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Tax Credits in Newton, Iowa

posted on November 5, 2009 at 5:57 PM

Tax credits do cost money.  The question is do the benefits outweigh the costs.  Many state and community officials say yes.  And they say the credits are necessary for economic development.  Case in point, Newton.  In that city in 2000, Maytag employed over 4,000 people.  In October 2007 the last 660 jobs went away.  Newton was in trouble.       

Reporter:  The Maytag-whirlpool departure from Newton didn't happen all at once, so community leaders had some time to adjust.  And they had a variety of tools to help them, including the high quality jobs credit and the enterprise zone program.  Both are administered by the Department of Economic Development, and       both offer various tax credits and other incentives to help businesses.  First came central Iowa energy with a high-quality jobs credit.  Located just outside the city limits, it opened in 2007.

Bryan Friedman, Community Development Director, Newton: It's really built the tax base for the county.  Millions of dollars of new investment into the county, which is always a good thing.     

Reporter:  That could also be considered the beginning of Newton recreating itself as a center for renewable fuels, a status attested to when President Obama visited another new company in April 2009 for Earth Day.  Trinity Structural Towers builds towers for wind turbines in 300,000 square feet of former Maytag production space.  Trinity was awarded a $649,000 high-quality jobs credit.  But that wasn't all.

Charles "Chaz" Allen, Mayor, Newton: We gave them this road that went through there through an easement process, and then we designed this road not only for our community to use it but it's also specific -- or the specs that they can bring the towers out this way as well.  And that's what we’re working on right now.  We're going to connect this road to that pole yard, and they're going to bring those out on this road.

Reporter:  The state helped pay for the road and rerouting a rail line that comes into the plant.  Another new company that received tax credits is TPI.  It manufactures the blades for wind turbines.  TPI couldn't fit in any former Maytag facilities, so it built new.  Governor Culver helped celebrate its grand opening.  TPI has been awarded $3.7 million in tax credits under the enterprise zone program.  It's specifically targeted to economically distressed areas.        

Allen: Five hundred jobs went to TPI.  TPI had talked about earlier this year of increasing their size and adding 300 more jobs, but the financial markets took its toll on that.  Trinity has created 160 jobs.     

Reporter:  All three companies, Trinity, TPI and Central Iowa Energy, also were targeted for direct funding aid from various sources, as was springboard engineering, housed in this old K-mart.  Springboard's employees used to work for Maytag, and they could have moved and had jobs other places.  They didn't do that, and not because of government assistance, though that is greatly appreciated.  They stayed because Newton was their home.    

Jordan Bruntz was director of engineering for Maytag’s research and development operations in Newton.

Jordan Bruntz, President, Springboard Engineering, Newton: I’ve spent a lot of time with a lot of people that were working for me, known some of them for 20 years.  And so how do you look at those people and say I’m not going to do anything?

Today Bruntz is president of Springboard Engineering.  Springboard designs consumer products for customers and fabricates and tests those products.  They demonstrated a computer controlled milling machine that had already milled the piece, so we could see it operating.  Springboard serves regional, national, and international customers with 40 full-time and five to ten part-time employees.    

Downtown, Maytag’s old campus is home to other new offices.  So far, Newton officials figure the town has replaced 1,200 or so of the 2,000 jobs it lost in Maytag’s end days.  And while it's filled up a lot of Maytag’s structures or torn them down, there is still over 1 million square feet of manufacturing and office space empty.

Tags: business economy Iowa Newton taxes