ECONOMIC DEVELOPMENT TAKES HOLD IN THE MIDWEST
Companies are attracted to the Midwest’s high quality of life, available land and educated workforce.
Misty Reagin

The competition among economic development organizations across the Midwest is fierce, and it should be. Many cities and counties in the Heartland offer plenty of amenities that are attractive to companies seeking a central location in the United States. Heartland Real Estate Business spoke with several economic developers to find out what they do to stay ahead of the competition.

St. Joseph, Missouri

Downtown skyline view of St. Joseph, Missouri, along the Missouri River.

Economic development in St. Joseph first came to the forefront in the late 1960s when the community was suffering the loss of several packaging plants. In response, the Chamber of Commerce became the driving force for economic development in the area. “The Chamber of Commerce was recognized as an organization that could act as a conduit for various organizations that support economic development efforts,” says Tom Lesnak, vice president of economic development for the St. Joseph Area Chamber of Commerce (SJACC).

The SJACC serves the city of St. Joseph and Buchanan County, which has a total population of about 123,000. According to Lesnak, because of St. Joseph’s position as a regional hub for northwest Missouri, northern Kansas and southwest Nebraska, it typically works with other economic development agencies and real estate professionals to support the growth of the region.

The organization also works with the St. Joseph School District and other local agencies to achieve the goals of the economic development program.

The SJACC focuses on business attraction, business retention and expansion, and workforce development. As part of business attraction, the SJACC concentrates on attracting warehouse/distribution companies that need a central U.S. location with transportation access. “Food processing and pet food manufacturing have a strong foothold in the area and continue to grow,” Lesnak says. “St. Joseph also currently ranks fourth in the nation for per-capita employment in the animal life sciences industry, and that is one of our fastest growing segments.”

One of the most successful projects supported by the SJACC is the Profit in Education program. This program was developed by the United Way to address the problem with school dropout rates. In the early 1990s, St. Joseph had a high school dropout rate of 25 percent, which was identified as a problem when companies tried to find an educated workforce, Lesnak says. The program has more than 400 local businesses that participate by only hiring employees who have their high school diploma or GED. “Since the implementation of the program, the dropout rate has been reduced to about 10 percent.”

Also, in 1997, the SJACC created an initiative called “21st Century Jobs,” which was an effort to generate funds from the private sector in order to help fund its programs. According to Lesnak, companies committed to an annual pledge — for a 5-year period — to support economic development. The first effort raised $1.6 million, and the most recent campaign raised $2 million.

Currently, the SJACC is forming the Life Science Institute, which is an organization that will support new and existing life science companies in St. Joseph. In addition, county voters approved a half-cent sales tax in 1995 to provide forgivable loans (at a rate of about $1,000 per each new job created) to new companies coming into the community and to existing companies that expand their facilities.

In July 2003, Premium Pork Allied Producers announced that it had selected St. Joseph as the location for its $130 million pork processing plant and corporate headquarters — the largest project to date in the area. This facility will employ nearly 1,000 people and have an annual $27 million economic impact on the community.

Other companies that the SJACC has attracted to the area include Toronto-based Progressive Molded Products, which occupies a 72,000-square-foot manufacturing facility; and Tedd Cycle, which will occupy a 150,000-square-foot distribution center when it is completed early this year.

According to Lesnak, the area is attractive to companies because of its low cost of living, which also translates into finding qualified labor for less than most metropolitan areas. “Missouri is also one of the lowest tax burden states in the United States,” he says.

St. Charles County, Missouri

In September 2000, the Economic Development Center (EDC) in St. Charles County formed Partners for Progress (PFP), a not-for-profit consortium of major employers in the area. In general, the group invites companies with 100 employees or more to be members and, currently, it consists of about 25 member companies including General Motors and MasterCard International. Each member pays dues of $15,000 per year to support economic and community development initiatives. The consortium’s main goal is to make St. Charles County nationally recognized as a livable community.

To reach this goal, PFP commissioned a study by O’Fallon, Missouri-based Development Dynamics that compares St. Charles County to competitive peer counties in the United States. The report, which was recently released, compares St. Charles County with eight peer counties (Williamson County, Texas; Shelby County, Tennessee; Dakota County, Minnesota; Howard County, Maryland; Johnson County, Kansas; DeKalb County, Georgia; DuPage County, Illinois; and Pierce County, Washington) based on the economy, education, health, and environment and infrastructure.

Development Dynamics divided the economy category into three sub-categories, including job market growth from 1993 to 2002 and housing values. St. Charles County (at 32.2 percent) ranked third in job market growth during the 10-year period behind Williamson County (at 53.6 percent) and Howard County (at 35.3 percent).

To analyze housing value, Development Dynamics evaluated the percentage of a median-household-income family’s resources that are used to pay for the median home value in a given area. St. Charles County ranked second (at 17.03 percent) behind Williamson County at (16.03 percent).

Development Dynamics also divided the education category into three sub-categories including a trained workforce (meaning those individuals who have attained post-secondary education and/or business/technical training). St. Charles County came in seventh — at 58.9 percent — with regard to its total population trained to enter the workforce. Johnson County took first place at 77.4 percent.

The healthcare measures were provided through the Healthy People 2010 project led by an interagency work group within the U.S. Department of Health and Human Services. The three sub-categories in this subject are access to healthcare; wellness: physical activity; and wellness: preventative health screening.

Lastly, the environment and infrastructure section of the study was also broken down into three subcategories, including average commute times. The average commute times were drawn from data provided through the 2000 U.S. Census, and it measures the average time it takes a resident to commute from home to work regardless of transportation mode. According to the data, St. Charles County has an average commute time of about 23 minutes. This time ranked the county as Number 4 behind Johnson County, Dakota County and Shelby County.

According to Greg Prestemon, president of the EDC, he most wants to improve the economy. “When the wheels fall off of the economy, everything else is dismal,” he says. “The single most important factor that will put our economy higher is the job base.”

O’Fallon, Missouri

MasterCard’s World Technology headquarters is located in O’Fallon, Missouri. Photo courtesy of David Burkhart, City of O’Fallon

The city of O’Fallon, in St. Charles County, has had its own economic development department for more than 20 years. Initially, its focus was on industrial/manufacturing development but, as the city has grown, it has shifted its focus to attracting office and retail development, as well as retaining manufacturing companies.

As a result of this strategy, the city was successful in attracting MasterCard’s World Technology Headquarters, which opened in 2001 and processes 40 million transactions per day (every MasterCard transaction goes through O’Fallon) and a Citigroup expansion project, which held its grand opening last October. Each facility totals more than 550,000 square feet and represents millions of dollars of capital investment, according to Libbey Simpson, interim director of economic development for the city of O’Fallon. In addition, more than 7,300 jobs were attracted or retained in the St. Louis metropolitan area due to these projects.

Both projects were the result of joint efforts between the city of O’Fallon, the state of Missouri, St. Charles County, St. Louis Regional Chamber and Growth Association, and the Fort Zumwalt and Francis Howell school districts.

Even though O’Fallon has experienced enormous growth, the city’s economic development department realizes that the manufacturers in the community were there first and are the basis for jobs in the local economy. “It is important to retain those higher paying jobs and help the companies grow rather than chase ones to replace them,” Simpson says.

Currently, the city of O’Fallon has several economic development programs in place to help retain and attract companies. For example, the economic development department maintains a comprehensive list of available sites and buildings on the city’s Web site. This program, called Missouri Location One, is a state program that is going national. “We have worked hard to build relationships with local developers and realtors to obtain this information, which is used as a tool for those looking for a place to start or grow a business,” Simpson says.

Through another program, called Business First, the economic development department conducts monthly site visits and networking events to bring together manufacturers and businesses from different areas of the city. Besides these programs, the city of O’Fallon offers other amenities that make it an attractive place for businesses to locate. It has available land and infrastructure, an educated workforce and an economic development organization that is willing to work with business owners.

One example of this cooperative environment is the attraction of Austin Machine. With the assistance of the local Industrial Development Authority, the city was able to help the company obtain industrial revenue bonds to finance new equipment and expand into an 80,000-square-foot facility.

O’Fallon also has plenty of room to offer other companies looking to move to the area. In the past 2 years, O’Fallon has annexed more than 1,000 acres to the southern borders. This area is now providing several acres that are zoned for high-tech and commercial use as future growth occurs.

Grundy County, Illinois

In the fourth quarter of 1993, the county chair, the Chamber of Commerce and local business leaders developed the Grundy Economic Development Council (GEDC) to keep a healthy, diverse economic base. According to Daniel Duffy, business development director of the GEDC, the organization aims to encourage the creation of quality jobs; assist in the expansion and retention of current businesses in the area; encourage new development; support a high quality of life through value-added economic development; and improve, support and facilitate a favorable economic climate in Grundy County.

Since it was created, the GEDC has helped foster economic growth through several initiatives. For example, through a cooperative effort with local industry, business leaders, municipalities and the county, it lobbied, raised money and spearheaded the Brisbin Road Interchange Project, which will add a new interchange along Interstate 80 in the county’s heavy industrial corridor. It also created a standard tax incentive program, which includes 50 percent property tax breaks ranging from 3 years to 5 years for companies that qualify. Most impressively, it has helped introduce more than $600 million worth of industrial investment in Grundy County since its inception.

The GEDC aims to attract industrial and manufacturing employment, because Grundy County has traditionally had a large industrial base. The GEDC has also been examining future business development initiatives — such as promoting the county’s large healthcare base and targeting the agriculture technology fields.

Recently, the GEDC helped attract a small pre-cast company, Utility Concrete Products, which was a roughly $6 million investment in the area. The GEDC also attracted a new ALDI distribution center that opened last October in Dwight. Both projects represent nearly $40 million worth of new investment in Grundy County. The area is an attractive place for doing business due to its proximity to the Chicago market, its transportation system and several major rail systems, Duffy says.

Johnson County, Kansas

New Century AirCenter is a 2,300-acre multimodal industrial park located 25 miles southwest of Kansas City along Interstate 35.

In 1994, a group of volunteers created the Southwest Johnson County Economic Development Corporation (SJCEDC) to market southwest Johnson County — particularly the cities of Gardner and Edgerton, as well as New Century AirCenter (a former naval air base that is now an industrial park). The group believed that an organization separate from the local Chamber of Commerce could better market and respond to opportunities in the area.

According to Greg Kindle, president of the SJCEDC, the organization’s mission is to facilitate economic growth by promoting the county’s business advantages.

To help reach this goal, the SJCEDC — in coordination with the local Chamber of Commerce — recently began a program called Business First. “Even though the two organizations have different missions, we believe that by promoting a common message and common programming we will be more successful,” Kindle says. “The Business First program has included business appreciation events, surveying, a series of programs aimed at specific issues and networking events.”

Through another economic development program, the SJCEDC has helped the city of Gardner develop a downtown enhancement district, which provides a tax rebate to downtown property owners who make improvements to their commercial property. “The downtown enhancement district gives landowners within a designated area the opportunity to receive a 95 percent rebate for 10 years on the incremental additional property taxes assessed as a result of property improvements,” Kindle explains. The program has helped to encourage new construction and rehabilitation of the downtown area, while preventing commercial development from moving to the outskirts of town.

The SJCEDC has also been successful in attracting several new businesses to the county. For example, Roberts & Dybdahl recently built a 13,500-square-foot facility on 7 acres representing a $1.5 million investment and 20 new jobs. Garmin Industries also recently constructed a 25,000-square-foot facility to serve as its corporate hangar and to provide space for research and development. Russell-Hampton built an 18,000-square-foot building, and CFS West Foods opened a 240,000-square-foot facility.

In general, the SJCEDC aims to attract distribution facilities and companies looking for access to rail. “We have seen this market become more attractive to food manufacturing companies, and to printing, life sciences and aviation companies,” Kindle notes. “As a whole, we are interested in any industry that is looking to locate in the Midwest that isn’t harmful to the environment.”

Johnson County is an attractive place for businesses due to its positioning along the North American Free Trade Agreement corridor with direct access to Interstate 35. The New Century AirCenter is a 2,300-acre industrial park with infrastructure to the lot line, its own rail service and available land starting at 10 cents per square foot.

Indianapolis

In November 2000, local business leaders, communities and economic development professionals created The Indy Partnership to oversee economic development in a nine-county region (with a total population of about 1.7 million). According to Suzanne Vertesch, chief operating officer of the organization, each of these founding groups recognized the need for a comprehensive effort to market the Indianapolis region for new business development.

The not-for-profit organization works with economic development professionals throughout the region as well as with the Indiana Department of Commerce, other state and municipal agencies, and private sector businesses. The organization’s main goal is to serve as a catalyst for increased capital investment and quality job growth in the Indianapolis region.

“The Indy Partnership is an organization vital to the development of the Indianapolis region,” says Indianapolis Mayor Bart Peterson. “With the help of the partnership, we continue to attract new businesses to the area, create jobs and strengthen the economic environment of the city.”

The region offers many competitive advantages. The area’s central location and transportation system offer access to more than two-thirds of the U.S. population within 1 day’s drive. Furthermore, the state’s recent tax restructuring has simplified the corporate tax structure, provided additional business incentives and reduced the property tax burden on many businesses.

During its first 2 years of operation, The Indy Partnership created a brand for the region and incorporated it into its collateral materials. “Our tagline, ‘Competitive by Nature,’ represents the region’s approach to business and economic development,” says Greg Schenkel, CEO of The Indy Partnership. “We also focused on solidifying our economic development partnerships throughout the region and raising the funds needed to have an effective campaign. Finally, we promoted the existence of The Indy Partnership as the ‘one stop’ for economic development assistance in Indianapolis.”

With this foundation in place, The Indy Partnership has executed an aggressive sales strategy for the region. “We have made over 200 personal visits to business decision makers throughout the United States,” says Deb Coons, director of communications for The Indy Partnership. “We work with businesses interested in locating a facility in the region, and we facilitate development of attractive incentive packages.”

Currently, The Indy Partnership has a supplier recruitment program in place. Through the program, the organization uses existing businesses in the region to tap into common supplier networks. “If we can identify companies outside the Indianapolis region that are doing significant business with local companies, this provides a compelling case for attracting that business to our region,” Vertesch says.

The Indy Partnership focuses on attracting life sciences, logistics, advanced manufacturing, sports and motor sports, and information technology companies. It also focuses on attracting new corporate headquarters to the region. The Indy Partnership’s most important company attraction to date was the relocation of Norwood Promotional Products’ corporate headquarters to Indianapolis from Austin, Texas, Vertesch explains.

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