Guest Columnist

Modernize Iowa's economic incentives

The system worked in the '80s for large manufacturing operations, but not for tech companies in 2020

Mark Nolte, left, lead a discussion in the Regionalism and Workforce track during the Iowa Ideas symposium at Hotel Kirk
Mark Nolte, left, lead a discussion in the Regionalism and Workforce track during the Iowa Ideas symposium at Hotel Kirkwood in Cedar Rapids on Tuesday, Feb. 28, 2017. (Liz Martin/The Gazette)

While there is much to be concerned about with how our state gets through this pandemic, if we allow ourselves to look ahead there are opportunities for new business and job creation on the horizon. Existing companies will be poised to grow and expand, and new ventures will emerge.

Iowa, for many reasons, will have opportunities to recognize some of this post-COVID boom if we have the right approach to economic development and the right tools in the toolbox. Incentives for companies should never be the main driver for why a business starts or locates here, but they do play a role in the decision-making process in a competitive

landscape.

Iowa has a very traditional and somewhat rigid incentive model that was based on a different era. For example, for many projects to qualify for incentives a calculation of job creation and capital investment is used. This worked in the ’80s for large manufacturing operations that brought with them both jobs and investment.

The challenge today is that modern manufacturing might have high investment, but not create many jobs. Conversely, tech companies have the potential to create many very high-paying jobs in leased office space and thus provide limited capital investment. Our current model does not make Iowa as attractive as other states for either end of these scenarios. This is a challenge at the state and local level as generally tax increment financing is the only real tool at the city level, which, again, is modeled to favor companies building big buildings and not the realities of a new economy that is going to be more remote, lean and flexible in terms of their space needs.

Our Legislature will have no shortage of issues to contend with in its next session, but I do hope legislators continue to work with Iowa Economic Development Authority Director Debi Durham and her team to keep evaluating how to make our state competitive with flexible and adaptive incentive tools to encourage Iowans to start and grow businesses here as well as attract business from higher- cost states.

Mark Nolte of Iowa City is the former CEO of the Iowa City Area Development Group.

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