Greater Des Moines business leaders gave mixed reviews to a multimillion-dollar economic fund and a new hospital in the western suburbs, but hailed the virtues of combined governance in an informal, unscientific poll of some of the Business Record’s key news sources.

Among issues state lawmakers will tackle Thursday when they return to the Capitol for a special session is legislation authorizing the Iowa Values Fund. Senate Republicans, who declined to pass the legislation before adjourning earlier this month, reportedly are backing a $700 million pay-as-you-go fund.

“If the Legislature does not approve the fund, they will have squandered a historic opportunity to change the face of Iowa,” said Joseph Meshi, CEO of Growth Ventures Group, a Des Moines-based venture and investment company.

Don Pierce, president of Prairie Logic Inc., one of the companies Growth Ventures Group is supporting, said the fund is necessary to fuel the state’s economy. “Iowa has in the past lost several major opportunities as companies have moved away after becoming mature, due to lack of support given by the state, compared to other states,” he said.

If properly structured and managed, the Iowa Values Fund provides the jump-start the state needs to become more competitive, said Gregg Barcus, president of Emerging Growth Group, an investor-backed for-profit limited liability company that shelters technology businesses. “We can’t base our actions on trying to return Iowa to its past economic bases and geopolitical structures,” he said. “This, combined with the venture capital legislation passed last year, could be huge for the state’s future.”

Sid Ramsey, vice president of business development and marketing for Iowa Health System, said the fund is a creative approach that will stimulate economic development. “As a state, we have to wake up to the reality that old approaches to problem-solving won’t work in today’s economy.”

Others weren’t so optimistic.

Terry S. Slinde, chairman of TEC-Iowa and Principal/Three Dimensional LLC, supports the idea of an economic development fund, but wants to make sure appropriate accountability measures are put in place. “For the Iowa Values Fund to have any real significance, it must have clear and concise goals and have an accountability structure that measures the values for the dollars spent,” Slinde said. “If it follows the structure of the previous economic development funds, it will be nothing more than an effective ‘political’ solution that will spend lots of money and have little to show for it.”

Ryan Hanser, a vice president at Hanser & Associates Public Relations, said the plan is “well-intentioned,” but he’s concerned about the administration of the money.

“Government has, to date, failed to make successful venture capital investments,” he said. “Relying on private banks, supported by a loan guarantee, to fund business growth may be the stronger alternative.”

Peter Porto, president of Sciengistics Inc., opposes the idea. “Iowa ought to reject the ‘values’ that it represents: more government debt, pork-barrel politics and increased state involvement in private business,” he said.

Instead, he said, sound business should be funded by private investment at risk-reward levels that are determined by the markets instead of political appointees. “To the extent that businesses choose to avoid investing money in a given community at a given time, attempts to force taxpayers to fund the value gap are not only foolish, but downright wrong,” he said. “Everything the Iowa Values Fund seeks to do, individuals are free to do on their own, with their own money. The real pity is that things like the Iowa Values Fund teach people that they can’t and shouldn’t have to do so.”

A more effective means of stimulating the state economy is to create a tax climate that is conducive to business growth, said policy wonk Eric Woolson, who served as press secretary to former Gov. Terry Branstad and led Republican Doug Gross’s failed gubernatorial campaign last year before starting his own public relations company, The Concept Works. One way to do that, Woolson said, is to reduce the number of school districts and counties.

“There is great danger in spending money all over the place in the name of economic development,” he said. “Spending needs to be targeted to industries that are going to grow and create jobs.”

Woolson criticized a plan to borrow the state’s way to prosperity, and suggested a state economic development plan closely modeled after the Vision Iowa fund is the wrong approach.

“People who pat the state on the back for creating the Vision Iowa fund should stop and think for a moment that the money in that fund is going to projects that cost money to maintain rather than create money,” he said. “That’s not economic development; that’s a public works program.”

NEW HOSPITAL

Though the Justice Department has ruled out a joint venture between Iowa Health System and Mercy Medical Center to jointly build a hospital in West Des Moines, both groups own land in the suburb and are exploring separate projects.

Hanser & Associates President Ronald Hanser believes changes in the metro area’s demographic profile support more health-care facilities in the western suburbs. The suburbs didn’t exist when the four hospitals – Lutheran, Methodist, Blank and Mercy – were built in the early 20th century, and nearly all of the metro area’s population was within a few miles of the health-care facilities. “Things have changed,” he said. “Today, nearly 100,000 people live in the western suburbs. Growth in Dallas and Madison counties will continue to push the population center further west. Hospitals, doctors’ offices and other health-care facilities must be near the people to promote public health. We must create the future, rather than dwell on ‘the way it has always been.'”

“This is one of the most fundamental issues to face the Greater Des Moines community in a long time and will have potentially one of the largest impacts on our community health and access to health-care in the past 40 years,” said Iowa Health System Executive Vice President and Chief Operating Officer David Stark, who supports hospital construction by both his organization and Mercy. “The need with a growing and aging population is evident and will assure a high quality of life for all residents of the Greater Des Moines area for many years to come.”

Slinde opposes hospital construction in the western suburbs by either group. Neither plan calls for an acute-care hospital in West Des Moines, he said, but triage-type facilities that would offer limited medical and surgical services.

“These proposals would not eliminate the need for people living on the West Side to travel to the main campuses, and major emergencies would still have to go to the main facilities,” he said. “We already have surgical centers in the area and multi-specialty clinics that have extended hours.”

He believes hospital construction in West Des Moines could add between $65 million and $130 million to the community’s health-care costs – “for a need that has not been established or quantified,” he said.

The issue also drew a response from Myrna Erb-Gundel, the CEO at the Adair County Memorial Hospital in Greenfield, a small community hospital located about an hour away from downtown Des Moines. Erb-Gundel said the hospital has had difficulty maintaining both adequate staffing levels and the number of patients needed to justify remaining open. “We have been here serving our communities with primary care for 54 years, and the communities need us to be able to continue to do that,” she said. “Hospitals built in West Des Moines could present a clear threat to our viability.”

She doesn’t support a hospital by either Iowa Health System or Mercy Medical Center, and said the Adair County hospital could handle patient overflow if that is an issue. “Neither group should build in West Des Moines,” she said. “If one does build, both will. The health-care dollar is already stretched and should not fund additional buildings.

MERGER

On the issue of a merger of Polk County and Des Moines city governments, survey respondents were nearly united in their support for the plan.

“The more we can push resources out of duplicative administrative roles and into front-line services, the better,” said Sam Carrell, executive director of The Number 1 Question: Is it Good for the Kids?

“This has to happen if the region is to thrive,” Barcus said. He said governmental mergers could potentially streamline the delivery of service and reduce the growth of expenses. “The politicians need to put their self-serving posturing aside and move this forward,” he said.

“The city and county have duplicative services that unnecessarily add to taxpayers’ burden,” Woolson said. “Most important, a city-county merger would create a government that has a greater ability to focus on growing the metro-area economy.”

He said metropolitan areas that have moved to combined governance have experienced positive results. “A merger would help move Des Moines and its suburbs forward and make us more of a ‘big-league urban area,'” he said.   “Metro areas in other states figured out how to do this,” Ronald Hanser said. “They enjoy good government and the cost savings that result when unnecessary duplication is eliminated.”

Jim Goodman, president of Goodman Management Group Inc., gave conditional support. “I believe in it regarding services, but still question representation and spreading entities’ problems over a larger population,” he said. “If it is talking about the efficiencies on the use of taxes, then I am for it.”

Porto of Sciengistics opposes the idea. He thinks consolidating control into a larger governmental structure would result in a loss of local autonomy. “If saving money is the goal, reduce the size of government,” he said.

OTHER ISSUES

Survey respondents also offered advice to metro-area political leaders on how to best position the city for growth and economic development. Meshi and Pierce both called for additional financial assistance for start-up companies and small businesses in potentially high-growth sectors such as technology. Tom Conley, CEO at The Conley Group Inc., asked for changes in state law to “balance out employer rights with those of employees.” Ronald Hanser said leaders from Des Moines and its suburbs should establish a single set of rules for commercial building permits and other standards to help lower the cost of development while at the same time ensuring high-quality development.

He also said more focus should be placed on developing the downtown area to make it more attractive to tourists and young adults.

“We’ll need a downtown center that offers a vibrant place to live, work and play,” he said. “The visionary, comprehensive and bold Court Avenue redevelopment project proposed by Jim Hubbell’s and Harry Bookey’s Court Avenue Partners is a good beginning. [It] offers it all – exciting new entertainment, affordable housing and unique retail. The Riverwalk proposed by Principal [Financial Group Inc.] is another good example.”

The Principal Riverwalk also got a solid endorsement from Barcus, who called it “the most exciting thing to happen to Des Moines since I move here in the early 1980s.”

“The city and business communities should do whatever it takes to get it done – without the encumbrance of casino gambling, please,” he said.

“I don’t believe there is much that local government can or should do with respect to economic stability,” Porto said. “That should be left up to the individuals who have been blessed with the skills and the means to start and grow business. Local government can only help by creating an environment that is attractive for business, which means lower taxes and decreased regulation.

“I am not much of a believer that government ought to have much to do with business issues other than to get the heck out of the way,” he said.

Porto also said Greater Des Moines shouldn’t strive to shed its small-city image. “The people of Des Moines should be proud to live in a safe, courteous and prosperous community,” he said. “My wife and I share a ‘thank God,’ rather than a grimace, every time the lead story on the local news is something so mundane that it would embarrass big-city folk, rather than the latest list of felonies committed the night before.

“Greater Des Moines should not – out of envy, jealously, low self-esteem, greed or whatever – try to become a big city, particularly through the expensive tax-funded projects that we have seen and continue to see, which promoters promise will attract and retain the kind of people who want to live in bigger, fancier cities.

“If we try to pool public money in attempts to be something we are not meant to be, we will be less than we could have been, and that is what I see happening here.”

Medicare reimbursement rates – Iowa ranks at the bottom among states – ranked high on the list of issues survey respondents want presidential candidates coming to Iowa in preparation for next winter’s caucuses to address.

“This is a huge economic issue for the state, not just for hospitals and physicians, but to seniors and businesses,” Stark said.

“It’s unfair to Iowans, hospitals and physicians,” Ramsey added.

Barcus thinks candidates should be asked to comment on “the growing inequities of wealth.”

Carrell thinks predicted workforce shortages should be a key issue in the 2004 presidential election. He wants candidates to recognize that “59 percent of our economy is made up of human capital, that we are staring down a 350,000 to 500,000 workforce shortage in the next decade, and that developing any economic development or business strategy that doesn’t include serious and deliberate efforts in making sure we are building kids who can participate, compete and fuel the economy is foolish.”