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Council changes mind on Acciona’s $80K tax breaks
by Gregory R. Norfleet · News · November 17, 2010
Acciona Windpower added two more “yes” votes last week and successfully overturned an earlier city council decision to refuse more than $80,000 in tax credits for the alternative energy company.
The 2-2 vote on Oct. 18, which turned down the measure, became a 4-1 vote Nov. 9 in favor after the company’s CEO and three economic development representatives appealed.
Council member Jim Oaks changed his vote from “no” to “yes” and council member Mark Worrell, who missed the first meeting, added a “yes” for Acciona.
“We are pleased with the vote,” Acciona Windpower CEO Joe Baker said afterward.
City Administrator Matt Muckler said passing the measure was more difficult than a simple majority vote. Since the council originally said “no” via the tie vote, it was necessary for one of the members of the prevailing side to make the motion to overturn the original decision. Oaks made the motion.
Casting the lone “no” vote was council member David Johnson, who was the most vocal opponent. Reiterating comments he made at the Oct. 18 meeting, Johnson said the $80,000 was “chump change” to Acciona Windpower, whose parent company in 2009 had a net profit of $1.72 billion.
“I wouldn’t be able to sleep at night” after casting a “yes” vote, Johnson said, noting that the state could use that money elsewhere to help families struggling in the current economy.
Baker said he understood Johnson’s concerns, but noted that the state offered four incentives to bring Acciona here and that this one — the High Quality Job Creation program — represented a commitment by both the state and Acciona. To earn the tax credits, Acciona must create — and maintain — the high quality jobs.
“That $80,000 is like one $50,000 engineer,” Baker said.
Worrell noted that any new job created by Acciona increases the likelihood that newly employed person will bring another family to West Branch.
“That’s how it’s justifiable,” he said.
Joe Raso, president of Iowa City Area Development, said Acciona pays some $350,000 a year in employee payroll taxes.
Jerry Schroeder, economic development director of the East Central Intergovernmental Association, said his organization strives to “make sure” that businesses get promised incentives. He said the Acciona jobs and what it has promised the state in return, make it “one of the better (HQJC) programs.”
“The wages and benefits are really super,” he said. “This is a great project and I urge you to reconsider.”
Bill Schulte, executive director of the Cedar County Economic Development Commission, said this vote would send a message to other businesses on whether West Branch was business-friendly.
“How are you going to portray yourself?” he said. “Incentives are a big part of the game.”
Baker said his contract with parent company Acciona Energy was to grow the company “four times over four years.” That is, the $200 million company he manages needs to become an $800 million company by 2013.
“We recognize what the city of West Branch has done for us,” he said. “We are a good employer. We are a clean (assembly plant).”
He added that several companies have expressed a willingness to supply parts for Acciona and locate operations in Iowa to do it.
Johnson noted the $80,000 could be used to buy 38,000 school lunches at $2.10 each at West Branch Community Schools.
Baker argued that the money for this incentive and school lunches come from “separate buckets.” Johnson countered that unused funds would go back into the state’s general fund.
Johnson said the money would not affect Acciona’s decisions to hire and fire employees — only the market would do that.
“I like your business,” he said. “This would be a hell of a lot easier if you were a coal-burning plant.”
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