Iowa businesses are hurting. With the obstacles of 2020, plus an economy that was already showing signs of challenging times to come, many businesses were left to slow down or worse, shut down.
But there is a road to recovery. It’s going to take collaboration and multipronged policy efforts from both parties and all government, as well as private enterprise know-how. Iowa must look at innovative and competitive strategies for recovery, while preparing for an unpredictable future. Recovery includes smart, targeted, and competitive state tax incentives that complement the tax code, attract innovative projects, create jobs, meet housing needs, invest in underdeveloped areas, and demonstrate a real return on taxpayer investment for communities of all sizes — rural and urban.
Housing shortages have become more glaring during the pandemic and derecho. Constructing new and rehabilitation housing projects will help meet the workforce housing needs of our communities. Iowa’s Workforce Housing Tax Credit program is just one program that will answer the demand for housing by focusing on using abandoned, empty, or dilapidated properties, including those in Iowa’s smallest cities. However, the program needs additional funding. In 2020, the Iowa Economic Development Authority (IEDA), which administers the program, received 84 applications totaling $34 million in requests, with only $10 million available in the fund. We support expanding this high demand tax credit to address the project backlogs and increasing the amount of money available to reflect Iowa’s diverse communities and their specific workforce housing needs.
Attracting and retaining a skilled workforce remains the biggest issue our business community faces. Iowa’s Research Activities Credits program is used as a model by other states to incentivize investment in research and development and attract talent. Companies must balance substantial financial risk with market profitability, and this credit allows businesses to strategically plan for the long-term. Skyworks Solutions, which employs over 150 people in Cedar Rapids and utilizes the program, is working on next-gen mobile devices to meet global demands. Procter & Gamble, with 300 employees in Iowa City with plans to add more, credits the Research Activities Credits as part of their decision to not move operations out state. The same is true of Collins Aerospace, which uses the program to help them remain globally competitive in an industry that’s experienced dramatic blows due to the pandemic. Collins employs close to 10,000 people in Iowa, many throughout the ICR region. We support this tool that provides Iowa businesses an offset to our uncompetitive corporate tax climate, allowing them and their employees to develop technologies to compete globally in the 21st century.
Investing in underdeveloped areas in our communities contributes to recovery by creating jobs and promoting future community growth. Iowa’s Brownfields/Grayfields Development Tax Credit incentivizes rehabilitation of abandoned or blighted properties. You can see firsthand the return on investment with community improvement projects including the Iowa River Landing in Coralville, to the newly opened Woolen Mill Hotel in Main Amana. Soon you’ll see the redevelopment of the entire former Iowa Braille and Sight Saving School campus in Vinton into a Brewpub and the redevelopment of an abandoned warehouse in Cedar Rapids for the Willis Dady Emergency Shelter. We will advocate for this program to be renewed as it faces a sunset year and for additional investment to enable these kinds of redevelopments.
We support reviewing all tax credit programs to ensure they’re achieving their intended goals, now more than ever. Economic development incentives with proven return on investment that encourage innovation, create jobs, and preserve and rehabilitate our communities must be protected to support our businesses and communities on the road to recovery.
Kim Casko is president and CEO of the Iowa City Business Partnership. Kate Moreland is president of the Iowa City Area Development Group. Doug Neumann is executive director of the Cedar Rapids Metro Economic Alliance.