Cedar Rapids officials weighing future of city’s Cedar Rapids Metro Economic Alliance membership

CEDAR RAPIDS — City of Cedar Rapids officials are weighing whether to continue the city’s membership with the Cedar Rapids Metro Economic Alliance as the mayor looks to launch a conversation about the two organizations’ roles in local economic development efforts.

The nine-member City Council was slated Tuesday to vote to authorize a $75,000 payment for the city’s membership with the organization for fiscal 2024 — the budget year that began July 1 and ends June 30, 2024. But Mayor Tiffany O’Donnell yanked the item from the consent agenda before the council considered it to “take a closer look at what that looks like for us for the coming year.” It didn’t come to the council for a vote.

“What I look at is being the most responsible with taxpayer dollars, and what I’ve seen is that the city has stepped in to provide services that we haven’t received from the Economic Alliance,” O’Donnell told The Gazette. “I want to make sure that we all have clear roles and expectations. I don’t want to spend the money twice.”

Not long after Jeff Pomeranz arrived in 2010 to assume the role of city manager, the city launched an economic development office, which over time has taken on more duties in recruiting and retaining businesses, helping businesses expand and growing the workforce. The Economic Alliance serves the metro area, while the city’s staff focuses on Cedar Rapids exclusively.

In the city’s recently updated economic development strategic plan, made with the help of Angelou Economics of Texas, identifies the potential for the city to take on a larger role in business attraction.

O’Donnell has vocally pushed to ramp up economic development and workforce programming, particularly supporting the elevated focus on business attraction. The city’s fiscal 2024 budget includes $390,000 for economic development programming to move toward that goal.

More or less needed?

After her State of the City address in May, O’Donnell was asked about her view on the continuation of a decadeslong partnership between the city and private organizations such as Priority One, which merged with other organizations in 2011 to become the Economic Alliance. Her focus on boosting business attraction efforts has raised some questions about the relationship between the Economic Alliance and the city.

Now, she said brokers and landowners directly approach the city where tax incentives are offered. That means it’s critical to be in “lockstep” with partners in the private sector and the alliance and “examine ways to make that targeted and focused for Cedar Rapids,” she said at the time.

She touted the city’s “growth era,” as fiscal 2022 — the budget year that ended June 30, 2022 — saw a record-breaking $773 million in valuation of building permits. That was fueled by commercial, industrial and single- and multifamily residential construction.

As the city continues to grow its workforce and economic development functions, O’Donnell said Tuesday it’s necessary to convene staff and other council members to dig deeper into the city’s relationship with the alliance. She said it’s important to understand what the city receives from its $75,000 membership.

“We need to ask the question: Do we need more from the Economic Alliance or do we need less?” O’Donnell said. “This is our opportunity to ask that question as the annual membership is due.”

The Economic Alliance has about 1,200 paying members. When factoring in other economic development payments, the city is the largest contributor to the alliance.

“It’s not at all uncommon for renewing members to ask for clarity on membership benefits,” Economic Alliance Executive Director Doug Neumann said in a statement. “We have these type of meetings all the time, and we’re more than happy to do so, whether you invest $500 or $75,000. Membership dues fund key programs for the business community such as Leadership for Five Seasons, workforce initiatives, buy local campaigns, small business support and the Downtown Farmers Market to name just a few.

“Those programs wouldn’t exist without the support of our members, and so we’re always out explaining the value of these programs as well as listening to our members. We look forward to the discussion with city officials.”

Since the membership and other economic development services are separately funded, it’s possible that, if the city does pull out of its membership, its relationship with the alliance on other programming would continue. Neumann declined to comment further on the city’s overall relationship with the alliance, particularly on its growing role in business attraction.

Overall, according to information provided by the city, it paid $802,045.31 to the alliance from fiscal 2019 through fiscal 2023, the budget year that ended June 30. That includes membership dues and payments for items such as watering and planting beds, farmers market sponsorships, hotel-motel tax allocations, Leadership for Five Seasons tuition payments for city staff and other economic development programs.

‘Evaluate spending’ before vote

Typically at council meetings, the city manager has an opportunity to remove items from the consent agenda, where items considered non-controversial are grouped and voted on as a whole. The mayor reviews the agenda before it’s publicly posted, though, so it’s uncommon for the mayor to pull an item off the agenda during meetings.

“I have heard questions from council members about what the $75,000 entails and it indicated to me we need to have a deeper conversation,” O’Donnell said.

Council member Tyler Olson said he supported O’Donnell’s effort to get answers to her questions and to “continuously evaluate spending on all economic development efforts in the community.” He said the city should continue its alliance membership, though.

The city several years ago started a new application process for awarding economic development funds to groups that understand and can meet city goals identified in its strategic plan, which Olson said has been successful so far. The economic development implementation grants, launched in spring 2021, are awarded on a two-year cycle, Economic Development Manager Caleb Mason said.

The Gazette previously reported that the city’s memorandum-of-agreement with the alliance for economic development services shrunk from $120,000 in fiscal 2018 to $105,000 in fiscal 2019 to $95,000 in fiscal 2020.

After changing to the competitive process, in the 2022 and 2023 budget years, the alliance received $37,500 each year.

“In addition to the (request for proposals) process, we’re members of various organizations and each council member has to be comfortable with the value we get out of those memberships before they’re going to vote to approve them,” Olson said.

Comments: (319) 398-8494; marissa.payne@thegazette.com