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What’s the big deal?


An inside joke used to run through the offices of the Greater Dubuque Development Corp. that started like this: “Let’s treat every proposal like it’s IBM.”

The rest of the joke was “it will be a cold day in Dubuque before IBM comes to town,” recalled Rick Dickinson, executive director and chief operating officer of the economic development group.

Of course, Dickinson can really laugh about it all now. On Jan. 15, 2009 – a day the temperature hit 31 below – IBM Corp. announced that it would open a service center in the city, hire 1,300 tech-savvy workers and drop a $60 million payroll into the local economy.

“We’re still adjusting to it,” said Dickinson, a former state legislator and county supervisor who recalls another joke, of sorts, about economic development. That inside joke was that prosperity in Iowa focused on “pigs, poker and prisons,” he said.

Dubuque and West Des Moines have benefited in recent years from high-profile development deals involving technology companies. The Business Record asked leaders from both communities whether there are any mysteries to striking a big deal.

So, what changed and what was the key to attracting IBM to Dubuque and away from other parts of the country that seemed to better fit the company’s quest for a city near large centers of higher learning?

Dubuque changed, for one thing, Dickinson said. It had to.

In January 1982, back in the days when city council meetings “were like ‘The Jerry Springer Show’ – a circus,” the city gained national attention for having the worst unemployment rate in the country, at 23 percent.

Dubuque was a blue-collar river town, and like other towns along the Mississippi River, it was losing factory jobs, residents were walking out on mortgages, and, as Dickinson pointed out, there was reckless competition for other factories – and riverboat gambling operations – to take their place and pump more cash into the local economy.

Dickinson said that in the early 1990s, Dubuque residents began electing local leaders who were more focused on growth and sound policy making, and public officials who could deliver development deals and the jobs that come with them kept getting re-elected.

“Now, the community just really gets behind something and makes it work,” Dickinson said. “We’ve been at the bottom, we know it’s no fun, but I think people from other cities are disappointed when we tell them the key to getting something done is to work together.”

City officials and the economic development group, headed up by Dickinson and Mike Blouin, the group’s president and a former director of the Iowa Department of Economic Development, meet at 11 a.m. every Wednesday to talk about what is going right in Dubuque, what can go better and what needs to be done to make sure things go better.

“It’s not just a lip-flapping session,” Dickinson said. “We ask, ‘What did we do, what have we accomplished, what do we need to do?’”

The Greater Dubuque Development Corp. also interviews more than 200 businesses every year to find out what is right and what is wrong with the community. The results of that survey “is our bible,” Dickinson said. This year’s study found that more than 50 percent of Dubuque businesses plan to expand in 2011.

The weekly meetings, the annual interviews and a community attitude focused on growth already were in place in 2008 when the Iowa Department of Economic Development said a client had identified the city as the possible site for a business development.

There were conference calls with the still-unidentified client and a site locator.

This was not new territory for Dubuque.

Its banking sector was growing, and its tourism industry included two casinos, a hotel with an indoor water park, a riverfront museum and aquarium that had national recognition. Hormel Foods Corp. was soon to announce an expansion. And, a $20 million manufacturing plant had been announced.

As Dickinson says, if the city had been told “Acme IT” wanted to locate, elected leaders and development officials would have walked many extra miles to make sure the company located in Dubuque.

When IBM made an announced inspection of the city, Blouin delivered resumes from 600 people with information technology skills.

Dickinson said that by the time it became known that IBM was the prospective client, the company probably had a good idea of where it wanted to locate.

“By the time we heard it was IBM, there were 12 cities in the hunt. By the time of the first interview, there were six in the hunt,” he said.

Dickinson said there were no deep, dark tricks to attracting the company. He does say that a key element was making an honest presentation of what the city has to offer on a website.

“This isn’t a glad-handing kind of business,” he said. “It’s about presenting the product that is your community on the Web, so that it’s perused in confidence by a site locator. You make the initial cut based on what’s on your website.”

Dickinson said one thing the city would not have done was offer financial incentives to a company that was planning to open a facility that would pay low wages. He believes those wages deliver workers who wind up being a disappointment, and the low wages make little economic impact on the city.

Dubuque will not ignore such companies. It welcomes them to town, but they will come without the lure of financial incentives, Dickinson said.

“None of the IBM workers qualify for subsidized housing,” he said.

The city also places a premium on attracting companies that focus on sustainability, he said. IBM fits the bill, and the renovation of a historic, but at the time unused, downtown building with energy-efficient systems helped attract the company.

In the end, Dubuque presented a $53 million financial incentives package to IBM that included $14 million in state aid, $8.5 million from Northeast Iowa Community College and slightly more than $5.5 million in city funds.

Dubuque Initiatives Inc., another public-private group, borrowed $25 million from local lenders to help remodel the building that houses IBM. The building’s purchase and renovations cost $39 million, with IBM providing around $6.5 million for the renovations. The structure was the former home of Roshek’s Department Store.

Dickinson said the building was once an eyesore, but has become a downtown icon. In addition to IBM, it will house additional tenants, including retail shops.

“It is a shot in the arm to the psychology of the community that a brand could chose us,” Dickinson said. “We’re not a one-trick pony, but (IBM) is a heck of a pony.”

Dickinson also believes that because of its good experience in Dubuque, IBM decided to open another service center in Columbia, Mo., rather than placing it in another country.

“Bless IBM for taking another look in the United States,” he said.

No mystery about it

West Des Moines Mayor Steve Gaer is a man accustomed to intrigue.

When Microsoft Corp. went through a not-so-public process to locate a data center, Gaer and other city officials got wise to the company they were dealing with when a staffer spotted a “property of Microsoft” sticker on the laptop computer of someone they were meeting with.

That was in 2008. Gaer is convinced that before he knew which company was planning a high-tech development, Microsoft had pretty much made up its mind that it was going to locate in West Des Moines.

Earlier this year, the mayor said he learned that Trader Joe’s planned to move into the city when the company applied for a liquor permit.

The mystery is just fine by Gaer, who said his city is prepared to act when companies come calling. The big secret in West Des Moines, if there is one, is that the city is ready to deliver infrastructure support for developments that create jobs and bolster the West Des Moines tax base, said Duane Wittstock, the city engineer.

West Des Moines does have a plan for prospective customers. The creative deal making comes in the form of a tax increment financing package designed by Scott Sanders, the city’s finance director, in which businesses agree to a property tax valuation that will help pay for the streets, sewers and water lines the businesses need.

The deal with Microsoft involves a minimum property assessment of $15 million, the amount of property valuation that West Des Moines has decided will be necessary to pay for the $8 million it will spend to extend Grand Avenue from the Des Moines Area Community College technology campus to 88th Street, pave 88th between Raccoon River Drive and Booneville Road, lay conduit for fiber-optic lines, and install water mains and storm and wastewater sewer lines. The agreement expires in 19 years or when West Des Moines recovers its development costs.

If the valuation exceeds $18 million, West Des Moines will use tax increment financing to return the excess in property taxes to Microsoft, whose data center will serve as the centerpiece of the Grand Technology Gateway, an area that will follow Grand and 105th Street.

The infrastructure work is under way. Wittstock says the paving must be done by January, when Microsoft plans to deliver its data center – consisting of pods that can be replaced when they become obsolete – on 105-foot-long trucks.

In case the pavement isn’t poured in time because of weather-related delays, Wittstock is making alternative plans. The city made a promise that the trucks could deliver their cargo in January, and he plans to deliver.

The city is following a formula first used when Wells Fargo & Co. built its campus on Mills Civic Parkway in the Jordan Creek area. It also was used for the Aviva USA headquarters project and will be used on other large commercial projects.

It was a formula created after the city shifted capital improvement funds to pay for streets and other infrastructure to accommodate Jordan Creek Town Center. At the time of the development, the city split its capital improvement between new and old areas of town.

When plans were announced for Jordan Creek, the city tipped that balance to the area west of Interstate 35/80. It didn’t seem fair at the time, so Sanders created the financing plan.

Keeping promises, Gaer said, is key to convincing companies – and residents – that the city is serious about economic growth.

And there’s no mystery about that.

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