State OKs $10 million for Newton job creation

State OKs $10 million for Newton job creation
 
Date May 19, 2006
Section(s) Local News
Brief  
 
By ANDY KARR

NDN Staff Writer

The $10 million state economic development grant promised to Newton by Gov. Tom Vilsack received approval from the Iowa Department of Economic Development Board on Thursday.

The decision formalized Gov. Vilsack’s comments in Newton on May 10, when he offered the community an “unprecedented aid package” of $10 million in state money to fuel job creation in Newton and Jasper County following the loss of Maytag jobs.

The money will come from the Iowa Values Fund and be available in increments over the next three years with $2.5 million of the money available in fiscal 2006, $2.5 million in fiscal 2007 and $5 million in fiscal 2008.

That money can be used by Newton to lure new businesses to town or assist existing businesses in creating new jobs. The hope is the new jobs would offset the loss of the 1,800 Maytag jobs as announced by Whirlpool May 10. Those jobs are scheduled to be phased out between now and October 2007, with about 1,100 production positions moving to existing factories in Ohio and about 400 corporate jobs moving to Whirlpool’s headquarters in Benton Harbor, Mich.

Shifting those jobs to Ohio and Michigan earned Whirlpool tax breaks from those two states totaling nearly $40 million. Vilsack said Iowa offered Whirlpool incentive packages around $20 million and even offered to build a new plant in Newton to retain Whirlpool jobs.

In the end, the jobs could not be saved. Now Iowa offers $10 million in Values Fund money for Newton to help replace those lost jobs.

“It definitely helps, but it’s not a blank check that’s given directly to us for what we want,” Newton Economic Development Director Bryan Friedman said this morning. “It’s still through their normal Values Fund process.”

This means businesses approved by the city for the grant money would be reviewed by the state’s Economic Development Board and would need to meet the criteria of other Iowa Values Fund projects. Those criteria include meeting wage and benefit thresholds, receiving support from Newton City Council and being fully collateralized by business or equity fund assets.

Values Fund grants also typically require a local match, the amount of which is decided by the board on a case-by-case basis. Typically, the board requires a 20 percent local match according to Iowa Department of Economic Development Director Mary Lawyer.

The $10 million also comes with the stipulation that it must be used within a certain timeframe. The first $2.5 million needs to be used by May 31, 2007, or it will be de-allocated, Lawyer said. The second $2.5 million needs to be used by May 31, 2008, and the remaining money needs to be used by subsequent years.

Friedman doesn’t see the use-it-or-lose-it requirement as a problem for the community.

“We want to be able to start to bring in new job opportunities at the same time we’re having Whirlpool transition out of this community,” he said. “We don’t want things to sit empty.”

Given Values Fund requirements, the money likely is not eligible for funding the Newton Promise, Newton Development Corporation’s proposed scholarship program for all Newton Senior High School students, which the group hopes will lure new people to the community and encourage displaced Whirlpool employees to remain here. Regardless, NDC Executive Director Kim Didier said her group would work with the city and businesses to help secure new jobs in the area.

Friedman hopes the announcement of the $10 million for Newton will further stimulate interest in the community. Even before the announcement, he said, there had been businesses interested in Newton.

“We’ve had inquiries on things — not directly related to this $10 million — but folks are interested in this community,” Friedman said, declining to name the businesses until plans were more formalized.

In addition to luring businesses to Newton, Friedman also said the city would be open to expending some of the grant money on job creation outside of city limits, in Jasper County or other communities since those areas are affected by the loss of Maytag jobs, as well.

“We would hope we would be bringing in lots of job opportunities in the next year that would qualify for this Values Fund funding,” he said. “We think that’s definitely doable.”

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