Incentive plan misses the point, Alliance leader says

Jul 21, 2010 — Waterloo-Cedar Falls Courier

Jim Offner

Jul. 21, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- WATERLOO -- The agreement the city of Waterloo passed Monday night that moves its contract with the Greater Cedar Valley Alliance from a flat fee to a more incentive-based system misses the point, according to the Alliance's chief executive.

"We think the incentives are misaligned with the objectives of the Alliance," said Steve Dust, president and CEO of the Alliance.

Waterloo City Council members voted unanimously Monday to approve a new incentive-based contract for the organization which handles business recruitment and other economic development work for metro area communities.

It's a deviation from past agreements in which the city has paid the Alliance a flat $85,000 annual fee.

The Alliance has had an incentive-based contract with Cedar Falls since the organization's launch in 2003.

The new agreement with Waterloo contains a $28,500 annual guarantee with incentives totaling a cap of $85,000, based on a set of performance criteria.

Waterloo City Council members pushed for the incentive plan after having learned of Cedar Falls' incentive-based agreement. Cedar Falls pays a $25,000 base fee with the possibility of another $25,000 in incentives.

"We'll take a look at both the agreement that Waterloo passed last evening and Cedar Falls is to consider in another week during our Alliance meeting in early August, and then we hope we can engage both in taking a look at the structure of the agreements and see if we can't align their support of the Alliance with the objectives that they're trying to achieve," Dust said.

There had been some concerns voiced among Waterloo City Council members whether incentives might give one city an edge over the other in drawing in new businesses.

Dust said that misses the point of the Alliance, whose purpose is to market the metropolitan area as one market.

"What we'd really like the cities to do is align the incentives with the objectives of the agreement and the purpose of the Alliance," Dust said. "The incentives reward our success in obtaining commitments to locate in their communities; the Alliance is really outside that decision loop. Those are decisions made between a company and the city, certainly with our advice and counsel on how to work with business. Nevertheless, it's always the community's decision about the relative value of the businesses' decisions."

The potential incentives in Waterloo can be earned as follows:

$1,000 per acre of new development in an area officially designated for development, provided each acre contains at least 10,000 square feet of building structure.

$1,000 per $250,000 of new taxable value added to a development area.

$2,500 per new full-time equivalent job created in a development area, providing the jobs have an hourly starting wage of at least $15.63.

Up to $5,000 in quarterly performance payments based on Alliance activity, but paid solely at the city's discretion.

The incentives are capped once the city's total payment reaches $85,000 during the year.

Courier Staff Writer Tim Jamison contributed to this report.

Newstex ID: KRTB-0150-47174456