ECONOMIC DEVELOPMENT ASSISTANCE PROGRAMS
Community Development Programs
A community needs to provide a minimum level of services and facilities that vary with the type of development efforts desired. Planning services and technical assistance were previously discussed. Following are some programs that offer grants, loans, and other forms of assistance for capital costs:
o Chapter 403 of the Iowa Code allows a city to declare an area needing revitalization as an urban renewal area. This designation gives the city a number of options in providing assistance. All assistance under this approach comes from local property taxes. Tax abatement programs allow both commercial and industrial projects to avoid payment of all or some of the new taxes that are generated by a project. Old taxes remain the same. Urban renewal property tax abatement applies to all property taxes, not just municipal property taxes.
Retail and Commercial Business Assistance
Retail, service, and commercial businesses present special challenges regarding financial assistance. The nature of such businesses can be highly localized and highly competitive. However, as society has become more mobile, consumers are willing to travel greater distances for unique shopping experiences.
Local programs, when available, work best when they are carefully crafted to be fair and openly available to the majority of businesses. Examples of such programs are grants or low interest loans for facade improvements, existing building rehabilitation, tax abatement for rehabilitation investments into historic buildings, participation in marketing programs that feature the entire community.
At the federal level, the most common program is the Small Business Administration 7(a) loan guarantee program. Working in concert with local lenders, this program assists development efforts by encouraging a conventional loan through guarantees. Some areas also have local Certified Development Corporations that operate SBA 504 loan programs.
State programs available from the Iowa Department of Economic Development include the Downtown Resource Center and the Office of Tourism. Comprehensive technical assistance is available from the downtown resource center’s Main Street Program, for communities participating in Main Street. Fee based downtown assessment technical assistance visits are available from the resource center. The Tourism Office provides technical assistance and cooperative cost sharing marketing programs for tourism initiatives. The Department also has limited grant and loan funds available for female and minority owned businesses through the Targeted Small Business (TSB) and Self Employment Loan (SELP) Programs.
Business/Industrial Development Assistance
Iowa has developed a powerful series of tools and incentives to help create new opportunities for Iowans. Let the professionals at the Iowa Department of Economic Development and your local economic development organization help identify the right program or programs to support new business opportunities. 1-800.245.4692. Rather than identify one of the following specific programs, IDED prefers that city applicants complete one pre-application form on behalf of the business. The form found on the website at http://www.iowalifechanging.com/applications/bus_dev/index.html.
Iowa Values Fund
In 2005 the Iowa Legislature created a $500 million dollar Iowa Values Fund. The Iowa Values Fund is comprised of five main components: Business Development and Assistance, University Research and Development, Workforce Training, Quality of Life, and School Infrastructure. The goals of this fund are to help move and grow Iowa’s economy, create jobs, and help generate wealth for Iowans.
Community Economic Betterment Account (CEBA) :
The CEBA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. This program is funded with money from the Iowa Values Fund.
Economic Development Set-Aside (EDSA) :
The EDSA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. This program is available to those communities eligible for the Small Cities CDBG Program and is funded by federal CDBG funds.
Value-Added Agricultural Products and Processes Financial Assistance Program (VAAPFAP) :
The Value-Added Agricultural Products and Processes Financial Assistance Program seeks to increase the innovative utilization of Iowa’s agricultural commodities to produce renewable fuels, increase organic processing, and increase bio-mass processing among other uses. (Funded with money from the Iowa Values Fund). Grant and loan funds must be used for innovative processes and/or renewal energy projects that use Iowa commodities.
Enterprise Zones :
Business locating or expanding in an economically depressed areamay receive tax benefits. These tax benefits may also be convertible to cash depending upon a number of factors related to the business’ industry and Iowa corporate income tax situation. Not every community or county is eligible to have an Enterprise Zone.
High Quality Job Creation Program (HQJCP):
Expanding business may receive HQJCP tax credits, depending upon the scope of the project and the quality of the jobs. These tax benefits may also be convertible to cash depending upon a number of factors related to the business’ industry and Iowa corporate tax situation.
Tax Increment Financing (TIF) :
City councils or county boards of supervisors may use the property taxes resulting from the increase in taxable valuation caused by the construction of new industrial or commercial facilities to provide economic development incentives to a business or industry. (See Appendix ___)
Revitalize Iowa’s Sound Economy (RISE):
This program is administered by the Iowa Department of Transportation for improvements to public roadways to help attract new development or to support growth with existing developments. Projects are evaluated on economic potential and impact. Funding may be used in conjunction with other sources of federal, state, local and private financing for the purpose of improving specific roads.
Public Facilities Set-Aside Program (PFSA):
The program, administered by the Iowa Department of Economic Development, provides financial assistance to cities and counties to provide infrastructure improvements for businesses which require such improvements in order to create new job opportunities and invest in real estate and equipment. The form of assistance is limited to grants to cities under 50,000 population and counties for the provision of or improvements to sanitary sewer systems, water systems, streets and roads, storm sewers, rail lines and airports. Assistance is limited to two-thirds of the total cost of the improvements needed and other factors, including the number and quality of new jobs being created and/or retained. The emphasis of this program is to increase the productive capacity of the state. Priority will be given to projects that will create manufacturing jobs, add value to Iowa resources and/or export out-of-state.
Workforce Development :
Another major area of financial assistance to Iowa industrial development projects is through job training programs. Administered through the community college network, Iowa’s job training programs were the first in the nation and remain the national leader in terms of quality and benefit to manufacturers.
Entrepreneurial Assistance :
The Iowa Department of Economic Development’s Entrepreneurial Services Team is proactive in serving the needs of high-growth, value-adding entrepreneurs throughout Iowa. The Team’s Business License Information Center (BLIC) responds to 10,000 requests for comprehensive, customized business licensing and start-up information per year.
The Iowa Department of Economic Development also provides opportunities for entrepreneurs to interact with investors. The Venture Network of Iowa (VNI) showcases nearly 30 entrepreneurs each year to a number of Iowa’s angel and venture capital investors.
The Iowa Department of Economic Development can directly assist businesses with funding through such programs as the Entrepreneurial Ventures Assistance (EVA), Targeted Small Business Assistance (TSB), and Self Employment Loan (SELP) Programs.The Entrepreneurial Ventures Assistance Program (EVA) encourages and supports entrepreneurs focusing on high-growth, technology-based businesses. The program provides financing for early-stage business start-up and expansion activities as well as technical assistance grants.
Local or Regional Financial Assistance :
Many localities operate or have access to local revolving loan funds, often giving manufacturers breaks on interest rates or taking moderate risks that conventional lenders would not accept. These funds are capitalized from a number of sources. Rural electric cooperatives often manage revolving loan funds. Investor owned utilities also provide other economic development incentives. Local economic development organizations may administer revolving loan funds originally capitalized by repayments from loans made the Iowa Department of Economic Development through the EDSA Program, the U.S. Economic Development Administration (EDA), or the USDA Rural Development Intermediary Loan Program.
City councils and county boards of supervisors may declare specific areas as Urban Revitalization areas based upon the criteria contained Chapter 404 of the Iowa Code, which includes slum and blighting conditions. These Urban Revitalization Districts are formally created by ordinance through a process spelled out in State Code.
The benefit to doing so provides cities and counties the ability to provide property tax exemptions for investment into specific properties that arrest or eliminate the slum and blighting influences and add value to real estate. There are two exemptions possible that can be used as incentive to invest in real estate.
Industrial Property Tax Exemption:
Cities and counties have the ability to establish a 5-year graduated partial industrial property tax exemption program for the purpose of providing an incentive to manufacturers and processors, warehouse/distribution, and research-service operations meeting the eligibility definitions contained in Chapter 427B of the Iowa Code.