City and state tax breaks helped lure insurance giant Aviva to West Des Moines just two years ago. Now city leaders are worried that investment could be wasted.
The British insurance company's CEO was quoted in a Financial Times interview as saying he would be open to the idea of selling the entire North American branch, which is headquartered in West Des Moines.
While any sale is likely a long ways off, the mention was enough to make the 1300 Aviva employees working in West Des Moines a little nervous.
Two years ago, the city of West Des Moines spent $12 million building roads, water and sewer lines as well as putting in street lights and signs. Aviva signed a contract with the city to pay them back through their property taxes. However, there has to be a tenant in the building to write the check.
“They agree to pay us that revenue over a period of time so we can get reimbursed. We do that to protect ourselves. Our only downside is if the company goes out of business, but here it would be an acquisition so the buyer, whoever purchases them understands that obligation is in place,” says West Des Moines Mayor Steve Gear.
Gear says the idea of Aviva selling its North American headquarters in West Des Moines doesn't scare him. He says when companies have sold before, he's found that the new company that acquires the old usually expands and adds more jobs.
Gear says if Aviva sold, the company that buys it would be responsible for making good on the current agreement with West Des Moines. Under that agreement, a percentage of Aviva's property taxes go directly to pay for the $12 million the city spent on infrastructure improvements using TIF money. That agreement lasts until 2026. The city says it would never have been able to attract businesses like Aviva, Wells Fargo and Microsoft without TIF money. They mayor says since 2003, the city has invested $200 million in infrastructure, however, they've received $2.3 billion in building permits and added 20,000 new jobs.
“The infrastructure that might help a company to locate in West Des Moines also assists other residents and those operating in that area. Although the infrastructure is put in place initially because of that project, we are creating a new tax base with all the employees who are hired and other companies will be using that same road structure,” says Linda Jackson-Wunsch of Greater Dallas County Development Alliance.
The state of Iowa also granted Aviva more than $1.6 million in tax credits and forgivable loans if they created 544 new jobs by 2014. The Department of Economic Development says that contract would also transfer if another company acquired Aviva.
Aviva sent WHO-TV a statement late Friday afternoon that states “we do not comment on speculation. The U.S. remains one of the top 12 priority markets globally for Aviva.”