Last in a three-part series on the 20-year anniversary of the closing of Rath Packing Co.

WATERLOO -- All hope seemed lost in 1985.

A community was in tatters. Waterloo had just lost one of its most venerable companies and was suffering from the mass layoffs at another. Local unemployment was in the double digits. Homes were left abandoned. Morale was at an all-time low.

More than 10 months after its final day of production, Rath Packing Co. was officially buried as its plant and equipment were sold at auction.

In the years following Rath's closing, there was accusations of theft, corruption, and mismanagement of Rath property and liquidated funds. The issues surrounding the company's closing were cited by then-Mayor Del Bowers for his decision not to seek a second term.

The national media took notice, as The New York Times and CBS News published pieces on how high-paying Rath jobs were replaced by lower-paying jobs.

But from the ashes of despair rose hope and opportunity. Once Rath finally closed after years of exhaustive attempts to rescue it, the community's attention was diverted to diversifying the local economy, an effort longtime leaders believe laid the foundation for today's prosperity.

If at first you don't succeed…

One of the first attempts to put the community back on track ultimately failed, though its resurrection remains a possibility.

Waterloo Greyhound Park, capitalizing on the established reputation of its owner, the National Cattle Congress, opened to enthusiastic crowds in October 1986. Despite being limited by state regulators to a winter-only racing season, the track initially prospered, but not without controversy.

Displaced Rath workers felt betrayed when the city invested $1 million in Rath-targeted grant money recovered during liquidation in the track. Workers felt they should have recovered funds from the liquidation, since their contributions and wage concessions kept the company afloat.

"It was the employees who put up the matching funds," said Colleen Kacher, who worked at Rath more than 30 years before losing her job a week before the company's last day. "That's why so many Rath employees were bitter when they took the Rath money and built the dog track. It just wasn't right."

The dog track shut down in 1994 after two referendums to allow slot machines failed. But the facility could be reborn if the Iowa Racing and Gaming Commission grants a casino license to the National Cattle Congress.

As for the Rath site, several ill-fated dreams and schemes for its reuse arose, including a new locally run meatpacking operation and a mushroom factory.

"For the next two years, every Monday night, I had to listen to ex-Rath workers rail me because they felt there was more we could be doing," said former Mayor Bernie McKinley, who took office two months after Rath's liquidation. "It caused me a lot of misery."

One of the positives to come out of the Rath closing and the Deere layoffs was that it exposed a longtime weakness in the local economy that, once revealed, leaders sought to repair.

"One of things the community lacked in the '80s was diversity," said Lyle Taylor, the last president of Rath Packing Co. "Everything was dependent on Rath or Deere. If they slowed down, it hurt the whole community."

As the local economy sunk to its lowest point since the Depression, about a dozen economic development groups representing different cities and different interests united under the banner of the Cedar Valley Economic Development Corp., which is today known as the Greater Cedar Valley Alliance. After years of making economic development an afterthought, leaders realized it had to jump to the head of the line. And it make it even more effective, it had to be a collective effort.

"It brought the metro area together. Up until then, we'd done things separately," said Ross Christensen, a longtime leader in economic development efforts.

The group's sole purpose back then was to convince General Motors to build a 6,000-employee plant to manufacture its new Saturn cars in the Cedar Valley. That effort also failed, but the group's formation would signal a turning point for the area's fortunes.

With its marketing and recruitment muscle, Cedar Valley helped lure the likes of Eagle Ottawa, Hunt-Wesson, IBP, the 1.3 million-square-foot Target Distribution Center and most recently, Ferguson Enterprises.

"I'm happy that I was part of the turnaround," said McKinley.

The last 20 years have also seen more emphasis on assisting homegrown companies. Firms like Bertch Cabinets, Crystal Distribution and Van G. Miller & Associates started out with a handful of employees and now rank among the largest employers in the area.

One of the firms responsible for helping local entrepreneurs is Black Hawk Economic Development Corp., which formed in 1978 to secure a federal Economic Development Administration loan to help Rath stave off bankruptcy.

When Rath was liquidated in 1985, Black Hawk EDC recovered about $2 million. That money formed the basis of a revolving loan program that in the past 20 years has provided economic assistance to more than 200 area small businesses.

Taylor, chairman of Black Hawk EDC, knows from his Rath experience it takes a combination of financial capital and creative capital to make a venture work. Rath lacked both, leading to its failure. Taylor said Black Hawk's mission is to help fledging companies that have the ideas, but lack the financial resources to make those dreams become reality.

"I had a commitment to the people in this community to do what I could to save the Rath jobs," he said. "When that failed, we decided to help others keep jobs and create new ones."

Because of the work of BHED, Rath's legacy now extends to the Cedar Falls Industrial Park. Many of the companies located in the park have received loans from the organization to build or expand their operations.

"There are not a lot of companies out there we haven't helped," said Taylor.

Renaissance under way

On the flip side, the neighborhoods around the Rath site still bear the scars of the company's demise. The once-thriving working-class neighborhood has one of the highest unemployment rates in the city, and nearly half of its households have earnings below the federal poverty rate. The "Rath Area Neighborhood" also has the highest density of dilapidated housing in the city, and a large percentage of the homes near Rath are vacant.

Twenty years later, the downfallen Rath neighborhood is receiving much needed attention from both public and private interests.

Though millions of federal dollars couldn't save the plant, money from Washington has helped the neighborhood and provided incentives for commercial development.

Federal dollars financed the demolition of deteriorated Rath buildings as well as the Construction Machinery Co. building, helped rehabilitate dozens of neighborhood homes, funded environmental testing to help with future business development and purchased property along the Cedar River for future development.

The private sector is assisting as well. Crystal Distribution purchased a small piece of the Rath property during the 1985 liquidation sale and has been building its business in the neighborhood for the past 15 years. It purchased several more Rath buildings throughout the late 1980s, tore down a few, and eventually built a 55,000-square-foot freezer, meat packaging and office complex that was completed in 1999.

When McKinley makes speeches about economic development, he uses Crystal's investment as an example of how communities need to work with existing employers and not always be chasing newcomers.

"Nobody thought much about it at the time, but they turned out to be the big gun there," said McKinley. "They've done a tremendous thing in that area. I thank God for the Poe family."

Private developers are also turning their attention to the adjacent neighborhood.

One of those involved is David Deeds, a Cedar Falls native who now makes his home on Mulberry Street between Seventh and Eighth streets. Deeds is focusing his efforts and investment capital on plans to resurrect the historic neighborhood by rehabilitating old homes and building new ones.

"Obviously, I only remember Rath in its death," he said. "From my understanding, it was once a vital neighborhood. You shopped at one end and worked in the other."

He believes the key to revitalizing the neighborhood is making it resemble the past. He envisions a neighborhood where cars aren't necessary to get to important places. A key component of his plan is the Vision Iowa-funded Riverfront Renaissance Project, which will include a river walk and connecting trails along both sides of the Cedar River, from First Street to 18th Street.

"If you look across the country, you see a renaissance in urban areas that are creating these walkable areas," said Deeds. "I think people will start to see very soon what we're doing. In the next five to 10 years, it will be a very different neighborhood with a very different feel."

Joel Palmer can be reached at (319) 291-1582 or joel.palmer@wcfcourier.com.