COVER STORY, MARCH 2005

NO PLACE LIKE HOME
Three economic development organizations reveal how they attract and retain businesses in their communities.
Lindsey Walker

When deciding to relocate to a new town, businesses take many points into consideration. From incentive packages to quality of life to business costs, a city’s every pro and con is weighed against its competition. Heartland Real Estate Business recently spoke with several Midwestern economic development organizations to find out what they do to stand apart from the rest.

Janesville Economic Development Agency

Downtown Janesville, Wisconsin.

“With high unemployment rates at that time, the council felt that having a separate department to focus on economic development would improve the city’s ability to respond to growth opportunities from existing industries and to attract new industries to the community,” says Douglas Venable, director of economic development for Janesville Economic Development Agency.

The council’s plan seems to be working. Janesville, which has a population of 62,000, has attracted more than 1 million square feet of new retail development in the past decade and has added 400 to 500 housing units annually, concentrated mostly on the city’s northeast side. Since the agency’s inception, Janesville also has created 24 new tax increment financing (TIF) districts that have attracted more than 30 development projects totaling more than 4 million square feet of new construction valued at $120 million.

“In Wisconsin, the primary economic development tool is the creation of TIF districts to make the infrastructure investments needed to attract new industry and to help existing industry to expand,” Venable says.

An example of how Janesville uses TIFs to expand business is Lear Inc.’s decision to relocate and build a new plant in Janesville. In 1989, Lear was located in Janesville’s TIF Number 10 in a city-owned TIF industrial park.

“In 1990, the city sold Lear a fully improved industrial site for $1.00 in return for Lear’s commitment to construct a 120,000-square-foot plant and employ 200 persons,” Venable says. “The taxes on the new facility allowed the city to fully recover its investment in land and infrastructure by 1997. And, by early 2002, Lear had expanded their plant to 150,000 square feet and employed more than 900 workers.”

The Janesville Economic Development Agency focuses on manufacturing, warehousing and regional service sector businesses that export their products or services beyond the local market. These industries, according to Venable, bring dollars into the community and have a great multiplier effect on the local economy.

“Janesville’s economy is still dominated by traditional manufacturing companies,” Venable says. “We feel there is growth potential in our major industry clusters — motor vehicle parts and accessories, metal fabrication and plastics products. We tend to focus marketing efforts in these industries but are always interested in growing companies that can help us diversify our economic base.”

Logistics companies, for example, are helping to diversify Janesville’s economic base with the recent boom of distribution center projects along Interstate 39 — the I-39 Logistics Corridor, as it has been dubbed.

“There has been an explosion of distribution center projects extending west from the Chicago metropolitan area,” Venable says. “The construction of a 1,000-acre rail-to-truck intermodal facility in Rochelle, Illinois, also has enhanced this part of the country for distribution center projects.”

With its proximity to Chicago and a highly productive and skilled labor pool, Janesville has a lot to offer those companies looking to relocate to or remain in the region.

 “Our location in relation to major Chicago markets allows easy access to service customers in the Chicago area without the cost and hassles of a Chicago location,” Venable says. “Land costs in the Janesville area are 10 percent of the land prices found in the Chicago metropolitan area.”

Even with all of Janesville’s perks, the Janesville Economic Development Agency faces obstacles. With a manufacturing-dominated economy, the city sees continued pressure on the manufacturing sector as global sourcing and international markets squeeze production margins for certain products, according to Venable.

“Our biggest challenge is working with our existing manufacturing base to improve their productivity and help them compete in global markets,” he says.

Another challenge is to attract more knowledge-intensive industries with higher wages to the area.

“Over time, we see the need to transition the economic drivers in the local economy to the emerging industries for the future,” he says.

Partnering with the Wisconsin Department of Commerce, Forward Janesville, Forward Wisconsin and Alliant Energy, the Janesville Economic Development Agency hopes to jump these hurdles and continue attracting and retaining business in the region. 

Lenexa Economic Development Council

Like all economic development organizations, the Lenexa Economic Development Council in Lenexa, Kansas, works to retain and attract business in its city. Yet, unlike many economic development organizations, the Lenexa Economic Development Council can offer businesses a distinct, small town community of approximately 40,000 within a metropolitan area of more than 2 million people.

Since its inception in 1984, the council has attracted many companies to locate to Lenexa, including many in the biosciences industry.

“Lenexa actually has more bioscience companies than any other community in the state of Kansas,” says Eric Danielson, business development director of the council.

In order to continue to attract companies, such as those in the biosciences, the council works with several other organizations to keep Lenexa on the forefront.

“We work diligently with the Department of Commerce at the state level to ensure that we have the right incentive packages to offer back to companies that are looking to relocate to or stay in the Lenexa area,” Danielson says. “We work together with all of the other economic development councils within the county to market Johnson County nationally. We also come together on some other projects and programs that benefit the entire county as opposed to one community.”

Another way the council attracts and retains business is by ensuring that Lenexa has sites that are ready for new construction and maintaining the lowest cost of doing business.

“The state of Kansas, and the Midwest in general, is known for its low cost,” he says. “But, we can also offer that low cost with an incredible amount of quality of life aspects as well.”

And it is the quality of life aspects that sell Lenexa. The city’s incentives may not be as lucrative as some other cities’, but Lenexa’s intangibles make it stand apart, according to Danielson.

“There are so many projects that are now focused in on what kind of incentives a community can offer to a company, but Lenexa has always held its ground solidly on incentives and only incenting the right kind of projects that the city wants to see here,” he says. “And, when businesses come here and take a look at the business parks and the city — kind of the intangibles that are here — that makes the incentive package look much less important.”

T-Mobile, for example, found Lenexa’s overall package to be more important than just its incentives. The company, which already had an existing customer service center in Lenexa, recently built an $18 million, 80,000-square-foot customer service center located at 95th Street and Renner Boulevard inside the Renner Ridge Corporate Center. The new facility employs approximately 650 persons.

To continue seeing success stories like that of T-Mobile’s retention, the Lenexa Economic Development Council simply wants to keep its companies happy.

“We want to make sure that we have a pro-business attitude within the city hall and the planning department to make life a lot easier for those who are moving their businesses here,” Danielson says.

Village of Hoffman Estates, Illinois

Since it was created in May 2002 to address the economic development demands of the area on a daily basis, the Village of Hoffman Estates’ economic development department has continually strived to increase and sustain revenue to the Village. From establishing a TIF district for the redevelopment of two 40-year-old shopping centers to enticing big boxes to explore the region, the Village’s economic development department finds unique and effective ways to meet its goals.

One of the most recent programs the department initiated was a business retention program focusing primarily on restaurants.

“The need arose when several restaurants in town complained their lunch crowd was off by some 50 percent due to a road and two intersection construction projects lasting several months,” says Gary Skoog, director of economic development for the Village. “Our economic development office spearheaded a restaurant ‘give-away’ program. Area hotels and entertainment venues donated about $8,000 in prizes. The gifts were drawn weekly as an incentive to retain current customers as well as pull in new customers throughout the construction project.”

The economic development department’s most significant project to date has been its attempt to accomplish a Village goal of redeveloping the business improvement district (BID), according to Skoog. Based on a positive TIF feasibility study, the organization adopted a redevelopment plan. A TIF ordinance was passed, a redevelopment project area was established, a request for proposal (RFP) was written and circulated and a developer was chosen.

“Simultaneously, negotiations with one of the shopping center owners have resulted in a settlement agreement,” Skoog says. “The owner has agreed to substantially upgrade his center with no TIF expenditures.”

On top of redeveloping old projects, the Village’s economic development department also tries to attract new projects. “Our main focus is to attract quality retailers and office users,” Skoog says. “The Village desires retailers for the products and sales tax revenue. Office and light industrial will help to fill the beautiful environment celebrating the Midwestern landscape found in Prairie Stone, which is a business park that is home to Sears/K-Mart and other corporate headquarters.”

In 2004, the department was able to attract two automobile dealerships by Barrington, Illinois-based Motor Werks — a new 36,000-square-foot Mercedes Benz dealership and a 21,000-square-foot Infiniti dealership. These two dealerships will provide close to $1 million per year in sales tax when fully operational, according to Skoog.

The Village also was able to retain several key companies in 2004. Menard’s was retained and is expanding from its current 100,000-square-foot facility to one with more than 200,000 square feet located at 1001 N. Barrington Rd. Woodfield Nissan was retained and is expanding its operations at 700 W. Higgins by 13,300 square feet. Woodfield Acura also was retained and is expanding its operations at 1099 W. Higgins by 2.7 acres.

With its strategic location along Interstate 90, which has access to north/south arterials to surrounding states, and a population of more than 50,000, its no surprise that these companies are choosing to stay in the Village of Hoffman Estates.  

“We have one of the more renowned master-planned business parks in the entire country, Prairie Stone, with wetlands, tall grasses and wildflowers all accessible via walking paths,” Skoog says. “This, coupled with reliable and abundant power and broadband data capacity, makes it attractive for businesses. The affordable housing, ethnic diversity and numerous childcare and fitness centers make it attractive to employees. Throw in a major hospital and medical presence in St. Alexius Medical Center, which is undergoing a $20 million-plus expansion, and it makes the community an especially attractive place for business location.”

Even in the face of obstacles, such as strong competition from surrounding communities, suburban sprawl, transportation issues, increasing demands of Village services and consequent budget demands, the Village of Hoffman Estates thrives. And, with help from the Greater Woodfield Convention and Visitors Bureau, Illinois Development Council, Enterpriz Cook County, Hoffman Estates Chamber and Economic Development Commission, the Village’s economic development future looks bright.

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