Politics aside, developers say location is still key

CEDAR RAPIDS - Maybe it was Danica Patrick and that race-driver fire suit in the green-and-black corporate colors of Go Daddy.com that made the ruckus between Cedar Rapids and Hiawatha city halls seem more like an Indy car crash than it really was.

Two years ago this week the cities of Cedar Rapids and Hiawatha and their mayors publicly clashed in a competition as Go Daddy, the company with the provocative advertisements that bills itself as the world's largest web host provider and domain name registrar, promised to add hundreds of new jobs in the metro area in the coming years.

“I would have liked to have had that Go Daddy logo sign on one of the buildings in our downtown,” Cedar Rapids Mayor Corbett said earlier this month.

The economic-development tussles within the Corridor, he added, continue.

Back in 2010, the battle between cities veered into the public light as Go Daddy founder Bob Parsons had all but inked an incentive deal with the city of Hiawatha to significantly expand an existing Cedar Rapids presence and move it all to a building in Hiawatha. It was the same building on a street named for him in Hiawatha where 20 years before Parsons had run a software company called Parsons Technology.

Mayor Corbett, determined to get businesses to move into a downtown trying to get back on its feet after the 2008 flood, caught wind of the deal and made a last-minute plea with plenty of economic incentives to get Parsons to give up on his Hiawatha plan and move into downtown Cedar Rapids instead.

A representative of Arizona economic-incentives group CBRE at the time contended Corbett had offered to “give” Go Daddy a 60,000-square-foot building - the six-story former MCI call center at 323 Third St. SE, with furniture intact - among other incentives.

What Corbett termed a “Hail Mary pass” failed, and Parsons and Go Daddy went to Hiawatha, where Parsons had run Parsons Technology. But not before Hiawatha city officials accused Corbett of “submarine” tactics and an “11th-hour giveaway” to try to grab the Go Daddy expansion.

Hiawatha Mayor Tom Theis says now that he has no interest in revisiting bruises from old battles.

“You forgive and forget,” said Theis, acknowledging that he was well aware that Go Daddy had lived up to its promise and had grown as anticipated in Hiawatha.

In fact, Lane Jarvis, chief human resources officer at Go Daddy's headquarters in Scottsdale, Ariz., reported that Go Daddy has added more than 400 people to its payroll in Hiawatha since a July 2010 expansion, now employing 530 there. The jobs are in the fields of customer service, marketing, business intelligence, human resources and information technology, Jarvis said.

“A WEEKLY DEAL”

The fight in 2010 over Go Daddy sounds nearer at hand for Cedar Rapids's Corbett, who said that what was lost in his last-minute pitch to Parsons in 2010 was the fact that Go Daddy's expansion in Hiawatha started with the move of existing Go Daddy jobs from a Cedar Rapids office park along Collins Road NE to the Hiawatha facility.

“I was trying to hang on to Cedar Rapids jobs,” he recalled.

Corbett also said he was upset at the time that the local economic development organization, Priority One (now a part of the Cedar Rapids Metro Economic Alliance), had been aware of the Go Daddy expansion plans, he said, and hadn't informed the city of Cedar Rapids early on so it might have a chance to compete.

But in the end, Corbett said the Go Daddy drama helped the city of Cedar Rapids, which contributes $120,000 a year to the Metro Economic Alliance, to work harder to keep existing businesses in Cedar Rapids.

Corbett said the competition among the metro area cities and among developers in those cities doesn't center on large metro-area industries, most of which want to be in Cedar Rapids for access to the city's water and wastewater treatment.

The struggles are over light-industrial and commercial businesses, and those battles are constant, he said.

“We get a lot of people (inside the metro area) recruiting companies in Cedar Rapids,” Corbett said. “A developer who has a building in Hiawatha might call a Cedar Rapids company, and say, ‘Why don't you move out here where there's better parking and we can get you (economic incentives)?'”

Corbett said Iowa Health Systems, which is located in offices in downtown Cedar Rapids, is being courted to move, “and we're fighting to keep them,” he said. Wellmark's local office, with 50 jobs, was being recruited to move outside of Cedar Rapids, but has decided to stay in the downtown, he added.

“There's a lot more that goes on than people think,” he said. “It's a weekly deal, and it's not the other way around.

“We don't have economic development officials out there recruiting.”

Corbett said the city of Cedar Rapids worked long and hard to keep Raining Rose and Intermec, both of which are building new facilities in the city.

“We can't allow all the non-industrial jobs to be sucked out of Cedar Rapids,” he said.

Longtime Hiawatha Mayor Theis said Hiawatha's geographic location along Interstate 380 and its welcoming attitude are the reasons it can attract companies to the city, nothing else.

“I've been accused of going out and stealing,” Theis said. “If they call, I talk.

“But I'm not a scavenger for the city. I don't go out and steal anything for the city. Hiawatha does not go door-to-door asking people to move to Hiawatha.”

THE VALUE PROPOSITION

Next door in Marion, Lon Pluckhahn, Marion's city manager, said his city has not seen many companies located in Cedar Rapids or Hiawatha making a jump to Marion. Most businesses that have inquired about a possible move to Marion aren't asking about tax breaks - they're asking about the availability of a certain building, he said.

“I think a lot of the businesses really view the metro area as exactly that, a metro area, and they're just looking for a facility that works,” Pluckhahn said. “If it happens to be Hiawatha, fine, if it's in Cedar Rapids, fine, if it's in Marion, fine.”

At the same time, Pluckhahn said metro area cities compete, which he said has pluses and minuses.

“The downside of it, of course, is you don't want businesses simply using that opportunity to play off communities against one another to see what kind of incentives they can get because that just ends up damaging the whole metro area,” he said.

“All communities end up giving incentives just to keep a company from going to another community, and that ultimately damages everybody.”

Corbett and Cedar Rapids City Council member Chuck Swore can tick off a list of former Cedar Rapids businesses that have moved to Hiawatha over the years - J.P. Gasway, Munson Electric, Northwestern Mutual Financial and Hall & Hall Engineers, to name a few.

Primus Construction Inc., however, is one of the few that they can name that came in the other direction, from Hiawatha to Cedar Rapids.

Bart Woods, Primus Construction president, said the move to Cedar Rapids had nothing to do with tax incentives, and he added that Cedar Rapids was probably least willing among the metro cities to provide tax breaks for small companies such as his.

Woods said his move to Cedar Rapids came because he prefers older buildings, in contrast to the company's previous owner, who had moved the company to a new building in Hiawatha. He and his 18-employee company now call Eighth Avenue SE in Cedar Rapids home, and most love one thing in particular about it - a 5-minute commute to work, Woods said.

Allen Witt, a principal at Hall & Hall Engineers Inc., dismissed the idea that the city of Hiawatha stole his company from Cedar Rapids when it moved to Hiawatha in 2004. The Hiawatha site on Boyson Road off Interstate 380 “was very appealing,” Witt explained.

“I think it's a matter of people sitting down with a map, saying, ‘Look, this is a good location, the price is right and the city of Hiawatha is easy to work with,'” Witt said. “Business is business, don't you think?”

Hall & Hall Engineers serves as the city engineer for Hiawatha, which also made it make sense for Hall & Hall to move its office there, he recalled. The incentives, he said, from the city of Hiawatha are modest: “They aren't giving away the farm.”

Both Corbett and Swore pointed to Jon Dusek as the kind of developer in the metro area who, they said, can make life difficult for a city like Cedar Rapids as it tries to keep the companies it has.

Dusek, president of Armstrong Development in downtown Cedar Rapids, owns property in downtown Cedar Rapids, in Marion and in two office/industrial parks in Hiawatha. Dusek also is looking at the prospect of building a new office building in downtown Cedar Rapids at Third Street and Fourth Avenue SE, though he said that plan is moving slowly because of the risk.

Dusek views the metro area as generally comprised of three types of companies - those who like being based in downtown; those that want parking and a lawn out front and would never locate in downtown; and those that are willing to do either.

“And it's really going to come down to the value proposition available at the time,” Dusek said of the third group. “If there's a good value downtown, they will go there, and if there's a better one in Marion or Hiawatha or elsewhere, they'll go elsewhere. ... I think that's what really drives things.”

The reality, he added, is that few new companies have come to the metro area in recent years, and few already here have grown much in that time. Businesses, he said, are “hunkered down.”

What is most apparent is that companies are moving from one building to another, and many are looking at the whole metro area, he said.

Dusek said bidding wars across borders usually are “mostly unnecessary and not productive.” Instead, he said cities need to focus on being customer-friendly, making people feel welcome and putting their best foot forward.

“Sometimes I feel like the cities think they ‘own' a company, that a company that's in Cedar Rapids should always be in Cedar Rapids,” he said. “And I've heard talk, if they're going to move somewhere, they should tell the city.

“That's all silliness to me. … At the end of the day, companies can choose what's best for them.”

For more on Go Daddy, and the struggle among Corridor cities for companies,click here to read this earlier story.