Xceligent, a company with local offices in Lee’s Summit and Independence, recently decided to move workers to Blue Springs.
When that was announced last week, it caused some heartburn for Lee’s Summit leaders already hotly debating the effectiveness of its economic development efforts.
Xceligent is a near 15-year-old company, led by principals Doug and Erin Curry, which does research on commercial properties and provides that information to real-estate brokers, appraisers and others in that industry. It is in the process of rolling out its products major markets nationally, and its offices in Independence and Lee’s Summit were too small for the planned expansion.
The company leased a 45,000-square-foot building at 101-105 Magellan St., just off Adams Dairy Parkway and moved about 100 Lee’s Summit employees there.
“We just have not been very successful in getting businesses to move to Lee’s Summit,” Councilman Bob Johnson said. “Whatever it takes to compete with competing cities, we need to do.”
He said had talked to Mike Atcheson, a Lee’s Summit developer and real-estate broker who had been trying to negotiate a lease with Xceligent for its expansion and the role of the LSEDC.
“It seems like there wasn’t much of an effort to retain them in Lee’s Summit,” Johnson said.
Atcheson had been negotiating with Xceligent for a new lease to add space in Lee’s Summit, when the company told him it had decided to take another offer. Atcheson asked for a few days to make a counter offer. He approached the LSEDC, but at that point nothing could be done.
Doug Curry, CEO of Xceligent, said the space in Lee’s Summit wasn’t exactly what the company needed.
Curry said the reality is that either community would have been a good fit, but the property owner in Blue Springs gave Xceligent an “extremely reasonable rate, untypical of the market.”
He said the property owners had been very aggressive in getting financial assistance from Blue Springs and turning around a space for Xceligent.
Blue Springs, late last year, authorized $805,000 in industrial bonds for Walnut Street Properties to renovating its building and warehouse on Magellan to be used as a call center for Xceligent. By issuing the Chapter 100 bonds, Blue Springs technically owns the building for the 10 years while the bonds are repaid. For that reason Walnut Street Property won’t pay real estate taxes on the building. That wasn’t possible for Atcheson’s building because it is already in a tax-increment financing district.
Xceligent has a seven-year lease, subletting the property from Walnut Street Properties. It will pay personal property taxes.
Also, the company is getting $1.5 million in Missouri Works incentives, which offers possibility of retaining state tax withholdings or tax credits once it adds 211 newly-created jobs in Blue Springs.
The Missouri Works program would have been available for the project in Lee’s Summit as well. Individual employers can apply for those credits by going directly to the Missouri Department of Economic Development, or city or development groups can help facilitate that.
Todd Pelham, assistant city administrator in Blue Springs, said owners of the Magellan Street property about six years ago built it specifically for three construction companies with high-end front offices and warehouse space behind. In the recession, two of the companies went bankrupt, so the owners had to find tenants, a combination that made it hard to lease in today’s market
Pelham said that he had the impression from Xceligent that Lee’s Summit just didn’t have the product it needed right now.
If Xceligent decides to move in the future, the structure on Magellan will be ready for another call center of 100 to 300 employees, Pelham said.
He said he hopes the city will win a future expansion of Xceligent in the city’s Missouri Innovation Park, although he expects competition.
Erin Curry, director of human resources for Xceligent, said the company expects to need even more space in the metropolitan area in the next 24-36 months. It would either lease or build. The Blue Springs Missouri Innovation Park is one possibility, but there also are attractive sites along the Interstate-470 corridor in Lee’s Summit, she said.
The company hopes to grow to 600 employees in the next few years. It has offices outside the Kansas City area as well.
The couple did look at other states for its headquarters, primarily Kansas, and compared incentives.
“There were no compelling reasons to move from Missouri to Kansas,” Erin Curry said. “We wanted to build something in our own community.”
She said they prefer to grow their company in Jackson County where they’ve lived 25 years, both in Lee’s Summit and Blue Springs and now in a rural home.
Atcheson said Xceligent representatives told him lease rates were a major piece in the decision.
“They said to me, it’s so much less we weren’t going to insult you by asking you to lower it again,” he said.
There was a $3 per-square-foot spread.
Atcheson said he’s still supportive of the LSEDC, even if frustrated with that particular outcome.
“We lost a good business that would have grown in Lee’s Summit,” Atcheson said. “It was a tough day for LSEDC. I’m a big supporter, I believe they do a lot of good.”
Jim Devine, president of the LSEDC, said the project wouldn’t have met the city’s current guidelines for economic incentives because it’s a lease. He said it was an example of Blue Springs having the right-sized building at the right price.
“One loss does not make a bad community,” Devine said.
Tom Lesnak, President of the Independence Economic Development Council, said it had been working with the company for about two years, but Xceligent was looking for a specific sized building and cost.
“It came available, the timing was right and the building was right,” Lesnak said.
He said it’s always frustrating to run out of options and have a company move, but at least it stayed in the area.
“That money flows through all the communities,” Lesnak said. “The important thing is we were able to keep it in eastern Jackson County.”