Competitive Capacity Assessment

January 19, 2011

Community Leadership Meeting

Presented By Alex Pearlstein, Director of Projects Ellen Anderson, Director of Research

Agenda
Economic context Market Street Services Capital Crossroads process

Competitive Capacity Assessment

Next Steps

Economic Context

-900,000 100,000 200,000 70,000 -10,000 -50,000

-800,000

-700,000

-600,000

-500,000

Source: Bureau of Labor Statistics, seasonally adjusted

-334,000 -458,000 -554,000 -728,000 -673,000 -779,000 -726,000 -753,000 -582,000 -347,000 -504,000 -344,000 -211,000 -225,000 -224,000 64,000 -109,000 14,000

-400,000

-231,000

-193,000
-210,000

-300,000

The Great Recession: Dec 07 Jan 10

-149,000

-200,000

-33,000

-100,000

Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10

By January 2010, 14.8 million were unemployed and 9.3 million were working part time, wanting full-time work.

Total jobs lost during this time:

8.35 million

The 2000s

This was the first business cycle where a working-age household ended up worse at the end of it than the beginning, and this in spite of substantial growth in productivity, which should have been able to improve everyone's well-being.
Lawrence Mishel Economic Policy Institute Washington Post January 2, 2010

The Great Recession Has Left Us

1. The decade of 2000 2009 was JOBLESS. While we gained 27 million new

residents, we lost 985,000 jobs.

2. Three in 10 unemployed Americans were out of work for 27 weeks or more at the

end of the recession. That number has since climbed to 4 in 10, the highest since the measure's creation in 1948.
3. The civilian labor force shrunk by 1.5 million people - a record since World War II. 4. Total loans at FDIC banks dropped 7.4 percent in 2009 - the largest drop in 67

years.
5. The Standard & Poors Index (including dividends) from 2000 through 2009 was -

9%: a greater loss than the 1930s.

Source: The Economist; Bureau of Labor Statistics; Atlanta Federal Reserve

The Great Recession Has Left Us

6. Number of homes where the mortgage exceeded the value: 1 in 4.

7. 70 banks failed during the recession, an additional 234 banks have failed since then.
8. Companies with fewer than 50 employees accounted for 41 percent of the total job loss

in the great recession. That number is five times its share compared to the 2001 recession.
9. Household debt has declined 3.8 percent from its peak in July 2008 through October

2009. This is the largest decline since 1943.

Source: The Economist; Bureau of Labor Statistics; Atlanta Federal Reserve

Household Net Worth 19812010

Average Net Worth of Households and Non Profits, United States
(Adjusted for Inflation, 2010 dollars)
= National Recession
$700,000 $650,000 $600,000 $550,000 $500,000
$450,000 $400,000 $350,000

-23.5%
Q1'07 - Q4'09

$300,000 $250,000 $200,000

Source: United States Census Bureau, Moodys Economy.com

Families in Need
Percentage of Households Receiving Food Stamps
Source: Food and Drug Administration; Moody's Economy.com 18% 16% 14% 12% 10%
8% 6%
1 out of every 6 households (June 2010)

4% 2% 0%

Key Dates: 1990 - Mickey Leland Domestic Hunger Relief Act greatly expands benefits. 1997 - Welfare reform; introduction of TANF leads to restrictions on access and benefits . 2002 - Food Security and Rural Investment Act reapproves restores eligibility limited in 1997. 2005 - Spike in food stamp receipients due to Hurricanes Katrina and Rita.

Consumer Confidence Drops Slightly

120

100

80

52.5

60

40

20

Dec 2007: Dec 2008: Dec 2009: Dec 2010:

90.6 38.6 53.6 52.5

0
Jan Mar May Jul Sept Nov Jan Mar May Jul Sept Nov Jan Mar May July Sept Nov Jan Mar May July Sept Nov 2007 2008 2009 2010

The consumer confidence index from a survey of 5,000 U.S. households. Seasonally adjusted: 1985=100 Source: The Conference Board

State Unemployment Rates November 2010

Nevada 14.3% Michigan 12.4% California 12.4% Florida 12.0% Rhode Island 11.6% South Carolina 10.6% Oregon 10.6% Kentucky 10.2% Georgia 10.1% Mississippi 9.9% Ohio 9.8% Washington DC 9.8% Indiana 9.8%

United States Iowa

Source: U.S. Bureau of Labor Statistics, seasonally adjusted

9.8% 6.6%

Elvis Has Left the Mountain

First, if it is not apparent to you yet, it will be soon: there is no magic bullet for this economic crisis, no magic bailout package, no magic stimulusWe are going to have to learn to live with a lot more uncertainty for a lot longer than our generation has ever experienced.
Thomas L. Friedman, Author New York Times February 1, 2009

Market Street Services

Background on Market Street

Three key principles distinguish our work from other firms: Rather than prescribing quick fixes, our goal is systemic change. Rather than producing boilerplate studies where only the clients name changes, our goal is producing deliverables specific to each clients situation. Rather than faceless consultants that make two presentations and disappear, our goal is developing a relationship as partners.

Market Street Clients

Since 1997, Market Street has worked in more than 125 communities and 29 states, including:

Austin, TX Nashville and Memphis, TN Birmingham, AL St. Louis, Springfield, and Jefferson City, MO Tulsa, OK Little Rock, AR Sioux Falls, SD Coachella Valley, CA Greenville, SC Metro Atlanta: Carroll, Clayton, Cobb, Henry, Forsyth, & Gwinnett Counties

At the state level in:

Alabama Florida Georgia Indiana Missouri North Carolina West Virginia Wyoming

Market Street Current Clients

In addition to Greater Des Moines, Market Street is currently working in the following communities:
Wheeling, West Virginia Hancock County, Mississippi Springfield, Illinois State of Missouri Montgomery, Alabama Northwest Arkansas Cobb County, Georgia DeKalb County, Georgia Alpharetta, Georgia

Visioning Process

Scope of Work
Stakeholder Input & Place People, Prosperity
Economic and Demographic Snapshot

50 one-on-one interviews Greater Des Moines (MSA) 30 focus Iowa Central groups
Constituency-specific Des Moines MSA
Stakeholder Input

Competitive Capacity Assessment

Assistance from ISU Extension Ames MSA Newton MiSA Online survey Pella MiSA General survey: CapitalCrossroadsVision.com Marshalltown MiSA

Steering Committee

Target Cluster and Marketing Analysis

Boone Misa Young professionals survey

Capital Crossroads Plan

Implementation Action Plan

Comparison metros Project Advisors Dr.Denver, L. WhiteMadison Jesse Omaha, Amy Holloway State and Nation Next Generation Consulting

Competitive Capacity Assessment

Analyzes Greater Des Moines and Central Iowas competitiveness

as a place for business and talent

People, Prosperity, Place

Research indicators reflect those from a typical site selection process

What issues, challenges, constraints and opportunities affect your

community product?

Public input informs and supports the quantitative research

Target Cluster and Marketing Analysis

Reviews business location/expansion decision factors Begins with an overview of the decision making process of relocating and expanding businesses Confirms existing and analyzes emerging targets Recommends key targets for Greater Des Moines to pursue Based on the Capital Crossroads regions corporate and research strengths, workforce capacity, wealth-creation potential and national industry trends Marketing advisor Amy Holloway will review: Regional websites External and internal marketing programs Advertising, branding, identity, message
Findings will inform the Capital Crossroads strategy

Capital Crossroads strategy

Focus is on taking community to the next level of competitiveness Culmination of all prior research components Recommendation of goals, objectives, and action steps to prioritize

future Greater Des Moines and Central Iowa investments for the coming five-year period

References best practices and provides benchmarks and

performance measures

Implementation Plan
Critical to the success of the Capital Crossroads strategy Key components:

Identification of lead and support implementation entities Program assessments and recommended enhancements Funding allocation analysis and recommendations Action timelines for implementation developed for each program year Discussion of new and/or enhanced partnerships necessary for effective implementation

Key questions
How can the Capital Crossroads regions growth be most sustainable? What will that growth look like, and where/how will it be focused? How big is too big? Is there such a thing as too big? How can the Capital Crossroads area grow, but retain the qualities that

people cherish about the region? What employment sectors will drive the regional economy and how can they best be supported? Does the regional training pipeline effectively prepare students and adults for locally available, high-value jobs? What could be the transformative projects/efforts that really move the region forward in the coming years? How can quality of life continue to play a key role in the regions growth? Can it be enhanced even more?

PEOPLE:
Talent development & socioeconomics

People: Talent Development

Pre-K Access: Participation skyrocketing, but potentially

threatened by de-funding
Stakeholders are pleased with services but would like increased access Iowa ranks 14th nationally, but significantly trails top states Governor Branstad set to propose a shift to needs-based funding

Public K-12 Schools: Urban/suburban regional disparities Des Moines PS enrollments have declined (-0.92%) while those in the MSA have increased notably (10.1%) over the 5-year period
Performance challenged by changing demographics

Stakeholders would like to see more charter schools and career academies but are discouraged by state policy and regional parochialism

People: Talent Development

Higher education: Extremely competitive capacity, which

continues to grow can be better leveraged for talent retention

Very high college students per capita, with the highest percentage increase in enrollment among the comparison MSAs
ISU one of the nations top agriculturally-focused research institutions

All of the regions colleges and universities are well regarded by residents, with Drake University achieving the highest ratings among survey respondents Question of how students can be better connected to job opportunities

Workforce development resources: Multiple resources but

reported lack of awareness of certain programs

RWIB trying to recover from scandal involving predecessor agency Central IA Works created to fill void coordinate cluster councils DMACC a key asset but some programs are space-constrained

People: Talent Development

Market Street Services Workforce Risk Index, Rankings out of 353 Metropolitan Areas, 2008
W orkforce Index - Demographic Substainability Index
Rank 37 116 39 38 62 Metropolitan Area Des Moines-West Des Moines, IA Ames, IA Denver-Aurora, CO Madison, WI Omaha-Council Bluffs, NE-IA Index 60.37 53.24 59.50 59.99 56.73

Age Pipeline
Population Young Approaching Professionals Retirement Population 89 102 59 81 96 106 82 77 81 114

Labor Force Participation

LFPR (Ages 62+) 23 52 13 15 21

Migration Trends

LFPR Long-Term Net Short-Term Net (Ages 25-34) Migration Migration 16 99 139 20 55 93 284 105 117 173 72 291 142 160 165

Public School MSA Students

College Students

People: Socio-economics
College students per 100 residents* Rank

% Eligible for Free or Reduced Lunch, 2008-09 Rank

30.9% 2 8.6 2

35.3% 3 5.4 4

25.2% 1 13.1 1

36.8% 4 7.3 3

n/a n/a

n/a n/a

College Enrollment Growth

% from 2001-02 to 2009-10* Rank

37.2% 1
Des Moines, IA 37

35.9% 2
Denver, CO 39

7.1% 4
Madison, WI 38

33.8% 3
Omaha, NE 62

n/a

n/a
United States -

Market Street Workforce Risk Index

Rank of 353 Metropolitan Areas, 2008

Iowa -

Rank PEOPLE: Snapshot data

n/a

n/a

Poverty Public School MSA Students

2009 total for Free or Reduced Lunch, 2008-09 % Eligible poverty rate Rank

15.0% 30.9% 2
8.6 $42,506 2 4 37.2% 10.87% 1 6 37 33.8% 1 3 15.0% 2

17.1% 35.3% 3 4

11.0% 25.2% 1

15.0% 36.8% 4 2

15.7% n/a 3

20.0% n/a 5

College Students Per Capita Income

College students per 100 2008 Per Capita Income residents* Rank Rank

5.4 13.1 7.3 $48,010 $44,172 $43,012 $37,509 $40,166 4 1 3 n/a n/a 1 2 3 6 5 35.9% 11.01% 2 5 39 37.6% 3 2 17.1% 4 7.1% 12.05% 4 4 38 41.0% 2 1 11.0% 1 33.8% 12.17% 3 3 62 31.8% 4 4 15.0% 2 16.02% n/a 1 25.1% n/a 6 15.7% 3 13.39% n/a 2 27.9% n/a 5 20.0% 5

College Enrollment Growth Per Capita Income Growth

% from 2001-02 to 2009-10* %, 2005-08 Rank Rank

Market Street Workforce Educational Attainment Risk Index

Rank of 353 Metropolitan Areas, 2008 % of adults w/ an Bachelor's degree or higher, 2009

Rank Rank

Poverty
2009 total poverty rate Rank

Per Capita Income

2008 Per Capita Income

$42,506

$48,010 $44,172 $43,012 $37,509 $40,166

People: Young Professionals

Overall Rank 1 2 3 4 5 6 7 8 MSA Madison Des Moines Denver Austin Minneapolis Omaha Nashville Indianapolis Vitality 10 6 5 3 5 5 4 2 Earning 8 4 5 7 7 5 3 1 Learning 9 5 5 6 5 4 1 4 Social Capital 7 7 8 5 5 2 3 2 Cost of Lifestyle 2 8 3 5 2 6 6 6 After Hours 10 5 5 5 3 3 5 5 Around Town 7 5 6 5 7 6 2 1 Avg. Score 7.57 5.71 5.29 5.14 4.86 4.43 3.43 3.00

10 = BEST SCORE Source: Next Generation Consulting

PROSPERITY:
Economic performance and structure, business climate, and entrepreneurship and innovation

Prosperity: Performance and Structure

Des Moines, IA Denver, CO Madison, WI Omaha, NE Iowa United States

PROSPERITY: Snapshot data

Employment
5-year change, Q1 2005-Q1 2010 Rank

4.16% 1

0.23% 3

-1.05% 5

0.96% 2

-0.39% 4

-2.58% 6

Wages
Average annual wage, 2009 Rank

$44,073 3

$51,733 1

$42,861 4

$40,555 5

$37,158 6

$45,559 2

Wage Growth
%, 2005-2009 Rank

10.85% 6

12.61% 1

12.17% 3

11.63% 5

12.36% 2

12.00% 4

Worker Productivity
Output per Worker, 2008 Rank

$106,493 $121,951 $98,418 $100,197 $91,040 $105,081 2 1 5 4 6 3

Business Bankruptcies
Rate per 1,000 Establishments, Q1 2010 Rank

5.4 3

10.6 6

5.8 4

5.3 2

3.8 1

6.8 5

Commercial Property Taxes

Taxes on a $1M property in core city, 2010 Rank

$46,781 4

$5,185 1

$20,570 2

$21,343 3

n/a

n/a

Prosperity: Performance and Structure

Central Iowa Private Employment By Business Sector, Q1 2010, 5-Yr Trends
Private Employment, Q1 2010 Average Annual Wage $43,220 $39,748 $78,788 $30,122 $56,160 $32,130 $74,818 $20,009 $114,219 $66,711 $38,777 $53,096 $12,911 $49,006 $22,652 $47,007 $45,726 Establishments 22,769 1,974 1,767 1,358 2,766 271 242 377 221 2,206 954 659 1,703 414 2,855 2,070 799 5-Year Trend (Q1 05 - Q1 10)

Business Sector
Total Private

Total 332,335 44,991 49,127 20,992 15,985 6,472 5,528 5,738 2,044 19,973 4,649 10,549 28,322 9,907 45,712 14,237 34,244

LQ 1.00 0.88 2.79 0.95 0.67 0.81 0.93 1.06 0.65 1.16 0.77 0.85 0.83 1.14 1.01 0.86 0.94

Change (#) 2,922 6,586 4,262 3,401 1,573 1,105 700 638 508 (105) (321) (742) (756) (1,110) (2,145) (5,043) (5,844)

1% 17% 9% 19% 11% 21% 14% 13% 33% -1% -6% -7% -3% -10% -4% -26% -15%

5-Year Job Growth Health care and social assistance Finance and insurance Administrative and waste services Professional and technical services Educational services Management of companies and enterprises Arts, entertainment, and recreation Agriculture, forestry, fishing and hunting 5-Year Job Loss Wholesale trade Real estate and rental and leasing Transportation and warehousing Accommodation and food services Information Retail trade Construction Manufacturing

Source: U.S. Bureau of Labor Statistics and U.S. Census Bureau

Change (%)

Prosperity:
Business Climate & Small Business Development
Taxes: Perception of Iowas tax environment as anticompetitive

Ranked 5th worst in U.S. by Tax Foundations 2011 State Bus. Tax Climate Index. $1 million commercial building will be assessed $46,781 in property taxes in Des Moines vs. $21,343 in Omaha, $20,570 in Madison, and $5,185 in Denver. Net tax expenditures minus credits and federal withholding are less restrictive
Competitive retail and office lease rates, but a glut of inventory

Downtown worries stakeholders

Small business development and tech transfer/commercialization must

be optimized
High per capita small business loan amounts but no prominent go-to resource for people looking to start or grow a small business. Need for an enterprise development support system Despite improvement, ISUs IP and Conflict of Interest policies limit research and commercialization efforts

PLACE:
Quality of life, infrastructure, arts and culture, and community capacity

Place: Summary
Des Moines, IA Denver, CO Madison, WI Omaha, NE Iowa United States

Metro crime rates Lower number of are very low capita doctors per Cost of living key selling point However,average of Lowest the City Des Moines cost per doctor visit Favorable housing combined property compared to appreciation trends and violent crime Omaha, Madison, rates ranked higher and Denver Rental market is than all the comparatively comparison cities Health and affordable, but wellness poised to many residents still Strong philanthropic become a major pay >30% of their and civic capacities initiative in the income on rent region

PLACE: Snapshot data

Cost of Living
C2ER Index (US = 100), 3Q2010 Rank

90.0 2

103.9 4

109.8 5

89.5 1

n/a

100.0 3

Home Prices
Median sale price of single family homes, 2Q2010

Rank

$154,298 $229,258 $213,599 $137,027 2 5 4 1

$173,178 3

Rental Housing Cost

Median Rent

Rank

$619 3

$778 6

$731 5

$611 2

$496 1

$702 4

Health Care Capacity

Physicians per 100K residents, 2010 Rank

227.5 4

238.9 3

334.7 1

242.3 2

175.3 6

220.5 5

Well-Being Index
Overall Well-Being Ranking of 185 metros Rank

30 1

52 3

33 2

73 4

n/a

n/a

Crime Rates
Combined Property and Violent Crime Ranking of 332 metros Rank

200 2

168 3

277 1

119 4

n/a

n/a

Philanthropy
Nonprofit Organization revenue per capita, 2010

Rank

$11,685 1

$4,627 6

$11,109 2

$8,307 3

$5,408 5

$5,587 4

Place:
Infrastructure
Highways and roads N/S and E/W interstates and loop highway competitive for logistics and an attractor for manufacturing projects I-35 corridor could be key link b/w Ames-Story Co. and Greater Des Moines
What do you think about the relationship between Des Moines and Ames? 81.3 % friendly but do not cooperate very often, 5.4% - relationship is strained

Air and rail Air cargo capacity allows for growth, but passenger issues related to limited direct flights and high airfares a source of strong stakeholder concern Strong number of Class I rail lines hope dimming for passenger rail Public transit Many input respondents want to see more capacity but lack of population density is a challenge

Place:
Livability and Civic Capacity
Arts, Culture and Recreation Strong capacity in Greater Des Moines, not just for a community of its size, but for a much larger region
Bravo regional arts agency has been effective in coordinating resources and working to increase capacity

Billions invested in Downtown Des Moines helping with talent attraction/retention Miles of bike/walking trails developed next stage is to close gaps and connect

Philanthropy and Leadership Legacy of strong public and private leadership led to development of numerous community assets and projects Reportedly, a growing philanthropic gap as older generation steps away and next generation of transformative leadership yet to be identified

General Online Survey: Highlights

Place of Residence Place of Employment

Please respond to the following statement:

General Online Survey: Highlights

Overall stakeholder attitudes on quality of place

Ans we r Op tio ns Likelihood you will continue to live in the community Likelihood you will raise children in the community Likelihood your children (once grown) will choose to live in the community Likelihood you will retire in the community

Exc e lle nt 49.8% 50.4% 11.0% 20.6%

Go o d 34.2% 30.9% 28.4% 27.5%

Av e ra g e 9.7% 9.4% 26.2% 20.8%

Be lo w Av e ra g e 3.6% 3.5% 12.2% 10.6%

Po o r 1.8% 3.1% 8.8% 12.3%

D o nt Kno w 0.9% 2.7% 13.4% 8.3%

General Online Survey: Highlights

Business Climate

Community Climate
Ans we r Op tio ns New members of the community are welcomed The community values persons of diverse races, ethnicities, faiths, and sexual Young professionals are actively engaged in leadership There are opportunities to volunteer your time for worthy causes The public's opinions are valued by government Healthy, active lifestyles are encouraged and supported Stro ng ly Ag re e 17.9% 10.7% 13.5% 43.5% 5.8% 15.1% Ag re e N e ithe r Ag re e no r D is a g re e 19.4% 24.5% 22.7% 5.8% 31.8% 18.8% D is a g re e Stro ng ly D is a g re e 1.4% 3.6% 1.2% 0.4% 9.5% 2.0% 54.9% 46.6% 51.7% 48.8% 32.0% 54.8% 6.4% 14.6% 10.9% 1.5% 20.8% 9.3%

General Online Survey: Highlights

Greatest workforce strength

Most critical workforce weakness

General Online Survey: Highlights

Rank 1 2 3 4 5 6 7 8 9 10 Rank 1 2 3 4 5 6 7 8 9 10 Response Des Moines/Iowa 'image' Unemployment/Lack of jobs Young professionals leaving/attract younger people Educational performance Public transportation Need to revitalize downtown Attracting quality businessess High property and sales taxes Tolerance of diversity Weather Response Quality of life Quality of education Family friendly Cost of living Downtown revitalization Workforce/work ethic Outdoor recreation/Bike trails The people Low crime rate Art scene Count 192 164 155 109 105 67 78 57 52 45 Count 136 123 120 115 104 81 75 70 67 45

Most important challenge

Top Opportunity

General Online Survey: Highlights

VISION
A cool, culturally welcoming and diverse place with interesting cities and

scenic rural attractions that offers all people access to world class education, career employment opportunities in 21st Century industries while enjoying a very interesting and stimulating quality of life outside of the workplace.
I want to be able to brag about my city and how great it is to other young

people. I want to be able to say that, living in Des Moines, so many of the cultural opportunities I am interested in come right to my doorstep. I also want to be able to say that, no matter what your career goal, Des Moines has something to offer.

General Online Survey: Highlights

FINAL THOUGHTS
Central Iowa has the right people in the right places to accomplish

anything it sets its mind on.

For the 33+ years that I have lived in Des Moines I have been

continually impressed with the forward thinking and planning that goes on and the resulting progress made. It is and should continue to be an ongoing cycle among Greater DSM and now Central Iowa that continually expands the discussion of what is possible along with what is attainable and doable next.
Some leaders do not realize they ARE leaders. There should be

mindfulness toward cultivating those who would normally not speak up, but may have the greatest impact if incorporated into this process.

Conclusion: Strengths and Opportunities

Increasingly diverse population

Competitive school systems

Dynamic higher education resources Strong work ethic and competitive workforce A growing base of networked young professionals Well established, effective economic development programs Finance and insurance concentration with key diversification opportunities I-35 corridor potential

Growing number of fast-growing technology start-ups

A dynamic, affordable quality of life ongoing downtown development A philanthropic, active civic capacity and respected leadership base

Conclusion: Challenges
External perception of Greater Des Moines and Central Iowa Divergent economic/demographic/education trends in City of DM vs.

region
Potential over-concentration of finance and insurance employment

Reportedly risk-averse attitudes preventing development of a culture

of entrepreneurship in Greater Des Moines

Lack of connectivity and go-to support entity for small business

No formalized networking and support system for aspiring entrepreneurs

Evolving but still restrictive tech transfer and commercialization at ISU

Conclusion: Challenges
Perceived tax inequities Above average airfares and a lack of direct flights at DSM Lack of critical mass of entertainment amenities and districts YPs often dont serve as ambassadors for Central Iowa Widening philanthropic gap as current leaders step aside Persistent parochialism that hamstrings regional efforts

Next Steps
Community Leadership Meeting #2
Presentation of the final Capital Crossroads Plan Tuesday, April 26, 2011 5:00-6:00 pm
Documents will be posted on the project website:

http://www.capitalcrossroadsvision.com

Questions, comments?