Friday, April 29, 2011

Economic Development Expenditures for the Bioscience Industry in Iowa

Iowa is well known in the United States for being a state filled border-to-border with cropland. The state conjures an image of acres upon acres of corn and soybean fields. The growth, sale, and use of these vast resources is a fundamental part of Iowa’s economy. The advanced processing of these crops is part of a large industry called bioscience. The bioscience industry is considered to be one of the key industry clusters in the state of Iowa and is a prime target for state expenditures to capitalize on this strength and promote further economic development. Two of many programs through which Iowa supports the bioscience industry include the Grow Iowa Values Fund and the Iowa Demonstration Fund. They are both programs organized and operated by the Iowa Department of Economic Development (IDED). Together they support a wide range of companies doing business in Iowa.

The Grow Iowa Values Fund (GIVF) is one of the most contentious pieces of economic development legislation in the last decade. Both policy groups and editorial writers question its effectiveness. It was designed to be a funding resource, including loan and forgivable loans, for projects focused on job creation or retention, value-added agriculture, and entrepreneurial efforts. The first legislation for its creation in 2003 was found unconstitutional due to inappropriate Governor vetoes. When it was finally enacted in July 2005, large financial awards to companies like Wells Fargo made people question whether it was an appropriate use of tax dollars. The most troubling report of all, initial evaluations showed GIVF projects to be drastically under-performing their stated employment and wage projections. Despite its issues, the GIVF has been very active. From its creation in 2003 through February 2010, it has awarded funds to 579 projects pledging 33,954 new or retained jobs. Source

The Iowa Demonstration Fund is a much smaller, matching grant program. Grants of up to $150,000 are awarded to applicants who match the dollar amount 2-to-1. The program is for companies in targeted industries (including bioscience) who have a product ready for commercialization and market entry. During fiscal years 2008 to 2010, 131 applications for the program were received, with 81 total grants funded totaling around $8.3 million. Source No criticism could be found for the program, likely due to its small annual cost. It also has had recent changes to its application process to set up applicant for success and continue mentoring grant recipients. Source

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