By Randall Turk

Transcript Business Editor

Central location within the metro appears to be the prime reason Dell Computers announced on Nov. 1, 2004, it will locate a huge call center in Oklahoma City.

Norman was a contender for the Dell project, but economic development leaders say the city was not equipped with the necessary economic incentives to compete for an employer of this size.

“If we want to play in the major arena, we’ll have to offer some level of local incentives to attract big employers,” said Don Wood, executive director of the Norman Economic Development Coalition (NEDC).

“Presently, there’s no culture for the Norman community to offer incentives for business development,” said Ted Greb, president of the Norman Chamber of Commerce Board of Directors.

“Many people in Norman don’t feel we need local business incentives because we already have great quality of life,” said Greb, who also is manager for community development for OG&E Electric Services. “There are a lot of ‘Norman, Oklahomans’ with high quality of life and living standards in the U.S., yet they have business incentives. We have to compete with them to attract quality employers.”

Wood said Dell was shown two sites on the north side of Norman that could accommodate the surging commuter traffic the company would attract. The first is on University of Oklahoma land southeast of I-35 and Rock Creek Road. The other is on the northeast corner of I-35 and Indian Hill Road. He said Dell regarded both sites on the southern fringe of the metro area labor pool as inconvenient for commuters.

Wood said the recently vacated Saxon Publishers offices and distribution center south of Highway 9 and the U.S. Postal Service training center would be an extra 20-minute commute for Dell employees. “The biggest negative we had is having to attract commuters from throughout the six-county metro area,” he said.

Dell will build a 120,000-square-foot call center on a 62-acre tract of park land northeast of I-44 and SW 15^th Street. The site is near the Oklahoma River and Oklahoma City’s Bricktown. In addition to more than $5 million in state job creation grants, Dell will receive the land, worth $680,000, and about $11 million worth of infrastructure improvements furnished by Oklahoma City. Since Oklahoma City cannot legally donate park land, it will be required to purchase new acreage to replace the Dell site. That could add another $600,000 to the city’s costs for landing Dell.

Most of the site improvements for Dell will be financed through a bond issue enabled by voter approval of State Question 707. SQ 707 amends the state Constitution to permit cities to extend “tax increment financing” over a period of more than a year. The bond issue, to be repaid by Dell property tax increases, would be retired over 25 years.

In August, Dell opened a customer contact center in leased space in northwest Oklahoma City. The company now has 500 employees in the temporary facility, with plans to hire another 200 by year-end. Dell eventually could employ as many as 3,000, making it one of the top 10 private sector employers in Oklahoma City.

“Of course, Norman’s economic development projects have been much smaller than Dell,” Wood said. “The question is, do we want to attract these bigger employers?”

With help from a consortium of eight Norman banks, the NEDC established Norman Business Park on 116 acres along Highway 9 that had been held by 3M Corporation for nearly a decade. The business park is occupied by two large call centers. A major British employer, Albon Engineering & Manufacturing, announced plans this summer to build a 200,000-square-foot manufacturing plant in the business park. Several sites remain for businesses choosing to relocate in Norman.

“Many of our projects have involved securing land for companies,” Wood said. “We were among 125 cities in the U.S. and Canada Dell considered. The Dell prospect put us in the position of competing without having time to make decisions about local incentives.”
NEDC activities are financed by an annual budget of $300,000. The City of Norman, the University of Oklahoma and the Centurion Club, a chamber group, each put up a third of NEDC funds.

On Sept. 20, inspired by Norman’s apparent loss of Dell, the Norman chamber Board of Directors approved a resolution creating “new economic development programs” because “Norman has not provided financial and tax incentives such as those offered by other Oklahoma and out-of-state communities.”

Attracting high-tech employers such as Dell can greatly reduce the “brain drain” experienced when graduates of OU and other institutions leave the state for promising employment elsewhere, Greb said. “What we hope to achieve by bringing such employers here is to provide young, educated people the opportunity to stay in Oklahoma.”

OU’s research component and quality of graduates are of interest to Dell, Greb said. “OU President David Boren was clear on offering opportunities to Dell.”

Dell is headquartered in Round Rock, Texas, in the Austin metro, where the University of Texas main campus is situated. “The University of Texas has never reached out to Dell,” Greb said. “Dell wanted that, but Oklahoma City offered more money.”

Incentives can include such elements as land, buildings, tax credits, tax exemptions and city concessions. “But the City of Norman is strapped for revenue,” Greb said. “And it’s very difficult to raise all the money from businesses.”

“Personally, I would hope we could go to a sales tax to establish a fund for local incentives and provide more support for NEDC.”

Norman falls short of other Oklahoma cities in terms of easing costs for potential employers. Ponca City, for instance, has a half-cent sales tax for economic development dedicated over 10 years. Wood said Lawton, Ardmore, Bartlesville, Ada, and Duncan dedicated sales taxes can be used to provide revolving loans, grants, credits and infrastructure for relocating companies. But, as with any business venture, local incentives carry risks.

Tulsa voted a sales tax bring in Boeing Aircraft, and Oklahoma City approved a sales tax to attract American Airlines. The cities failed to lure those companies.

Ada put up sales tax funds to build a facility for a company that pulled up stakes and left the city’s investment behind.

“We need local dialogue to determine whether we want larger employers, how to compete for them with incentives and how to pay for it,” Wood said. “The City Council is supportive, but we couldn’t go far enough without local dialogue.”

Doing nothing, the other side of the decision, can still have positive results for Norman, Wood said. “Oklahoma City footed the bill for Dell, but Norman will get 200 to 300 more residents (Dell employees) without paying a dime. Dell will end up being a major employer for Norman without even being here.”

But Greb said Norman risks becoming more of a “bedroom community” by failing to convince major employers to the city. “It’s important to the vitality and quality of Norman to have people who live and work here.”

Greb said several city councilmen have suggested an incentive planning process much like the method used for Norman’s 2025 Plan. “We want to set up meeting and bring experts in to educate people about economic development,” he said. “Let people see what incentives have done for other communities. I would hope that would lead the council to set it (incentive financing) for an election.”

Companies have other standards when reviewing potential locations, Wood said. “There are quality of life issues. Norman has advantages with its research and university connection, its educated, productive workforce and low cost of living. We’re a little limited in the real estate we have to offer companies.”

Norman needs to examine what is needed to maintain and improve quality of life, Wood believes. ‘Transportation, parks and recreation, and a new library come to mind.

“For Oklahoma City to land the Dell project, the impact is huge,” he said. “Norman is part of this market. Dell interviewed 20 MBA graduates of OU and hired 18. Those are jobs with a Fortune 50 company with a lot of upward mobility.

“The location selected by Dell is an easy commute for Norman people. There are not stop signs from here to there.”