Fair-play deals guide Cedar Rapids metro incentives

CEDAR RAPIDS - Keeping existing businesses or luring new ones to town has made for a sometimes-testy competition among the three biggest cities in the metro area.

On Tuesday, the Cedar Rapids City Council will approve a new 'fair-play” agreement between it and the city of Hiawatha as Cedar Rapids already has done with the city of Marion. Hiawatha is slated to consider the deal on Oct. 1. Hiawatha and Marion previously have signed a similar agreement with each other.

The agreements translate into only so much friendliness.

Lon Pluckhahn, Marion city manager, on Monday said the fair-play agreements are the result of a state law approved in 2012 that prohibits jurisdictions in Iowa from using tax incentives unfairly to poach a business from another Iowa jurisdiction.

The new fair-play agreement between Cedar Rapids and Hiawatha wholeheartedly embraces incentives by stating that neither city will object to the other offering incentives to a company located in one city to leave there and move to the other city.

But the agreement comes with this caveat: A business that obtains incentives in its move to the other community must initiate the first contact with the city that provides incentives to move the business.

In addition, each city will inform the other within 14 days of the contact from a business looking to move from one to the other city.

A similar Cedar Rapids-Marion agreement, which was put in place in April 2013, comes with a provision that a company seeking to move from one city the other must verify in writing its 'irrevocable intent” to move outside its current city before the other city can provide economic incentives to the company to locate there.

Cedar Rapids Mayor Ron Corbett on Monday said the fair-play agreements aren't intended to eliminate competition among Cedar Rapids, Marion and Hiawatha, but he said the agreements 'send a message” to the general public and to the other communities 'not to go out actively recruiting” businesses from a neighboring community.

In the end, Corbett said he doubted that much business pirating was taking place these days in the metro area.

'The mayor of Hiawatha isn't walking up the street passing out his business cards, saying to businesses, ‘If you're tired of Cedar Rapids, move to Hiawatha,'” Corbett said.

Marion's Pluckhahn said companies come to or leave Marion because of practical business concerns, such as location or building availability, not because of stealth economic-development incentives.

Corbett said developers, builders and Realtors typically are working the rumor mill or receiving contacts from businesses that might be starting to consider a change. The developers and Realtors then are the first to approach cities to see what might be available in terms of buildings and incentives, he said.

Corbett said the city of Cedar Rapids has adopted a policy of 'being open for business” in the last two years, which he said is designed to keep the city in better contact with Cedar Rapids businesses so the city knows about a company's plans as they come to light.

'We try to put ourselves more at the front end before the ball gets rolling,” he said.

As a case in point, he said the city learned that Modern Piping was looking for a larger building than the one it occupied in northeast Cedar Rapids even as developers were trying to find Modern Piping a new home, with one option in Marion. The company stayed in Cedar Rapids, 'which is good for Cedar Rapids,” the mayor said.

At the same time, he said Hupp Electric Motors is leaving its spot in Cedar Rapids to move into the former Kwik Way plant on Highway 13 in Marion. Corbett said the Hupp move is meeting the company's needs. It's not happening, he said, because of unfair play on Marion's part. Hupp likes the additional space, Marion's Pluckhahn said.

Back in the summer of 2010, matters were less congenial in the metro area as Corbett and the city of Hiawatha tangled in a high-profile battle to land Internet firm Go Daddy, which was looking for a larger building to meet the firm's expansion plans.

Go Daddy had all but sealed an agreement to move from a small building in Cedar Rapids to Hiawatha when Corbett intervened with a last-minute pitch to try to lure Go Daddy to a spot in downtown Cedar Rapids. Hiawatha won out.

'I think the whole Go Daddy case is one of the reasons the city said that we've got to be at the front end of the deal,” Corbett said.

Then again, in 2012, the city of Cedar Rapids failed to convince Safelite Solutions' auto-glass claims office to stay in Cedar Rapids. Instead, the company moved to a nicer building in Hiawatha.

In the defeat, Corbett said Cedar Rapids lost out because the city did not have a sufficient amount of Class A office space to find Safelite a new home in Cedar Rapids. Shortly thereafter, the Cedar Rapids City Council provided economic incentives to developer Joe Ahmann for his $35-million Fountains development at Blairs Ferry and Edgewood roads NE, which includes new Class A office space along with retail development.

Corbett said Ahmann, whose office is in Hiawatha, had little desire in recent years to develop in Cedar Rapids because Cedar Rapids had not been easy to work with. Now he's one of the top developers in Cedar Rapids, the mayor said.

'That's been quite a sea change,” Corbett said. 'And it had nothing to do with fair-play agreements. It has more to do with our particular attitude toward business and being open for business.

'We've had some tax base slip away from us over the last 10 to 15 years because the city didn't counter that by stepping up and protecting that tax base. That's changed. The focus now is not on other communities, but on what we are doing internally.”

Marion's Pluckhahn said his interest is Marion first for economic development, though a loss to another metro area community might still means workers living in homes in Marion.

Corbett said metro area mayors are like football coaches in that they can enjoy sitting down together and talking shop.

'Not unlike football coaches, when it comes to game time, those coaches want to win,” he said. 'And when it comes to economic development, every community wants to win. And I want to win for Cedar Rapids.”