In Cerro Gordo County, a handful of public officials and an economic development agency funded with public dollars are going to unprecedented lengths to keep a secret. They have secured a promise to generate $65 million in new development and create 164 full-time jobs at a new warehouse and distribution center on 39 acres of ground in Clear Lake Industrial Park. All they have to do is hand over roughly $9.3 million toward a 10-year forgivable loan and a 15-year, 90 percent property tax rebate — and keep quiet about the identity of the owner until the construction project is finished next spring. While some say they have no problem with those terms, its rankled folks like rural Britt resident John B. Johnson. The 57-year-old truck driver and Erin Township clerk says he didnt realize hed stumbled upon a larger controversy when he wrote The Des Moines Register Readers Watchdog to question how county supervisors and the City Council could agree to provide public money, when only a handful of people will know the name of the Fortune 100 company until it starts hiring. It just comes off as wrong, Johnson told me after writing an unsuccessful open records request to city and county officials. He said he also contacted the attorney generals office, the state ombudsman and the Freedom of Information Council without much success. You have people voting to put millions into play, and the full boards and councils dont know to whom, he said. It just seems to defeat the whole purpose of having open records and meetings laws. Johnson said projects that cost taxpayers far less have to survive a public vetting process. He said he favors creating new jobs, but sees how such secrecy could backfire — if not in Clear Lake, then someplace else in Iowa if the practice catches on. Bill Monroe, chairman of Iowas new Public Information Board, said he didnt know all the facts surrounding the development deal in Clear Lake but had never heard of public officials waiting so long to identify the recipient of public money. Its a bad precedent, he said. A bad precedent. At least 172 local and regional economic development groups now exist across the state — all trying to finesse projects for businesses competing for market share, workers and real estate. Keith Luchtel, a former lobbyist who serves as executive director of the Public Information Board, said its become common for public officials to keep the names of corporations secret in development deals until incentive and real estate packages are negotiated. To get around public records laws, many use place-holder or straw companies to buy land, negotiate incentive contracts and obtain permits. The Iowa Economic Development Authority, for example, reveals the names of companies when its board votes on public incentive packages. Whats unusual in the Clear Lake case, however, is that public officials agreed to be silent about the company seeking to set up shop in northern Iowa until the project is completed next year. This one seems extreme in that (the Fortune 100) company is not going to surface until they are hiring people, Luchtel said. Public officials say name isnt on files After reading about the Clear Lake deal, Johnson contacted Kathleen Richardson, executive director of the Iowa Freedom of Information Board, in March. Richardson encouraged him to write an open records request and suggested he contact the Watchdog. Good grief, Richardson wrote to him. There is no discussion of why this company wants to remain anonymous or the propriety of approving such a large development deal, including forgivable loans, without the name of the company that will benefit from this public largesse. Johnson fired off an open records request to Mayor Nelson Crabb, County Supervisor Jay Urdahl, Cerro Gordo County Planning & Zoning Administrator Tom Drzycimski and City Administrator Scott Flory — said to be the only ones to know the name of the company, other than the North Iowa Corridor Economic Development Corp.s former president, who resigned this spring. Iowas open records law requires all records and information belonging to state, county or local governments be public, with certain exceptions. One exemption protects company trade secrets, while another reports to governmental agencies which, if released, would give advantage to competitors and serve no public purpose. All the public officials denied having any documents that named the Fortune 100 firm. When that fact came out, other residents grew suspicious. Clear Lake nurse Laura Williamson said she and her husband doubt the officials claim to have no records. She added: I know we are supposed to trust our public officials, but I also want to make sure theres nothing hazardous or harmful about this (project), or something that would bring on heavy traffic. Clear Lake resident Jan Glandon wrote the Watchdog, asking for a separate inquiry into the deal. There is no way this can be legal, she said. Flory, the city administrator, said no records or correspondence with the company exist because all the dealings thus far have been with the place-holder company. He said he realizes the prolonged secrecy is unprecedented but said nothing illegal is taking place. Deal depends on job, payroll levels Flory said the deal unfolded after local leaders got a tip from the Iowa Economic Development Authority, saying a site selector was looking to build on a 40-acre site in the region. Clear Lake and Austin, Minn., became finalists for the warehouse site from a field of a half-dozen competitors. Under the development contract, Flory said, the forgivable loan and 15 years of tax breaks would hinge on a total capital investment of $65 million, a payroll of at least $6.5 million and 164 full-time positions that pay at least $39,000 apiece. The company that occupies that building has to create all those jobs, he said. I believe strongly that its going to be transferred to the Fortune 100 company, but we have no guarantees. Flory said he and the handful of other public officials, who also serve on the North Iowa Corridor Economic Development Corp. board, agreed to keep the companys name secret because it is publicly traded, and the distribution center stands to have broader impact for shareholders. The deal hinged on signing a non-disclosure agreement with the companys site selector, he said. Flory insists an extensive vetting process took place that included public meetings and requisite zoning requirements. Ultimately, he said, they had a rare opportunity to bring a large employer to the area — and they took it. I dont care if its a Fortune 100 company, a Fortune 500 company or a Fortune 1,000 company, its 164 jobs. People have been overzealous about wanting to know, he said. No compelling interest in secrecy Dave Swenson, an economist and researcher of public incentives who teaches at the University of Iowa and Iowa State University, said companies like Google, Facebook and Microsoft all insisted on a certain amount of secrecy while their Iowa development deals were being forged. Still, he called the Clear Lake deal bizarre and said government officials have a legal obligation to keep the public informed, not act as obligatory agents to business. Swenson also noted he could think of no compelling public interest for safeguarding the businesss name for so long and questioned how public officials could have no public documents in the deal. Gary Dickey, a Des Moines lawyer who used to act as legal counsel for former Gov. Tom Vilsack, said he sees long-term problems if other public officials tried to follow suit. One, he said, is that potential conflicts of interest remain hidden until its too late. We all want to create jobs, he said. But at the same time, there needs to be transparency to hold the public and private entities involved accountable. Lee Roods Readers Watchdog column helps Iowans get answers and accountability from public officials, the justice system, businesses and nonprofits. Contact her at lrood@dmreg or 515-284-8549. Whats next? Last week, I filed an open records request with the North Iowa Corridor Economic Development Corp., asking the interim president for the name of the Fortune 100 company and related communications. He said no such records exist and said the agency is a registered private nonprofit corporation and is not a government body.
Posted on: Sat, 02 Aug 2014 02:13:20 +0000
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