c o m m u n i t y p r o f i l e
Federal Funds,
Tax Increase
Help Owensboro
Shore Up Its Economy
With $40 million in federal aid, the city put in a new retaining wall to halt erosion of downtown by the
By Susan C. Thomson ohio river. that project spurred redevelopment of much of downtown. photo provided by the cit y of owensboro
F or years, the Ohio River had been washing
away the waterfront park in Owensboro,
Ky., threatening to eventually submerge the
Owensboro, Ky. by the numbers
Population ......................................................... 55,745 *
downtown streets behind it. A $40 million
Labor Force ....................................................... 28,003 **
federal erosion-control project secured by U.S. Unemployment Rate .....................................9 percent **
Sen. Mitch McConnell, R-Ky., has stopped the Per Capita Personal Income............................ $33,278 ***
destruction. A new steel containment wall * U.S. Bureau of the Census, estimate July 1, 2009
** BLS/HAVER, October 2010, seasonally adjusted
has been sunk into the riverbed at the water’s *** BEA/HAVER, 2008
old edge. Tons of dirt have been hauled in and TOp EmplOyErs
graded, restoring the wasted bank. Owensboro Medical Health System ................... 3,200 †
Inspired by the announcement in 2005 Emblematic of the old economy is the now-shuttered Green Daviess County Public Schools .......................... 1,755 † †
river steel co. plant. it is being razed. photo by susan c. thomson U.S. Bank Home Mortgage .................................. 1,261 †
of the federal funds, civic leaders got seri-
Owensboro Public Schools .................................... 778 † †
ous about redeveloping the wider riverfront Specialty Food Group (meat processing) ............... 470 † †
area, a subject of off-and-on discussion since † Self-reported
World War II. In late 2008, a bold master The elected commissioners of the city and of † † SOURCE: Greater Owensboro Economic Development Corp.
plan for downtown was unveiled. Streets Daviess County separately approved the plan
would be rerouted and a pedestrian-friendly in early 2009. They also raised taxes to ensure
plaza created, revitalizing dozens of blocks. that it would be realized. A four-percentage-
The park would be re-created with a plaza point increase in their assessments on premi-
named for McConnell, plus fountains, play ums for all personal and business insurance
areas, a waterfall, a hotel and an indoor other than health is projected to produce the
“events center.” needed $79 million over 20 years.
12 The Regional Economist | January 2011
“This was a remarkable step forward, with
the city and county governments, with their
different constituencies, coming together
for the common good of the community
and overcoming the inertia of 65 years,” said
Owensboro’s city manager, William Parrish.
Over those same years, the Owensboro
economy has slowly shifted away from
manufacturing. In 2001, Green River Steel
Co., where hundreds once worked, closed
a plant that is now being razed. General
Electric Co., where 6,600 people made radio
and television tubes in the mid-1960s, was
down to 109 employees making motors when
it closed in October. Now the economy is
The Owensboro Medical Health System is build-
more mixed, consisting of “a little of several Across town, the Owensboro Medical
ing a $385 million hospital, which will have 447
things,” said Jody Wassmer, president of the Health System is building a $385 million beds, almost 100 more than in the current hospital.
Greater Owensboro Chamber of Commerce. hospital, which it is financing itself. The
Among the mid-sized employers he cited are system, the result of two local hospitals that
two natural-gas pipeline companies, a meat combined in 1995, has grown into a regional
packer and makers of pasta sauce, auto parts enterprise serving 11 counties. In the pro-
and chewing tobacco. cess, it has taken on 1,200 more employees,
Nicholas Brake, president of the Greater including well-paid specialist physicians
Owensboro Economic Development Corp., and other clinical professionals. The chief
said the area has benefited from “a lot of executive, Jeff Barber, estimated that the
success from the internal growth of existing system will add 300 jobs before the new
companies.” hospital opens in 2013 and then a “couple
The Owensboro Medical Health System of hundred” new positions after that.
and U.S. Bank illustrate his point. Both are The new hospital will replace the system’s
outgrowths of long-time local enterprises that existing 360-bed one and provide space At Kentucky BioProcessing, greenhouse manager
have serendipitously evolved over the years for it to operate its full complement of 447 Jennifer poole harvests tobacco plants. the plants
into job-creating powerhouses. licensed beds. The older building will stay undergo an extensive process to purify and extract
In 2001, after 30 years of mergers and proteins for use in vaccines and other medicine.
open for, among other uses, outpatient
acquisitions, a one-time Owensboro start-up diagnostic and lab services, cancer treat-
became U.S. Bank’s national mortgage- ment and research, and degree-completion
servicing center. By early 2010, it had run out programs. The last are offered by the system
of space for its burgeoning work force. The in cooperation with the University of Louis-
bank started planning for a new building, one ville’s School of Nursing and the University
that would accommodate an additional 500 of Kentucky’s College of Pharmacy.
workers. Owensboro was in competition for In 2006, the health system bought the
that building with unidentified larger cities in production facilities of then-bankrupt Large
Kansas and Wisconsin. Scale Biology Corp. An offshoot of Owens-
Bob Smiley, executive vice president for boro’s once-thriving tobacco industry, the
the mortgage business, admits to rooting for company developed a unique system using
Owensboro because of its “abundance tobacco plants to make proteins for the
of workers with the right work ethic.” production of vaccines and other drugs.
A combination of incentives, speedily The purchase was a move not just to secure
A lab technician at Kentucky bioprocessing,
arranged, won the day for Owensboro. In a technology of potential patient benefit but Jill atherton, prepares to test proteins.
package valued at $1.7 million, the city offered also “to bring employment and economic
photos by charles mahlinGer
to build an 81,000-square-foot building and growth to the area,” Barber said.
lease it back to the bank for 20 years at below- The state of Kentucky, having identified
market rates. The company also qualified biosciences as a key future industry, tapped
for state tax credits worth up to $4.5 million, its national tobacco settlement funds to
depending on the exact number of jobs cre- lend the company half of the $6.4 million
ated. The building is under construction. purchase price.
The Regional Economist | www.stlouisfed.org 13
Brake, the economic development instance, husband-and-wife entrepreneurs
official, forecasts that the company will Larry and Rosemary Conder began buying
position Owensboro to eventually become and fixing up downtown buildings, the
“a really key player in the emerging plant- oldest dating to the mid-19th century. The
made pharmaceutical industry as it devel- couple’s properties now include a gift shop,
ops, one of the centers in the world.” a coffee house and a row of four buildings
Now called Kentucky BioProcessing, renovated into second-floor condos and
the company has signed a collaboration street-level retail space, all of it rented.
agreement with German pharmaceutical Among the ground-floor tenants is Gamb-
giant Bayer Innovation GmbH and received rinus Libation Emporium, an upscale bar
a $17.9 million contract from the U.S. run by the Conders’ daughter and son-
Department of Defense. In less than five in-law, Adrianne and John Condray.
years, it has grown from six employees to “Owensboro is fortunate to have city and
32 and become profitable, said the chair- county leaders that recognized the value of
man, Hugh Haydon. our historic core and riverfront” and were
In 2010, the company built a second, willing to risk their political careers for it,
55,000-square-foot building, increasing Rosemary Conder said.
its plant-growing space more than tenfold The master plan raised doubts; the tax
and adding to the stunning amount of increase roused opposition.
construction activity around town. But “after you saw initial success, people
By Brake’s calculation, $500 million stopped listening to the naysayers,” said
worth of work is still under way and likely Michael Beckwith, chief financial officer of
to generate 9,000 jobs over the next three to homegrown First Security Bank.
Not everything is new in downtown owensboro. many five years. That money includes $37 million The bank is another Owensboro success
of the older buildings, some dating to the mid-19th for the last 2.2-mile stretch of the four-lane story. After growing through acquisitions,
century, have been renovated for second-level condos U.S. Highway 60 bypass under way on the it had run out of space in its downtown
and street-level retail.
eastern edge of town. Financing is equal headquarters. Among possible solutions,
parts state and federal stimulus funds. it considered moving the operation to
Gradually, the downtown master plan Evansville, Ind.
is being executed, with some tweaking. The bank’s ultimate decision was to
As an add-on, planners have conceived spend $4.5 million to buy and renovate
an international bluegrass museum and much of a square block of downtown,
performance center. It would be housed including a building there that will be its
in a vacant state office building, replacing new home. At 28,000 square feet, it will
a smaller museum. The new place would be twice the size of the current one just
further capitalize on Kentucky’s musical across the street and allow the bank to
heritage and Owensboro’s annual blue- double its existing corporate staff of 25.
grass festival. The deal, announced in September, was
At Creme, a downtown coffee shop, Kelly creed tends Meanwhile, the master plan’s most sealed by the state’s promise of $250,000
the counter. creme is one of several properties devel- expensive feature, the events center, has in payroll tax credits for the 25 new jobs.
oped by larry and rosemary conder. entered the design phase. In October, a The chance to stay in the emerging new
photos by susan c. thomson Louisiana architectural firm was chosen, downtown iced the cake. “We thought it
from among 26 bidders, to design the $27 was important to be part of that,” Beckwith
million project, which will have flexible said.
spaces that can be used for everything from
meetings to concerts to sporting events.
The center is projected to open in 2013, as Susan C. Thomson is a freelancer.
is a 150-bed Hampton Inn & Suites that a
local developer has signed on to build next
door. As specified in the master plan, the
hotel will be built with private funds.
All along, one of the plan’s goals has
been to leverage the public money involved
to spur private investment, some of which
had already begun to happen. In 2006, for
14 The Regional Economist | January 2011