Bringing New Business to Nebraska Touting fiscal opportunities has not been at the forefront of state chambers of commerce or offices of economic development across the nation that are responsible for luring in businesses based on their states’ competitive incentive opportunities. Instead, states are selling themselves based on aesthetic qualities that their cities have to offer. While this seems to be the case for most states, Nebraska, which ranked sixth behind places like Colorado, North Dakota and top-ranking Utah in Forbes 2012 List of Best States for Business, continues to be assertive in its pursuit to bring new businesses to the state.
“Our right-to-work legislation is actually built into our constitution so that is a pretty sound protection for employers. We have no state debt by constitution, so the state of Nebraska can’t borrow money, which means we’re not stalling future obligations and we’ve managed to live within our means in that process,” said Richard Baier, executive vice president, Nebraska Chamber of Commerce and Industry. “So among other great attributes, these have really helped Nebraska float to the top.”
Coupled with strong educational systems along with the resurgence and diversification of the economy, Nebraska has had the support of great leadership championing the state. “Governor Heineman has completely modernized our incentive program called Nebraska Advantage,” said Catherine Lang, Nebraska’s commissioner of labor and the director of the Department of Economic Development. “Truly, while the state of Nebraska can’t lend the credit of the state, we believe that we offer one of the most aggressive incentive programs for businesses and their long-term goals.”
The state’s aggressive incentive program aptly titled, Nebraska Advantage, established by the Nebraska Department of Revenue, was created to “offer comprehensive economic development incentives to meet the needs of expanding or relocating businesses” as a way to increase Nebraska’s competitive advantage amongst other states in the nation; especially as it continues to establish itself as a place of higher education, building its workforce, and increasing economic development.
“Our initiatives have been to support all of our communities whether they are our largest communities like Omaha or any one of our smaller communities that are attempting to work and attract new businesses to their locations or expand existing businesses in their locations,” said Lang, “all of which goes to the effort of creating high-quality jobs so that our citizens can have a high standard of living in safe communities with quality education for their children and of course for the future of our state.”
One of those communities is Sidney, located in a remote area of western Nebraska. Known mostly for being home to outdoor retail-giant Cabela’s, which employs roughly 35 percent of the town’s 6,857 citizens, Sidney boasts a growing business sector and is working with the state to build its workforce and attract new and expanding businesses. While growth has been slow, the steady increase has helped the town plan for the future and lead its citizens into a more prosperous future.
Hampered by state rules and regulations, money to incentivize new and expanding businesses has been slow and cities and towns across Nebraska have had to find creative ways to entice businesses to their communities. Adding to the competition are states like neighboring Colorado and Utah who lead the country not only in a pro-business atmosphere but also possess a variety of outdoor activities, sports teams and growing community-development projects that sparkle in the eyes of interested executives. This has forced communities like Sidney to take action, providing real cost-based savings and financing incentives for these businesses.
“Companies may not first think about Nebraska because we’re a rural state in the middle of the country, so we want to make sure from an anecdotal standpoint as well as a business standpoint that they find Nebraska a successful place to have their business,” Lang emphasized.
Recognizing the challenges, Sidney, like the state of Nebraska, developed its own plan under the town’s Local Option Municipal Economic Development Act Section as its own development tool in 1997. Under the plan, one-fourth of each cent collected through local sales tax is allocated for the economic development program. The town’s citizens voted nearly unanimously, with 92 percent in favor of the plan, that would generate $2.5 million dollars to be used for expansion projects over a 10-year period. Then again in 2007, Sidney’s citizens reinstated the plan for another 10 years with an annual allocation of $300,000 of existing sales-tax revenues.
While $2.5 to $3 million seems trifling to an outsider, the development program paid dividends to the town. In just 10 years, between 1997 and 2007, before the plan’s reinstatement, the town’s valuation grew by 56 percent, annual building permits averaged $12 million, up from $4 million previously, and Sidney led the panhandle communities in population and job growth. It was evident that the plan had a direct correlation to the progress of the community.
So when a new vote came for the program’s next 10-year extension in 2007, citizens again jumped on board. Along with new allocations, $500,000 was specifically “targeted for community economic development projects in the area of Sidney north of the Union Pacific tracks.” One such company fit the bill exactly: Adams Industries—located in an industrial park just north of Sidney on the old Sioux Army Depot and next to Cabela's distribution center.
Free Trade Zone, Dual-Served Rail Access Puts Adams Industries on the Map
The bones of the old Sioux Army Depot, deactivated in June 1967, greet you as you drive in from the state highway. Once a United States Army depot during the height of World War II, the site contained ammunition storage igloos, supply warehouses, support buildings, living quarters and 51 miles of railroad tracks on more than 19 thousand acres. Besides its dry climate for storing munitions, the Depot was centrally located to both coasts and had access to both major rail lines. After 25 years in operation, the Sioux Army depot was shuttered. Some of it was sold back to the existing farmers who were displaced during the depot’s construction; the rest was left to the Army and the town of Sidney to secure some sort of use for the property. Both had mediocre success.
Much of what remains of the depot is either dilapidated structures or the eroded frames from existing buildings spread about the property, which now only encompasses roughly 600 acres. Yet, tucked up front, alongside several beleaguered and restored facilities is a new warehouse. There, mixed amongst the past, lies the future of Adams Industries—a family-owned and seemingly modest-sized company.
At its onset, the company used its truck fleet as water trucks and to move drilling rigs, but as the oil fields slowed in the late 1980s it was clear that the family needed to reevaluate their business model. While the rig count declined, oil companies started using more pipe per rig as the technology within the industry changed. The Adams family immediately realized where they could carve out and cultivate a niche. Expanding the business, Adams branched out into the flatbed truck market and started hauling pipe. It paid off. The company eventually got too big for its space and in 2000, Adams started purchasing land for warehousing at the depot north of Sidney where they are currently located.
“We knew that to compete in the market that we were in, that if we could get the product into this area cheaper it would give us a more regional approach, especially using the transloading side of the business to get the product here and then from us to the end-user,” said Don Adams, president of Adams Industries. Within a few years, Adams not only grew, but also became a viable opportunity to lure businesses to the state and increase economic growth in the area. The depot’s distinctive features and location hadn’t gone unnoticed.
Adams’ depot property not only allowed for expansion, but it also provided dual-served rail access and a rare free trade zone (FTZ) for a rural area that the state of Nebraska worked on for five years for Cabela’s, whose distribution center is also on the property. Normally only available in urban areas, the FTZ increased the types of businesses, especially in manufacturing and agriculture that could come into the area.
“As you begin to look at transportation in this country, we wanted to find where there was really solid rail access, and when possible, where could we find dual-rail access,” said Baier. “So that’s when we started working with Don Adams and his group to see what we could do to take that area and develop it into a preferred site for companies that needed heavy transportation access.”
The state of Nebraska’s Department of Economic Development in conjunction with the municipality of Sidney and Don Adams soon started work on a set of terms to continue development on Adams’ depot land. With Nebraska Advantage already in place, the group worked to see how they could take Adams already preferred status with Union Pacific (UP) and Burlington Northern Santa Fe (BNSF) and make it work for others who could be potential tenants on the land.
Because Nebraska can’t lend the credit of the state, the group found a unique provision within the state statute that allowed for the use of tax increment financing (TIF) outside of a city limit as long as it was tied to a project that provided natural, value-added agriculture. Concurrently, Bell Lumber & Pole was looking for a new location to expand its business. The TIF agricultural statute solidified Bell’s business within the state. The diversification wasn’t just good for the state—it was good for Adams, too.
As the anchor tenant, Adams needed to prepare for the additional space that Bell would need. But at 90-percent capacity, the company was experiencing some growing pains. The company had already expanded three times to its current 600 acres, so to accommodate Bell and other potential manufacturers, they needed to significantly expand. The previous expansions had resulted in a significant diversification of their business, allowing Adams to bring in everything from line pipe, OCTG and coils to fertilizer, bulk rail and lumber products, as well as storage for barite and bentonite. Adding additional partners could only help.
The investments from the three earlier expansions may have seemed risky at the time, but this newest expansion was a no-brainer, especially with the help of TIF. Already, Adams had privately funded renovations of the site’s drainage system as well as the utilities and was close to finishing all of the warehouse buildings on site. But what the property desperately needed was extra room and significant improvements to the rail infrastructure. Along with private and state funding, the $10 million Adams Industries’ expansion will increase the property size from 600 to 900 acres and will bring 10 to 12 miles of rail capacity on site. The $5-million rail expansion alone will allow Adams to handle seven-unit trains at once as well as manifest cars, a distinct advantage to that of other locations that cannot handle the throughput.
The expanded tracks will be especially useful for industries utilizing Adams’ site for storage. The dual-rail advantage works especially well for transporting crude oil. With the additional rail, tanker cars with aggregate product can be held onsite and transported based on spot markets of the refineries without incurring a switching fee to move the car from one rail to another. The site allows for companies to make decisions that are most economical for them, a very attractive quality for businesses.
“Successfully bringing Bell to Sidney had a lot to do with Don Adams’ energy, passion and enthusiasm. I’ve never seen Don find a project that he couldn’t get done; he also has that same ‘What are we going to do to get to yes’ mentality and he’s been willing to risk his own personal wealth, he’s been willing to integrate his kids into his business, and so he really has been the driver behind this project.” Baier said with praise, “He is key to making a lot of things happen without all the attention, he’s very unassuming, and that’s what separates Don from others.”
Adams and its dual-rail site is one of the few things leading the progressive town of Sidney into the future. “The key is to let people know that we’re here. A lot of companies don’t realize how close Sidney is to some of the large areas and how competitive this town can be,” said Adams. For the town of Sidney, whose primary employer is Cabela’s, it’s really about creating new jobs, broadening their business base and building a community to lead them into the future.