Council objects to new rule on targeted jobs projects
By Lynn Zerschling lzerschling@siouxcityjournal.com | Posted: Tuesday, October 14, 2008
SIOUX CITY -- Mayor Mike Hobart said Monday he almost voted against an economic development plan to allow Cardiovascular Associates to expand its clinic at St. Luke's Regional Medical Center.
In the end, Hobart and his fellow council members voted to authorize city staff to apply for a Targeted Jobs Withholding Tax Credit Program to assist the clinic expand in Sioux City, rather than in Dakota Dunes.
"This had nothing to do with CVA," Hobart stressed. "I, like Mr. (Brent) Hoffman, didn't like what was done by this informal rule change."
He was referring to the Iowa Department of Economic Development which now requires the four pilot cities operating the program to kick in a 10 percent match. That has not been required in the past. If approved by the state, CVA will receive an estimated $185,000 in withholding tax credits. The city's share would be $18,500, which will come from sales tax dollars.
"I have a dilemma," Councilman Jim Rixner said. "We will not recover this through sales taxes. The only trade-off is they will stay in Sioux City and pay property taxes."
By retaining the St. Luke's clinic, 12 employees will remain in Sioux City and not work in another state, as well as paying property taxes in Sioux City, Dr. Edward Zajac Jr., CEO of the group, said.
"A large number of subspecialities have left Sioux City. We have two major programs at both hospitals and outreach clinics throughout the area," Zajac said of 19 other locations in the tri-state area.
Rixner said the 10 percent rule might make future projects unaffordable.
Marty Dougherty, economic development director, said he will attend a meeting of the Department of Economic Development Oct. 29 to oppose the regulation.
City Manager Paul Eckert said he and Dougherty have talked to state legislators from Sioux City, Gov. Chet Culver's office and state officials about the adverse impact the 10 percent rule would have on economic development efforts.
Rixner added, "It's probably the most significant economic development tool we have right now."
In the end, Hobart and his fellow council members voted to authorize city staff to apply for a Targeted Jobs Withholding Tax Credit Program to assist the clinic expand in Sioux City, rather than in Dakota Dunes.
"This had nothing to do with CVA," Hobart stressed. "I, like Mr. (Brent) Hoffman, didn't like what was done by this informal rule change."
He was referring to the Iowa Department of Economic Development which now requires the four pilot cities operating the program to kick in a 10 percent match. That has not been required in the past. If approved by the state, CVA will receive an estimated $185,000 in withholding tax credits. The city's share would be $18,500, which will come from sales tax dollars.
"I have a dilemma," Councilman Jim Rixner said. "We will not recover this through sales taxes. The only trade-off is they will stay in Sioux City and pay property taxes."
By retaining the St. Luke's clinic, 12 employees will remain in Sioux City and not work in another state, as well as paying property taxes in Sioux City, Dr. Edward Zajac Jr., CEO of the group, said.
"A large number of subspecialities have left Sioux City. We have two major programs at both hospitals and outreach clinics throughout the area," Zajac said of 19 other locations in the tri-state area.
Rixner said the 10 percent rule might make future projects unaffordable.
Marty Dougherty, economic development director, said he will attend a meeting of the Department of Economic Development Oct. 29 to oppose the regulation.
City Manager Paul Eckert said he and Dougherty have talked to state legislators from Sioux City, Gov. Chet Culver's office and state officials about the adverse impact the 10 percent rule would have on economic development efforts.
Rixner added, "It's probably the most significant economic development tool we have right now."
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