One in four of the so-called Nebraska companies working on Lincoln’s arena development are headquartered out of state. File photo

By Deena Winter | Nebraska Watchdog

LINCOLN – The overseers of a $346 million basketball arena in Lincoln like to boast that 77 percent of the work is being done by Nebraska companies, keeping jobs and public money close to home.

Actually, one in four of those so-called “Nebraska firms” are headquartered outside the state, a Nebraska Watchdog investigation has found.

Companies such as United Rentals are on the list of locals working on the arena project, even though United is the world’s largest equipment rental provider, headquartered in Greenwich, Conn., with more than 850 branches. The fact that one of those branches is in Nebraska qualifies it as a Nebraska company in the eyes of the public board handling the project.

The 16,000-seat Pinnacle Bank Arena, slated to be finished this fall, will be home to the University of Nebraska Husker basketball teams. The project, overseen by a three-member Joint Public Agency, includes infrastructure around the arena, parking garages, a festival space and private shops, condos and offices nearby.

Another example of a “Nebraska company” is Overhead Door Co. of Lincoln. Although the garage door company has a distributor in Lincoln, it’s just one of 450 distributors nationwide for the company, which is based in Texas.

And while companies like Total Tool are recognizable as national companies, many of the names on the list of Nebraska firms are less widely known. Like Wesco, which has four branches in Nebraska but is a publicly traded Fortune 500 holding company headquartered in Pittsburgh, with annual sales of about $6 billion.

Or Graybar, which specializes in supply chain management services and was ranked by Forbes as the 65th largest private company in America last year, with $5.4 billion in revenue. Its two Nebraska distribution centers are among 240 nationwide.

(View a list of the companies with out-of-state headquarters here.)

The board overseeing the Lincoln arena project classifies contractors as Nebraska firms if they have a presence here, even if they are headquartered elsewhere. File photo

Paula Yancey, an out-of-state contractor who is program manager for Lincoln’s project, acknowledged some of the companies “have offices in other areas.”

“We base it on the office that we are doing business with and the office the contract is signed with,” she said. If an out-of-state office signs the agreement, the company is considered out of state.

Yancey said she thinks it’s fair to call businesses on the list Nebraska companies because she’s working with local people and branches.

“If we’re working with a local business, though, we’re hiring their employees, we’re using the people here,” she said. “The money’s going back into the company in this region.”

After all, she said, those firms have Nebraska offices and pay taxes here.

“If we weren’t working with the local companies, if we had nothing to do with the local office, I could see that,” she said. “I don’t think you can say, ‘Oh, because you have a national office… you’re not local.’ ”

However, she acknowledged it’s impossible to know how much of the money flows back to their corporate headquarters in other states. She said the Joint Public Agency is trying to use as many Nebraska firms as possible, but it would be impossible to do all the work with purely Nebraska companies. She said it’s challenging to find local companies that can bond a huge project and have experience doing a specialty project like an arena on a fast track. Often those out-of-state companies subcontract with local companies, she said.

Construction on the Pinnacle Bank Arena is about half done. Photo by Bethany Schmidt/Nebraska Watchdog

“You don’t want to put people out of business either,” she said, noting that when she was working on a big job once in San Antonio, she hired a local painter who insisted he could handle the work but got in over his head and went out of business.

Originally, the list of so-called Nebraska firms included two companies that didn’t have any Nebraska presence: Gephart Electric, which is a Minnesota company, and Sports Facility Acoustics, of Ohio. Yancey said those were mistakenly put on the Nebraska list.

Another company on the Nebraska list is AGA Consulting, which is headquartered in Bloomington, Minn., and has two employees there and one in Wisconsin. But its only Nebraska presence is an unmanned executive suite on the second floor of an Omaha downtown highrise. AGA Consulting’s website lists offices in Minneapolis and Omaha, but its Omaha office phone number doesn’t work and the office is only used sporadically by AGA President Bill Gmiterko.

Gmiterko told Nebraska Watchdog the Omaha office opened in 1999, but he just uses it for a couple of days every other week. The company, which specializes in designing parking garages, has two contracts worth about $197,000.

After being alerted by a reporter to AGA’s lack of a Nebraska presence, Yancey took them off her Nebraska list.

(Watch what happened when Joe Jordan tried to track down AGA’s Omaha office.)

University of Nebraska Regent Tim Clare, who sits on the three-member Joint Public Agency, said even though some of the companies may have headquarters outside Nebraska, they own property here and have employees who spend money here. He said it would be “very, very difficult” to do the project solely with companies headquartered in Nebraska.

“I don’t know that I’ve ever referred to them as Nebraska companies,” Clare said. “I’ve referred to them as companies that have a significant Nebraska presence.”

Prior to the public vote in May 2010 on the arena project, Clare said there was concern that most of the work would be done by out-of-state workers, so the procurement process was modified to avoid having to give bids solely to the lowest bidder, regardless of the bidder’s location.

“We made a promise to taxpayers that we’re going to do the best we can to hire local talent,” Clare said. “Are all the dollars going to Nebraska companies? No. And that would be impossible to do.”

Jane Kinsey, spokeswoman for the Watchdogs of Lincoln group that monitors the arena project, said the arena board needs to clarify what it means by “Nebraska companies.”

“If it’s an out-of-state national company how many local people are employed in that capacity? If it’s an out-of-state company and they have one employee here are they counting that?” she said. “That needs to be clarified.”

Mayor Chris Beutler and Councilman Gene Carroll are the other two members of the arena board. Beutler’s office deferred to Yancey, and Carroll did not respond to a request for comment.

Contact Deena Winter at deena@nebraskawatchdog.org. Follow Deena on Twitter at @DeenaNEWatchdog

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