NORTH LIBERTY– What role should a city take in helping its businesses?
North Liberty City Council members want to know what you think.
At least two council members have been asking for a written economic policy, a framework for how it financially assists businesses looking to locate in North Liberty.
Of equal interest to the council last Tuesday was how it can help small businesses and the mom-and-pop shops that are already here.
In a February 2011 work session, the council asked City Administrator Ryan Heiar to create a list of strategies North Liberty might use when considering incentive packages for businesses looking to locate in North Liberty.
Council member Terry Donahue is one of the councilors pushing for the policy.
“The discussion generated from the Credit Union project,” Donahue said in a telephone interview last week, referring to the city’s 2010 decision to give the University of Iowa Community Credit Union nearly $12 million in TIF funding to help build a member support center on the west edge of town, a move that met with opposition from the public and resulted in court action against the city.
“We had a conflict. We had denied a small business TIF before, and then approved it for a much larger business.” The former involved daycare owner Missy Butcher-Evans, who was forced to relocate her business because the city owned her property and wanted to begin its own project on the site. In 2009, Butcher-Evans asked for a $10,000 forgivable loan to help build a new and bigger building, but was denied. Instead, the council forgave three months’ rent on the property, crediting Butcher-Evans a total of $6,000.
“I felt it was inconsistent,” Donahue said of the two decisions. “So now, the thing to do is to get a policy developed, as suggested by North Liberty Development months ago, to address these types of issues for both large and small businesses.”
During the regular meeting of July 12, Heiar presented a first draft of an economic development strategy to the council. Heiar said he crafted the document by looking at what the city’s past practices have been, and talking with colleagues around the state about what economic tools are available to cities.
“I wanted to show what potential incentives are available, in a document that is accessible by the public, so the council knows what the city’s options are. And so when businesses approach North Liberty, they know what their options are,” Heiar said after the meeting.
The two-page document offers general guidelines for assisting “businesses in the expansion and new construction of high-quality industrial or commercial facilities, where such assistance will boost employment opportunities and/or tax base within the City,” it states.
Primarily, the strategy relates to how it might use Tax Increment Financing (TIF) to rebate or abate property taxes to the business, acquire land for economic development projects, construct infrastructure to support and improve the properties for those projects, and provide loans or grants for projects of “extraordinary employment and/or property value expectations.”
The document also lays out seven criteria for how the city shall review the possible use of TIF to help such projects, like the amount of investment and type of facility being built, the number of jobs created and their average wages, and the extent to which the project requires infrastructure improvements, eliminates blighting conditions, and serves a public service.
None of those guidelines or considerations are new, Heiar admitted, and, by design, they aren’t terribly specific.
“When it comes to economic development, the last thing we want to do is be married to a policy that could potentially eliminate us from the running for a potential new company,” Heiar said. “We don’t want to be too specific, because when it comes to economic development, we are competing across Iowa and across the country. We obviously have a number of things to offer that other cities cannot, but one thing businesses do come back to is the incentive package. I feel we need to keep that somewhat close to the chest while we are negotiating, so it can’t be used against us and become a game of one-upmanship.”
Therefore, Heiar said, he put together a basic strategy, a list of potential tools and a set of general criteria the city can look to in those instances.
“I like the term ‘strategy,’” he said. “It is only used as a guideline. It doesn’t mean it’s a policy they are tied to; it’s a strategy that can be used and changed if needed.”
Council member Gerry Kuhl felt it is important to get more input on the policy– both from a small business perspective and in regards to incentives for larger companies. Kuhl suggested using the resources of area economic development organizations, including the North Liberty Development (NLD) group, the Urban Planning Department at the University of Iowa, the Small Business Development Center, Priority One, Iowa City Area Development (ICAD) and the Entrepreneurial Development Center (EDC).
Donahue said first and foremost on the list of interested parties is NLD.
“They are the key players,” said Donahue. “They are the ones who face these businesses where the rubber meets the road, every day.”
NLD president Dennis Tallman was in the audience last week, taking note of the council’s discussion. Tallman said after the meeting he was pleased to see the discussion on the agenda.
“I think it’s a good first draft, and a great effort on part of city to put something in place,” Tallman said. “North Liberty Development would be very willing to work with the city to help develop details of the policy and procedures.”
Donahue agreed that at first blush, the policy is a decent start, but it’s not enough.
“It finally puts down on paper the conditions under which the city has done business before,” he said. However, he added, “It doesn’t get down to meeting the needs of the local business people who we all really depend on.”
And that’s what caught the attention of councilors more than the content of the policy; really, just a footnote at its end.
“One of the criticisms we have heard is that the City does not have any programs for small businesses,” it reads.
“If council is interested, we can discuss that as well,” Heiar told the group.
Councilor Chris Hoffman was definitely interested in discussing that.
“North Liberty isn’t comprised of a significant amount of …larger companies; it’s those smaller businesses that have chosen be here as well,” Hoffman said. “If they want to upgrade their structures, I would think there could be some relief to them in the form of tax reduction, or something to help them get off the ground or expand their existing business.”
Hoffman said it is important to engage current business owners in such a discussion. He suggested it might be a two-step process: first, to invite economic development experts to the table to answer questions and give information on the best practices for large, overall projects; and second, to seek input from citizens and current business owners operating on a smaller scale.
Tallman also thinks there are two distinct types of economic development to be talked about.
“I agree that it is kind of two separate issues. I do see a gap in most comprehensive economic development plans that don’t have provisions in them for the small business owner,” said Tallman, “so the fact that they are looking at it is a great sign. The work will come in hammering out the details and working out a viable plan.”
Heiar said he will now do the legwork to get the process started.
“I want to engage ICAD, the EDC and Priority One, because they hear from people nationwide, so I am interested in their opinion on how to make it work on the smaller scale of things. NLD can provide input on what they hear from local business owners or those who are trying to develop a business here,” Heiar said.
And that’s where attention need to focus, Donahue concluded.
“We did have a large employer situation,” he said, “but the bread and butter of this community is based on the small business people, and that’s where our efforts really need to be right now.”
Both Heiar and Donahue encouraged all community members to engage in future discussions on economic policy. Heiar said people should call or email him, any council member or Mayor Tom Salm with questions, or offer remarks at the public comment portions of meetings.
Donahue said citizen input will be essential.
“If we engage the public in this, we can come up with a good, public-directed policy,” said Donahue. “We need as much input as possible. I hope people will come to a work session, or a community-driven roundtable, so we can collect ideas to understand the needs of small businesses and make suggestions on how we can best address those.”