Corridor Business Journal Article

gigi@corridorbiznews.com, tim@corridorbiznews.com

It has been a year of changes.

The effect of leadership vacancies, local business expansions and national trends on the local economy are the top issues of 2007. For our final issue of the year, the Corridor Business Journal looks back and reviews this year’s biggest stories. The list of top deals and projects is on page 8.

New faces

Leadership is vital in any enterprise.

The Corridor has witnessed the exit and entrance of many new faces this year and those changes likely have the greatest impact on this year’s business news, as well as on the future of the area’s business vitality.

After a year of controversy, the Iowa state Board of Regents hired Sally Mason as president of the University of Iowa. She replaced David Skorton, who left in June 2006 to become president of Cornell University. Ms. Mason, formerly a provost at Purdue University, started her Iowa tenure in August. She has already made an impact; she was named to the Corridor Business Journal’s Most Influential list earlier this month.

Many throughout Iowa have been pleased with Ms. Mason’s energy and enthusiasm, but were displeased with the handling of the search process. The first search came to a dead end. Most breathed a sigh of relief when the second search yielded a candidate with Ms. Mason’s talents. Both searches, however, were shrouded in secrecy.

The process was the catalyst for several departures. Michael Hogan, who served as UI provost, was at one time a candidate for president. After he was left off the finalist list, he left the UI to become president of the University of Connecticut.

State and UI leaders could not overcome a $135,000 difference in pay when UI Hospitals and Clinics CEO Donna Katen-Bahensky was lured away to the University of Wisconsin. Also named to this year’s Most Influential list, Ms. Katen-Bahensky leaves at the end of this month after helping fill many executive and faculty positions. She helped hire Ken Fisher, the hospital’s new CFO. Mr. Fisher will greet interim CEO Gordon Williams when he starts at the UI on Dec. 31. Mr. Williams is leaving as executive vice dean and chief operating officer at Duke University’s hospital.

In Cedar Rapids, City Manager Jim Prosser continues making waves. Hired in August 2006, he spent 2007 proposing bold changes to a city that recently switched from a commission-style city government to a mayor-council form.

Since then, he and several other top city leaders persuaded a council majority to approve reorganizing the city staff, eliminating many positions to save nearly $2 million in fiscal 2007. He is working with city departments and business groups such as the Cedar Rapids Area Chamber of Commerce and Downtown District to follow through on a vision adopted for the city.

City and business leaders focused much of the vision on improving downtown. Following visioning and marketing studies released earlier this year, a big push is ongoing to increase availability of downtown housing as the first major step in planned improvements.

Mr. Prosser will soon work with two new city councilors following the first election with Cedar Rapids’ new style of government. Monica Vernon and Chuck Weineke will be new faces when they join the council next month.

There are new councilors in Iowa City, as well. Matt Hayek and Mike Wright were elected. They will work with a new city manager, to be named in 2008 to replace the retired Steve Atkins, and new Planning Department Director Jeff Davidson, who was promoted to the post held by Karin Franklin, who also retired. In Coralville, Mitch Gross, a member of the Generation Iowa commission, was elected to a council seat.

Meanwhile, North Liberty finally has a mayor and city administrator following resignations of David Franker and Brian James earlier this year. Thomas Salm served in the interim until the November election, when he was elected mayor. Tracy Mulcahey served in Mr. James’ stead, until the city hired Ryan Heiar this fall.

National trends

The sub-prime mortgage crisis has been top news nationally where it led to ballooning debt, defaults and bankruptcies. The Iowa impact has been less severe.

“If you take the whole of the Midwest relative to the other parts of the country, in general we tend not to experience huge rises in property prices, and also if prices are coming down they tend not to pound on us as you see in other parts of the country,” Jay Sa-Aadu, a UI real estate and business finance professor, said in an Oct. 22 Corridor Business Journal story.

No state, not even Iowa, however, has been able to escape high gas prices. Mushrooming to more than $3 a gallon, the price of oil and gas is an annoyance to commuting workers, creating higher shipping rates and affecting the cost of goods made and sold. Prices continue to rise, affecting everyone’s bottom line.

As banks continue to consolidate nationally, one has done so in Iowa City. Iowa State Bank & Trust announced recently it will merge with MidWestOne Bank, allowing it access to more branches and more customers. State officials said bank mergers are a growing trend across Iowa, as well.

The Corridor has seemed to avoid the uneventful national employment scene. Hiring has been flat in many parts of the country, while many businesses in the Corridor continue to hire. Before a spring job fair in Cedar Rapids, many local employers said they found it difficult to find enough employees for skilled positions. Conversely, before a new hardware store opened last month in North Liberty, the manager said he was surprised he received so many applications.

Expansions

More jobs will come online as many Corridor companies complete expansions.

In Cedar Rapids, many major companies are growing. Quaker Oats is planning a $16 million expansion of its plant. Rockwell Collins is remodeling the former K’s Merchandise site to make room for its growing team of engineers and spending $23 million on a new office facility. Clipper Windpower is hiring additional workers and expanding its operation.

AEGON is transferring 400 jobs from its TransAmerica division from Kansas City to Cedar Rapids. McLeodUSA moved its network management center to Hiawatha. Genencor is planning a new training center. Kirkwood Community College is building a hotel to train hospitality-industry trainees that will be open for public patronage. Yellow Book and Pindar added more than 150 jobs to Cedar Rapids operations.

Further south, North Liberty saw the opening of its first hotel. Sleep Inn will pay a 7 percent hotel/motel tax next year, a measure recently approved by voters. North Liberty also witnessed the opening of the $8 million headquarters of Heartland Express. The trucking company moved from Coralville to avoid increasing traffic congestion.

The Iowa City Area Development group announced earlier this year that about 67 percent of businesses in the southern end of the Corridor plan to expand during the next few years. Procter & Gamble is completing a $70 million expansion to its Iowa City plant and hiring more workers. Alpla, which makes plastic bottles for Procter & Gamble, is also expanding.

New businesses

Hundreds of new jobs were created this year because of new businesses coming to the Corridor.

A major coup for Iowa was landing Acciona Energy in West Branch. The company’s first North American operation, by mid-2008 about 110 people will be working at the plant assembling wind turbines. It is one of a handful of wind energy projects launched during the past year in Iowa.

UI officials broke ground on a new business incubator on the Oakdale Research campus but will likely lose its first commercial tenant. Negotiations broke down between builder Ryan Companies and National Genecular Institute. The new facility is expected to be completed next year.

In Cedar Rapids, Bio Springer announced plans earlier this year to open a yeast extract plant in Cedar Rapids as part of a $75 million joint venture with Red Star Yeast.

The year ahead

Both ends of the Corridor will face challenges and opportunities in 2008.
Coralville will celebrate the 10th anniversary of the Coral Ridge Mall.

Cedar Rapids residents and businesses wait for decisions from Westdale Mall owners to boost occupancy and increase shopping. Mr. Prosser and Richard Luther of the city’s development department were among city officials who led discussions earlier this year prompting talk of redeveloping Westdale Mall in the city’s southwest area.

City councilors approved a six-month development moratorium in March and extended it in September. The goal was to aim for cohesive development around the mall area to attract a master developer through work with mall owners.

Nevertheless, two of the three separate ownership entities eventually filed lawsuits seeking relief from the moratorium claiming it was preventing possible sale of the mall and surrounding parcels on the 85-acre site.

Last week, city officials lifed the moratorium after months of trying to obtain public input from residents and businesses after commissioning market and planning and design study reports from consultants.

In Tiffin, residents are still waiting to hear what retailers are planning to locate in a proposed outlet mall.

Cedar Rapids and Iowa City will continue to look at ways to spruce up downtowns. Many are waiting to see if years of planning, studies and strategizing will turn into tangible results.

The Eastern Iowa Airport will try to improve passenger service, even though traffic has reached record levels several months this year. Corridor business owners, when surveyed by the Iowa City Area Development Group, gave the airport high marks for its cargo service but lower grades for passenger travel.

Also in 2008, chamber and the Greater Cedar Rapids Community Foundation along with other county and city public and private entities will continue to develop Fifteen in 5 strategy initiatives as that community improvement planning process moves into its second half. One that has received much attention is a proposed light rail service that could extend from Cedar Rapids to Iowa City.

The train would travel past Coralville’s Iowa River Landing District. Many announcements about developments in the district are expected in the new year, including a detailed proposal for a literary-themed attraction. CBJ

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