Measure	Pre project	Post project	Change	% Change
Personal Income Per Capita	0	0	0	N/A
Economic Distress	0	0	0	N/A
Number of Jobs	0	0	0	N/A
Business Sales (in $M's)	0	0	0	N/A
Tax Revenue (in $M's)	0	0	0	N/A
Population	0	0	0	N/A
Property Value (median house value)	0	0	0	N/A
Density (ppl/sq mi)	0	0	0	N/A

Measure	Pre project	Post project	Change	% Change
Personal Income Per Capita	38,918	48,118	9,200	0.24%
Economic Distress	0.61	0.65	0.04	0.07%
Number of Jobs	255,281	350,020	94,739	0.37%
Business Sales (in $M's)	29,061	62,396	33,335	1.15%
Tax Revenue (in $M's)	0	139	0	N/A
Population	328,531	451,677	123,146	0.37%
Property Value (median house value)	106,408	154,400	47,992	0.45%
Density (ppl/sq mi)	572.55	787.17	214.62	0.37%

Measure	Pre project	Post project	Change	% Change
Personal Income Per Capita	31,427	44,763	13,336	0.42%
Economic Distress	0.80	0.62	-0.18	-0.23%
Number of Jobs	1,293,382	2,018,830	725,448	0.56%
Business Sales (in $M's)	184,798	422,079	237,281	1.28%
Tax Revenue (in $M's)	3,616	8,374	4,758	1.32%
Population	2,781,018	3,090,416	309,398	0.11%
Property Value (median house value)	79,276	126,900	47,624	0.60%
Density (ppl/sq mi)	49.79	55.33	5.54	0.11%

Measure	Direct	Indirect	Total
Jobs	645.00	400.00	1,045.00
Income (in $M's)	37.70	23.30	61.00
Output (in $M's)	107.48	64.63	172.11

Des Moines US 65/IA 5 Beltway

1.0 Synopsis

Iowa 5 and U.S. 65 highways, built in phases between 1994 and 2003, run along the southern and eastern sides of the Des Moines metropolitan region. Together with Interstates 35 and 80, which bound Des Moines to the west and north, Iowa 5 and U.S. 65 form a beltway around the city. The new highways improved access to less developed areas to the east and south. The 24-mile project is located almost entirely within Polk County, with one small segment in the south running through Warren County. The bypass was built to both support existing and encourage new development, and to alleviate anticipated future congestion in the corridor and on I-35 and I-80.

All identified net-new economic impacts to-date have accrued within Polk County. However, this case also discusses development trends and effects to the south within Warren County. Ultimately, growth to the south and east of Des Moines in the IA-5/U.S. 65 corridor proved slower than expected. Growth in the Des Moines region continued west of the City, and has only more recently begun to occur in the IA-5/U.S. 65 corridor. Congestion did not occur to a degree that encouraged people to search out alternate routes around Des Moines. The IA-5/U.S. 65 bypass has increased the accessibility of certain communities in the region and offered time and cost savings for freight and passenger travel. It is estimated that 645 jobs were created in Polk County as a result of the bypass construction. Much of this development is associated with new retail in the City of Altoona.

2.0 Background

2.1 Location & Transportation Connections

The freeway segment of Iowa 5 analyzed here runs from I-35 in the west through West Des Moines and Des Moines, past the Des Moines International Airport, and east to the intersection with U.S. 65. U.S. 65 travels north from its junction with IA-5 across the Des Moines River, through Pleasant Hill, to the junction with I-80. Together with Interstates 35 and 80, these freeway segments complete a beltway around the City of Des Moines.

Des Moines is served by multiple rail lines, including some in the vicinity of the project corridor. The industrial area located west of U.S. 65 bounded to the south by the Des Moines River and to the north by Highway 163 (E University Avenue) is served by Norfolk Southern, Iowa Intestate, and Union Pacific railroads, including a Union Pacific short line rail yard.

2.2 Community Character & Project Context

The direct area of influence of the IA-5/U.S. 65 bypass includes the cities of Des Moines (population 207,510 in 2013), West Des Moines (61,255), Norwalk (9,639), Carlisle (3,951), Pleasant Hill (9,082), and Altoona (15,653). Des Moines and West Des Moines are major centers of employment, while Norwalk and Carlisle are smaller, more residential communities. Pleasant Hill is characterized by a mix of industrial, commercial, and residential development. Altoona has, since the construction of the bypass, become a major retail hub for the western part of the metropolitan area.

The economy of Polk County is, like many metropolitan regions, concentrated in the finance, insurance, and real estate industries. These sectors together accounted for 40% of the county’s gross regional product (GRP) in 2013. Wholesale and manufacturing sectors make up an additional 14% of the county’s GRP. Since 1990, the economy has shifted to some extent away from manufacturing and towards the service sectors. In 1990, manufacturing comprised 10% of the county GRP, compared to 7% in 2013. Similarly, finance and insurance grew from 15% of Polk County’s GRP in 1990 to 24% in 2013.

Economic development in the Iowa 5/U.S. 65 corridor was affected by the recession of 2007-2009. Prior to the recession, the region experienced relatively consistent and robust growth. However, in the years 2008 and 2009, the economy contracted before beginning a recovery in 2010. Development did not materialize at the pace predicted by planners in the region. In some parts of the corridor, development is only now beginning to occur. Overall, Polk County has grown faster than Iowa as a whole, both in terms of population (2.5% annual growth in Polk County compared to 0.8% in Iowa from 1993-2013) and employment (2.5% annual growth in Polk County, as compared to 1.6% statewide).

3.0 Project Description & Motives

Planning for the corridor dates back at least to the 1970s when the first environmental and location studies were prepared for the Iowa 5 improvements. Funding limitations prevented construction of the project, which was delayed until the early 1990s. Similar alignments were considered as far back as the Iowa 1968 Highway Plan, a planning document authored following the completion of the majority of the Interstate System in Iowa. Prior to the construction of the freeway segment east of Des Moines, U.S. 65 ran coterminous with U.S. 69 north as far as Euclid Avenue, at which point it joined U.S. 6 and ran northeast to I-80. Army Post Road, which stretched east-west from I-35 to Southeast 45th Street (just west of the future U.S. 65 alignment), was originally designated as IA 5. The new freeway segment of Iowa 5 runs between one quarter and two miles south of the original Army Post Road alignment. Construction of the two highway segments began with the north-south U.S. 65 portion, and finished with the segment of Iowa 5 between IA-28 and I-35 to the west. According to the Iowa Department of Transportation, the total bypass cost $315 million in 2013 dollars to construct.

The freeway bypass was built to decrease travel times in the Des Moines area, improve safety, address anticipated future congestion, and increase accessibility to existing and proposed development areas along the corridor. The bypass is still considered a tool for economic development in the region, in part because its full development potential has yet to be realized. In 2012, the Iowa Department of Transportation (DOT) issued an analysis of necessary improvements to upgrade the corridor to an Interstate. Both the Des Moines Partnership, a regional economic and community development organization, and the Des Moines International Airport are pushing for Interstate designation to increase visibility of the corridor and the access it provides, and to help attract businesses to the area. The Des Moines Area Metropolitan Planning Organization (MPO) and the Purple Heart Highway Collaborative, a coalition of communities along the bypass, also support the designation bid as a means to further development in the corridor.

4.0 Project Impacts

4.1 Transportation Impacts

4.2 Demographic, Economic & Land Use Impacts

Demographic, economic, and land use impacts are reported all along the Iowa 5/U.S. 65 corridor. Some impacts are just now materializing, while others occurred several years ago. Impacts include residential, commercial, and industrial development. This section reports starting at the intersection of Highway 5 with I-35, works east along Highway 5, and then continues north along U.S. 65 to I-80. Some economic development is net new growth in the Des Moines region, while other development trends reflect shifting geographic concentrations within the metropolitan area.

In recent years, the City of West Des Moines has experience rapid growth but most of this growth continues to be concentrated in the western part of the city. City planners originally anticipated more development along Highway 5, and commissioned a study to identify barriers to growth along the corridor. The study concluded that until the western part of the city is built out, businesses are unlikely locate elsewhere. Signs of that shift are beginning to materialize. Microsoft announced in 2014 that it plans to build a billion-dollar data center on a site just north of Highway 5. The data center will bring significant tax revenues to the city, and also facilitate the installation of water and sewer infrastructure along Highway 5, increasing utility availability and helping to attract other smaller commercial developments. Infrastructure in the area will be funded using tax increment financing (TIF).

The next cluster of development along Highway 5 is located in the City of Des Moines, just east of the interchange with Highway 28. The Iowa Public Employees Retirement System building relocated there in August of 2000. While the relocation likely did not create net new jobs in the region, it demonstrates how improved accessibility has increased the attractiveness of the area for businesses interested in upgrading or expanding their facilities. Similarly, the Des Moines Register opened a new expanded production facility in the area. A Hewlett Packard (HP) fulfillment and logistics center and the production facilities of Katecho Inc. are located nearby. The HP Center opened in 2002 with 440 jobs and then expanded its facility in 2011/2012, adding 150 jobs. It is unclear whether these jobs would have existed in the Des Moines area had the bypass not been constructed. Nevertheless, planners in the City of Des Moines believe that the highway access was important in facilitating employee and truck access. Katecho, a manufacturer of medical and cosmetic devices, reports that the joint access provided by Highway 5 and the airport were important factors in the decision to locate along Army Post Road. The firm relocated in 2003 to enable expansion of production. The new facility added 100 jobs. This increase, while facilitated by the highway, is not considered net-new to the Des Moines region. Had Katecho not moved to its current location, the firm would have sought out an alternate location for expansion in the metropolitan area.

The City of Norwalk is located south of Highway 5 on Highway 28. Construction of the bypass significantly improved accessibility to this relatively small residential community. As a result, the city has grown from 6,883 people in 2000 to 8,945 in 2010. The city manager reports that as they approach the “magical 10,000 mark,” the city is beginning to see increased interest in retail development to support the new population. The improved access to and availability of appropriately zoned land in Norwalk has also attracted a number of companies from the greater Des Moines area. Loffredo Fresh Produce relocated in 2014, moving 165 employees from Des Moines to a new produce cutting operation in Norwalk. In the coming years, Loffredo plans to increase its Norwalk operations to 250 employees. The Loffredo move exemplifies how new Highway 5 access enables companies to easily grow and expand within the region. Similarly, Capital City Fruit, a Norwalk company since 1981, expanded its operations into a new $12 million dollar facility in 2012. While the expansion itself is attributable to trends in the fruit industry and not the highway, the bypass has improved access for trucks. La Quercia, a producer of premium prosciutto, and Rowe Electronics are two additional companies that have expanded the industrial base of Norwalk since the opening of the bypass. Rowe Electronics relocated from the City of West Des Moines in order to secure additional space for future expansion.

The construction of the new Highway 5 freeway alignment significantly improved access to the Des Moines International Airport and its surroundings. Since the highway’s completion, development has accelerated in the airport vicinity, particularly along Fleur Drive. Vatterott College is a technical college that has expanded considerably in recent years. The college benefits from highway 5 access to serve its out-of-town students. However, its growth was not contingent on the highway access. Eurofins Scientific is a food testing company that moved to the Des Moines region in 2006 and later relocated to a site along Fleur Drive and closer to the highway. The relocation enabled consolidation of Des Moines operations and provides space for anticipated future growth. A new convenience store and a new hotel located along Fleur Drive. The hotel was attracted to the area due to both expanded commercial air service at the airport and the access provided by Highway 5. Twelve new jobs at the convenience store and hotel are considered attributable to the construction of the bypass.

Along the U.S. 65 corridor, the industrial area located just north of the Des Moines River and west of U.S. 65 contains a number of companies that report benefits from the bypass. Kemin Industries, founded in Des Moines in 1961, expanded twice since 2010 and has added 305 new jobs. The company reports benefiting from the bypass access, although the bypass is not the underlying cause of the company’s growth. Rather, trends in the company’s U.S., Canada, and Mexico markets have increased demand for Kemin Products. Helena Industries, another long-time Des Moines company, has spent approximately $20 million on expansion projects since 2007 and added 50 employees since the U.S. 65 segment was completed. According to the Helena plant manager, that expansion would not have occurred at the same scale without the access provided by the bypass. At least two thirds of the location’s employment growth is attributable to the highway construction.

U.S. 65 runs through the City of Pleasant Hill. The city has experience rapid population growth since the opening of the bypass, attributable to improved regional commuter access. The highway and resulting population growth has attracted development to the area around the interchange, including new housing, two hotels, a medical clinic, car dealership, and an industrial laundry and uniform rental facility that serves a large portion of central Iowa. While not net new to the region, this development demonstrates the value of accessibility from the bypass. Development was facilitated by a series of truck line extensions for water and sewer in the mid-2000s. New roads were also built on the east side of U.S. 65 using tax-increment financing. The laundry facility, G&K Services, had been located in Des Moines but was unhappy with their location and was considering leaving the Des Moines region entirely. The new site in Pleasant Hill allowed the business to stay in the region, thus retaining approximately 100 jobs that otherwise would have been lost. Also in Pleasant Hill is a large fuel distribution center. The facility opened new biodiesel storage and blending operations in 2012 and has announced plans for additional expansions. The company reports transportation performance improvements for trucks accessing the site, but the overall growth is a result of trends in biodiesel demand and production, and not attributable to the bypass.

The City of Altoona is located adjacent to the intersection of U.S. 65 and I-80. The city has experienced major retail, hotel, and restaurant development spurred by the highway project. Prior to construction of the bypass, there was little retail development in Altoona or on the east side of Des Moines. Shortly after the bypass opened, Walmart expressed interest in locating a store in Altoona. The city used tax increment financing to build sewer lines to the western side of the city near Highway 65, thus opening the area for development. A Menards home improvement store, several strip malls, and fast food restaurants soon followed. In early 2002, Lowes, Staples, and Target all moved into Altoona. The city next extended infrastructure to the north, in the area closest to I-80, and attracted Bass Pro Shops, a large-scale retailer of outdoor recreational merchandise. The Heart of America Group has begun developing The Shoppes at Prairie Crossing. This development will bring high-end retail to the central and eastern Iowa markets. The city asserts that the highway access has attracted more than 880,000 square feet of development since 1999, supporting approximately 800 new jobs. The development is one-hundred-percent attributable to U.S. 65, based on its timing, and the fact that I-80 had long served the city (since the 1960s) without inducing similar results. However, given that some of these jobs may or may not have been attracted to locations elsewhere in the region in response to population growth, 600 jobs are estimated to be net new to Polk County.

In total, it is estimated that 645 jobs were created in Polk County as a result of the bypass construction. For a more detailed account of the impacts of the IA-5/U.S. 65 bypass, refer to the detailed narrative document posted under attachments, to the left of this page.

5.0 Non-Transportation Factors

A number of additional non-transportation factors affected development in the highway corridor. For example, the fact that the industrial area located just west of U.S. 65 is in a floodplain acts to some degree to constrain development interests. The most significant non-transportation factor affecting the corridor’s development is the historic westward momentum of growth in Des Moines. The beltway has only gradually shifted development to the east and south, and only after developable land became scarcer to the west and north.

Tax increment financing played a significant role in the development strategy of multiple communities along the corridor. TIF is used to secure a major new business with anticipated tax revenue large enough to fund infrastructure investment. Utilities or road infrastructure built with tax increment financing then can attract additional firms to the same area. TIF was used extensively in Altoona and is also part of the development package for the recently announced Microsoft Data Center in West Des Moines. Another funding source that has supported development along the beltway is Iowa DOT’s Revitalize Iowa’s Sound Economy (RISE) grant program, which was used to finance the new Capital City Fruit facility in Norwalk.

Finally, it is worth noting some of the subtleties associated with determining “net new” jobs from project development in the Des Moines area. The metropolitan area of Des Moines has experienced overall robust growth in the last decade or so. Moreover, companies with long histories in the area want to remain in their established communities. While Iowa 5/U.S. 65 has opened up new areas for growth and made it easier to find large parcels of land for companies looking to expand, these companies would have attempted to the stay in the region even without the highway’s construction. The highway contributes towards the fulfillment of growth in the region, by making it easier to find locations for companies already in the area to stay and grow.

6.0 Resources

6.1 Citations

Aschbrenner, Joel. Why 'real estate is on fire' in Norwalk. The Des Moines Register. http://www.desmoinesregister.com/story/money/business/2014/07/10/real-estate-market-poised-takeoff-norwalk/12444727/
City of Pleasant Hill. Multimillion Dollar Warehouse/Distribution Facilities Proposed for Pleasant Hill. 10 May 2013. http://www.ci.pleasant-hill.ia.us/CivicAlerts.aspx?AID=35&ARC=95
Conetzkey, Chris. A new Iowa interstate? Business Record. 2010. http://businessrecord.com/Content/Default/Archives/Article/A-new-Iowa-interstate-/-3/988/44497
Des Moines Area Metropolitan Planning Organization. Transportation Improvement Program Fiscal Years 2001-2003.
Gardyasz, Joe. Capital City Fruit to expand in Norwalk. 6 May 2011. Business Record. http://www.businessrecord.com/Content/RetailBusiness/RetailBusiness/Article/CapitalCityFruittoexpandinNorwalk/179/854/46454
Gardyasz, Joe. Eurofins Scientific to expand headquarters here. Business Record. 4 July 2009. http://www.businessrecord.com/Content/Default/Archives/Article/Eurofins-Scientific-to-expand-headquarters-here/-3/988/38430
Heart of America Group. The Shoppes at Prairie Crossing: Altoona, Iowa. http://www.heartofamericagroup.com/portfolio/retail/the-shoppes-at-prairie-crossing-altoona-iowa/
Inside IPERS. Issue 10, Spring 2001. https://www.ipers.org/publications/members/pdf/insideipers/inside10.pdf
Iowa Department of Transportation. Iowa Transportation Commission approves $916,500 grant for the city of Norwalk. 10 May 2011. http://www.news.iowadot.gov/newsandinfo/2011/05/iowa-transportation-commission-approves-916500-grant-for-the-city-of-norwalk.html
Iowa Department of Transportation. Iowa 5 (State Arterial 592) In Polk and Warren Counties From Interstate 35 to U.S. 65/69 Reevaluation.
Iowa Department of Transportation. Traffic Flow Map of Des Moines. 2012. http://www.iowadot.gov/maps/msp/traffic/2012/cities/DesMoines.pdf
Iowa Department of Transportation. Vehicle Traffic Map 1992. http://www.iowadot.gov/maps/msp/HistoricVehicleTraffic/1992_Vehicular_Traffic_Map.pdf
Iowa's 1968 Highway Plan. http://iowahighwayends.net/maps/1968plan.html
Miller, Jennifer. The prosciutto of happiness. The Des Moines Register. 25 August 2012. http://archive.desmoinesregister.com/article/20120826/LIFE/308260010/The-prosciutto-happiness
New Plant. Rowe Electronics News. http://cwddevelopmentserver.com/rowe-electronics/about-the-company/news
Oppenhuizen, Kyle. Project update: A new interstate? Business Record. 2012. http://www.businessrecord.com/Content/Transportation/Transportation/Article/Project-update--A-new-interstate-/175/837/45054
Patane, Matthew. Loffredo to build new produce cutting facility in Norwalk. The Des Moines Register. 6 November 2013. http://www.desmoinesregister.com/story/money/agriculture/2013/11/06/-loffredoto-build-new-produce-cutting-facility-in-norwalk/3450999/
Patane, Matthew and Meinch, Timothy. Microsoft project is big data boom for West Des Moines. 19 April 2014. The Des Moines Register. http://www.desmoinesregister.com/story/news/2014/04/19/microsoft-project-alluvion-big-data-boom-west-des-moines/7900923/
Pratt, Christopher. Southeast Polk board votes to join TIF lawsuit. The Des Moines Register. 17 April 2014. http://www.desmoinesregister.com/story/news/local/altoona/2014/04/17/southeast-polk-tif-lawsuit-pleasant-hill/7853991/
Santana, Marco. Iowa lab helps ensure food safety. The Des Moines Register. 26 June 2013. http://www.usatoday.com/story/money/business/2013/06/26/iowa-lab-helps-ensure-food-safety/2462359/
Shive Hattery. Des Moines Register Newspaper Facility. http://www.shive-hattery.com/Projects/Industrial/Project/Des-Moines-Register-Newspaper-Facility.aspx
Southeast Connector Frequently Asked Questions. http://www.seconnector.com/faq.stm
Via Rail Logistics. Area Rail Service Map Des Moines Metropolitan Area. 2014. https://dmampodemo.files.wordpress.com/2014/09/dsm-railport-rail-map-2014-08-05.pdf

6.2 Interviews

Organizations

Capital City Fruit

City of Altoona

City of Des Moines

City of Norwalk

City of West Des Moines

Des Moines Area Metropolitan Planning Organization

Des Moines International Airport

Greater Des Moines Partnership

Helena Industries

Hewlett Packard

Iowa Department of Transportation

Katecho, Inc.

Kemin Industries

Magellan Midstream Partners, L.P.

Vatterott College

Warren County Economic Development Corporation

Footnotes

Case Study Developed by Economic Development Research Group, Inc.

Project: Des Moines US 65/IA 5 Beltway

Summary:

Characteristics and Setting:

Geography

Timing

Costs

Pre/Post Conditions:

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Local

County(ies)

State

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Narrative: