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IBM brings big business, new challenges to Dubuque, Iowa, economy

Thursday, June 3, 2010 | 12:01 a.m. CDT
The gold-domed Dubuque County, Iowa, courthouse lies northwest of the Port of Dubuque, a recently revitalized area of the city along the banks of the Mississippi River in Dubuque, Iowa. The port is home to offices, museums, a hotel, conference center and casino, providing new business opportunities and entertainment for the 60,000 residents.

Tracy Connolly, the sales director at Oak Park Place senior residents home in Dubuque, Iowa, did not take much note when IBM announced that it was opening a customer service center in the city.

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Oak Park Place is a housing complex for people 55 years and older, and Connolly did not imagine that the IBM “techies” would be interested in renting any of the vacant apartments.

She still finds it amusing that about 13 IBM workers now occupy the entire second floor of Oak Park apartments, located about three miles from downtown Dubuque.

“They enjoy the quiet environment,” Connolly said. “And the older folk in the complex also enjoy the new company.”

The feeling on Dubuque’s streets regarding IBM’s investment in the city is one of optimism, and it is shared by city officials as well as small- and medium-sized business enterprise owners.

The U.S. Bank and the Northeast Iowa Community College situated across the street from the nine-story Roshek Brothers Building that houses IBM both have banners that welcome the global technology firm to Dubuque.

Dubuque, located in northeast Iowa on the Mississippi River, was selected to house an IBM customer service center similar to the one set to open this November in Columbia.

Connolly said business was slow for most of last year, and only the first and third floors of the housing complex had tenants, until she got a call in the winter from some IBM workers who could not find rental apartments and were tired of living out of hotel rooms.

She negotiated a special month-to-month lease with the IBM workers, whose ages, she said, range from early 20s to mid-50s.

She declined to disclose the price they were paying for their stay, but said most preferred to pay only the basic rent, unlike senior housing clients who pay for full accommodations.

IBM employees who have young children are housed in separate apartments elsewhere in Dubuque that are also managed by Oak Park.

Big Blue’s move to Dubuque, where it has created about 866 new jobs to date and is on course to hire a total of 1,300 by end of this year, has been a vital shot in the arm for Connolly’s flagging business.

"At least two of the 'IBMers' want to bring their parents here as well,” Connolly said.

Such inquiries, she said, give her hope that even after the younger techies find homes to rent and move out of Oak Park Place, she will have made useful contacts that will generate business for her in the future.

At Dave’s Downtown Conoco on Locust Street, just one block from the service center, Dave Adams said he is finally starting to feel IBM’s presence.

Dave Adams has operated the gas station and convenience store for the past 32 years. His business, already feeling the effects of the economic downturn, took an initial hit when many of his customers moved out of the Roshek Brothers Building so it could be renovated for IBM.

Although the occupancy rate at the Roshek Brothers Building was only at 20 percent before IBM moved into the fifth through ninth floors, the few remaining tenants provided a critical lifeline for Adams.

“It was a double whammy," Dave Adams said. "I don’t know how I survived. But it’s starting to feel like the good old days now.”

The 53-year-old married father of two has three full-time employees and one part-time worker, and he plans to hire one more if business continues to pick up.

IBM’s presence in Dubuque has also caused excitement at Clarke College, located about five miles from downtown.

Scott Schneider, the director of continuing education, said the college has started a special course in information technology that could open doors for Dubuque residents who wish to work for Big Blue.

IBM has a representative on Clarke College’s advisory board, Schneider said.

The first 24 students in the special information technology degree class are expected to graduate in about two years.

IBM has not offered any guarantees it will employ students who take the class, Schneider said, but the firm was "instrumental” in developing the course outline.

The coming of IBM has been bittersweet for Greg Adams, a real estate agent in Dubuque.

Greg Adams, the proprietor of Re/Max Advantage Realty, has worked in Dubuque for three decades and said he and other real estate agents are profiting from the “IBMers” moving to the city.

But there is a damper to the housing boom for those in the real estate sector.

The city of Dubuque has introduced a long list of ‘green building’ guidelines that developers in the city must comply with, and it is costing Greg Adams and his colleagues more money to build new houses. 

The higher building costs, which Greg Adams estimates to be an additional 5 to 10 percent of the total property value, could add more fuel to an already inflationary real estate market.

Dubuque had developed guidelines for the Sustainable Dubuque project even before IBM came to the city early last year, and after it arrived Big Blue signed on and expanded the initiative.

The city has adopted a new green building code that requires contractors to meet at least 65 of 119 specifications for approval of new housing.

“Ultimately it hikes the prices,” Greg Adams said, adding that higher houses prices could slow down sales.

The requirements include preserving as many trees as possible in new subdivisions, construction of streets that absorb water and the use of energy-efficient, tankless water heaters.

There were about 526 housing units approved for construction in the city on May 21, with 236 under construction and 33 complete, according to figures from the Greater Dubuque Development Corp. All of that housing is expected to meet the "green building" specifications.

The bright side for Greg Adams is how Dubuque has defied the national trend of a flat housing market.

He has employed three real estate agents in the past one year, though he said the additional hires are only “indirectly” related to the housing boom spurred by IBM.

Rick Dickinson, executive director and chief operating officer of the Greater Dubuque Development Corp., said economic benefits from the IBM deal were likely to exceed the $52 million incentive package the Iowa state government and the city spent in luring Big Blue.

The most certain economic gain, Dickinson said, is a $60 million annual wage income from the 1,300 workers, whose average pay, he said, will be in the "mid-40s."

“No surprises so far," Dickinson said. "IBM has met and exceeded all promises it made.”

Mark Burns, the manager at a secondhand store that is owned by the Dubuque Rescue Mission, said furniture and other household goods in his shop have been selling much faster since IBM started hiring, making a "noticeable difference” in his total sales.

“They are probably the most diverse group of employees I’ve ever seen in Dubuque,” Burns said. “I haven’t heard anything bad.”


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