Archive for 2007
Local developer breaks with convention
I grew up near a bowling alley and have many fond memories hanging out there as a kid. But that’s not why I look forward to the opening later this year of the Grand Central Building on Portland’s inner east side. Before its large-scale remodel the building was a 28-lane bowling alley. In addition to retaining 12 bowling lanes it will house a bar, restaurant, billiards room and 12 tenants in storefronts along and between Belmont and Morrison avenues.
The local developer John Plew tells the Oregonian that tenant interest in the storefront spaces is high. What I was most pleased to hear him say is this: “I could fill it up tomorrow with the national guys, but I don’t want to…We want local and regional businesses that are distinctive to the city and region. We want an urban feel. We’re not looking to make it something you’d find in the suburbs.”
Now that’s something you don’t hear many developers say. Depending on which report you read, Plew’s firm sunk between $8 million and $11 million into buying and renovating the historic building. Even with that financial exposure, Plew isn’t following the depressingly conventional formula of filling it with national chain outlets. Although his tenants will pay a premium for their store space, Plew’s commitment to area businesses is hugely refreshing. And another re-emerging Portland neighborhood is soon to be the richer for it.
Corn ethanol advocates take the patriotic path
We here on the West Coast when talking about the need for renewable energy usually point to climate change. It seems the people and organizations behind corn ethanol, mainly in the Midwest, prefer to make the case in more patriotic terms, as in greater “energy security” from relying less on imported oil. And they’re finding favor in Congress at the moment.
I noticed the nuance today after doing some follow-up reading on an article that reported on the skyrocketing costs of farmland in the Midwest. The price hike is attributed to the demand for corn by ethanol producers. Can’t help but feel we’re in the midst of yet another real estate bubble and those buying the farmland today at highly inflated prices, their lenders and the taxpayers who will have to bail them out, will be big losers down the road. Among the losers right now, as the article points out, are the younger farmers who are priced out of buying more farmland.
The farm bill recently passed by the House contained provisions that apparently made the corn producers and ethanol lobby happy. One major lobbying organization, the Renewable Fuels Association, sent a letter to the House Agriculture Committee praising it for passing the bill (HR 2419) out of committee. It called the bill “a pathway that will provide a more stable and sustainable energy future for all Americans.”
A Sacramento Bee columnist called it and the recently passed energy bill “monuments to waste, stupidity and policy distortions.” Peter Schrag says the farm bill is more akin to an energy program.
“The link is corn — already subsidized to the tune of billions — since corn is the source of ethanol, which refiners are now required by federal law to mix into almost everybody’s gasoline. The theory is that gas blended with ethanol doesn’t emit greenhouse gases in the same concentrations as regular gas, and that it reduces dependence on imported oil. In fact, it does little of either.”
Schrag explains some of the reasons for this and why “the cheers for corn ethanol are far more political than they are scientific.” If the corn ethanol lobby cannot make their case as the best option for reducing greenhouse gases, it’s understandable they would hang their hat on energy security. In our post 9/11 world, politicians prefer to be seen fighting for security than against global warming. But the scientific, environmental and economic facts are not on the side of corn ethanol as a viable solution for either energy independence or lower carbon emissions.
Time to create a new game
“You’re nobody here at $10 million.”
That’s one of the wealthy Silicon Valley executives talking to the New York Times for its series on the growing concentration of wealth in America. I know Silicon Valley well, having spent more than 20 years in high tech marketing and had a number of Silicon Valley companies as clients with my former firm here in Portland.
I enjoyed my years in high tech and, yes, I was able to make a good living. I left the industry a year ago, in part because of burnout and in part because I could no longer ignore the growing inequities in our world. It’s striking how warped the perspective of some wealthy individuals can become. How about these Times quotes from several rich technology types, for example:
• “People around here, if they have 2 or 3 million dollars, they don’t feel secure.”
• “We’re in such a rarefied environment, people here lose perspective on what the rest of the world looks like.”
• “I’d be rich in Kansas City. People would seek me out for boards. But here I’m a dime a dozen.”
• “We could move. But if you do that, then you’re admitting defeat. No one wants to go backwards.”
• “Here, the top 1 percent chases the top one-tenth of 1 percent, and the top one-tenth of 1 percent chases the top one-one-hundredth of 1 percent.”
It would be easy to dismiss these individuals as bad, selfish people. But that wasn’t my experience in working with folks like them. For the most part, these are extremely intelligent, extremely hard working people, devoted beyond any reasonable measure to their work and truly exhilarated by the technology their companies are producing. The thing is, high tech is unbelievably competitive and the drive to win is enormous. I learned years ago how the winners were determined: by their net worth. “Money is a way of keeping score,” I was told by a wealthy founder of the company I was working for.
By that measure there really is only one winner in high tech. His name is Bill Gates, the richest human on earth. If the winner is the one with the most money, then every other tech millionaire, even billionaire, is a nobody, and there will never come a time when those in pursuit have “enough.”
Unless they stop playing the game. And that’s really what it will take to alter the dynamics that concentrate more wealth into fewer hands. The haves must start conceiving and playing a different game. One where the goal is to produce the greatest number of winners. Imagine all the wealth, intelligence and ambition of Silicon Valley’s technology elites in service to the have-nots of the world. Now that would be a game I’d pay plenty to watch. I’d even play along.
The fool’s gold of economic development
More than 200 people lost their jobs yesterday in Roseburg, Oregon after Dell closed its call center there. While the closure came as a shock to many employees and the community, no one should be the least bit surprised it came to this. What’s surprising is that elected and economic development officials, desperate for jobs, keep rolling out the red carpet for global corporations whose only long-term allegiance is to making money for their shareholders.
Back in 2002, Dell chose Roseburg for its call center after starting with a list of 3,300 communities as potential sites for the center, according to a December 23, 2002 article in The News-Review of Roseburg. To win the selection process, the city, Douglas County and the state of Oregon agreed to give Dell a package of tax breaks and other inducements. According to The News Review, the package included a property tax waiver of up to three years, a state income tax credit worth up to 25 percent of property investments that relate to online trade, a reimbursement of $250,000 for Dell expenditures on telecommunications upgrades and equipment, and even an agreement to build a 75-car parking lot at no cost to Dell.
In that same newspaper piece five years ago, well-known Oregon economist Joe Cortright warned, “Places that are going after call centers have to be very cautious.” He was very aware that the trend then (and now) was toward moving corporate call centers overseas to save costs. It’s also the case that business conditions change rapidly and companies react accordingly. That same month of December 2002, as the article noted, DirecTV closed its call center in Beaverton, Oregon and laid off 400 people after shutting down its Internet subsidiary.
The warning signs were there five years ago, making what happened yesterday in Roseburg no surprise. Too often winning the chase for jobs from outside corporations is nothing more than fool’s gold. It may look like real economic development, but it is soon followed by the realization that the same thing that draws large companies to a community – lower costs and higher profits – is what sends them on their way when their business declines or better opportunities present themselves elsewhere. Dell is just the latest example of this. As has been widely reported, Dell sales have been falling, and they are in the process of shedding jobs.
So what’s the choice for communities hungry for jobs, like Roseburg, which has long struggled to overcome the deterioration of timber industry employment? It’s doing everything possible to take care of existing local employers and to encourage local entrepreneurship. This is not the quick-fix answer public officials seek, and it doesn’t let them bask in the glow of ribbon-cutting ceremonies with out-of-town corporate fat cats. But independent locally owned businesses are the long-term foundation for a sustainable economy.
One Roseburg resident summed it up well yesterday in comments to The News Review:
“Did anyone know Dell was going to close?” Absolutely! Everyone who has been paying attention to the business world for the past few decades (at least). Small towns bend over backward to give big corporations whatever they want; the companies fail to deliver, and then leave in five years. If half the worth of incentives and tax breaks had gone to supporting locally-owned businesses instead of Dell, the people of Roseburg would be better off today.
Tags: call center, Dell, fool's gold, layoffs, locally owned independent business, Roseburg Oregon, tax breaks
Posted in Business & Economics, Oregon, Sustainability | 1 Comment »
Thoughts of Minnesota
The majority of my life has been spent in Oregon, but it was Minnesota where I was born and raised. Many of my former high school and college classmates made their way to the Twin Cities and settled down, while I headed to the far west. I am thinking of them and all Minnesotans today. Catastrophic events like yesterday’s 35W bridge collapse at rush hour just don’t happen there. Or so it seems. But if ever there was a state whose citizens would come together in a time of crisis, it’s Minnesota. Be well, all of you.
The new coastal colonialists
Maybe I’m the only one who finds the irony in the naming of a new upscale residential development near Bandon, Oregon, “The Colony.” Came across an ad for the development in this morning’s local paper. If you’re an Oregonian or a golfer, you’ve probably heard of the world-renown golf courses in the vicinity of Bandon. That’s the impetus behind a surge in construction of expensive homes in the area in recent years.
The developers describe The Colony as “Oregon’s premier residential coastal community.” Far from a community, what it looks like to me from the Web site is just another batch of condominiums, in this case perched along one of the most beautiful stretches of coastline anywhere. We’re talking 18 residences with an asking price of at least $1 million and upwards to $2.5 million or more. If most of these get sold as second homes, and I’m sure they will be, this won’t exactly be a bustling “community” since most of the homes will be vacant much of the year.
Over the last decade or more, we’ve seen Oregon’s coastal property fill in with expensive vacation homes. I admit I have thought often over the years about how nice it would be to own a second home at the coast. I love spending time there. But my views changed last fall when I was driving along the Florida Panhandle coastal highway. It was there I learned about the St. Joe Company, Florida’s largest private landowner; it boasts that it owns 800,000 acres including “five miles of beach, hundreds of miles of waterfront and hundreds of thousands of acres within ten miles of the Florida coast.”
Ten years ago the company began transforming itself from a tree grower and paper producer into a real estate developer as a way of profiting more from its land holdings. It has since been on a roll in developing upscale residential subdivisions and resorts, perhaps single handedly dispensing with the Panhandle’s reputation as “The Forgotten Coast.”
As I skirted by many of St. Joe’s manufactured neighborhoods, I decided to stop at a realtor’s office. The nice lady I spoke with was understandably energetic about all the real estate activity, driven in large part, she said, by wealthy folks in cities such as Atlanta and Birmingham buying up vacation properties built by St. Joe and other developers. But it was her off-handed remark about how so many of the “locals” were moving because they could no longer afford to live in the area or didn’t like what it was becoming that caught my attention. You won’t hear St. Joe talking about the impact of rising property values on the less affluent or the virtual overnight disruption to community among those who have long lived in those parts.
And therein lies, for me, the great irony of a beachfront development being dubbed The Colony. At least along the Panhandle, it very much feels like a land that’s being colonized. In this case by a large corporation. The nature of a colonizer is to dominate an economy or culture and extract wealth at the expense of or without regard to the existing inhabitants. The losers in the development game of the rich and richer are those who are priced out of their communities or watch as a way of life is pulled out from under them in the name of economic growth.
The Oregon coastline is increasingly the playground of the affluent. What I wonder is whether the locals who have lived in the region through thick and thin (mostly thin) are benefiting from any largesse of their johnny-come-lately neighbors. Or are they simply moving aside and giving up in the face of those who want a Colony they can call their own? Let me know what you think.