At the Southwestern Community College (SWCC) Board of Trustees meeting Tuesday, all members voted in favor for Wellman Dynamics to receive its fifth, and largest, state contract.
The contract, not to exceed $3 million, is for the hiring and training of 271 new employees throughout the departments of the company. This hiring and training process is expected to take place over the next 24 months.
The state program began on July 1, 1983, the date that Tom Lesan, SWCC Vice President of Economic Development, began working on the program. He has handled every contract in the area since that day nearly 30 years ago.
“It’s great,” Lesan said. “When you can go in and tell companies you can get them a couple million dollars.” The program itself is not a loan or a grant, he explained. It’s an incentive program through the state to encourage job creation within the state.
“You do bonding for the amount of revenue you believe will be generated over a 10-year period,” Lesan said. Instead of going to the state, the new employees’ withholding goes to pay back the bondholders for the first 10 years. After that, the withholding goes to the state. The idea is that no one is losing anything. The employees would have to pay withholding either way - this just determines who gets the money.
Why would the state do that? Why would they willingly lose money? They aren’t losing money, really. These jobs didn’t exist before, therefore there was no withholding for them to lose. Their hope is that after the decade is over, the company will be larger, healthier, and they will begin receiving the withholding at that time.
Wellman hosted Iowa Gov. Kim Reynolds and Sen. Chuck Grassley as this has plan has been worked out through the last 18 months. “They wanted to talk about what they needed to do, and what we can help them with,” Lesan said.
All four of Wellman’s previous contracts were paid off early, Lesan said. This means that it took less than the 10-year window to pay back bondholders. But the company doesn’t get the money up front. “They have the expenditures for the new hires and then they get reimbursed,” he said. This is where SWCC comes in. They collect the payments, monitor it on a monthly basis, and review documentation to ensure it was for training employees. After the verification, the company receives the reimbursement.
Lesan estimates he has facilitated hundreds of these state contracts in the last three decades. Cardinal Glass in Greenfield has done seven contracts themselves. Though Lesan’s retirement on June 30 will prevent him from seeing this contract through, he is optimistic about the results. “It definitely has an impact for the long-range employment in your community,” he said of the program.