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Discussion: The Possible Economic Future of Council Bluffs/Omaha

posted on May 1, 2009 at 5:36 PM

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Paul Yeager: We now need to continue this discussion a little bit.  We're going to talk about a couple of areas tonight in this piece.  Can this area collaborate its way to prosperity?  What is feasible?  What sorts of initiatives are needed to realize the potential of the region?  Joining us tonight for our discussion is Tom Hanafan, he's a long-time Mayor of Council Bluffs, Iowa and Edward Morse is a farmer, lawyer, economist, also a long-time observer of the growth of Council Bluffs and he's also a faculty member at Creighton University.  Gentlemen, welcome to The Iowa Journal.  Tom, you've been mayor since 1988.  You've been around gambling, been around this town for a while, tell me what gambling has done good for your community.

Tom Hanafan: Well, when actually it started in 1986 we had a dog track built and that created a different atmosphere in the area.  All of a sudden our interstate activity started growing, we saw some hotels and motels, that type of thing.  Our retail went from a negative 27% to right now we're at a plus 24% on our retail from then in 1986.  Riverboats came in 1986, 1987 and, again, motel rooms increased, the number of jobs that were -- there were 3500 jobs in these facilities -- and also a good number of visitors.  We have eight million people that come here.

Paul Yeager: I'm also looking around here from where we're at tonight at the Horseshoe, there's lots of retail development around here as well.

Tom Hanafan: Right, it's made a difference in the growth of the area so there have been economic benefits and really kind of changed the flavor of the community and done some things that I don't think we would have been able to do for a long time without it.

Paul Yeager: What has not gone so well with gambling here?

Edward Morse: Well, Paul, I think Mayor Hanafan does a nice job of pointing out some of the positives.  One of the problems with gambling is that you can point to benefits and measure them in very specific ways but there is the other side of the ledger and that is the cost side and that is a lot harder to tease out.  You have some social costs.  We do have some growth coming from this area but a lot of this revenue, there's over $400 million a year that is coming from these casinos and a good share of that is coming right from the pockets of local residents and we are getting some from across the border, we're getting some from other places but the vast majority I think of it is coming from fellow Iowans so that causes some displacement effect, there's some displaced economic investment that wouldn't be made.  We do have some retail here but I'm not sure that people that are coming just to visit casinos are big patrons of those retail establishments. 

Paul Yeager: It's hard to argue with seven million people, though, that are coming down here.

Edward Morse: It is hard to argue.  There are some numbers and those are the numbers that we can measure and we can look at.

Paul Yeager: So, it's not going away though anytime, Nebraska doesn't look like they're going to be passing anything to try to tap into this so how do you build on this?  Where do you go from here?

Edward Morse: I think that when you're thinking about economic development there's a lot of different directions you can go.  There's the small scale side and then there's the large scale that requires a lot more government intervention through tax incentives, etc.  One of the things that we're doing at Creighton University is we have an economic development clinic that is helping small businesses in both western Iowa and Nebraska try to grow themselves into larger businesses and these are people that otherwise couldn't afford legal counsel so they're getting legal help on that side and they're getting also referrals from our community college networks and they are doing a tremendous job in trying to get small business help to people that have ideas and dreams and knowledge and I think that's a real engine for development that is long-term and sustainable but it's one that is kind of behind the scenes.  It's smaller, it's not visible and you don't get as many political points from these things as you do from -- no offense to my colleague.

Paul Yeager: Did you know that they were doing that?  How do you think they're doing?

Tom Hanafan: Yes and your original question, gambling is not going to go away and how you build on that, that's the most difficult thing.  I think what happened is when we have gambling in our area we looked at it more than just that it was going to be gambling.  There's two reasons why gambling passed through the Iowa state legislature.  Number one was create tourism and to create jobs.  It's our responsibility as a community and an area to build from that.  There's eight million people that come here and you may be right that some of that retail they aren't coming here to do the retail but it's awfully nice to see eight million people driving down that road.  That creates energy.  Now, where do you go from here?  I think you do need to build that next area of small businesses but we also have to look at why type of jobs do we want in the future and what fits the area and how do you build those.

Paul Yeager: Talk about some of the small business initiatives.  Have there been any that you can point to that have come from being around in this area and seeing an influx of people?  Are there success stories?

Tom Hanafan: I was at a chamber function and it was a small company I went over and looked at, it was over in the east Omaha area and what they did was they built robotics, they design robotic systems for different small companies.  We had them move over to Iowa because there were more incentives to be in Iowa for a lot of different reasons, they went into their first building and now they're into their second building, much larger and the robotics that they are building today have made a big difference.  This started out with just a few people and now they're in a 100,000 square foot building with all the robotics and without that support they wouldn't have been there.

Paul Yeager: What do you think, small business, Google, throwing big money at them?  It seems like Iowa won that.  Talking to your colleague, Ernie Goss, he says Iowa just threw more money at them.  How do you balance the large corporations and the small business?

Edward Morse: That's the real tradeoff because once you start getting those public funds government starts to look like you're picking winners and losers and governments aren't always very good at that.  Moreover, the tax bills still come for all the other businesses in that community so you have some real differential effects on the small business community that perceive this politically potentially unfair.  But I think it takes both sides.  I would prefer to see the small business development grow because we avoid some of those problems.  We also let people in markets chose winners and losers instead of government involvement in that process.

Paul Yeager: What are some of the negotiations that go on trying to bring business people here, economic development?  Do you have more Googles in the pipeline than you do robotics firms?

Tom Hanafan: No.  It's really interesting -- Google did not select Council Bluffs or the state of Iowa because somebody threw more money at them.  Google selected Council Bluffs and this region because we have a power plant and we have bottled water that they needed and had available land that was affordable and they could have gone anywhere.  They didn't choose to go anywhere, they chose this site because we have some things in Iowa that are pretty good and we should be proud about.

Edward Morse: Tom, I think one thing you mentioned is really important.  We do have a very stable and low cost source of electrical power.  That is very important for server farms.  The statistics suggest that server farms are probably going to take more electricity than televisions and air conditioners in the coming years as that grows.  It also sees some other synergistic development going on here with the ethanol plant that is built right next door to the power plant using some of that heat that is generated from the power generation.  I think those kind of opportunities could also be expanded perhaps into some other types of horticulture or other production in this area and we can use these kinds of resources in a productive way to generate real growth.

Paul Yeager: You do not live in Council Bluffs but you live in Pottawattamie County in the rural area, what do they say about what's going on in this region and how do we get ours?  How do we get jobs to come out to Neola or wherever it is?

Edward Morse: I think we have an advantage in this part of the state in being very close to the Omaha/Council Bluffs metropolitan area.  We do not sense the same degree of out migration that has occurred in other parts of rural Iowa.  As a result you still have very strong school districts, people who want to live a different type of life or rural life they can commute and so the communities that are in close proximity and close driving distance are really doing fairly well because many of them can obtain jobs and work in this area.  I think as you draw the line and get out a ways from Council Bluffs into other parts of western Iowa it's a little different story because you're seeing larger farming operations, local dependence on inputs, etc. is making it more difficult in those environments and so we're going to have to look to more creative means to do that.  Ethanol plants are one approach.  The Internet is still I think untapped in some of these areas and we need good infrastructure for that Internet to generate the kind of business development that is possible.

Paul Yeager: Ed talked a little bit about that out migration not happening as much.  But how do you get those who have left or aren't familiar with the area, we have a producer on the broadcast tonight from Council Bluffs, how do you get them back from central Iowa to get them to come back to Council Bluffs?  Is it the Googles?  Is it the Bass Pro Shop?  The casinos?  How do you attract people to come back?

Tom Hanafan: Well, it's always difficult.  I remember when I went to college I said goodbye to my mother and my plans were to be in Miami opening a bar in Miami but that didn't work.  But I came home and got involved -- I have two children, one that lives here, one that doesn't, both educated and have great opportunity.  I think you really have to show what the opportunities are and I've seen people coming back.  I've got two young women today that called me that live in different areas and would like to come home and they're looking at home.  What do you do?  You've got to create some type of activity for them.  Both of them are professionals.  Where are they going to work?  Both of them would probably look in the Omaha area but would like to live in Council Bluffs.

Paul Yeager: Ed's colleague, Ernie Goss who we had on the program earlier, lives pretty much right on the other side of that pedestrian bridge.  He told me that his wife comes to Council Bluffs for a lot of their groceries, their movie theatre.  How do you continue to attract people like Ernie and his family to come across from Omaha, get them to come over to Council Bluffs and not get everybody from Council Bluffs to go to Omaha to do all their business and things like that?

Tom Hanafan: Right, our retail growth is going to help.  It's pretty simple for them just not -- they only have to drive about twelve blocks and they can get their restaurant, they can go do their shopping, they can do a lot of things and it's going to be our responsibility to make those facilities nice, make sure that the things that are available are easy to get to, make sure things are easy to do because that metro area -- it's like me in the old market, I'm closer to the old market in Council Bluffs than my sister is and where she lives is west Omaha.  So, I can go to the old market and utilize this and the Goss's can come over and utilize that.

Paul Yeager: How do you build that partnership between the two?  What is the good way to collaborate between Omaha and Council Bluffs and get them to think as one?

Edward Morse: I think that's a real challenge because of the political realities.  If a business locates in one jurisdiction you're going to get the tax revenues in that jurisdiction and the political leaders in that jurisdiction take advantage of that and healthy competition is probably going to be a reality from here on out.  But I think there can be some more cooperation realizing that we're if we're competing we're competing with brothers or sisters here because this economy is integrated.  In the parking lot here you're seeing Nebraska cars, Iowa cars, whether it's employees, whether it's patrons, etc. and that's a healthy thing, that's a good thing.

Paul Yeager: Are there regional things the two of you can do, joint sales tax, things like that?

Tom Hanafan: There are some things.  Actually I was at a meeting today and they're looking at what's going to happen in 2050 with the road systems.  How do we move people back and forth?  What type of interstates are going to be here?  What are the education opportunities?  As the boomers continue to get older what are the medical opportunities here?  It has to work together.  It's kind of like two ballparks, one in downtown Omaha, one in Sarpy County.  Does it make sense?  It may make sense to me but this is a region and we have to learn how to do it and it's going to take someone, a group of people to sit down responsibly and make some decisions.

Paul Yeager: It appears that Omaha looks to Lincoln, Council Bluffs doesn't have anybody to look to.  How do you get Omaha to turn that around?  I know I've already asked you that question about three times but how do you expand on that?  Nebraska has one legislative system.  What is to say that you can't merge governments from the two sides?  I'm not trying to put Tom out of a job.  Is that a direction you could go?

Edward Morse: You could come up with some kind of hybrid governments like a port authority, Tom and I were talking about that idea as a way to get some joint revenues there.  If you can get the legislatures to cooperate but the political realities cause difficulties.  I think the best thing is competition and when we have attractive things we'll bring people here.  I think our downtown in Council Bluffs has improved a lot over the past several years.  It's been very interesting.  There are some nice places.  In the future I hope we can get some really good restaurants downtown and we can create our own environments where people can come.  We have a budding wine industry here in western Iowa.  Breezy Hills is a vineyard up in Minden does a really nice job and that's bringing people across the river.  I think it's a matter of taste and seeing.  You experience it, you enjoy it and you overcome these geographical and political barriers that don't really matter.

Paul Yeager: You can take this chance to tell the entire state why they should come to Council Bluffs.  Or do you want to tell them we're fine, we're going to just do this on our own?

Tom Hanafan: I was in Des Moines at a meeting yesterday, I was in Omaha today with a metro area meeting and it's kind of interesting between the two sides of it, what do I want to see better?  Do I want to make sure that working with a metropolitan area that they have a better image and I'm part of that?  Or would I like to see Iowans know that there is a western Iowa and that we are part of Iowa, we're not Omaha, we're Iowa.  I think I'd like to have both sides of it.  We're going to have RAGBRAI is going to kick off this year.  I just sent the letter out today and I want you to have the best time ever started in the state of Iowa.  We're going to have Barenaked Ladies, we want you to go across that beautiful bridge between two states and really enjoy yourself in Council Bluffs.  I want the best of both worlds.

Paul Yeager: Three quick points that would be ideal for working points between the two cities, Ed?

Edward Morse: That's tough.  I would say first of all we need to talk, we need to get together.  It wouldn't be a bad thing at all to get our leaders together on a regular basis and talk about how we can attract people to this region because it's a region and not two cities.

Paul Yeager: I put him on the spot but I appreciate it, you were very good sports tonight.  Edward Morse, farmer, lawyer, economist, professor at Creighton, appreciate you coming in tonight.  And Mayor Tom Hanafan, long-time mayor of Council Bluffs.  Gentlemen, thank you for having us in your region, it was great to be here tonight in Council Bluffs. 

Tags: Council Bluffs economy future gambling Iowa Nebraska Omaha revenue


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