Incentive deal with PCI allows for fewer jobs than now

Is it a sign of the economic times?

There was a day when the handing over of taxpayer money to a private-sector company as part of a development incentive came with the expectation and requirement that the company create some new jobs.

In recent years, much of the talk about creating jobs has given way - to the benefit of public officials and the companies getting incentives - to “retaining” existing jobs.

A slightly new twist on publicly financed incentives - that a company actually can provide fewer jobs than it now provides - is part of the City Council's proposed development agreement, slated for approval Tuesday evening, with Physicians' Clinic of Iowa.

PCI intends to build a new $36-million “Regional Medical Mall” with an $8-million parking ramp at Second Avenue SE and 10th Street SE, necessitating the controversial closure of two blocks of Second Avenue SE.

In the development agreement between the city and PCI, the city agrees to provide $13.24 million in front-end spending for the parking ramp and street improvements for the project, a sum which will be paid off with new property-tax revenue generated by the development over the next 25 years. The city also will close a two-block stretch of the arterial, Second Avenue SE, at PCI's request.

Meanwhile, PCI agrees to employ 315 full-time people when its new medical facility opens by Jan. 1, 2014, and it agres to employ that number of people five years later.

PCI employs 332 people today, Mike Sundall, CEO at PCI, reported on Tuesday.

Sundall acknowledged on Tuesday that PCI suggested to the city in January that its proposed new medical facility might house a total of 400 employees, including some non-PCI employees, when it opened. PCI also suggested that the new facility would help create an additional 100 jobs at the site over time.

However, Sundall said PCI scaled back its job projections in the spring as the project moved from concept toward reality. At a public forum in August, PCI still spoke of adding 50 new jobs over time, but Sundall said such a “hypothetical” fell out of the city-PCI development agreement at the insistence of the banks financing the project.

Even so, Sundall assured that PCI would “exceed” the 315 jobs in the development agreement. However, he said banks did not want to see an agreement in which PCI promised a higher number of jobs and then gave the city a “claw-back” provision to reduce its contribution to the project if the higher number was not met.

Sundall noted that a small drop in the current number of PCI employees has been expected as the physicians' group moves its operation from five different sites to one site.

Earlier this year, PCI had talked about a 180,000-square-foot facility, which now will be a 205,000-square-foot one. Building on Second Avenue SE has given the new building more space, he said.