The West Branch City Council voted unanimously Monday to cancel its 2008 Tax Increment Financing agreement with Acciona Windpower North America, LLC. Acciona, however, is fighting the decision.
The action comes after the city provided a required 30-day notice for what it considers a breach by Acciona regarding requirements for creation of 110 full time jobs and the “continued payment of median wages for 95 employees.”
The Development Agreement provides tax rebates to Acciona for a period of eight years, including approximately $250,000 owed to the company later this year. With the cancellation, the city would not be obligated to make this rebate or any remaining payments under the agreement.
Acciona responded to the city’s April 16 notice in a letter dated May 9. In it the company stated the agreement called for “creation of ‘approximately 110 new full time jobs in a period of not to exceed five (5) years commencing May, 2007’. Therefore the job creation period ended in May 2012, and the recent layoffs we regrettably had to undertake due to conditions in the market are not considered a breach under the Development Agreement. As of May 2012, Acciona employed 102 employees, which while not 110 employees, is ‘approximately 110’ employees, consistent with our obligations under the Development Agreement.”
The letter did not provide current employment levels. The company did not respond to requests for additional information.
Mayor Mark Worrell said that the city felt the need to send the notice in order to meet its responsibility to protect its other taxpayers.
Equally as important, according to Worrell, is that the notice was intended to prompt Acciona to communicate with the city regarding its current situation and plans for the future.
The response from Acciona was the first communication the city has received from the company since job cuts began, he said.
For example, the council only became aware of the recent resignation of Acciona Windpower North America CEO Joe Baker through a posting on a Web site that covers the industry.
Baker resigned for what were cited as “personal reasons.” He was replaced by Enrique Teruel, who has been with Acciona since 2002.
Worrell said the city is willing to work with the company, though likely under a new agreement.
He cited the importance of the plant and its jobs to the city.
Looking around the audience, Worrell said, “We probably all know someone who has been affected by this. I know several people.”
Mark Nolte of Iowa City Area Development, who worked with West Branch and Acciona to originally bring the company to the area, tried to address some of the council’s concerns.
He noted the problems in the wind energy generation industry caused by the inability of the U.S. Congress to act in a timely manner on the extension of industry subsidies. Nolte said that this was a regional disruption for those states focused on development of wind power versus other alternatives to fossil fuels.
Nolte told the council he felt Acciona was a good partner which tried its best to maintain jobs at the West Branch plant for as long as possible in the face of the market slowdown by, for example, assigning workers to non-production tasks.
He said that passage of the subsidy extension in December and such things as the recent announcement of a major expansion of wind power development in Iowa by MidAmerican Energy point to a brighter future for the industry.
Nolte told the council that he would attempt to work through his contacts at Acciona to encourage them to communicate with the city so that all parties could find a way to go forward.
The city could have decided to withhold one year’s payment, which would then extend the original rebate period by one year.
Any tax funds not rebated to Acciona remain restricted by the terms of the formation of the city’s TIF District.
According to City Administrator Matt Muckler, if this year’s tax rebate of approximately $250,000 stays in the TIF Fund, it would first be used to make annual payments of $38,000 on debt created by the construction of the city’s Water Tower No. 2. In other words, the impact would be felt in the city’s finances over time, rather than simply moving to its general fund immediately.