The Iowa Bankers Association is currently located at this building in Johnston, Iowa. (Photo by Randy Evans)
The coronavirus crisis has exposed the financial vulnerabilities of countless Iowa businesses.
Whether we like it or not, it will be touch-and-go to see how many come through this intact, how many will end up as shadows of their former selves, and how many will disappear.
It’s implausible that businesses will pick right up where they left off two months ago and proceed as if this were just an extended power outage.
That’s why our state needs to have its leaders — Democrats, Republicans, conservatives, liberals, middle-of-the-roaders, big-city folks, small-town and rural residents — sit down for in-depth, comprehensive discussions about the way state government uses its economic assistance to help businesses.
I’ve been chewing on this, not just because of the “Closed Because of the Pandemic” signs in store windows and on businesses’ websites. For several years, I have been concerned that state government puts too much of its business incentive money into the largest cities and too little into the county seat communities that are sprinkled across the Iowa countryside.
This has been on my mind lately because of a decision earlier this month by the Iowa Economic Development Authority that did not get much attention at the time. People were focused, instead, on the life-and-death battle against the coronavirus epidemic that was playing out in nursing homes, meatpacking plants and factories across our state.
On April 17, the economic development agency awarded $710,000 in state tax credits to Iowa Bankers Insurance and Services Inc., a for-profit affiliate of the Iowa Bankers Association. The state assistance is tied to the bankers groups’ plans for a new office building in Urbandale to house their operations.
When the building is completed next year, the business association, its insurance company and a wholly owned mortgage subsidiary will move out of an office building in Johnston, where they now rent space.
Let me repeat that so there is no confusion:
Iowa state government agreed to provide the Iowa Bankers Association and its for-profit affiliate with $710,000 in state tax credits in return for the association moving its offices from Johnston four stoplights away to Urbandale.
The association and its affiliated companies now have 196 employees. In exchange for the state tax assistance, the association agreed to add 18 jobs.
However, in a separate agreement with the City of Urbandale, the association agreed to employ at least 195 people — that’s down one from the current level — for the next 10 years. During those 10 years, the city will provide about $1.6 million in property tax rebates to the bankers.
Eighteen new jobs certainly is a positive development for our state, especially with the economic uncertainties brought on by coronavirus.
But businesses all across Iowa regularly create new jobs, and they have received not a nickel’s worth of state economic assistance in return.
These owners have opened new businesses or expanded their existing operations. Some having constructed new buildings or remodeled older ones. These business owners have maintained their employment numbers or added jobs — all without a nickel’s worth of state assistance like the bankers association received.
These entrepreneurs have opened hardware stores and machinery repair businesses. Some have plunged into establishing Main Street restaurants. Walk the commercial areas of Iowa’s county seat communities and you will find computer repair and website development businesses. You will see sophisticated marketing firms.
All of these provide jobs that add to the economy of rural Iowa as surely as the Iowa Bankers Association office building will add to the vibrancy of the office park in Urbandale. That new hardware store at the edge of town, or a community bank’s new building, or the financial adviser’s tidy new quarters each adds in a positive way to our smaller communities.
I have long thought that Iowa’s economic incentive money is skewed too often to helping growing communities continue to grow, rather than helping other communities have more of a fighting chance.
This is unfortunate, because the complexion of Iowa will continue to change in ways that do not bode well for our future if state government does not provide a helping hand in rural Iowa, too, as well as urban areas.
If the Iowa Bankers Association wants to own its office building, rather than renting space, that’s a fine decision.
But $710,000 in state assistance to move four stoplights down the road?
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