Cornfields to Cloud Computing

Staff Writer
Columbus CEO

When representatives from Discover Financial Services first visited New Albany in 1998, the company was on a nationwide search for a place to build a 325,000-square-foot flagship facility. They met in a cornfield with a real estate broker, the land developer, the mayor and the school district superintendent. That meeting helped launch the New Albany Business Park, a 3,000-acre development located on the north side of state Route 161.

"From the very beginning, before the first shovel was in the ground for the business park, everybody came together instead of fighting over whose revenue belongs to who," says Jennifer Chrysler, community development director for the city of New Albany.

Discover's facility, which handles all of the fraud, forgery and recovery services for the Fortune 500 company, was New Albany's first big get. Standing in that cornfield, reps for what was then the village of New Albany touted a master plan developed by the New Albany Company. "They had to tell the farmer not to plow the fields that day so that they wouldn't go out and run them over," Chrysler says.

But to build the business park, New Albany needed cash--$16 million to fund roads and other infrastructure. "The council was really thinking proactively about what it is that companies were looking for and how you need to be competitive. So they took the risk and built the infrastructure before the first company even had a shovel in the ground. It was backed by a letter of credit from the New Albany Company at the time," Chrysler says.

The risk paid off. Since Discover opened its doors in 2000, dozens more companies have located in New Albany. The business park now contains more than 4 million square feet of developed land and about 9,000 employees. Its 3,000-plus acres (some of which are in Licking County) are only about 40 percent full, says Scott McAfee, New Albany's public information officer.

It's no secret that the economic downturn has been tough on commercial real estate development. Yet, New Albany has found success in attracting new business and new jobs, as well as cultivating entrepreneurs.

"One of the things in this economy is that people who have decided to make investments are doing it only because they believe it's a safe investment," Chrysler says. "From the very beginning in that cornfield, New Albany has developed according to the plan. We've done what we've said we were going to do, whether it's in the public sector or the private sector. You know who your neighbors are going to be, and you know that you can pretty much guarantee that another Fortune 500 company or another large corporation is going to take an ownership position in the ground next to you so that your investment is going to be protected."

Finding Success

Since 2009 alone, New Albany has attracted 3,119 jobs and more than 20 businesses. Such developments have brought new revenues to both the city and the New Albany-Plain Local School District.

The biggest additions are 510 jobs from Bob Evans Farms' new corporate headquarters (planned for completion in 2013), 400 from Accel, 300 from PharmaForce and 250 each from an Aetna expansion and new facilities for Communicare and KDC. In all, the business park has added more than 2 million square feet.

The business park is located within a community reinvestment area (CRA), which offers a 100 percent real property tax abatement for up to 15 years. The city also helps craft individual packages to meet each business's needs, including revenue bond financing, direct loan financing and grants. Since 2009, New Albany has approved $40 million in incentives, most through the 15-year tax abatement.

Since the CRA was created in 1998, more than $1 billion in private and public money has been invested, generating more than $85.6 million in income tax revenues in New Albany, city figures show. A portion of those taxes pays down the debt on the infrastructure; the city and school district split the remainder equally.

Most communities offer carrots to new businesses, and some incentive packages trump those offered by New Albany, Chrysler says. But the city promotes its technology and transportation assets--including easy access to Interstate 270 and state Route 161--to stand out from the crowd.

The lion's share of the credit for the development of this municipality goes to the New Albany Company, the brainchild of Les Wexner and Jack Kessler. The college classmates started the real estate development company in 1991 with a vision of transforming the village into a top-notch master planned community.

"With today's way of doing business, all companies offer incentives. But what really stands out is that we are a master planned community," says Bill Ebbing, president of the New Albany Company. "Part of our master plan development is the infrastructure. It is definitely a distinguishing factor. We created a partnership with American Electric Power to bring dual-feed electric. They have two different substations, so if one goes down it automatically syncs into the other and that's very important for these companies."

The village also partnered with AEP on a fiber-optic network when the utility company built a major transmission center in New Albany. The partnership reduced the cost of an $8 million investment to just $1.2 million.

"Most recently, we've partnered with a company called Bluemile, which has lit our fiber-optic network," Chrysler says. "Now we're able to provide access for each one of our data centers to over 180 different, unique service providers across the United States."

People are important, too. Many of New Albany's 7,700 residents also work there. "That workforce is so critical for these companies when they make a decision. Being in close proximity to a strong workforce is key," Ebbing says.

Aetna looked at multiple factors when deciding to expand. "There's a great, well-educated workforce that we can recruit from the New Albany location. Logistically, there is an ability to expand in New Albany. The tax incentives that the village and state offered were a big part of that commitment, too. Those were the three keys," says Brad Fischer, market head for Aetna's public sector and labor division in the northern Midwest. The company received total incentives worth about $3.5 million.


"We subscribe to the cluster theory of economic development," Chrysler says. "Companies that are like one another tend to locate near one another because they are able, basically by economies of scale, to share resources." The New Albany Business Park has established four clusters: research and information, retail, medical office, and personal care and beauty.

"To not have all your eggs in one basket is huge," Ebbing says. "That's really what we've been able to do in the business park, to focus on several different industries."

The research and information campus includes Aetna and Discover. Also, there's TJX Companies Inc.'s technology center (which relocated from Massachusetts), PharmaForce, and data centers for Motorists Insurance Group and Nationwide; those four have added a combined 382 new jobs since 2009.

PharmaForce, in particular, is a regional win, Chrysler says. "They are backfilling the jobs in the Columbus office because they moved those corporate jobs here. They were also purchased by a Japanese company, so they're an international corporation now."

After Daiichi Sankyo Company acquired PharmaForce, company officials visited New Albany and bumped the local job count from 200 to 300 and invested in better equipment.

The personal care and beauty campus, which has $9 million worth of infrastructure under construction, includes Accel, Vee Pak Inc., KDC, Alene Candles and Axium Plastics-and 1,070 new jobs. Accel, the first company to start construction, will open July 1 after relocating from Orange Township.

The Pizzuti Companies is building the more than 400,000-square-foot Accel facility at a cost of about $20 million, says Joel Pizzuti, the company's president. "They recognized on a micro level a great opportunity to capitalize on some synergies by being co-located with companies that work together," he says.

Businesses on this campus can reap financial incentives if they meet certain green goals. "We created our own program based off of the LEED version 2.2 system. If they meet our standards then they receive a tax abatement, plus they have to meet some payroll benchmarks," Chrysler says. The standards include offering bike racks and walking and bike paths that connect to the city's 27 miles of trails.

The medical campus, which includes recent expansions by Mount Carmel Health System and Equity Inc. and a new facility from Communicare, has brought 376 new jobs since 2009.

Mount Carmel New Albany Surgical Hospital is one of the largest orthopedic specialty hospitals in the Midwest, Chrysler says, while Communicare offers rehabilitation services. "It's for people who have had a hip or knee replacement, but they're too sick to go home or to even go to a nursing home. They go to this acute facility to get intense occupational and physical therapy and also the nursing care they need for seven days," she says.

Unlike the other three campuses, the retail niche is not geographically clustered, but spread along Route 161 so tenant companies have good access to highways, McAfee says.

The business park also includes Water's Edge, a multitenant office building that has brought 505 new jobs and houses travel agency TS24, Limited Stores, Janova and Bluemile.

The building, which opened in January 2010, has already achieved full occupancy well short of its three-year goal. Construction has started on Water's Edge II, an identical 108,000-square-foot building, as well as another 60,000-square-foot-building.

New Albany is also home to the 210,000-square-foot Tween Brands facility and the 1.25-million-square-foot Abercrombie & Fitch campus, which has 2,800 employees.

Tech Push

Business incubator INC@8000 opened in February, part of the Innovate New Albany project to link entrepreneurs with tech startups and TechColumbus. The incubator, occupying 8,000 square feet on the second floor of the Signature Office Building along Walton Parkway, debuted with more than 50 percent occupancy. Today, there's a waiting list.

The incubator is a partnership between the city, which committed $250,000 in support for two years; the New Albany Company, which is offering subsidized lease space; and TechColumbus, which is using $100,000 in city funding to support new ventures.

"If an entrepreneur has an idea and it's tech-based or tech-enabled, we can sit down with the entrepreneur and talk through a business concept," says Ted Ford, president and CEO of TechColumbus. "We can help them start a company and coach them. Put up to $50,000 in funding into validating whether their idea will work. We can do a prototype, a survey, see if there's a patent, do a market survey. We can invest $250,000 if all of those things come back positive, which is funding for development of the product and to hire some key people."

Startups also have the opportunity to pitch their concepts to the Ohio TechAngels, which has an office in the New Albany Business Development Center and is the largest tech angel investor in the country, Ford says. "They can get another $250,000 or maybe significantly more."

Chrysler says Innovate New Albany is focused on small business and entrepreneurial development. "There are three components to economic development and they're all equally important: business attraction, retention and business creation. [TechColumbus] was really the business creation side of that equation. So by partnering with them and providing this technology resource, we thought that it would be a great way to meet that economic development need," she says.

Water's Edge tenant Janova is a perfect example of what New Albany hopes to accomplish, McAfee says. "Two to three years ago, Janova had six employees. They grew to 35 and now all of a sudden they're growing from 35 to almost 150. If we can cultivate that and start businesses here and they can grow and become successful and want to stay here, that's really the goal," he says.

Already, INC@8000 businesses have established relationships amongst themselves. "There's a lot of collaboration. Two or three of our clients are also tenants here," says Brad Griffith, president of Buckeye Interactive, a Web development and interactive marketing company located in the incubator. "We also have a couple of suppliers who are here. It's been really a nice physical environment, a nice climate in which to get referrals and a great infrastructure."

New Albany offers the chance to network and connect with other businesses, says Ron Savoia, founder of Stratus Innovations Group, a cloud computing consulting firm. "The advantage of being able to connect to Janova and Bluemile because what the three of us do is complimentary. ... It's advantageous for us to network together," Savoia says. "There are networking events, brainstorming about what kinds of solutions there are out there, business opportunities and how we can market our products and services."

"It's a very collaborative, networking environment here," says Tammy Krings, CEO and leadership coach with TS24. "The technology incubator is an example of New Albany's commitment to attract technology companies and they're able to do that in part because of the dynamic infrastructure."

Competition or Cooperation?

In March, Bob Evans Farms announced plans to move its corporate headquarters from Columbus to New Albany. The 175,000-square-foot facility, planned for completion in 2013, will bring 510 jobs to the city--150 of them new to Ohio. Columbus Mayor Michael Coleman criticized the move, calling for more cooperation between Central Ohio communities on economic development.

New Albany officials contend they're not trying to rob Peter to pay Paul. McAfee points out that of 3,119 new jobs brought to New Albany since 2009, 2,151 are new to Ohio. He also cites a new revenue-sharing agreement for the Licking County personal care and beauty campus. "Columbus will very soon get 15 percent of the income tax revenues out here that are generated for a 15-year period from most of these businesses that would never have come to Central Ohio if not for being recruited and sold on New Albany," he says.

"One of the things that we learned through this process is that it's not always about incentives, because our incentive package to Bob Evans was about $5.5 million less than Columbus. We've provided them with an opportunity to go from 350 jobs to 500 jobs, and we think that's good for the whole region," Chrysler says.

"New Albany met the most criteria of the places that we looked at when we were selecting a location. In the end, the parcel of land we were looking at was going to be the easiest to develop, the best location in terms of accessibility and the infrastructure of the location was quite good, as well," says Margaret Standing, a spokeswoman for Bob Evans Farms. As to Coleman's criticism? "I wouldn't want to comment any further than to say we're very excited about the move," she says.

Chrysler dismisses the suggestion of competition between New Albany and other Central Ohio communities. "I think as a region we're competing for companies outside of the state of Ohio to locate here, and I think that we do that really well," she says. "In fact, we're so thankful to Columbus for all of the amazing assets there and all of the things that they've done to help spur economic development in the region."

Regional economic development push Columbus2020, for example, has fostered relationships with other communities. "It's nice to be able to court a company from Canada and talk about Ohio State University or some of the things going on in Dublin, which isn't even close to being in New Albany," Chrysler says.

"Central Ohio, in general, is a great place to locate and grow a business. New Albany has positioned itself to be extremely competitive," Ebbing says. "It's the quality planning, the proactive development of the state-of-the-art infrastructure, the competitive incentives and being able to accommodate various segments of the market with shovel-ready sites."

Michelle Davey is an editorial assistant for Columbus C.E.O.

Reprinted from the July 2011 issue of Columbus C.E.O. Copyright © Columbus C.E.O.