As the Economic Development Corp.’s Mike Kazmierski is fond of pointing out, Colorado Springs has many competitors — not only cities in the Midwest and the Rocky Mountain region, but cities across the nation and in dozens of foreign countries.
In a global economy, companies and the entrepreneurs who create them have virtually limitless choices for locales, chock full of welcoming local governments, available capital and skilled work forces.
For Colorado Springs, the stakes are high. Increasingly, cities such as Albuquerque, Omaha and Des Moines are making substantial investments in infrastructure and civic amenities, believing that such investments will make their cities that much more attractive to businesses and young professionals.
In addition, each of these three cities has a comprehensive, well-funded, and ambitious economic development program. And while they might lack the Pikes Peak region’s climate and scenery, they are more than a match in other categories.
During the last several years, Omaha has incurred hundreds of millions of dollars in bonded indebtedness to pay for downtown revitalization. The city’s total debt stands at $842 million. Of that, $206 million is attributable to a convention center-arena complex, $110 million to a convention center hotel (the Hilton Omaha) and $49 million to a riverfront development project.
Springs leaders would probably blanch at such numbers, but they don’t tell the whole story. Not included are other major costs that Omaha is anticipating: a projected $1.5 billion over about 20 years for sewer improvements and $400 million in unfunded liability for city pensions during the next 30 years.
But Omaha leaders, far from being deterred, are pursuing another major project aimed at retaining one of the city’s “crown jewels.”
Just as Colorado Springs has long hosted the U.S. Olympic Committee and the Olympic Training Center, the College World Series has historically been played at Omaha’s Rosenblatt Stadium.
But the aging facility is no longer adequate. The NCAA has told the city that, absent a new facility, the event might move to greener pastures.
In response, Mayor Mike Fahey is pushing for a downtown stadium, which would enable the city to execute a 20-year contract with the NCAA.
The estimated price tag for a 23,600-seat ballpark is between $95.1 million and $116.5 million. Fahey has proposed levying a citywide 2 percent tax on prepared food, beverages and event tickets to help finance the project.
The College World Series generates about $38 million in annual revenue for Omaha, according to figures on the city’s Web site.
The proposed tax would support about half of the stadium’s cost. The remainder would be paid for by private donations, parking revenue and naming rights.
During a recent City Council meeting, according to a report in the Omaha World-Herald, “Fahey gave council members a newspaper article from Indianapolis hinting at that city’s desire to host the College World Series.”
“It is a big number,” the paper reported Fahey as saying, “but we have an unprecedented opportunity.”
Although the Des Moines metro area, with a population of 535,000, is virtually identical in size to Colorado Springs, the cities have taken different paths during the last three decades.
During the 1960s, the Des Moines skyline resembled that of Colorado Springs. Just as Colorado Springs had a single high-rise, the Holly Sugar Building, so, too, did Des Moines, where the 1924 Equitable Building, at 19 stories, remained the city’s tallest structure until 1972.
But between 1972 and 1995, 10 buildings of 20 stories or more were erected, including Principal Financial’s 45-story skyscraper in 1990.
During the last few years, downtown Des Moines has seen another burst of construction, including the Iowa Events Center, the Science Center of Iowa, a new public library, a riverwalk, a fountain and skating plaza, and multiple loft/condo conversions.
The city’s famous skywalks, which link virtually every downtown building, extend for more than three miles, enabling visitors and workers to move easily through downtown regardless of the weather.
Forbes named Des Moines the fourth best city to do business in the United States in 2007. That might be because city leaders have been aggressive in removing regulatory obstacles and creating ways of helping businesses grow and prosper.
The city’s Economic Development Corp. lists eight different city-sponsored financing programs on its Web site, each targeted at particular business needs.
There’s a “microloan” program, aimed at young entrepreneurs with a good idea, lots of energy and little access to conventional financing. There are tax abatement programs, a “Neighborhood Commercial Revival” fund, and several programs designed to complement Small Business Administration loans.
There’s also the “Des Moines Action Loan Fund,” which makes small business loans up to $50,000, a revolving loan fund with a similar structure and the “Community Economic Betterment” program, which makes loans up to $1 million to existing and relocating businesses.
While few Springs residents would identify Des Moines as a sports capitol, Des Moines is the only U.S. city with baseball, hockey and basketball at the triple-A level.
And that’s not all. When the NBA Development League’s Iowa Energy begins play this winter and an Arena Football II franchise has its expected launch next season, there will be six minor-league franchises in the Des Moines area.
Two NCAA events during 2008 — championship track and the Midwest Regional for women’s basketball — will join a crowded athletic landscape that includes a golf tournament, a sponsored triathlon and an Indy Racing League stop at the nearby Iowa Speedway.
Major franchises and events in Des Moines are expected to attract more than 1 million fans in 2008.
Of all our neighbors, Kazmierski identifies New Mexico’s largest city as our fiercest, most effective competitor.
That’s because of the formidable economic incentives that Albuquerque, and the state of New Mexico, are prepared to offer to targeted businesses to persuade them to relocate, he said.
Like Des Moines, Albuquerque has reduced and simplified business regulation; and like Des Moines, the city’s efforts have pleased the editors of Forbes, which ranked it as the best place in America to do business during 2006.
Albuquerque’s incentives program owes more to venture capitalism than to conventional economic development theory. Rather than only attempting to lure established businesses from high-cost locations on both coasts, which has been a staple of economic development efforts in sunbelt cities, Albuquerque also tries to hit home runs.
An example of Albuquerque’s strategy would be Eclipse Aviation, a then start-up company lured to New Mexico by an incentive package that included free land, job training and a $20 million investment in the company.
Eclipse, first funded by venture capital investors that included Bill Gates, designs and manufactures so-called very light jets. Such aircraft are cheaper to buy and operate than conventional business jets, and easier and safer to fly.
Since establishing operations in Albuquerque, Eclipse has begun production of commercial aircraft, delivering its first aircraft for commercial service early this year. According to the company, more than 60 aircraft are in various stages of assembly, and more than 1,000 have been ordered by customers throughout the world.
Eclipse CEO Vern Raburn said the company is ramping up to produce six planes daily during 2008. More than 2,000 people are employed at the firm’s Albuquerque headquarters.
In addition, Eclipse has drawn an array of aviation-related companies to Albuquerque, including local start-ups Aspen Avionics, Vertical Power and Aero Mechanical Industries. The first two were created by former Eclipse employees.
According to the Albuquerque Economic Development Corp., aviation firms in the Albuquerque metro area now employ 3,660 people, and the number is expected to increase sharply during coming years.
Tax breaks, government-funded employee training, and other incentives are important to his business, said Jim Cooper, founder/president of Aero Mechanical.
“Government incentives and the low cost of real estate make it a lot less expensive to start a business here compared to other states,” Cooper said. “All the government’s incentive programs contributed to our decision to locate here.”
During the summer of 2006, the Business Journal asked Mark Earle, the Colorado Springs airport director, whether Eclipse might have located in the Springs, had we been able to match Albuquerque’s incentives.
“I think absolutely — look at our work force, our quality of life,” he said. “But to make that kind of investment, there are a lot of communities that don’t want to take that risk.”
Colorado Springs ranks as one of the most fiscally conservative cities in the United States. By any measure, it has been extraordinarily reluctant to use debt to fund civic improvements.
The city’s charter restricts bonded indebtedness to a conservative 10 percent of the assessed valuation of all taxable property within the city. During 2008, the city’s total bonded indebtedness will be $5.8 million, which is less than 1 percent of the debt limit. The available debt margin: $466.4 million.
Although city taxpayers have approved modest general obligation bond issues, such as the 1999 SCIP bonds, the city’s debt load is strikingly low, even when obligations arising from certificates of participation and revenue bonds are included.
Unlike its competitors, neither city leaders nor local residents have been willing to take advantage of historically low interest rates to fund city infrastructure and capital improvements.
The city’s commitment to economic development pales in comparison to other cities, even with substantial increases projected for 2008. Next year, the city might have as much as $315,000 in an economic development fund, as well as an additional $900,000 for “the city’s and partner agencies economic development efforts.” The sum is an order of magnitude below Albuquerque’s resources, which are in turn magnified by state-funded incentives.
The city also offers a number of incentives to businesses, including tax increment financing, business personal property tax rebates and other forms of tax relief. Such incentives mirror those offered by its competitors.
Downtown infrastructure and civic improvements, whether privately or publicly funded, severely lag those of competing cities. Other cities have built downtown convention centers and sports facilities, but Springs voters have overwhelmingly rejected such plans, even going to the extent of forbidding the city to plan a downtown convention center, much less fund one.
And although downtown has been enhanced in recent years by America the Beautiful Park and a handful of residential lofts, only one substantial multistory building has been erected during the last 15 years.