MINUTES OF THE INFORMAL MEETING OF THE JOHNSON COUNTY BOARD OF SUPERVISORS:
JANUARY 12, 2006
Chairperson Lehman called the Johnson County Board of Supervisors to order in the Johnson County Administration Building at 11:01 a.m. Members present were: Pat Harney, Mike Lehman, Terrence Neuzil, Sally Stutsman, and Rod Sullivan.
Iowa City Area Development (ICAD) President Joe Raso said that he has with him several individuals who have spent a lot of time involved in community development in the area and would like to recognize them. Raso introduced Lynn Rowett from West Bank, Brad Langguth from Hills Bank, Jeff Disterhoft from the Iowa City Credit Union, and Bart Floyd with US Bank. He also introduced Bill Geringswald, the campaign director with Stellar Fundraising Executives. Raso said that what he would like to do is share the past four to five years of ICAD’s efforts to tie in the projects and programs and emphasize the return on investment that the area has seen. Lehman introduced Assistant Planner Dan Swartzendruber of the Planning and Zoning Department who has worked on the County’s economic development policy.
Raso said that in the last four and half years, they have assisted 35 primary sector companies with expansion, retention, and relocation projects. These companies have committed $250 million in capital investment in the region. The Procter & Gamble project will generate a minimum of 40 high paying jobs. The number of jobs that these 35 projects have generated or retained is around 2,500. Some are in place now or will be in the next couple of years. In every single case, they have exceeded the numbers set out in 2001 for projects capital investment and jobs created or retained.
Raso said that they put together a return on investment report. At that time, they had worked with 27 different projects. They used a firm out of Atlanta, Georgia to help them better understand how they are doing with return to investors. The consultant came back after running the numbers two or three times and found that direct return on investment was $51 per $1 of investment. That is two to three times what is being seen on the market in the past several years across the country. One of the reasons that ICAD hired these consultants is that they have worked with hundreds of other economic development organizations and could compare ICAD to others in terms of efficiency and use of funds. There are only six organizations across the country who had a better return than ICAD. All six are suburban areas outside of large metropolitan areas, so ICAD feels very good about the type of return that they have had. Raso said that the projects are paying an average wage that is 10% higher than existing private sector jobs in the County. When they are looking to approach the State and other entities for funds, there are strict criteria that these companies have to meet in order to receive that assistance. ICAD feels that is important and should be maintained because they want to increase the jobs and the wages and wealth of the individuals who are being assisted.
Raso noted that he is proud of the work that they have done. He said that they have been the first in Iowa to institute Laborshed Reports, an accurate inventory of wages, availability, and workforce size. Others have begun to follow this model. They are doing mini-job fairs. He said they are not the sole reason why this has happened but have taken a leadership role in them. He said that they are in the process of being the first business led Work Ready Certificate Program region in the country. This is a key issue in relation to needs of their businesses when they surveyed them a few years ago as part of the Skills 2006 report. He said that they are contacted on a monthly basis by other areas looking for such a model. He said that Linda Schreiber is the Chair of the Professional Technical Diversity Network, and he chairs the Workplace Learning Connection to link students with relationships in the business community. ICAD also took the lead in convincing the State and their utility partners of the importance of the building site and community database. This would not have been possible in the timeframe that it happened if it had not been for the ICAD group pushing that. Raso explained that they learned from the state that the existing Industry Program that they adopted several years ago and produced a very important, award-winning report, is going to be taken on statewide. Raso emphasized that not only are they achieving the goals that they set out to achieve in terms of the overall economic impact but they are also setting a tone within this organization about regional development and about leadership and innovation in all of these programs that he has mentioned.
Raso said that they will continue with the award winning Industry Program and visit every single one of their basic sector clients annually. They will provide trend data to the cities and counties when things pop up that their businesses are telling them things that aren’t being addressed or things that are being handled very well. They will also visit every headquarter that they have to get their input. He noted that they will focus more staff time on profit center industries such educational services, medical technology, and so on. In terms of expanded business recruitment efforts, they want to make sure that they have their websites up and running and have their information up in a timely way. 65% of site searches begin on the internet, so they need to make sure their information is there. They are also going to make sure that they are meeting with their targeted industries. He said that they have a large project right now from the State that is coming through a consulting firm working for a Fortune 500 company. They are working as a region to submit information by the early part of next week. This is a perfect example of why they have to be visiting with their consultants. They also want to increase awareness of the region among targeted industries and look at more public relations spending, which they have not previously done. He said they have a responsibility as a region to let the rest of the country know what the Cedar Rapids/Iowa City Corridor is like for business. They are definitely going to be spending some time to make sure that happens.
Raso said that they have a saying in their office “Y2KXI” because 2011 is the year when all the baby boomers will start to retire. He said if they think they have a workforce issue today, there will really be a an issue five years from now. They are directing nearly $1 million dollars to workforce development issues. A number of those items are outlined in documents presented by Raso: Laborshed, Employment CDGroms, and career fairs. ICAD has provided their investors with well over one hundred packets for individuals who are being recruited to the area. He said that one of things that has been talked about in the past is entrepreneurial development. He said that there are already organizations in the area who are addressing this issue. The Chamber seed initiative is doing that as is the Entrepreneurial Development Center out of Cedar Rapids. Also, Paul Heath’s and David Hensley’s efforts with the SPDC and the John Papajohn Entrepreneurial Center are working in this area. The ICAD group feels it is important for them to be a voice and to assist with entrepreneurial development but more so, they want to put some money to help underwrite things that they feel will really grow. Raso said that Pearson, Rockwell Collins, and ACT all started by one or two individuals have become the supporters of their regional economy, so they want to make sure that they are doing what they can to underwrite such efforts. Raso said that these programs are going to require a considerable increase in resources, and they hope and expect to hire two more individuals to focus on Workforce Development and Business Development.
Geringswald explained that in September of last year, Stellar Fundraising Executives was hired to conduct a feasibility study. During a four to five week period, he personally interviewed over 70 individuals who represent over 70 companies in the area. What came out of this is a tremendous embrace of the components of ICAD’s programs moving forward. He noted that he was amazed at the amount of civility, compassion, cooperation, and heart for the community, which is a rare commodity. He said he is in the middle or wrapping up another project where the cities and counties are at each other’s throats. Geringswald said the situation in the Johnson County area is a breath of fresh air and can be attributed to a group of people who developed an ICAD group 20 years ago. Geringswald said that the world is changing dramatically so, as they look at what ICAD has the potential over the past five years, they have a staff of three who are doing the work of five to seven people in comparison to other economic organizations in this country. He said that the budgeted cost of existing business retention and expansion is $1.2 million, workforce development is $850,000, and marketing and recruitment is $1 million. Regional communication and collaboration is estimated to cost $550,000. Geringswald said that a number of people who were interviewed privately would like to see that number tripled or quadrupled because they understand the regional impact. They see that as instrumental in getting the message out regionally and globally.
Geringswald said that entrepreneurial development will cost around $150,000 over the next five years. Stutsman asked if that includes the money that they talked about giving to new businesses to start up. Raso said it wouldn’t be dollars to give directly to businesses but money to programs that other agencies are providing. For example, if the Chamber were looking to provide lunches, ICAD could help support that. Raso said that they are already doing that but because the investors are especially interested in this area, and ICAD wants to support that. Bart Floyd said that in some regards ICAD is like the United Way in that United Way doesn’t usually put money directly into a certain program but works with other agencies to help those end recipients be successful. ICAD doesn’t have the volunteer resources available but does have some funding available.
Geringswald said that goal is to create 2,880 jobs, which is a measurable goal. He said the mean average of these jobs is $37,500 annually in wages and benefits which would generate a new payroll $156 million to the Johnson County area. Also targeted with the company expansions and new business development is another increase in capital investment of $250 million. Raso said that the jobs referred to are the direct jobs. With P&G, not only would the employees of that company be affected if the company were to go away, but so would 1,500 other individuals who work for restaurants, direct suppliers to the company, health care, automotive, and so on because the dollars from PG&E are not circulating in the economy to support those jobs. Geringswald said that $86 million dollars of expendable income would be put back into the community. R. Sullivan asked if the indirect jobs are at the same pay scale. Geringswald said that they figure the primary jobs at $18 an hour with wages and benefits and the secondary jobs at $14.26.
Geringswald continues that this has been heavily debated already with bank presidents. When Raso came up with this number, it is half of what is being used in the presentations in Linn County, so, it is very conservative. New deposits are between $12.6 million and $13.5 million depending on how it is weighed. Out of the $86 million generated, $27 million dollars into the economy in housing, $6 million in utilities, fuel, and public services, and $37 million in retail. Raso added there is another sheet that breaks this number down as far as how that $86 million is to be broken up across all business sectors. Geringswald said that in his past 30 years of work in this area, they have had a number of parties take tremendous ownership on campaigns such as this. He added that Raso has given a nice summary but that his has been very modest. Geringswald said that people are needed not only for addressing the wants and needs of the local community but also to have this become a model for the rest of the country to emulate to see what happens when the public sector is working for the private sector working with the educational sector, which is the model here. With the proper funding, horse power, and professionals with Raso's direction and the direction of the Board, the next ten years can be a very exciting time. Geringswald said that they are asking $50,000 a year for the next five years. He noted that he knows this is an aggressive ask in comparison to the past, but ICAD is doubling their budget. Also, ICAD has been living hand to mouth, but with the proper funding from all the sectors, ICAD can develop a strong plan of action that is accountable and measurable throughout the entire process. Raso and the organization are responsible to the investment group including the Board, which is part of that group.
Neuzil said that he is glad to see this aggressive approach. This is something that he was hoping to see a few years ago and is happy to see that it is happening now. He asked if this is in addition to what the County is already giving. Geringswald said that the current $20,000 would be a part of the $50,000. Neuzil also inquired regarding the request from other communities and what are they investing. Raso said that they will be sitting down with the three largest communities in the County in the next ten days to two weeks, and the request that ICAD will be making will be comparable in terms of the areas that they represent and the economic impact that they've provided to each of those. He said he can't go into the details of each one right now. Neuzil said that at some point he could. Raso said yes, it will be well known for everyone. Neuzil said that in the County's strategic planning, one of their goals is to be in collaboration with other communities so, the Board would like to have that information. He asked if North Liberty, Coralville, and Iowa City make contributions. Raso said that they all do and they all have. They all have made considerable investments as the County has over the last 5 years. Neuzil said he appreciates Raso's time in working with the Johnson County Economic Development Committee. This is an organization that has started up in the last 5 or 6 years, and hearing how Raso is being pulled in eleven directions at once makes the Board really appreciate that. Lehman said that they need a reminder of the big picture and see the number of jobs multiplied by the size of the pay check, and it is much more.
Neuzil left at 11:40 a.m.
Stutsman asked Budget Coordinator Rich Claiborne what the County is currently contributing to ICAD. Claiborne said $20,000. Stutsman said that things are going very well right now and she wonders if they are going to benefit that much by expanding funding. She said she thinks they do well with the businesses that they attract and the quality of the community that they have. Raso said that in their office on an annual basis, there is a minimum of six projects that they cannot service primarily due to the lack of infrastructure that is not out there in the community or an issue related to workforce. He said that getting back to Lehman's comment, ICAD has done a number of things in the past five years to explain or work through that data. Looking forward to the next five years, there are many things that given the resources, someone like himself could devote more time to. If they don't have infrastructure at a City level or County level, they are out of the game. He sees himself spending some time working with communities on that. If ICAD is not responsive in a timely manner when people think they are Idaho or Ohio, they don't have the time not to get things to people faster than anyone else because they are not the first on their radar screen. The only way they can do that is to be visiting them more. He said that Stutsman is absolutely right that this area is likely to continue to grow and this area will be a good area to live, but the question is will the community be great. Will the community have the assets in place and the resources in place to take care of the opportunities that are going to come to or be available to a region like this--opportunities that are not available to many others in Iowa or the Midwest. He commented that this is a large increase in their budget, but it is still small in comparison to the people they compete against. They will still be operating very lean to make this program successful.
Harney said that people don't understand the national competition out there with the economy the way it is. He said they are fighting with the Ohios, the Michigans, the big name businesses that are located in those communities. He thought it is hard to get by the issue that the Johnson County Board of Supervisors represents the entire County not just rural Johnson County. They all prosper for every dollar that comes in. Some would say that growth is good and other would say it isn't, said Harney. Stutsman said that she thinks growth is good. She noted that she and Floyd work on the Johnson County Housing Trust Fund and thinks that these jobs are great and positive for the community, but there are some issues that still need to be dealt with. She said that they really need to work on the infrastructure, not just the sewer and the water but the community infrastructure. She hopes that with ICAD, they continue to work together. Raso said it is important to keep in mind that the County probably wouldn't have the strong relationship with Linn County and the multiple organizations there if an ICAD and a Priority One hadn't spent the past five years building a very strong relationship with one another, getting their chambers together.
Raso said at the end of the day ICAD will not be the ones making the decision as to where the roads should go and that kind of thing, but it is their job to be communicating back to everyone in a timely manner and to emphasize focusing regionally on all of these things. Raso said that if they grow the profit centers and they are not concentrating the issue of a broad level of housing throughout the region and figuring out transportation, they risk running themselves up against the wall that some of the other major metros are experiencing today. They have the opportunity now to plan ahead and be prepared for these challenges.
R. Sullivan thanked Raso for his time and especially for the numbers he offered. He said it also helps to know how to rank their region in comparison to others. He asked what the current public money coming from the other three entities is. Raso said that right now ICAD's budget in terms of investor income is roughly $375,000, 30% comes from the public sector including the County, Iowa City, Coralville, North Liberty, Tiffin, Kalona, U of I, Kirkwood and more. R. Sullivan asked how much comes from Iowa City/Coralville for example. Raso said that today, Iowa City is at $55,000, and Coralville is at the same commitment that the County makes. North Liberty is about half of what the County gives, Raso speculated. R. Sullivan said that they hear a lot from the State about consolidation. When they talk Laborshed, they talk Johnson County and Linn County together, and R. Sullivan wondered if they should be talking about consolidation of Priority One and ICAD. He asked if they have discussed that. Raso said that discussion has taken place. He said that approach that they have been taking is that over time, how much can they continue to do together to meet the needs of their client. He said at the end of the day, their focus needs to be on the clients. If it weren't for that focus, it would be harder for them as individual organizations, though wrongly, to work together. All of their workforce initiatives are done today as region. Before that it was 80% and before that, 60%. As they build a commitment and a trust with one another, it allows them to better serve their clients. He said it has been a requirement of the Board coming back to staff saying that they want them showing them more how they are going to work with other entities. He said that they may become one large entity in the future, but they are not at the point yet. He noted that Priority One has a much larger budget than them and has still agreed to partner with ICAD, so ICAD is getting a great deal. They are putting in fewer dollars but still getting the same tools. What they contribute is the innovative things coming out their office. Floyd said that to some extent, that merger has been taking place if not through the change of name. There has been much more collaboration since he has been here not just between ICAD and Priority One but concerning the chambers and visitors’ bureaus. They have formed a technology corridor business alliance that brings those four together.
Raso said that he visited a company in Texas that had a small operation in Iowa. There are times when it happens on the other end. Cedar Rapids might call and say that they don’t have a building for a client but thought Iowa City might. R. Sullivan said that he finds it striking that they don’t get a lot of feedback from ICAD in the sense that decisions that the County makes affect ICAD’s ability to recruit a business. He said he thinks it would be tremendously important to hear from ICAD on what the Board is doing. Floyd said they have been using the synchronous software and process. Lehman said that their general rule of thumb is that they may get 16 to 18% of the tax dollars of anything in the municipality. He said that they all benefit from an increased tax base. Stutsman said the Land Use Plan is a perfect example. They could use some feedback about whether or not, for example, they need more industrial area in the County. Or, perhaps they need more housing in the rural area. Raso said that he has the pleasure of sitting down with all of the cities who are investors and learning about their plans for going forward concerning infrastructure. It might be helpful to communicate those plans across entities. Lehman said that he is thinking of growth areas and fringe area agreements because it is sometimes nice to have an outside source and perspective.
Assistant Planning and Zoning Administrator R.J. Moore said that his department is getting ready to review the Land Use Plan for the Board. One of the recommendations they are going to make is putting together a planning committee to facilitate the participation process. That would be about 15 members. Maybe they could have a member of ICAD on that committee. Raso said that makes a tremendous amount of sense and would welcome a request for that that he could take back to their Executive Committee. R. Sullivan said that the County budget sessions are just starting, and he wondered what time frame ICAD is under. Raso said that they plan to have a launch of this campaign publicly in the 3rd week of February. Lehman said that may be a little early for them but they might have a preliminary indication. Raso said that they are on the July 1 schedule. Floyd thanked the entire group for their past financial support and for their leadership. He said that regardless of what the decision is going forward, he is sure it will be win/win situation. Lehman said that they will stay in touch and thanked everyone for their time.
Adjourned at 12:03 p.m.
Attest: Tom Slockett, Auditor
By John Deeth, Recording Secretary