.
II. Market Analysis
The need
Though the Iowa City area is quite progressive in terms of waste disposal and
environmental stewardship, the vast majority of the public emphasis has been placed on
recycling, rather than on reuse.
Iowa City has needed a facility to collect non-historical surplus building supplies and
materials from contractors, manufacturers, building material suppliers and individuals, for the
purpose of reuse. Surveys of nonprofit housing-related organizations reveal that contractors and
businesses regularly offer donations of surplus building materials to housing-related charities.
However, as these organizations lack storage facilities and cannot always find immediate uses for
the donated materials, these types of donations are often thwarted. Lacking a mechanism for
donation of such materials, the landfill is often a would-be donor's easy option. In a very real
sense, the landfill is the lazy man's competitor for many of the items the ReStore will handle.
Iowa City lacks a source of quality new and used building materials for low income
residents, non-profit organizations, landlords and reuse enthusiasts. ReStores in other
communities report that customers are delighted to use low cost building materials to upgrade
their homes and soon become devoted supporters of the Re-Store. Finally, the local Habitat for
Humanity affiliate is in need of regular financial support in order to build affordable housing for
disadvantaged families. The ReStore, after a start-up period, will be a year-round source of free
materials and funding to the local Habitat affiliate to support this organization's home-building
efforts.
The potential success of the ReStore will be, in a large measure, due to the mentoring and
support of the reuse facilities visited during research for this project. Therefore, as the ReStore
grows, Habitat would like to offer this facility as a model for other such ventures in Iowa and
would be pleased to act as mentors or hosts for anyone attempting to open a similar center. The
Quad Cities' ReStore as have others (See Attachmel!t A) have been a models for Iowa City
already.
ReStore niche
Though various types of reuse facilities do operate successfully in Iowa City, the products
offered by those stores are generally limited to clothing, furniture, and other household items.
One small non-profit group in Iowa City collects and sells special types of salvaged building
materials, particularly architecturally valuable items. This store is open to the public for very few
hours every other week or by appointment, and processes a far smaller volume of products than
the ReStore expects to handle. The type of materials found in this store would be sought by those
renovating an older home, whereas the products in the ReStore will be newer items suitable for
remodeling and repair of contemporary homes, though donations of quality vintage materials will
not be turned away.
Recyling Efforts Combined
It is thought that combining groups' efforts: (City, County, Salvage Barn, Furniture Barn)
used furniture, historical building materials, electronics, yard/tree waste, white goods, etc. that a
user friendly drop-off site will help encourage community-wide recycling. The site, 240 I Scott
Blvd., will provide the following benefits for the community:
I) Convenient location for the eastern Y2 of the city and county.
2) User friendly set-up (drive in and drop off).
3) High visibility for all recycling work.
4) Extended hours (six days per week) from some existing sites.
5) Clean and accessible environment.
Obstacles
Obstacles that might be faced by the ReStore are similar to those that would be
encountered by any enterprise that begins a somewhat unfamiliar business. As the Iowa City area
has not experienced a building supply reuse center like the ReStore, education will be needed for
potential donors and customers to help them understand how the ReStore works and how they
can participate and/or benefit. The first year's operation saved more than 40 tons of waste from
the landfill and grossed $53,000 in sales.
Information to potential donors, volunteers and customers will be conveyed via
presentations at meetings of trade, service and neighborhood organizations, ReStore brochures, a
website, press releases, articles in newsletters and mailings of related non-profits, church
bulletins, and booths at expos and trade shows.
Demographics
In many ways, Iowa City is quite typical of the types of communities where successful
building reuse centers currently operate. Demographic information was assembled for the Iowa
City area and for seven other Midwestern communities that have building reuse stores that offer
the types of materials that the ReStore intends to offer.
Because items at the ReStore will be far less expensive than those at a conventional
building supply store, it is expected that persons of lower income will make up a significant
portion of the store's customer base. Of the communities studied, only two communities have
populations with lower median incomes than Iowa City, and Iowa City has the 3rd highest
percent of residents Ilving below the poverty level. Nonetheless, home ownership in Iowa City is
just above 70%, well above the average of 49% for the seven communities that currently sURport
building material restores. This would indicate that the Iowa City area does have a significant
portion of lower income homeowners who might be inclined seek lower cost items for home
repair and renovation.
The high number of rental units in the area also lends themselves to less expensive
building materials for repairs. The transitory nature of the local population also creates turnover
as well as demand for furnishings, appliances, and do-it-yourself supplies.
Initial reception to the Habitat Restore concept has been very positive. A number of
different businesses and organizations have indicated a willingness to partner with the ReStore.
See Attachment D for a list of some of those organizations and the type of support they expect to
provide.
III. Marketing Plan
The ReStore has two separate groups of customers: the donors of materials and the
purchasers of donated materials.
Material Donors:
The relationship of the ReStore to would-be donors of building materials is the
foundation of the store's suecess. Without a steady and varied supply of appropriate items, the
store will not be able to attract and hold the interest of purchasing customers. Sources of the
types of building materials that the ReStore seeks are contractors, remodelers, manufacturers,
retailers & wholesalers, and individuals.
The process to build relationships with material donors is two-fold. First, these
businesses and individuals must be educated as to the existence of the ReStore, its mission and
the values of reuse (economic, envirolUhental and social), the types of acceptable material, and
the procedures for donating. In most cases, the prospective donors must be convinced of the
economic benefits to reuse -- how the donation can improve their bottom line through tax
deductions and cost savings. Material donors have been sought at their places of business, at
trade organization meetings and shows, through networking and word-of-mouth, and through the
public media. Would-be donors are prioritized and those considered key to the ReStore have
been contacted first.
Store promotion is approached in a variety of ways, depending upon the donor and the
setting. Most donors, and especially those of a higher priority, will be contacted by individual
visits at their places of business. This method allows the donor to meet the ReStore staff and
.....
allows the staff to make a more personal appeal. Phone calls to higher priority donors also will
be used, though their effect may not be as positive. Group presentations to promote the ReStore
will be given to trade and.professional organizations at their regular meetings, such as the Iowa
City Homebuilders Association, Rotary and area churches. More generalized methods of
promotion include articles in professional organizations' newsletters, pamphlets distributed at
trade shows, a ReStore website, public service announcements and the Iowa Valley Habitat for
Humanity newsletter. We have had great success in advertising through the Press Citizen's
sticky ad on the front page. In addition, we have had I5-second spots on WSUIIKSUI radio over
the course of the first year. Additionally, the local Habitat affiliate frequently receives
unsolicited calls about donations; these calls can also serve as an opportunity to provide
information on the ReStore.
The second aspect of the donor-store relationship is that, once an agreement to participate
is reached and donations is received, that relationship must be nurtured and supported through
on-going communications. Donors need to feel that their efforts are appreciated and important.
Their enthusiasm to be a part of the mission of the ReStore is essential to the success of the store.
The ReStore staff will promote and support its donor relationships through such actions as phone
calls of appreciation, in-store recognition, and other recognition and incentives.
Purchasers:
The second set of ReStore customers is the purchasers. Their importance to the store
cannot be overemphasized for, without sales, the business would fail and the mission of the
ReStore would be unrealized. Purchasing customers will be the general public, but marketing
will focus on residents of lower incomes, reuse-minded residents, landlords, remodelers, and
other non-profits, especially from within the housing assistance sector.
Customers of the ReStore belong to many community organizations where marketing will
be focused. They are members of churches and homeowners associations. They affiliate with
various community agencies, including other housing agencies. They support other Iowa City
reuse businesses through donations and purchases.
Promotion methods will emphasize free or near-free mediums of communication to
customers. Written publicity will include, but not be limited to, church bulletins and newsletters,
newspaper articles, newspaper classifieds, homeowners associations' newsletters, city mailings
(e.g., water & sewer hills), Iowa Valley Habitat for Humanity's newsletter, etc. Use of bulletin
boards at other reuse businesses will reach environmentally cqnscious and reuse-minded
. .
shoppers. Internet users will find the ReStore's website a source of valuable information.
Volunteers:
The ReStore will employ one paid staff to manage the store until summer 2006 when a
half-time assistant will be hired, but it has been through the hard work and dedication of the two
VISTA's (Volunteer in Service to America) and volunteer staff that the store's day-to-day
operations are carried out. Potential sources for volunteers will be retiree clubs or other
organizations made up primarily ofthe retired workforce (e.g., RSVP, hospital auxiliary); other
businesses who rely on a large volunteer force; persons with parking violations or other minor
civil offenses requiring community service; youth groups from churches, schools and clubs
seeking service projects; and qualifying families with Iowa Valley Habitat for Humanity who
need "sweat equity" hours. The original Coralville location has been a difficult environment to
attract and retain volunteers: roads have been tom up, dirt is everywhere, and the space was
impossible to heat sufficiently for comfort in the winter. The new location lends itself to
attracting and retaining volunteers.
Promotion of the ReStore's volunteer opportunities to the community will utilize similar
free or near-free communication mediums to those mentioned above. Newsletters from
churches, youth clubs, retiree organizations, schools, and Iowa Valley Habitat for Humanity will
solicit volunteers from a variety of ages and backgrounds. The volunteer sections of local
newspapers and bulletin boards in businesses and offices frequented by potential volunteers will
provide additional coverage. Speaking engagements at service organizations, churches, and
retiree clubs will be sought. Additionally, the store's website will list volunteer opportunities.
The ReStore itself will have a bulletin board to encourage volunteerism, along with supplying
environmental education and promoting support for other reuse efforts.
~ ,.,.,.
IV. Services
It is the vision of the founders of the Iowa City ReStore that certain, specific goals be
achieved through the creation and operation of the business.
First of all, the ReStore will support the environment bv diverting construction and demolition
waste (CD&W) from the landfill. In so doing, the ReStore will help extend the life of the area
landfill, delaying the need for additional landfill space. The ReStore will help conserve natural
resources by extending the life of use able C&DW, decreasing the quantity of resources needed to
manufacture additional products. Further, the ReStore will provide an alternative to disposal for
environmentally responsible individuals, businesses and organizations. Currently, there are few
links in Iowa City between useable C&DW and those that would use such materials.
Secondly, the Habitat ReStore in Iowa City should improve the quality of housing for persons of
lower income. Items donated to the ReStore that can be utilized by the Habitat affiliate in
homebuilding, will be set aside for that purpose. After a startup period, the ReStore will donate
proceeds from its operations to HFH-IC, for use in local, national, and international housing
projects. In addition, discounts will be offered to other housing-related non-profits to support
their missions within the greater Iowa City area. By providing affordable, quality building
materials, the ReStore will enable homeowners to repair and renovate their properties, facilitating
the upkeep of neighborhoods.
Existing recycling efforts will be consolidated. It is planned that at least three other groups will
set up their recycling operations at the ReStore centralized site. By grouping together diverse
recyclers, it is anticipated that greater customer traffic (both for donations and purchases) will
result.
Finally, through the establishment of the ReStore, the founders envision providing meaningful,
productive work for Iowa City area citizens. Employees will be paid "living" wages and
benefits, not just the minimum required by law. And those individuals who seek opportunities to
support low-income housing efforts will find varied and flexible volunteer options in the
ReStore.
-.
V. Mission
The Habitat ReStore will be a mission-driven business, built upon the above vision. The ReStore
Mission is:
To provide an ongoing mechanism for diverting useable Construction & Demolition Waste
and new surplus building materials from the waste stream by collecting and selling these
materials to the general public; and to provide a source of materials and funding for
Iowa Valley Habitat for Humanity, to be used in support of local, national and
international home building efforts; and to provide meaningful volunteer opportunities for
individuals who wish to support housing projects.
. VI. Objectives
To achieve its mission, the ReStore will be guided by specific objectives for the near term and
the future. These objectives are as follows:
Short-Term Objectives:
· Locate a suitable building, remodel as necessary, obtain equipment and furniture as needed
and open store by summer 2006 (start-up achieved in a loaned building in February 2005).
· Apply for grants and seek funds for start up of the ReStore, and continuing as needed
(received $76,000 grant from Iowa DNR in early 2005).
· Coordinate the operation of the ReStore with the city government of Iowa City and the Waste
Commission of Johnson County.
· Hire a full-time store manager by June, 2006.
· Retain two VISTA volunteers in 2006-2007.
· Provide volunteer opportunities daily at the store.
Long-term Objectives:
· Provide sufficient funds to Iowa Valley Habitat for Humanity to cover the
overhead/administrative expenses by the ReStore's third anniversary. The ReStore will be
operated as a mission-driven, fiscally responsible business. It will not only support the
physical needs of the store and the salaries of the employees, but will also contribute
proceeds from its operations, after a start-up period, to support the building objectives of
IVHFH.
· Divert at least 150,000 pounds ofC&DW from the waste stream by the ReStore's second
anniversary. Using a technique developed by the Kansas City ReStore to calculate a
relationship between sales dollars and the weights of items sold, an estimated 2.5 pounds of
waste will be diverted for every sales dollar. This translates into a diversion of at least
200,000 pounds of construction waste when applied to the ReStore's second year sales
projection.
· Enable conservation of resources and savings to Iowa City area residents. Through the
availability of low cost, quality building materials, those living on limited incomes will be
able to apply savings realized at the ReStore to necessary living expenses. Additionally, as
the world's resources become depleted from the demand for new products, it is imperative to
manage those products responsibly. The ReStore enables the conservation of resources by
allowing an item its maximum life and use before disposal.
· Achieve financial self-reliance by the store's second anniversary. Grants will be sought
during the start-up period to balance the disproportionate expenses of that time. By the end
of its second year, the ReStore plans to finance its operations from the revenue generated by
the sale of its products.
· Be a model to other such ventures. The'success of the ReStore will be, in large measure, due
to the support of employees at other reuse facilities visited during the research for this
project. Therefore, as the ReStore grows, it will serve as a model to similar ventures, and its
founders would be pleased to act as mentors or hosts to those attempting to open a reuse
center.
VII. Operations
The ReStore is to be located at 2401 Scott Blvd. in Iowa City. The building will be a
retail/warehouse style facility occupying 9,000 square feet of space. Easily visible from the
street, the store will be accessible from main city thoroughfares and the 1-80 corridor. It will be
in a safe, well-lit location for tl1,e security of customers and staff, and inventory. The location is
accessible by vehicle, including semi-trucks. The existing space needs interior upgrades, exterior
covered storage, a loading dock and handicap accessible restrooms.
All inventories will be donated by businesses, contractors, manufacturers and individuals.
Donors will be encouraged to make delivery a part of their donation to the ReStore. Preferably,
donors will drop off materials during store hours. (An attempt will be made to discourage
material drop-offs outside of regular store hours in order to avoid the receipt of unusable items
and trash. A security camera may need to be installed to monitor after hours drop-offs.) In those
instances where delivery is not possible or is unlikely, materials will be picked up by ReStore
personnel on a scheduled basis 1-2 days per week. Materials will be screened for appropriateness
by either the driver at the donor's site (if picked up) or by store personnel (if dropped off).
Materials inappropriate for use directly by Habitat for Humanity or for sale in the ReStore will be
politely turned away with appreciation and a list provided to the would-be donor of acceptable
donations.
To be acceptable for donation, materials must be new, or in very good condition, ifused.
Minimally damaged items will be accepted if repairable with a coat of paint or similarly simple
procedure. All parts must be included or, if parts are missing, they must be easily and affordably
obtainable at another local store. An attempt will be made to give wide publicity (through
web site and written media) to what is acceptable and unacceptable for donation to the ReStore.
Once items have been accepted by the ReStore, an Iowa Valley Habitat for Humanity
representative will examine donations and set aside those items that can be used in the chapter's
home building efforts. All other inventory will be sorted and priced at 10-50% of retail.
Volunteers, under the supervision of the store manager, will use supplier and store catalogs, as
well as weekly advertisements, to estimate the item's retail price. New materials and those in
like-new condition will be priced at 40%-50% of retail. Older items or materials that show some
VIII. Board of Directors
The Board of Directors for the Iowa Valley Habitat for Humanity ReStore will be the same as the
Board of Directors for the Iowa Valley Habitat for Humanity affiliate for the immediate future.
Officers of this Board are the following:
President Ray Haas
Vice President Steve Ballard, Jan Taylor
Treasurer Kazi Alward
IVHFH Executive Director - Mark Patton
IVHFH Secretary - Jan Down
(319) 337-8949
(319) 354-1820
The Iowa Valley Habitat for Humanity Board has appointed a ReStore committee to provide
regular support and guidance to the ReStore. Members of this committee are:
Gary Orta1e, Iowa State Bank
John Watson, Goodwill Industries of Southeast Iowa
Steve Quigley, University ofIowa Community Credit Union
Tim Gholson, Wells Fargo
Bill Windauer, University ofIowa Foundation
Brad Langguth, Hills Bank
IX. Management and Personnel
The IVHFH ReStore will be patterned after the national Habitat ReStore format. Though
the ReStore will be administered by and ultimately responsible to the IVHFH Board of Directors,
a ReStore Manager will manage daily operations. This ReStore Manager will report to the
Executive Director of Iowa Valley Habitat for Humanity. See Appendix B for qualifications of
Manager.
Paid Staff
The ReStore Manager will manage the development and maintenance of systems to
accomplish the ReStQre mission. The Manager will possess a combination of organizational,
. .
management, marketing and financial skills, knowledge of building materials and a good public
relations rapport. The ReStore Manager responsibilities will include the following: reporting to
the IVHFH executive director and ReStore Committee, overall ReStore operation from donation
pickup to sales, office management, facility and equipment maintenance, staff and volunteer
development, and fiscal management of the ReStore.
A ReStore Assistant Manager will be a Y2 time skilled person to assist in all phases of
the operation. It is anticipated this person will begin in summer, 2006. The Assistant Manager
should posses many of the same skills as does the Director. Ideally, the skills of responsibilities
of the Assistant Manager will include each these individuals would augment and complement the
skills of the other. Some initial establishing of financial systems, store. po'licies and procedures as
well as hiring and training staff, contacts with the public and store management/oversight will be
required. By the summer of 2007 the Assistant Manager will become full-time.
During the start up phase (first two years), the Manager and Assistant Manager will
focus on the following duties: manage the establishment of the store and offices; establish and
maintain contacts with potential donors and customers; establish a volunteer program; develop
policies and procedures for the store, employees and volunteers; recruit and train employees &
volunteers; write and arrange for publicity; establish and maintain daily financial records;
provide consistent coverage for day-to-day store operation.
Following the start up period, the focus of store management is expected to shift to
improving processes, increasing sales volumes to enhance waste diversion and funding for
IVHFH projects, and serving as a model for other reuse start up enterprises.
Traditional Volunteers
V olunteers will provide a much of the day-to-day workforce and will be an integral part
of the ReStore's operation. Volunteers will be drawn.from the pool of IVHFH volunteers, court-
appointed community service volunteers, retirees, reuse enthusiasts and local residents. These
-.
volunteers will be solicited through Retired Senior Volunteer Program (RSVP), trade
organizations, churches and friends.
Vista and AmeriCorps volunteers will continue to be sought to work closely with the
ReStore Manager.
Following are the identified Positions for General Volunteers:
Donation ReceiDt Staff - Assist warehouse manager with collections from donors or performs
pick up and delivery to the ReStore. Receive materials at the ReStore and prepare them for sale
(re-assembly, pricing, display)
Cashiers - Operate the sales counter, answer questions, and interact with customers, answer
phone.
ReStore Ambassadors- Provide information to prospective customers and donors by giving
informal presentations to homeowner, trade & neighborhood organizations and churches, staffing
booths at trade shows, festivals and expos and any other activities that support the marketing
plan.
Donation Associates- Return calls to prospective donors and schedule pick up of donations.
Screen donations from individuals. Log donation information and produce receipts for donors.
Customer Service Associates - Be a friendly, attentive presence in the store to answer customer
questions. Attend to the neat, clean presentation of store and inventory.
Every effort will be made to treat all staff with fairness and respect. The ReStore will
offer living wages, rather than minimum wage, to paid staff. Volunteers will receive discounts
and/or store credit depending on hours worked. Appreciation for volunteers and paid staff will
be shown through special events, and personal and group recognition activities.
X. Funding Requirements
Based on the Cash Flow projections in Attachment C, the ReStore will need subsidizing during
the first two years and in order to purchase a building/site. It is proposed that anjnterest free.
loan of up to $70,000 be secured from the city oflowa City to purchase a site on Scott Blvd.
Record keeping of the grants will be handled through the assignment of separate general
ledger accounts for each grant. Expenditures in excess of $750 will require two signatures for
approval. Monthly reconciliations of each grant will be made in connection with the regular
reconciliation of bank statements. All accounting will be under the supervision of the treasurer
of the board of Iowa Valley Habitat for Humanity.
The initial start-up phase will continue for 24 months, ending in 2007. After this start-up
phase, it is projected that the ReStore will be financially self-sufficient and will be able to meet
expenses through income generated from operations. Beyond the start-up phase, it will be
necessary for the ReStore to establish a reserve fund for contingencies and periods of slower
sales. One of the principle goals of creating the ReStore is to generate net revenues to be
allocated to Iowa Valley Habitat to cover overhead/administrative expenses.
Financial Statements
Based upon the experience of other successful ReStores and building material reuse
centers, community demographics and upon estimates of local supply and demand, and operating
costs, a cash flow statement has been prepared for the second year of operations. The analysis of
projected finances was prepared based upon the assumptions noted within the document (see
Attachment C).
The founders of the ReStore have attempted to limit operating and start-up expenses with
the following strategies:
Start-up a donated building for the ReStore for the first 12-18 months (the City of Coralville has
loaned space since November 2004).
Locate a long-term rental in a building which requires minimal renovation. Some changes to the
structure of any building are to be expected. We have budgeted $78,000 for upgrades to the
building.
Attachment A
Reuse Stores visited/contacted during research for the QC Habitat Restore:
The Storehouse - Chicago, Illinois.
Not-for-profit. Building materials. Benefits World Vision
Habitat Restore - Madison, Wisconsin
Not-for-profit. Building materials. Benefits Habitat for Humanity
Habitat Restore - Kansas City, Missouri
Not-for-profit. Building materials. Benefits Habitat for Humanity
Discovery Shop- Bettendorf, Iowa
Not-for-profit. Clothing & Miscellaneous. Benefits American Cancer
Society
Surplus Exchange - Kansas City, Missouri
Not-for-profit. Office furniture and electronics. Benefits other non-
profit organizations.
Iowa Salvage Barn - Iowa City, Iowa
Not-for-profit. Architectural relics for renovating older homes.
Warehouse One- Kansas City, Missouri
For profit. Shelving, fork lifts, office furniture, miscellaneous.
MiPaNora - Rock Island, Illinois
For profit. Light fixtures.
Renovator's Resource - Rock Island, Illinois
For-profit. Architectural relics for renovating older homes.
Milan Surplus - Milan, Illinois
For profit. Building materials, automotive, miscellaneous.
All-Makes Office Furniture - Moline, Illinois
For-profit. Office furniture.
Appendix B
Qualifications of initial paid staff
Mark Patton, Executive Director
Iowa Valley Habitat for Humanity ReStore
Education: B.S. Public Service Administration in Agriculture, ISU 1974
M.S. Agricultural Education, ISU 1976
Work Experience:
- 25 years directing non-profit organizations
- 2.5 years Executive Director, Iowa Valley Habitat
Jennifer L. Jordan
ReStore Manager (Beginning in June, 2006)
EDUCATION:
M.A. in Urban and Regional Planning. The University ofIowa.
May 2005
B.S. in Geography. The University ofIowa. Iowa City, Iowa. Dean's List
May 2002
WORK EXPERIENCE:
Environmental and Safety Coordinator
Grinnell College Facilities Management Grinnell, IA
. Oversaw, expanded, and advertised campus recycling program
. Located reuse and recycling venues for products no longer used at the college
. Worked with various groups on campus to provide waste reduction and diversion information
. Organized numerous educational and waste reduction initiatives
. Worked with community group to organize electronic waste collections for City of Grinnell
· Managed OSHA compliance programs and training for 80 facilities management employees
Solid Waste Management Planning Intern May 2004 to December 2004
Johnson County Council of Governments Iowa City, IA
.-Researched solid waste diversion options for Iowa City Landfill and Recycling Center
· Updated and expanded Johnson County Waste Reduction and Recycling Guide
Solid Waste Management Planning Intern. September - December 2003
Cedar Rapids Linn County Solid Waste Agency (Bluestem) Cedar Rapids, IA
· Collected and analyzed survey data to improve recycling drop-off site facilities
· Assisted with recycling education outreach programs to local elementary schools
Waste Management Technician
2002
Johnson County Refuse, Inc.
. Collected commercial and residential curbside recycling and trash
June - December
Oxford, IA
The "Iowa Advantage Fund": A unique partnership of the State of Iowa,
employees with educational debt, and Iowa employers
By Jay Christensen-Szalanski, PhD, MPH
(Independent Candidate for State Senate District #39)
Summary
The "Iowa Advantage Fund" gives an advantage to everyone. It creates a beneficial partnership for
the State of Iowa, Iowa employers, and new college graduates. It rewards the creation of new jobs in
Iowa (a benefit to businesses, the state budget, and Iowans); makes businesses more competitive than
neighboring states at recruiting new graduates into the state (a benefit to the State and businesses);
reduces the labor costs associated with turnover (a benefit to businesses); adds to the state tax rolls
younger citizens who are starting new households (a benefit to the State); increases State income tax and
sales tax revenue (a benefit to the State budget); provides an incentive for recent graduates who left the
state to return (a benefit to the state); and helps college graduates eliminate a substantial amount of
educational debt (a benefit to graduates), so that they can spend more of their income on Iowa services
and goods (a benefit to the state budget and Iowa businesses).
Present Challenges and Problems
The State oflowa. The State ofIowa has the second-worst record in the country of retaining its recently
educated younger citizensl. Between 1995 and 2000, nearly 22% of young college-educated citizens left
Iowa after graduation. Currently nearly 40% of the undergraduates at VI and ISD leave the state2. This
emigration forces the State to rely on an aging workforce for its long-tenn tax base. It also discourages
businesses seeking new college graduates from locating or expanding their employment within the state.
College Graduates. The cost of college tuition continues to rise while scholarships and grants continue
to decline3. In the early 1980s students could earn enough money to cover most of their college expenses
by working during the summer at minimum-wage jobs. Today, similarly employed students would need
to work full-time the entire year to afford one year of education at a public university4. Students are
increasingly forced to fund their education with loans. Currently, nearly 50% of graduating VI seniors
have loans averaging $20,000, slightly higher than the national averages. Because of this debt, college
graduates increasingly focus on financial compensation when deciding on a job, and they postpone
starting a family and establishing roots in a community6.
Iowa Employers. Many Iowa employers are having a difficult time recruiting and retaining college
graduates. These emfloyers struggle to compete with the higher wages offered by competitors in urban
centers outside Iowa . Iowa employers also frequently face the prospect of losing their employees to
competitors. In many professional industries, the cost to replace these departing employees is substantial,
with industry estinlates ranging from 90-200% of the departing employee's salary8.
The "Iowa Advantage Fund" Proposal
The State ofIowa will provide to employers a tax credit equal to 30% of the amount of undergraduate
educational debt that employers pay on behalf of eligible ,employees. During the first year of this
program, those eligible for the program will include all current or newly hired employees who work in
Iowa, earn a yearly salary of at least $25,0009, and have federal (e.g. Stafford, Ford, Perkins loans) or
private undergraduate educational loans certified by an educational institution. Starting the second year of
this program, eligibility will be limited to newly hired employees meeting the above salary and loan
criteria. An employer wishing to claim this credit must begin the loan paYment program within six months
of the newly hired employee's start date. The maximum amount of student loans eligible for this tax
credit is $25,000. An employer will receive the tax credit when paying up to 20% of this amount in Year
One, up to 30% in Year Two, and up to '50% in Year Three. This program would be administered through
the Iowa College Student Aid Commission.
Who Benefits from the Iowa Advantage Fund?
Iowa employers will have the advantage of being more competitive in recruiting new graduates because
they can offer employees a financial benefit not available in neighboring states. These employers can also
operate more profitably because the tax credit and savings in reduced turnover costs will exceed the
money spent to pay their employees' student loans, thereby lowering labor costs. Other Iowa employers
will benefit because more young employees will be living in the State, and they will spend their money
purchasing Iowa goods and services rather than on paying off student loans.
College graduates will have the advantage of substantially reducing their college debt. Even though
these employees will still need to pay federal and state income taxes on the amount of student loans their
employers pay, this cost will likely be less than 32 cents on the dollar. Thus, by paying at most $8000 in
additional taxes over three years, graduates will have eliminated $25,000 in education debt-a net saving
of at least $17,000.
The State of Iowa will have the advantage of having more young people in their workforce, and by
providing businesses a reason to locate and expand their hiring in Iowa. Additionally, as summarized
below, this program would pay for itself relatively quickly because it will generate: (1) an increase in
income tax revenues from new jobs; (2) an increase in income tax revenue from employees' tax share of
their employer's loan payment; and (3) an increase in sales tax revenues because employees are spending
their income purchasing Iowa goods and services rather than paying for student loans.
Paying for the Iowa Advantage Fund
The preceding discussion shows how the Iowa Advantage Fund will benefit both graduates who would
have remained in Iowawithout it, and "new" employees who otherwise would have worked outside of
Iowa. The more participants in this program that are employees filling new or previously unfilled jobs, the
faster the program will pay for itself. The payback period is affected by the average salary of the
employees participating in the program and the percentage of those employees who would have otherwise
worked outside Iowa. Using the average starting salary of current ill students ($34,800) as an example,
this program would pay for itself in less than one yearif 50% ofthe participants were "new" employees.
A more realistic percentage of only 25% ofthe participants being "new" would yield a payback time of
less than four years.
Other Possible-and Less Effective-Approaches
A tuition reduction program10 provides an incentive for students to go to college, but it does not provide
any incentive for graduates to work or to stay in Iowa after graduation. It also does not provide any
incentive for employers to create new jobs in Iowa.
A loan payback program for Iowa graduates entering certain "critical" industriesll does not provide
any incentive.to students from outside the state to come to Iowa for ajob; nor does this program provide
any incentive for employers to create new jobSl2. This program also requires a state agency to spend
money trying to identify specific target industries to subsidize. This subsidy implicitly pits different Iowa
businesses against each other, and it creates incentives for special interests to influence the State agency's
defmition of "critical industries." Additionally, graduates not interested in the State defined "critical"
industries will not be eligible for a loan payback, and thus will not have an incentive to stay in Iowa.
References
I The 2005 Condition of Education Report (U.S. Census 2000).
2 Data from the Marvin A. and Rose Lee Pomerantz Career Center, University ofIowa, 2006.
3 Trends in Student Aid, College Board, Princeton, N.J., 2005.
4 Student Debt: Bigger and Bigger, Center for Economic and Policy Research, Washington, D.C., September 2005. See also
Crucial Choices: How students' financial decisions affect their academic success. American Council on Education,
Washington, D.C., 2002.
S Data from the Office of Student Financial Aid, University of Iowa, 2006. See also Student Debt: Bigger and Bigger, Center
for Economic and Policy Research, Washington, D.C., September 2005.
6 Student Debt: Bigger and Bigger, Center for Economic and Policy Research, Washington, D.C., September 2005. See also
Debt Burden. A comparison of 1992-93 and /999-2000 Bachelor's Degree Recipients a Year after Graduating, National
Center for Education Statistics, U.S. Department of Education, Washington, D.C., March 2005.
7 For example, recent ~tarting offers for UI undergraduate business majors were more than 25% higher for positions in Chicago
than in Des Moines.
8 "You hired 'em: But can you keep 'em?" Fortune (November 9, 1998),247-250. See also "Companies try measuring cost
savings from new types of corporate benefits." Wall Street Journal (Dec. 29, 1988), B 1. See also "The business case for work-
family programs." Journal of Accountancy 180(2), 53-57, 1995.
9 This amount is equal to or less than the common starting salary of many two-year programs (Kirkwood Community College
Web Site, and Iowa Workforce Development Web Site). The median starting salary offers for bachelor's degree candidates in
2005 for most professions is more than $30,000 (Salary Survey A Study of 2004-2005. National Association of Colleges and
Employers, Bethlehem, Pa.). The average starting salary offer for VI Liberal Arts and Sciences and Business majors is $34,800
(Data from the Marvin A. and Rose Lee Pomerantz Career Center, University of Iowa, 2006).
10 For example Iowa SF2024, Iowa State Senate, 2004.
J I For example Iowa SF3 74, Iowa State Senate, 1999.
12 Student Loan Forgiveness Programs, Congressional Research Service, The Library of Congress, Washington D.C., February
2005.
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DRAFT
CITY OF IOWA CITY
MEMORANDUM
Date:
To:
June 14, 2006
Re:
Council Economic Development Co
Karin Franklin, Director, P
Wage criteria for financial assistance
mi~J---
From:
During discussions of what type of financial assistance the City might provide a prospect, Joe
Raso proposed a methodology for looking at the "quality" of jobs relative to the amount of TIF
funds awarded and relative to the source of those TIF funds. TIF funds may be those taxes
available from the particular project receiving an award or may be available from the taxes paid
within the TIF district. Regenia and I thought it would be useful to have some discussion of this
with the Committee.
The goal of this proposal is to encourage businesses to provide jobs that pay good wages and
include health care benefits. The theory is that higher-paid employees contribute to the tax
base by buying homes in the community and contribute also by generally fueling the local
economy. Because of this it makes sense to support businesses that pay well through use of
TIF monies from the larger district. The rewards to the companies would work, roughly, as
follows:
1.
. If the average starting wage of all positions is greater than 100% of the average county
wage( currently $13.85/hour), and
. at least 51 % of all jobs have a starting wage equal to or greater than the average county
wage,and
. the company pays individual health insurance premiums equal to or greater than the
most recent regional benefit survey for the industry, then
TIF assistance could be provided equal to or less than the amount of taxes paid by the company
for a period of 3, 5, or 7 years, up to 100% of the taxes paid, depending upon the type of
industry and its relationship to any targeted industries and depending upon the percent of
employees paid more than the county average wage.
2.
. If the average starting wage of all positions exceeds 125% of the average county wage,
and
. At least 51 % of all jobs have a starting wage equal to or greater than the average county
wage, and
. The company pays the health premiums as noted above, then
TIF assistance could be provided as noted above and for every job for which the pay is in
excess of 125% of the current county wage, the City would provide up to $5,000 per job payable
at the end of each year of operation. Funds for the job incentive would come from the tax
reviews from the larger TI F district.
3.
Similar to the provisions above, TIF assistance would be provided except the benchmark
for wages would be 150% of the current county wage and the incentive would be up to $10,000
per job.
June 14, 2006
Page 2
The conversation Joe and I had regarding these wage criteria grew out of a concern regarding
the price of land in Iowa City relative to elsewhere and how the City might offer a slightly
different incentive package that could mitigate the affect of high land costs for prospective
businesses. This memo is intended to start the conversation about this issue with the
Committee. None of the criteria in this memo have been fully analyzed as to feasibility.
Cc Joe Raso
City Manager
Tracy Hightshoe