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Home My WebLink About10-09-2007 Council Economic Development Committee AGENDA City of Iowa City City Council Economic Development Committee Tuesday, October 9, 2007 8:30 a.m. Lobby Conference Room City Hall 1. Call to Order 2. Minutes of September 13, 2007 Economic Development Committee Meeting 3. Annual Report from Iowa City Area Development Group, Joe Raso 4. Staff time 5. Committee time 6. Adjournment ,~ i ~~~~'! ~ ~1III1' ~: CITY OF IOWA CITY MEMORANDUM Date: To: From: Re: October 4, 2007 Economic Development Committee Wendy Ford, Economic Development Coordinator !bf- Iowa City Area Development Group Annual Report Joe Raso, President of the Iowa City Area Development Group will present an annual report to the Council Economic Development Committee at the meeting on Oct. 9. He will distribute the organization's printed Annual Report and provide an update on specific action items in the Memorandum of Understanding between the City and ICAD. The enclosed report is a Business Climate Assessment Report completed by the ICAD Group in August. Raso will also discuss this in detail at the meeting. Iowa City Area Development Group Business Climate Assessment Report: Primary Sector Business Satisfaction, Workforce and Growth for Iowa City in Comparison to Area Figures and the Blane, Canada Ltd. 2006 National Data Study Data gathered from 25 Synchronist Business Information System@ Interviews conducted in FY 2007 Presented to: The City of Iowa City on August 14, 2007 By the: Iowa City Area Development Group ~~~ Group 325 E. Washington 51. 5uite 100 P.O. Box 2567 Iowa City, Iowa 52244-2567 PH: 319/354-3939 www.iowacityareadevelopment.com FAX: 319/338-9958 Business Growth and Expansion Analvsis: Primary sector companies interviewed in Iowa City are poised for continued success and growth. The chart below compares information gathered from local companies to area and national data attained from the North American Data Study. Local companies show a significant competitive advantage in all major categories. Iowa City companies included in this survey are not stagnant, as they have outpaced national figures for new products introduced in the last five years. Their future continues to look good as each company indicated they would launch new products in the coming years. While 26 percent of companies interviewed indicated their product lines were mature, none admitted to a declining phase. With total sales and market share increases well above national trends it is not surprising that two-thirds of the companies we talked with are planning to expand their local operations in the coming years and will increase their employment levels with close to 70~ new jobs. ----c:; 100% 90% - 80% 70% 60% 50%- 40% 30% - 20% 10% 0% ute Cycle EmergirY,j1 GrowirY,j Market Share Plans to Total Sales IrcreasirY,j expand in next IrcreasirY,j 3 years New Products New products No objections in last five in next two to fullJ"e years years expansion in community IncreasirY,j employment needs Comn-lInty Infrastructlre Adequate for growth 10 Iowa City . Area 0 NADS I Iowa Iowa City National City Area Data Life Cycle Emerging I Growing 74% 78% 65% Market Share Increasing 78% 71% 57% Plans to expand in next 3 years 67% 67% 59% Total Sales Increasing 100% 86% 68% New Products in last five years 96% 88% 80% New products in next two years 100% 92% 74% No objections to future expansion in community 74% 73% 79% IncreasinQ employment needs 67% 69% 44% Community Infrastructure Adequate for growth 78% 80% N/A Seventy-eight percent of companies interviewed felt the infrastructure of the community was adequate for their growth plans. When posed the question: "Are there any reasons that the community would not be considered for future expansion?" Seventy-four percent oflocal companies felt there were no compelling reasons not to expand here. Of the executives who offered comments, four responses related to workforce shortage issues, one indicated a high cost of doing business, one cited difficulty in working with the city and two other comments indicated they may need to look in other markets for strategic purposes. Community Weaknesses: The following chart represents a categorical breakdown of responses received when executives were asked to cite weaknesses for the community as a place to do business. Labor Related (workforce shortages) 9. Transportation Related* . 5 Negative Business Climate 3 Cost of Business High 3 A vailable Buildings 2 Infrastructure Poor 1 Housing Costs 1 * Two comments specifically related to Eastern Iowa Airport. Executives are also a-;ked if there are specific barriers to growth in the community. This chart shows a similar pattern of labor concerns being the most pressing issue facing local companies. Labor (workforce shortage) 8 Skilled Labor 5 Unskilled Labor 3 Local Government Issues 4 Transportation Related 1 Building Costs 1 Comments about local government were related to zoning, permitting and the perception that local government is not sufficiently pro-business. Workforce Needs / Rankin2s: The following chart indicates highest priority of recruiting needs for local companies. Scientific / Technical 6 Management / Marketing / Sales 6 Skilled Production Labor 4 Other 4 When asked if problems recruiting employees was more attributable to the community or their specific industry, 44 percent oflocal executives cited the community, with 37 percent noting an industry-wide issue. The remaining 19 percent of companies interviewed were either not currently recruiting or were not able to determine the. source of their recruiting difficulties. The researchers who compiled the national data determined a competitive advantage exists if local figures are four percent higher than the national average. As this chart shows, Iowa City demonstrates an advantage to national norms in each category and is within the standard deviation range in each compared to area data. The following chart compares the ratings given to the availability, quality, stability and productivity of the local workforce as rated by executives on a seven point Likert scale. 7 6 5 o 4 2 Availability of Workforce Quality of/Workforce Stability of Workforce Productivity of Workforce I 4% = .28 I 10 Iowa City . Iowa city Area 0 National Data ! Lesdslative Requests: Executives were also asked if there is any state, local or federal legislation expected that would have either a positive or negative impact on the business. National concerns reflected the community's position as a center of educational testing with the majority of respondents mentioning No Child Left Behind. Health Insurance and "Fair Share" legislation dominated the state level portion and no company in Iowa City noted local legislative concerns other than making comments relating to prior issues with zoning and permitting. Community Stren2ths / Services: When asked about the strengths of the community, local executives offered comments in frequencies shown by the following categorical breakdown: Quality of Life 13 Good Infrastructure 2 Workforce Attributes (worth ethic, availability) 11 Cost of Doing Business Low 2 Educational System 9 Positive Business Climate 1 Location 7 Cost of Living Low 1 Transportation 2 Community Service Attributes 1 The final segment of the executive interview offers a list of community services and attributes with a seven point Likert scale to rate executive satisfaction. This chart ranks from high to low area services based on the satisfaction rating received as well as a comparison to the area wide rank and the rankings attained from the National Data Study. 7 6 5 4 - 3 2 1 - o .~ & e o ~ (5 0: ~ u: e .Q om =1:: .c 0 ~ fil- e ~ I- e 1: 8 u !E 11l .= "0 e 11l '" ","0 ..... 11l Gl 0 Gla:: ~ lBe> ~1: g>.!;;; '" 0 ~ .2!~E ~~ UOOli; g.g ~-ga... a::ffi ~ 11l ~1: I- Gl ~~ ~lB o '" O:~ >- ~ CD e e :::J .- E e E~ 8 a... ~'" 5 ~ E .- E c: 8~ I- Gl ~ J ! 0 Iowa City . Area 0 NADS I The following services, while not the responsibility- of the community, are provided for y~ information as a way of gauging local executives' perceptions. - ~I'~ 1+07 IC Area NADS IC Area NADS Internet Speed 6.4 5.2 NA Airline Passenqer Service 5.3 4.4 4.2 Ambulance / Paramedic Services 6.1 6 6.1 Air Carqo Service 5.3 5.5 2.8 Health Care 6.1 6.2 4.4 County Services 5.1 5.5 5.2 Child Care 6.1 5.3 3.2 Internet Access 5 5.3 NA Schools (K-12) 6 6.3 5.1 Chamber of Commerce (5" \ 5.6 4 Economic Development ("5' Community Colleae 6 6 3.3 Organization 6 4 University 5.6 6.4 4 Telephone Service ---- 4.8 5.3 NA Highways 5.4 5.4 4.7 Cellular Service 4.8 5 NA Truckina 5.3 5.7 4.3 Electric. 4.7 5.3 NA Natural Gas 4.7 5.5 NA Assessin2 the Value. Growth. Risk and Satisfaction of Iowa City Companies: One of the interesting features of the Synchronist Business Information System@ tool is the utilization of a patented matrix analysis methodology using more than 300 data points, to provide a complex, objective calculation of a company's: - Value to the community (employment, wages, investment in community, etc) - Growth potential (new jobs, additional property, new products, investment in R&D) - Risk of downsizing or closing - Satisfaction with the community as a place to do business The following chart depicts the average community score in each of the four categories and compares it to area and national data. 10 0- 63 70 60 50 40 30 20- J ~]-- ~~ .~ t~ ,~ Avg Risk Avg Value Avg Growth Avg Satisfaction 10 Iowa City . Area 0 NADS I The range for value, growth, risk and satisfaction is based on local environments and reflects a two-digit numeric form, between I and 99 (not a percentage). Ratings should not be interpreted like classroom grades. Value, growth and satisfaction ratings above 60 are considered favorable. Ranges below 40 are considered unfavorable. Ratings for risk factors should be viewed like golf scores, the lower the number the better. r^n"\n":n"\;~C'I '.71t1, nn.,.""\h.&:Iol'O<:I ah^"p ,,(\ 4'lIriPo f'"'r..nC"1r1prAr11"",1.,.h r1C'lr -fnr rln''1TnCl17;."HT nr Ipt:ll'U1t"\(T tl"l,p, f'''n...mln"\~.t\1 Internally, the ICAD Group looks at the categorical scores of each company to determine how to best assist companies with high values and when a proactive stance is needed if a company appears to be in the high risk range. Conclusions I Recommendation: Overall, the Iowa City market is satisfied with the business climate and area companies are poised for significant growth in the coming years. The ICAD group will communicate with city staff area executives' concerns and suggestions that may improve relations between the public and private sectors. It's the opinion of the ICAD Group staffthat some negative comments offered about the community as a place to do business may be attributable to historical perceptions rather than existing realities. In an effort to raise opinion levels, the ICAD Group is willing to host and facilitate an open discussion about Iowa City as a place to do business. Invitations would be sent to primary sector companies that have participated in the survey, city economic development staff and city council members on the economic development committee. Topics of discussion could/might cover P&Z, utility and infrastructure needs, workforce, permitting and other issues that could be addressed in a group setting. Such a meeting may yield potential improvements while reinforcing to area executives that Iowa City truly is "pro-business." Iowa City companies participatinl! in FY 2007 survey: ACT, Inc. Alpla of Iowa, Buckle Down Publishing, Budcat Creations, City Carton Recycling, CorrFlex Display & Packaging, Economy Advertising, Graham Packaging, Lear Corporation, Loparex, Mercer Administration, Meta Communications, Millard Refrigerated Services, Moore Wallace, an R. R. Donnelley & Sons Company, National Learning and Achievement Organization Inc, Noel-Levitz, Optical Mechanics, Oral- B Laboratories, Patient Education Institute, Inc., Pearson Educational Services, Procter & Gamble Mfg. Co., Roberts Dairy, United Natural Foods, West Wind Education Policy, MINUTES CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE SEPTEMBER 13, 2007 CITY HALL, LOBBY CONFERENCE ROOM Preliminary Members Present: Regenia Bailey, Connie Champion, Bob Elliott Members Absent: none Staff Present: Wendy Ford, Jeff Davidson, Tracy Hightshoe. Others Present: Nancy Quelhorst, Area Chamber of Commerce; Gregg Hennigan, Cedar Rapids Gazette; Mary Bosch, Eleanor Matthews, and Melissa Mailloux, Marketek; IIham B. Mohamed, Nile Valley; Michael Heinrich, Steven Rohrbach, and Kelly Durian, Iowa City Ambulatory Surgical Center. RECOMMENDATIONS TO CITY COUNCIL After some discussion, Champion moved, with second by Elliott, approval of the staff recommendation for the Nile Valley Restaurant proposal: $25,000 CDBG Economic Development fund loan for working capital. Maximum term of 7 years at 4%. Motion carried 2-1. (Elliott, nay) CALL MEETING TO ORDER Chairperson Regenia Bailey called the meeting to order at 8:30 AM. APPROVAL OF MINUTES FROM JULY 24 Minutes were approved as distributed. Elliot inquired about the pay scale at Alpla; Ford will review wording of the pay in the Alpla agreement and report back. DOWNTOWN MARKET NICHE ANALYSIS UPDATE Bosch provided a status report of the downtown market niche analysis project, which is two-thirds completed. The project has involved market analysis of the retail, office, residential, and lodging sectors, as well as an analysis of the the creative sector and young professionals. Final results will provide a detailed analysis of projected supply and demand over a ten-year period, with a look at how much of that demand downtown could realize with directed efforts. Included in the final report will be an analysis of the appropriate business mix and an action plan that would enable the community to capitalize on the best mix. Marketek reported they spent considerable time reaching out to the entire community through focus groups , surveys, and advertising to reach university students, with a good response. The tone of the consumer survey tone was generally very favorable, with comments such as "best downtown in Iowa", "hope it continues to take pride in being a welcoming, artistic community", and "community with a heart- let's keep it that way always." Business owners were less responsive, but generally positive as well. One- third were looking at expansion; one-half were stable, not looking to make changes; and some were looking to relocate or retire. The shopper survey showed that 75% of consumers shop after 5:00pm on weeknights or on Saturday afternoon; businesses tend to accommodate that by remaining open longer than in other communities, to 6:00 or 6:30pm, but this is inconsistent. Businesses are eager for an improved business mix, showing a willingness to accept chain stores; they are not looking to go back to the way things were. Elliott asked how much of the information gathered is from students. The response was that students are a part of the market, and the impact of the university is imbedded in the data. Iowa City also has a strong flow of visitors, which is another important sector to consider. Champion mentioned the lack of empty space downtown. Economic Development Committee Septemer 13, 2007 Page 2 Davidson inquired about negative comments such as the safety issue, parking, pan-handling, and loitering. Bosch replied such comments were there but they were not a dominant theme. A key theme coming out of the surveys is that people want to retain a healthy mix of business and entertainment for students and families alike. The market study will be complete by November, and there will public presentations on the findings in late in November including action item recommendations. How to implement the recommendations will depend on many factors, including availability of resources and leadership. Marketek will provide specific guidance on how to proceed. An active business development plan will be central to the process, including an aggressive marketing plan with active follow up. Marketek recommended that we should be prepared to proceed with the implementation of a downtown business development program in January. A critical question to answer is who or what organization will take the leadership role in the downtown business development activities? Bosch is seeking initial thoughts from the committee at today's meeting. She said that most communities that succeed in this kind of project have some kind of public-private partnership. The obvious stakeholders need to come together (the city, chamber, business owners, property owners, Downtown Association) to begin to "own" the action plan, with the goal of determining who will to take leadership and how it would be funded. Marketek stongly indicated that a staff person must be involved who can stay focused on retail development, implement an aggressive marketing plan, and follow-up. The kind of work that needs to be done simply doesn't happen on a volunteer basis. Bosch further noted that it cannot be just a city or chamber or DTA project; the business owners must own the plan also, and have a seat at the table. There needs to be a creative way to bring all the players together, to identify resources or funding base, with perhaps a two-year commitment. Gustaveson mentioned the possibility of implementing a SSMID district again, which would be one way to fund a position. Champion agreed that could be possible. Davidson mentioned that the city of Boulder, Colorado has a Down Town Emergence Commission which might provide a model from which to learn. Bosch said that it would clearly be the role of a newly formed group to influence what goes into spaces as the spaces become available downtown. Aggressive marketing and establishing a stable funding base must be two central goals of the group. The discussion turned to scheduling. Marketek is budgeted for only one more trip to Iowa, but there will be a conference call in the week of November 12 with the committee, after all have had time to read the final report, which would arrive about November 1. Marketek will make a presentation to a lengthened Council work session on Monday, November 26. There will be a public meeting at the Public Library on Tuesday, November 27 at 5:00pm, followed by the formal Council meeting. NILE VALLEY RESTAURANT, CDBG ECONOMIC DEVELOPMENT FUNDS REQUEST Hightshoe reviewed two new cash flow projections and a marketing plan, as requested by the committee at the July 24 committee meeting. She reported that Mohammed had received a regular $50,000 loan for equipment and start-up costs; the lease took effect on September 1. Hightshoe said the original staff recommendation still stands. Champion moved, seconded by Elliott, approval of the staff recommendation for the Nile Valley Restaurant proposal: $25,000 CDBG Economic Development fund loan for working capital. Maximum term of 7 years at 4%. Job creation would require three FTE positions paid $10.50/hour or more. As a condition of the award, the owner must get additional business training on items such as loss prevention, portion control, personnel and financial management. The training required would be based on an evaluation by the Small Business Development Center. Motion carried 2-1. IOWA CITY AMBULATORY SURGICAL CENTER (ICASC). TAX INCREMENT FINANCING APPLICATION ICASC is a for-profit business, comprised of a partnership between Mercy Hospital and a local physicians' group, that will treat surgical patients not requiring hospitalization. ICASC is building a new 20,000 square foot surgical center in the Northgate Corporate Park Urban Renewal Area, at a cost of $5.6 million excluding equipment. The intent is to meet LEED standards in so far as LEED standards exist in the medical field. Economic Development Committee Septemer 13, 2007 Page 3 In response to questions following a PowerPoint presentation the ICASC group stated that while tax- exwmpt Mercy Hospital will be a 70% owner of the company, the entire building and company will be 100% taxable. The project will free up space in Mercy, which will run out of space by 2010 due to increasing number of surgeries and the aging of the population. Without TIF, some capital costs and expensive out-patient equipment would not be possible, although the project would continue regardless. Keeping TIF funding in mind will help the ICASC group focused on sustainable design practices. Elliott noted that this project would further the city's image as a partner. Ford said this 3-year TIF is the shortest ever considered. Champion made note of the 25 new jobs at an average of $20 per hour. Bailey was concerned that the project would go forward regardless of the TIF and wanted some indication of what additional community benefit the applicant could provide in return for TIF rebates. Ford noted that new questions about the agreement from the developer had arisen the day before, including the completion and certification dates and wording in the defaults and remedies sections. The committee decided to meet again on October 1 after staff had time to work with the developer on the new concerns and discuss alternatives to the LEED requirements. STAFF TIME Ford reported that there is interest in redevelopment of the Towncrest area and inquired whether the committee had an interest in creating an urban renewal area. Discussion ensued and there was consensus that the area needs improvement, but that input would should be obtained from the entire neighborhood. The committee directed Ford to take initial steps, including soliciting input from the neighborhood, to put together an urban renewal plan to take to Planning and Zoning, and then to Council. It was agreed that there needs to be serious consideration as to what kinds of businesses should be encouraged to move in. Ford also reported on her involvement with the Iowa City Area Chamber of Commerce Business Friendly Cities Task Force, which is working to ease the perception of the difficulty of working with the city. There was discussion of the need for improved customer service and especially increased communication with business members of the community. One outcome is to schedule a one-day forum with members of staff who are in zoning, housing and inspection services (HIS), economic development, and public works, and advertise it to chamber members. Ford mentioned that Joe Raso will attend the October 9 meeting to give his annual report to the Economic Development Committee and hopefully to renew the memo of understanding, and also to report on the Synchronist visits with area businesses. Hightshoe distributed a tabular summary of community development block grants, and Ford distributed a sheet showing current TIF projects and the performance measures they are held to and the property valuation differences before and after TIF-assisted projects. ADJOURNMENT Champion moved to adjourn, with second by Elliott. Motion passed. Meeting adjourned at 10:37a.m. Next meeting: Oct. 1, 8:30a.m., in the City Hall Lobby Conference Room. Submitted by Carolyn Kohler s/pcd/mins/ecodev/2007/9-13-07.doc CD CD ~ E E o o - coo CD ... 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