Open for Business

I got my first hint of how wonderful a job and an income can be on Friday evenings growing up, when my mom and dad cashed their weekly paychecks and my mom took my sisters and me grocery shopping and to McDonald’s.

In our own simple way, my classmates and I joined the American economy in 1978 when our Junior Achievement team at Newton High School came up with the idea to produce “Red Pride” bumper stickers and sell them for $1 each to supporters of our playoff-bound, high school football team. It seemed every vehicle in town displayed one.

Our business venture helped give us a sense of worth, and I think it made Newton feel good as a community and optimistic about the future.

I hope in my time in the public eye that I’ve never lost sight of the obvious: Supporting business to help it blossom matters a lot.

Over the years, too, I’ve seen how competition for businesses has grown tougher and major economic development victories more elusive.

States continue to fight one another to attract companies as they work to keep their own companies from leaving.

But what has surprised me most as mayor of Cedar Rapids is the spirited rivalry between neighboring cities. It may be today’s toughest battleground for jobs.

In 1999, when I left the Iowa Legislature to head the Cedar Rapids Area Chamber of Commerce, Cedar Rapids was still living off the legend of its longest-serving mayor, Don Canney. He had a knack for helping to bring manufacturing plants to the city during his 22-plus years in office. But people had lost sight of the fact that Canney retired from city government in 1992.

By the start of the new millennium, Canney-era victories were fewer and farther between. Companies were consolidating, not expanding, and some were moving to the South or outside the United States in pursuit of lower costs.

Cedar Rapids had done well by the old economic model. We set aside land for local industrial parks; we promoted the city with a toll-free 800 number; and we embraced the development chant of “recruit, recruit, recruit.” No less noticeable, though, were the manufacturing plants that left town. By the early 2000s, the model had run out of gas.

In its place came the idea of “grow your own.” Instead of recruiting trips, a community’s economic development officials were paying more attention to existing companies, encouraging them to stay and expand. There was a new effort as well to help local entrepreneurs turn ideas into new companies and new jobs.

The perplexing questions, though, stayed the same: Why do companies stay or go, expand or stagnate, move to your city or somewhere else?

One official duty of the Cedar Rapids mayor, which is written into the 2005 City Charter, is to lead the economic development effort at City Hall. This role has taught me that a city can shape its own future even if some things end up out of its control.

From the start, my City Council colleagues and I have emphasized that Cedar Rapids is “open for business.” If the city had a reputation of being unfriendly to business, that was going to end. Instead of saying “No, we can’t do that,” we were going to say, “Let’s try to find a solution for that.”

To show we were serious, we hired City Manager Jeff Pomeranz away from West Des Moines, where he had overseen a level of growth and development nearly unrivaled elsewhere in Iowa. We wanted to bring that savvy to Cedar Rapids at a crucial time, 2010, as the city continued to recover from its flood disaster of 2008.

Pomeranz helped us roll out the red carpet for business prospects while keeping an eye on bordering cities that can use tax incentives to lure Cedar Rapids businesses to move next door.

In any one year, losing a company to a neighboring city might not mean much, but it can matter a lot over a decade if you aren’t paying attention.

Understand, I’m not opposed to the idea of regional economic development. A victory for one city in a metro area can be good for all the other cities. An employee might work in a neighboring city, but live, shop and pay taxes in your city. I realize that. After all, I was president and chief executive officer from 1999 to 2005 of the Cedar Rapids “Area” Chamber of Commerce.

Nonetheless, as mayor of Cedar Rapids, I’ve wanted to make sure businesses weren’t being enticed away. If there was any enticing, I wanted us to do it, both to keep employ-
ers and to attract new ones.

Defending turf and working to attract businesses often involves incentives. It is a fact of life.

I quickly was reminded of that as I was about to take office. Physicians’ Clinic of Iowa (PCI) announced in 2009 that it would move from its existing Cedar Rapids location and build a $40 million-plus regional medical clinic, possibly next door in Hiawatha.

Keeping PCI in the city was especially important because the proposed Cedar Rapids site for the new building sat between the two hospitals in the heart of the city’s new medical district. We wanted to strengthen the district with the clinic development, not hurt the new district by losing PCI.

However, the city’s incentive package for the project touched a nerve when the City Council agreed, on a split vote, to accede to the clinic’s request and close two blocks of Second Avenue SE, a major arterial street into downtown. The clinic’s doctors wanted part of the new PCI building to sit on the street as well as on both sides of it.

Council member Tom Podzimek said closing the street would help define the city’s new medical district and add “vibrancy” to it. He said Second Avenue SE, the wide thoroughfare that served the downtown in the days when it was a retail powerhouse, had become an idle “runway” much of the day.

Council member Monica Vernon, though, said the city should require PCI to build over the street rather than take a significant piece of the city’s transportation system out of commission.

I voted with the majority in October 2010 to close the street. The vote was 6-3. I agreed with council members Pat Shey and Kris Gulick that PCI’s project was a “game-
changer” for the city and for our new medical district. The clinic since has expanded and exceeded its job-creation goals.

But that hasn’t been the final word. Decisions like this one stick around. Even today, residents stop me in the grocery store and at community events to tell me that we got it wrong.

My most publicized fight for jobs in the Cedar Rapids metro area also came in 2010, six months into my term as mayor, when Cedar Rapids and Hiawatha competed to land GoDaddy, the Internet company known for its flashy TV ads.

Maybe Danica Patrick, the glamorous race car driver in GoDaddy’s lime-green and black corporate colors at the time, raised the dispute’s profile into more than it was.

In the dustup, Hiawatha took exception to my last-minute “Hail Mary” effort to persuade GoDaddy to change its plans and move to downtown Cedar Rapids to help with the city’s flood recovery. From Hiawatha’s perspective, it seemed like big bully Cedar Rapids was trying to steal jobs from its smaller neighbor. Lost in the hullabaloo was the fact that GoDaddy had occupied a small office in Cedar Rapids before it announced it would close that office and expand to Hiawatha. It was my thought that Cedar Rapids was the one getting robbed.

We didn’t win that one, but I didn’t lose heart.

The GoDaddy battle motivated us in Cedar Rapids to reach out to employers so we’d know about a company’s plans and what intercity battles might be looming.

And the potential battles are constant, weekly. In the wake of the GoDaddy matter, I think Hiawatha Mayor Tom Theis had it right when he said he wasn’t going door to door in Cedar Rapids trying to steal businesses. Or as he put it: “I’m not a scavenger for the city of Hiawatha. If they call, I talk.”

In Cedar Rapids, we wanted to make the calls to Cedar Rapids employers so they wouldn’t have to call Hiawatha or anyone else.

In 2017, Cedar Rapids still is out there vying for what I call the whales; the big new plants or technology complexes that cities continue to dream about and compete for. There is a new 1,300-acre industrial park near the city’s Eastern Iowa Airport just waiting for a big catch.

Even so, the financial incentives offered by some states and metro areas for the biggest projects often are out of reach for Iowa and many of its metro areas.

But there are fish to catch.

To do so, Cedar Rapids and cities across Iowa rely on a similar bait: a local property-tax incentive called tax-increment financing, or TIF.

The TIF incentive is often misunderstood and can be a target for critics who say TIFs are unfair tax breaks for business and City Hall giveaways. TIF is neither if used reasonably. TIF is just a piece of the open-for-business tool kit.

With a TIF, a community forgoes property-tax revenue for a period of years in trade, so to speak, for a business’ willingness to build a project. A five-year or 10-year waiver of property taxes ends before you know it. Then, the new development is taxed on its full property value for decades to come.

In the last couple of years, my City Council colleagues and I have approved incentives for companies willing to invest in the downtown and urban renewal areas and for those that provide high-quality jobs, restore brownfield sites and preserve historic buildings. The city is open for business. It’s not an open checkbook. The incentives come with a guarantee of a public benefit.

For us at City Hall, we want to encourage investment. We want new buildings to go up. We want more jobs. We want to grow and progress.

I still get asked all the time when I’m going to do something to land the whale, the major new employer, for Cedar Rapids. “But what about Apache Hose?” I ask people. “What about its $7 million expansion?”


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