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Opinion

Opinion

Another look

Local officials should try to learn something from the loss of a promising engineering firm.

May 23, 2011

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A growing engineering firm’s plans to leave Lawrence for a new building in Olathe is a major disappointment for the local economic development community.

If there’s any possibility of keeping EN Engineering in Lawrence, local officials should go for it. If not, perhaps there are lessons to be learned.

City, county and Lawrence Chamber of Commerce officials say they worked hard to barter a deal to keep the company in Lawrence. EN Engineering, the former Wheatland Systems, currently provides 65 high-paying jobs and plans to hire as many as 20 or 30 additional employees in the foreseeable future.

That meant they needed more space than they currently had at 2110 Del. Plans to expand at that location didn’t work out. The company looked at the possibility of a new building in east Lawrence, but some problems apparently surfaced with an agreement to extend their current lease while a new building was constructed.

In the end, local officials appear to be taken by surprise by what they saw as EN’s sudden decision to go to Olathe. As County Administrator Craig Weinaug put it, “we never were really given the opportunity to work out a specific deal.”

In the current economy, it’s extremely difficult to attract new businesses to the community. That’s why it becomes even more important to keep the businesses we have and try to facilitate their plans for the future. If dealings with EN are now water under the bridge, local officials need to look at what they might do differently in the future.

EN’s decision to move apparently seemed sudden. Was that the case, or would better communication or quicker action by local officials have made a difference? Chamber officials said they had been working with EN for about 10 months.

The lease issue also raises questions worth discussing. The owner of the 2110 Del. building wanted a two-year lease from EN. That would be ample time for the company to complete a move, meaning the owner could be confident the building would be available for a new tenant at the end of that lease. EN wanted a shorter lease. If local officials had agreed to pay off the rest of the two-year lease if EN moved early, could a deal have been reached? It’s understandable that officials were hesitant to earmark public money to pay a local landlord, but the $30,000 that would have been needed to pay the lease for six months wouldn’t be unusually high for an incentives package to keep or attract a local business.

City Commissioners Mike Dever and Mike Amyx both said they would have liked to at least discuss that option. As Dever said, “creative packages sometimes need to be put together.”

Local economic development officials should see the loss of EN Engineering as a major blow. If nothing can be done to reverse the decision, they also should see it as a call to revisit their dealings with the company and consider how they might be more proactive or more creative when facing a similar situation in the future.

Comments

nativeson 3 years, 7 months ago

Economic development incentives are difficult to judge. A firm that has 65 professionals will not make a decision to move or stay based on a $30,000 rent subsidy. It is almost certain there were many other factors involved in a decision on a payroll that exceeds $5,000,000.

just_another_bozo_on_this_bus 3 years, 7 months ago

"If local officials had agreed to pay off the rest of the two-year lease if EN moved early, could a deal have been reached?"

And what's the city policy on such subsidies to landlords? To my knowledge, there isn't one, and I can't imagine how one can be structured that doesn't quickly become abused.

Kendall Simmons 3 years, 7 months ago

While I agree with nativeson that there's likely much more to the story than we're hearing, I wonder why, based on what we've been told so far, the City should be held responsible for this.

It seems to me that the landlord (Steve Schwada) was the one who screwed up by not being willing to work with his tenants. I guess he figured he had them over a barrel. Now he's going to have an empty building bringing in zero dollars. (Perhaps he needed the tax writeoff? Or has something in mind akin to Trump's strategic bankruptices?)

And the editorial argument that a 2 year lease was appropriate because "it would be ample time for the company to complete a move, meaning the owner could be confident the building would be available for a new tenant at the end of that lease" is one of the most absurd editorial arguments I've heard in a long time. This town is FULL of rental properties of all types with countless landlords signing leases with tenants that end on a specific day and require the tenants be gone by the end of that day...and signing new leases with new tenants giving them the right to move in the very next day. And the J-W wants to argue for the appropriateness of an "ample time to move" lease in this one situation??? Gimme a break.

I think bozo is right that City funding of corporate rent would quickly become abused, what with landlords deciding they can count on the taxpayers to pay their corporate tenants' rents, and corporate tenants feeling they have nothing to lose by signing longer leases than they actually need because, hey, the taxpayers will pick up the tab. Unfortunately, whoever wrote this editorial didn't seem to think any further than "it must be the City's fault".

GSR1855 3 years, 7 months ago

It is unfortunate that the City and Schwada are so focused on bringing warehouse industry jobs to Lawrence, rather than focusing on the service industry...such as engineering. During the last 3 years, the City has been very supportive of Schwada and his ideals to create a warehouse industrial park north of Farmers Turnpike, with island annexation of at least 2 properties. The speculative possibilities of bringing 50-100 new industry lower-paying jobs to Lawrence is totally lost when very good paying service jobs go walking out the door. Who is really in charge of the future of Lawrence? Right now i don't think the Chamber, the City, or Schwada have the right mindset to take this community into the next phase.

Richard Heckler 3 years, 7 months ago

I also say why should local officials be held responsible? Frankly I'm glad the chance was not open to local officials. Our tax dollars would have been given away in a flash.

Why should taxpayers be expected to cover rent? Taxpayers cannot afford this nonsensical thinking.

Blame Schwada Schwada Schwada . Absolutely. He spends too much time in Florida to give a damn about Lawrence economic growth. The Schwada tax moocher corporation is reckless use of our tax dollars.

The bottom line: The real estate industry should be providing all the incentives NOT the taxpayers. After all it is their for profit ventures that leave taxpayers holding the bag.

The real estate industry should be providing all the incentives NOT the taxpayers. Lawrence,Kansas taxpayers cannot afford the tax dollar handouts to the real estate industry and the developer/builder industry. GO TO THE BANK and leave the taxpayers alone!

Carol Bowen 3 years, 7 months ago

"Economic development incentives are difficult to judge. A firm that has 65 professionals will not make a decision to move or stay based on a $30,000 rent subsidy. It is almost certain there were many other factors involved in a decision on a payroll that exceeds $5,000,000."

Nativeson has a point. EN had a lot of factors to consider. When anyone proposes something, the response will be a "yes" or a "no". No reason to play the the blame game. It would be interesting to know what factors were important to EN Engineering.

The city pays the Chamber for economic development. Why should the city be involved? Every community in the nation is vying for businesses to move in. If businesses move that easily, they will move again. (not in this case, but generally) The idea of competing for economic development is kind of self-defeating, because of the fabricated incentives. I'd like to suggest that we let free enterprise work. If we make Lawrence desirable for it's current residents, it will be attractive to outsiders.

jafs 3 years, 7 months ago

Good points.

We could simply focus on fixing problems and improving services.

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