Moving the Needle on Regional Growth
What will it take to drive growth across a region as broad and economically diverse as Kansas City? That was the outline for a thoughtful,
several hour conversation involving two dozen of the area’s most influential business executives on Nov. 18, as they gathered for the
Greater Kansas City Economic Development Assembly. It was hosted by JE Dunn Construction, a long-time driver of civic initiatives, and
chaired by Paul Neidlein, president/CEO of Dunn’s Midwest Division, along with Michael Kiley, president and CEO of Topeka-based Security
Benefit Corp., and Courtney Dunbar, economic-development executive with Burns & McDonnell. Work-force development remained a
prime topic, as well as the new airport terminal, emerging business opportunities such as logistics, building a research university, appropriate use of public incentives and more.
Imagine you could make one wish to set the stage for regional growth in Kansas City. What would it be? The assembly attendees were asked to identify that one driver, and they responded with a variety of thoughtful choices.
JE Dunn’s Rob Cleavinger, director of construction operations, kicked it off with a regional touch, “I think it’s breaking down the bistate division and combining folks on both sides of the region to become one,” he said. That answer, said UMB Bank CEO Jim Rine, would likely be heard a lot. “But I would also say keep the economy going and to do that, take the president’s Twitter account away.”
Jill McCarthy, senior development leader at the Kansas City Area Development Council, offered a contrasting viewpoint on geographic divisions: “I like the state line,” she said. “It gives us two packages to put in front of every new business coming in.” As for that one wish, it would be “triple-time the airport construction to get that open immediately.”
John Petersen, a development-law specialist from Polsinelli, wishes there would be less editorial negativity from the local newspaper on matters of development. The public, he said, needs to be better educated on the real ROI of public investments in development through the
use of incentives.
Zach Hubbard of Block Real Estate Services concurred, but decried the politicization of the incentives processes in the region. “We need to have an honest discussion about how they improve our region,” he said. That honesty, and transparency, would go a long way toward resolving the debate over the use of incentives, said David Soffer, of the Kansas Department of Commerce. He said there was a need “to drive home the message that we are not the enemy; we are trying to bring companies to Kansas.”
Don Greenwell, president of The Builders’ Association, sees the furor over use of incentives tied to broader issues of equity. “We need to get this consensus as a community with where we are with incentives, and with social issues of equity and justice.”
“A game-changer for us would be a Downtown baseball stadium,” declared Mark Long, CEO, Newmark Grubb Zimmer.
For LANE4 Property Group’s Owen Buckley, “74 degrees and sunny every day,” would be the ideal. More realistically, he said, “we have to get a handle on our crime and the way it’s being messaged to the rest of the universe.”
Mike Boehm, mayor of Lenexa and a Commerce Bank executive by day, restated his long-held vision for a locally based research university, “whether that’s UMKC or KU.”
Molly Howey of Go Topeka! and the Greater Topeka Partnership cast her vote in statewide and regional terms: “To retain the talent we are so frequently exporting to other states,” she said. Her colleague at the Topeka operation,
Matt Pivarnik, sees economic vitality springing from “St. Joseph, Columbia, Topeka and everything in between with serious population growth.”
But even more than an advanced construction timetable at KCI, said Brent Roberts of Block Real Estate Services, “we need more direct flights. That would do so much more for us.”
At Burns & McDonnell, said commercial construction leader James Isom, the need lies with the work force, and he called for “a more regional focus on solving the skilled-labor shortage.”
Tim O’Brien of Blue Cross and Blue Shield of Kansas City, sees the manpower needs extending well beyond the trades. “We still have some tech growth,” he said, “but we need to recruit younger talent into the market. That’s already in place, seeing what light rail can do for us, and I think the expansion (of the streetcar) would lead to good economic growth.”
Ryan Manies of McCownGordon Construction, said that “erasing the state line would be great, but absent from that, building the Hyperloop from Kansas City to St. Louis.” That future-is-now project envisions a transportation system that could cut the distance between the state’s two largest metro areas to just 30 minutes, or less.
Charles Renner, a development-law expert with Husch Blackwell, called for a recognition of what the region does best, and to use that as building blocks, the way it has done with logistics and animal health. “I’d like to see the same type of undertaking with construction,
architecture and engineering firms in the city, because Kansas City designs the country,” he said.
Harkening back to the successes that made Union Station’s restoration possible a generation ago, David Fenley of the law firm Dentons said, “I’d like to put a couple of bistate partnerships together” with new, bold agendas.
With most of the meat-and-potatoes recommendations already on the table, Pete Fullerton of the Kansas City Aviation Department flatly declared that “the single most impactful economic asset we could have the next one to two years would be a Chiefs Super Bowl victory.”
He did not get an argument on that.
From her co-chair’s seat, Courtney Dunbar of Burns & McDonnell said that, “as a macro, Kansas City has so many amazing assets,” while she called its deficiencies “mitigatable.” “I’d like to see how to align and promote those so we are proactive, not reactive, and know what we are chasing, what we are incenting, and how to train labor.”
Her co-chair, JE Dunn’s Paul Neidlein, said it’s important that the region drive a message that welcomes growth. “I fear, with some clients, what they are worried about is Kansas City is closed for business,” he said. “With all the public economic-development discussion, we’ve got to make sure nobody feels like we’re done. We want to keep pushing forward, keep growing for the right reasons and not pause.”
Security Benefit, a major employer in Topeka and a national power in the retirement investing space, sent CEO Mike Kiley to co-chair, and he brought to that role a great deal of career experience in far larger markets of the northeast. There, he said, “regionalism goes across boarders. In New Jersey or Connecticut, you live off things going on in New York. There’s not a lot of cross-border animosity.” Thus, he said,
cross-border pride was critical with a host of opportunities in Kansas City.
So which elements of the room’s wish list could be prioritized? That’s a tough order, said Jill McCarthy. “I don’t think it is any one thing.
Everything has to work in concert. It matters about press, yes, but it matters that visitors are hearing good news, it matters about getting the Hyperloop—that’s a once-in-a-lifetime game-changer for the region—it matters that incentives are creative and match what companies need to get going, rather than a static list of gosh, I hope I fit into this EDC form. There’s never one solution.”
But one piece of a solution, said Pete Fullerton, is what he called the evolving issue with housing and affordability. “It’s not necessarily acute in our marketplace,” he said. “But I’m hearing more about availability and affordability, and it’s really starting to percolate. There’s not a silver bullet, but it’s something we have to be playing with in the public sector as to how we make that happen.”
The governors of Missouri and Kansas have reached a cease-fire on the economic-incentive cross-border battle, and the “war” may indeed be over. But that’s not the end of things.
“There’s still border competition, and there had better be, and there always will be as long as there are separate taxing jurisdictions,” said John Petersen. “So let’s deal with it. Some regional initiatives could be a good exercise, it brought us Union Station, they could bring a ballpark Downtown, who knows? But the idea that cities don’t compete. The Border War is done, but Kansas City and Johnson County
still compete. The USDA, that was a regional effort to get them to the metro area, but incentives were used to drag them over to Missouri. They create economic activity.”
“Some competition,” said Mike Kiley, “will make a region stronger. If you have Johnson County vs. Missouri trying to offer incentives or a better regulatory environment, more companies come to the area and the net result is, the entire region wins.”
The Border War truce, said David Soffer, “is only as strong as all agree to abide. As soon as one doesn’t we have issues.” The unintended consequence of that truce, said Brent Roberts, is a different type of war. “It could lead to a tripling up of incentives for companies to come in,” he said.
Both states, said Courtney Dunbar, “have something incredible to offer, but they don’t rank out the same” with every potential relocation candidate. Missouri fares well with companies that have heavy capital requirements, and the incentives are better for them.
Kansas, by contrast, has incentives better tailored to research and development enterprises and corporate headquarters space, she said. “You can sometimes have scenarios where the decision is truly a logistical or market reason, not about favoritism. It’s can we produce, can we operate more efficiently and can we receive and send goods out better.”
Confusion over incentives, said John Petersen begins with the way the term is used, especially in under-informed news reporting. “What we need, and everybody in economic development knows this, is place-making. We have to create places where people live, work and play, and where corporations say they want to bring Millennials.”
That means a different structure for blending work and play, and it must now include walkability. “It takes incentives to create place-making,” he said, and the region must replace antiquated infrastructure, continue to improve Downtown and add more structured parking to do that.
Mike Boehm’s civic success, Lenexa City Center, was held up as effective use of incentives. The city took the risk of building the infrastructure to create, in effect, a new downtown. That proved attractive to developers who were willing to accept packages that gave the city a return on its investment.
Petersen’s frustration with public discourse over incentives is the way conversations are framed around benefits for
developers and tenants—but on underdeveloped land that’s not currently realizing its taxable potential. “It’s a false conversation,” he said. “When you’re talking about 20 percent of a $100 million private capital investment, part of that will come from future taxes.”
That’s the way Zach Hubbard sees things, as well. “There are some very smart people who don’t seem to understand how developments work,” he said. The debate becomes a distraction from addressing underlying issues every community faces, including public education and public safety. The incentive package that prompted Cerner Corp. to build its Innovation Campus on blighted land in south Kansas City, he said, was a perfect example. A recent news report suggested that the $4.4 billion project, still in the works, was failing to reach its promised potential as an economic boon for the distressed region.
How creating 5,000 jobs in five years can be considered a failure, some at the table wondered, was a mystery. “But it was the right move,” Roberts said.
Proof of that lies with Owen Buckley’s LANE4, which purchased the Red Bridge Shopping Center not far from the Cerner site, four years ago.
“No way we would have purchased that if not for Cerner,” he said. The site has a few other things going for it—access to I-435 and a number of other daytime jobs, “but if you took that one thing out with Cerner, no. There’s a lot of success stories out there.”
Charles Renner returned to the concept of growth-drivers, saying two that have been proven through research are greater population density and per-capita college education. “From a higher-ed research standpoint, we have a great collection of assets,” he said. “There’s a lot to be said for medical-based and scientific research in the community.”
Many of the issues related to growth and outlined as discussion points for the assembly, noted Pete Fullerton, dealt with talent development. He wondered if an initiative supporting cradle-to-grave human-capital development might generate the broad support needed for a
bistate rallying cry.
It takes a full-employment economy, said Mike Kiley, to focus the spotlight on work-force development challenges. “The mismatch of skills to what is available in the labor force is pretty dramatic,” he said. One advantage the Kansas City area has going for it, he said, is with parents of the types of young workers Security Benefit needs— smart and open-minded. “If you are mom or dad and your kid grew up in Topeka, would you rather have them in the Kansas City area or New York?”
Those same young workers, Kiley said, have their own concerns. They can live a good life in the Kansas City area on a solid income, or go to “a big city, where they can’t afford to live without 12 roommates.” Engaging out-of-state students at regional universities, is a key to retaining that talent as w ell, he said. And it must happen earlier—by their junior year, many college students are already making plans for where they want to live.
Charles Renner cited the cluster theory approach to economic development as a key talent magnet. “The more available jobs, the more talent moves there, and that raises the economic performance of companies.” Focusing investment along those lines, he said, will attract the population.
That’s a critical issue, Kiley said. A recent Security Benefit-sponsored summit in Topeka included information showing that Kansas ranked 50th in the nation in keeping graduates in the state. The upside, others said, is that many who are leaving Kansas are landing just across the border on the Missouri side of the Kansas City area.
Going forward, said John Petersen, “we’ve got to be the place that’s cool, that has affordable housing, that has good transportation, so when that corporation says we have to downsize, if it’s Indianapolis or Kansas City, “we’re not doing Kansas City, that’s a good place. “Don’t be the one that gets scalped first. That’s how you inoculate a community from a downturn.”
Kansas City has achieved much, said Pete Fullerton, and many of the challenges it faces today—the need for affordable housing Downtown, for example—are the direct result of successes it has had addressing prior needs. “We ought to celebrate once in a while,” he said. “A lot of people pushed a lot of rocks up that hill for a long time to make this happen Downtown.”
Owen Buckley concurred, and the successes create opportunities to educate more people about the return on public investment in development. “I have friends who are smart and still don’t get it—I have to explain how a CID works, how a TIF works. It’s been going
on for 15 years. “So yes, we have to do a better job of celebrating success. ‘You like the Crossroads?’ ‘I love the Crossroads!’ “What do you think about incentives?’ ‘I hate incentives.’ Well, the reason you have the Crossroads is because of the incentives.”