Tuesday, May 11, 2010

A radical proposal: Service Cuts now to invest in the future

I Testified at Corvallis City Council Budget planning session that we need to help fix our property tax problem by investing in Economic Development, even if it means having to reduce next year’s spending on some our quality of life services like libraries, parks and pools…because if we don’t grow our shrinking economic base, there won’t be anything next year or the year after to fund those parks, libraries and pools.

Friday, April 30, 2010

Corvallis Bleeding Property Taxes....Do we care?

Framing the Economic Development Discussion for Corvallis-

The economic base of Corvallis city operations is eroding because of the slow loss of manufacturing jobs and the hemorrhage of HP jobs. Corvallis is bleeding business property taxes.

1. Does the community (that means you reader) care that the economic base of Corvallis is crumbling with no end in sight because of the slow loss of manufacturing jobs and the hemorrhage of HP jobs? Corvallis is bleeding business property taxes (which are levied on both buildings and equipment), which constitute the City’s General Fund. This year the city is facing a $2.5 million shortfall in property tax revenues, predominantly due to declines in property taxes paid by businesses. Next year the shortfall is expected to be worse. This slow bleed is uniquely complicated in Corvallis by the growth of OSU and Samaritan Health (a non profit), organizations which fill buildings and employ people, but PAY NO PROPERTY TAXES to the city. This means that the underlying health of the city, its financial foundation, is in a serious decline, with no fix in sight. Without more private sector businesses and jobs (anything that is not a state job, a city job, a school job, a federal job or a non-profit job), the bleeding will continue.

2. Does the Corvallis community believe that the quality of life in our city, as augmented by City Govt (meaning; parks, bike trails, libraries, festivals, human services, arts funding) are worth keeping at their current levels? Or are we content to let services decline with the inevitable decrease in city funds over the next one to five years as our property tax base continues to erode?

3. Does the Corvallis community want to stabilize the property tax base for the city by encouraging businesses to work here, paying property taxes for the privilege? Or would we prefer to have higher residential property taxes (the growth of which is limited by state law to 3% per household), or an increased number of households ? (sprawl anyone?)

4. Does the Corvallis community believe that small, in-fill growth from encouraging (via economic development) local start up business to take hold here and grow is an appropriate kind of growth (aka Economic Gardening)? Is this more appropriate to the Corvallis community’s values (green overlays, living wages) and resources (limited industrial land) than recruiting large companies?

If yes, then we, the Corvallis Citizens, have to invest in that Economic Development work.

We need to tell our city councilors that the city government should invest in helping create those businesses and jobs. That is what public economic development funding is all about. It’s about the community’s best interest. No one sector benefits more than others, businesses have no more to gain than citizens, and in most cases, citizens have more to gain than businesses.

As a citizen using city services, each of us benefits from effective economic development when it increases the property tax base. History across the US shows, in thousands of communities, that without some investment in economic development, (paying for someone to coordinate the plays and call the action), very rarely are enough businesses established and jobs created.

The private sector is already investing.

We’ve got a large number of businesses, large and small, giving privately to help support John’s work with Economic Gardening, but its not enough. Corvallis needs the public sector to invest, to commit to helping repair the property tax infrastructure.

The Economic Development committee (former Economic Development Partnership board- all community volunteers who have spent from 6 years to 3 decades committed to Corvallis’s economic vitality) think “John’s” style of economic gardening is aligned with the city’s values (local, unique, value-added), goals(modest job growth with modest infrastructure impact) and interests (clean tech, micro nano, nutriceuticals, green building), and we know from the metrics that it’s being effective. Results don’t show overnight, but that’s why its called Gardening…you plant a whole bunch of seeds, and then nurture them to make them grow to seedlings, then transplant them for better conditions, and keep growing until you can harvest. John has been leading our economic gardening for 3 years now, and many of the seeds are planted, seedlings are growing all around town, and a few, like Perpetua, have been transplanted as saplings.

The goals for the Economic Development Director position, (funded by the city, previously by the county, and by private donations), is to have 100 businesses with 10 employees each, and 10 businesses with 100 employees each over the next 5 years. 110 new small businesses is a challenge, but with support we, as a community, can do it. This number of business and jobs will not mean a larger Corvallis, but will help replace jobs, diversify our business and property tax base, maintaining our quality of life.

Why have the economic development director position outside of city government?

1. Because it more effectively creates a public/private partnership and encourages private donations of both time and money, by giving both citizens and businesses a stake in the outcomes.
2. Because it offers more flexibility and leverage.- the economic director works with city, county, neighboring city and county, state, regional and outside organizations to effect the outcomes.
3. Because it is more cost effective. City positions are darn expensive.

What is Economic Development?

What is Economic Development?

Economic Development is the commitment of a community to proactively shaping their economy.

Why should you care?
The declining city with declining services
In Corvallis's case, we need economic development to maintain the quality of our city, and to prevent a decline that will be precipitated by decreasing property tax revenues. Here it is not about "go go growth" and its not about huge sprawl for residential or commercial reasons, but it needs to be about replacing the businesses and jobs that are being lost. As private sector (read business) employment declines, property taxes (based on building and equipment values) also decline. Residential property taxes can't make up the difference, due to measure 5 limits. So the city has budget shortfalls, this year $2.5 million for the general fund, and in future years, even greater.

So what?
Quality of Life
with property taxes declining, and basic costs going up for operating the city (like labor, electricity, etc), there is no choice but to reduce services. Those very services that make Corvallis so awesome, like bike trails, trees, parks, library, arts, human services etc.

So how do we fix it?
STABILIZE property taxes collected, focusing on business taxes, by replacing the business and jobs lost when employers downsize or leave town. This takes an active effort by the community to figure out how to "welcome" new businesses and jobs.

That is what Economic Development is about.

In Oregon, I see two approaches that are relevant to Corvallis, we can "welcome" new businesses by either 1. Growing our own or 2. Importing others.

1. Economic Gardening...a "grow your own" approach, involving nurturing start ups, spin offs, and expansion of local businesses. This is essentially an "in-fill" approach. It looks at the assets we've got, the people, resources, and skills, and gives them the support they need (training, encouragement,introductions, access to capital) to create a new business or grow the one they started.

Part of Economic Gardening is "incubating", which is taking a newly hatched business and putting the services around it that are needed to grow it. This is one small piece of the whole system...

2. Recruiting... importing other businesses to move to or create a branch here. This a process of bringing (woo-ing) existing businesses to either relocate or expand to our area. (this tends to be the classic definition of Economic development.

I think the right approach for Corvallis is clearly Economic Gardening. Its efficient, aligned with our values, and has the least impact on the culture and resources of the city.

Wednesday, April 28, 2010

Why did Econ Dev Merge with the Chamber?

And doesn't that make it less effective?

(I'm borrowing this from my previous post to expand on it a bit, as it was the topic of two conversations today.)


As a board member of the EDP, I supported merging the EDP into the newly formed Chamber Coalition 4 years ago. But it would be a NEW Chamber Coalition, with a new focus and executive director, to ensure viability and effectiveness of the EDP. We deliberately changed the name of the organization to signal a break from the previous "Corvallis Chamber of Commerce", and to signal the newly combined boards intent to work collaboratively across the community to help represent business.

Viability: The Corvallis-Benton EDP had 1.5 employees, and spent way too much of its meager budget and staff on overhead activities, fund raising, and too little on direct services and the "work" of economic gardening or recruiting. In that environment it was very difficult to be effective, and show a positive return on investment in terms of creating businesses and jobs. In addition, the EDP had "no" resources to develop and maintain a web site, we had no email list or donation management capabilities, we paid independently for accounting phone, internet and rent support. It didn't have critical mass.

By merging with the Corvallis Chamber, we were able to focus almost all of the Economic Development public and private funds on the work of economic development. In the new organization, rent, computers, internet, back end infrastructure (registration systems, web site, accounting, and fund raising infrastructure) are shared services with the Chamber Coalition. Economic Development is saving $1200 a month in rent alone, that can now be spent on salaries for direct services.

It was not without its risks and downsides, but it made sense. Corvallis has too many business organizations, and they don't work together and collaborate often enough.

To mitigate the concerns about the merger, the EDP board and Chamber Board agreed to several important things, and bound the new Coalition board to them:
1. There is clear and transparent accounting of all Economic Development spending from both public and private sources, and the details of spending are reported monthly on a separate P/L. Economic Development does not and has not subsidized Chamber membership activities, and in fact, it is quite the opposite, the Chamber supports economic development.
2. We would maintain a separate Economic Development committee that would work with the Contracts with the city and county, and would direct and aid the work of the economic development director.
3. We would continue our commitment to align Economic Development work with the Prosperity that Fits plan developed by the city, and would continue our commitments to drive those activities where we took a lead role.

I joined the Coalition board for the first time when the organizations merged to keep track of these commitments and ensure that the Economic Development function maintain its integrity and effectiveness, and I think it has done so.

Why am I involved in helping small businesses?

I got involved in Corvallis Economic Development, and in particular looking at what it takes to grow jobs, because I saw what was going to happen to Corvallis with HP downsizing (I believe they have gone from more than 8000 jobs to less than 1500 jobs -no data is available), HP contractor's downsizing (Nypro, ATS, Videx etc) and OSU funding changes- leaving more "soft money jobs", and felt like I had to give my talents to creating an alternative future:

- Where Corvallis wasn't dependent on one major private employer, and the rest government and service jobs,

- Where Corvallis citizens had options about where to work, and as one business downsized or shifted, there were other businesses growing, and able to hire folks, rather than necessitating that they leave town,

- Where the schools were vibrant because Corvallis had living wage jobs that attracted and retained families.

- Where we had enough public sector employment paying property taxes to support the services and quality of life that we so value.

I've been volunteering large amounts of time for 7 years in creating a small-business "ecosystem" where the support needed for 1, 2, 10 or 50 person businesses can find the resources, connections and financing they need to make a go of it. The goal is to have 100 1 person businesses, with 10 becoming 100 person businesses, and perhaps leading to 1 1000 person business. In this model, we don't have to change our values and quality of life, but we can change and create a better future for our community.

------ Background------ more about me.
I left HP seven years ago (before they started downsizing). I had been at HP Corvallis for 14 years, and had paid very little attention to the rest of the Corvallis community and economy. I was blissfully inside the HP bubble. Then several things happened, I moved away and came back, I left my HP job and started my own business, I learned about the loss of jobs in Corvallis, and what it meant for the future of our schools, and I got involved with a group of folks trying to start new start-ups with existing talent and resources, rather than focusing on trying to get a new HP in town.... with that new perspective I got passionate about choosing between two futures, and decided to actively work for the better future.


Here's a rough order of how I got as passionate as I am about what we need to do to create a thriving community of small businesses in Corvallis.
1. I left HP, willingly, for personal reasons, and moved to a suburb of Boston for a year. By leaving Corvallis I realized what a unique and amazing community we have.
2. I got interested in entrepreneurship and start ups. I was nearby MIT and Harvard, so I set about learning from "the best" about how new business started, grew and thrived -esp MIT, as Cambridge has many parallels to Corvallis.
3. I returned to Corvallis, and learned about the population changes that were/are threatening the strength of our local schools (through work the school board did on long term planning, note: we are barely able to justify two high schools, and enrollments are declining at all schools)
4. I started my own business- putting some of the theory into practice, (and learning that its really a lot more difficult than it sounds)
5. I volunteered with a group working on Commercializing Oregon Research (CORC), and brought marketing, sales and go-to-market perspectives to that team. The goal was bringing research out of university to start new businesses.
6. I moved my business into the new Business Enterprise Center, and started working with start-up and small technology clients to help them in marketing, but learning that many of their issues were, like mine very basic, and very broad. Finding the right resources while keeping your business running is amazingly difficult, especially for those who are technologists working to commercialize an invention, rather than business background folks.
7. I asked to be, and was appointed to the Economic Development Partnership (EDP) board by the Benton County Commissioners to help support and focus the EDP"s efforts to start, grow and nuture local businesses (called Economic Gardening or Economic Ecosystem), as opposed to supporting classic Economic Development, which is usually focused on recruiting large corporations.
8. As a board member of the EDP, I supported merging the EDP into the newly formed Chamber Coalition with a new focus and executive director to ensure viability of the EDP. The edp had 1.5 employees, and spent way too much of its meager budget on overhead, fund raising, and too little on direct services and the "work" of economic gardening or recruiting. By merging, we were able to focus almost all of the Economic Development public and private funds on the work, with Rent, computers, internet, back end infrastructure and fund raising infrastructure being shared and supported services with the Chamber Coalition.
9. I have served for 3 years on the ChamberCoalition board, stewarding the Economic development work to make sure the commitment made with the EDP merger was kept. Since then we have helped 100's of businesses, helped create 3 businesses (at least) of greater than 10 employees, influenced or helped create 100 or more jobs, and have brought hundreds of thousands of dollars of investment capital into Corvallis. We ran the first, highly successful Angel Conference in the willamette Valley.

90% of this work and success is due to the efforts of John Sechrest. It's the right kind of job growth for Corvallis, and we'd be fools to let him go.

Tuesday, April 27, 2010

What can You do to help support John and Econ. Dev?

WRITE 1. have folks write letters to their city councilors and county commissioners with a specific, personal story of how John helped their business, and the results that came from it, and then recommend continuing funding support for Economic development

SHOW UP AND SPEAK 2. Encourage people to come to the Upcoming city budget Meetings- May 11 is most important, as there will be an opportunity for public testimony there.
May 4, 2010 City Manager will Present the Budget
7:00 PM
Fire Station Main Meeting Room
400 NW Harrison

May 11, 2010 (Public Hearing- Opportunity to give short testimony)
7:00 PM
OSU Lasells Stewart Center - Construction & Engineering Auditorium
875 SW 26th Street

May 13, 2010 (deliberations- be present, they know you're listening, it changes the conversation)
7:00 PM
Fire Station Main Meeting Room
400 NW Harrison


GO PUBLIC 3. write a letter to the editor support economic development and Johns' work-- or post a note to your facebook or blog page, or tweet about the upcoming meetings. (you can find some talking points on my blog at www.clelandmarketing.blogspot.com) or chime in on www.welovecorvallis.com, where there are few folks who are at best skeptics, and at worst venomous towards Economic Development.

CONTRIBUTE 4. make a contribution to private fundraising for John's position...you can make a check to the Corvallis Benton Economic Development or make an online contribution at the Chamber Coalition's web site. http://www.cbchambercoalition.com/index.php/econdev/edreport.html

SPREAD THE WORD
and finally, join me in making some noise.

There are so many in Corvallis who don't understand A. what economic development is. and A1. Think that the word "development" only means bad things... B. that private sector jobs are what pay for public sector jobs and services through property taxes.

Tell others who may have been impacted by one of John's many programs, or who care about the business environment in Corvallis to get engaged, because if we don't we won't have a say. and If we don't have a say, its pretty clear there won't be any resources to build Jobs and Businesses in Corvallis.

Monday, April 26, 2010

What if we didn't Invest in Job Creation?

Major Consequences for Corvallis/Benton County. Economic Development Funding at Risk.

Has John Sechrest’s work touched your business or you professionally in any way? Does he create value for the money the City/County has invested in his salary? Would Corvallis be better off without his position, his work, and his personal enthusiasm?

Its all about jobs, employment and the economy. Time is of the essence.

The economy is down. Unemployment is up.
Corvallis and Benton County need new business and new living wage jobs. John Sechrest and Aaron Edwards, working under the banner of the Corvallis-Benton Chamber Coalition, have been working hard, with good results, to help create and bring those jobs to our community *. But their own jobs- and the funding that supports economic development in Corvallis and Benton County- are in Jeopardy. The consequences will be serious.

No Economic Development, No New Jobs.

Benton County and the City of Corvallis allocate funding for economic development. In the past, a small part of those funds have paid for John’s and part of Aaron’s salary via a contract for Economic Development with the Chamber Coalition. Now the City and County are facing tough budget situations, and the economic development budgets may be cut, and with it, they will cut the funding that pays for John and Aaron to create and recruit new jobs to Corvallis and Benton County.

These decisions will be made soon. The City Council Budget commission will meet May 4th to hear the proposed city budget. May 11 is a public hearing (come give testimony). The County Commissioners are finalizing budgets this month. They need to hear from you now.

If we lose the funding for Econ Dev, and with it, John and Aaron, we are at high risk of losing both of their jobs (barring an amazing private fundraising effort, which we have begun). The effects of these losses could be devastating to our efforts to start, grow and expand local businesses like yours. This would be a real blow at a time when we should be focusing on creating jobs, and reaping the harvests of the new business seeds that John has sown for 4 years.

Please contact your Corvallis city councilor, contact your Benton County commissioner, and let them know we need to invest in growing jobs when the economy is down. It only makes sense. Also let them know what John, Aaron and The Chamber’s economic development team have done for you, someone you know, and the greater business community. Encourage them to support some level of funding for the continuation of those positions.


Katherine Cleland
Board Member, Economic Development Committee, Corvallis-Benton Chamber Coalition

Attachment: List of city councilors, List of County Commissioners

List of city councilors and their emails see www.corvallis.or.us and search city council. Hyperlinks will open up an email form from the city.

For a list of County Commissioners and their contact information see www http://www.co.benton.or.us/boc/index.php

To send and email to the entire board: bocinfo@co.benton.or.us
Annabelle.E.JARAMILLO@Co.Benton.OR.US

jay.dixon@co.benton.or.us

Linda.L.MODRELL@Co.Benton.OR.US


*For details on jobs created, businesses supported, please see our past economic development report go to
http://www.corvallischamber.com/index.php/econdev/edreport.html