Tuesday, November 13, 2007

'Hope' replacing sound business decisions?

A Sunday Blade article took a look at Toledo's downtown and the struggles going on to 'redevelop' this area.

"Once the undisputed business and shopping center of Lucas County, downtown Toledo long ago lost its status as either of those.

Over the past quarter-century, projects such as CitiFest, Erie Street Market, and COSI have helped sustain the hope of the downtown community.
...

Downtown's advocates say there is much from which to take heart.

There is Fifth Third Field, which has spawned enough spin-off business to nurture a handful of nearby bars and restaurants, including a Tony Packo's.

The Toledo Riverfront Hotel - which opened as the Hotel Sofitel in the same spurt of redevelopment that produced Portside - is set for a $6 million upgrade and a new name, Crowne Plaza.

City officials are hoping the new county-owned arena being built at Jefferson Avenue and Huron Street, at a cost of $85 million to $105 million, will contribute to downtown's re-emergence - not become another struggling victim.

Also contributing to hopes for an ultimate downtown revival is the Marina District across the Maumee River, now getting a $10 million public road and park investment to be followed by a $75 million private investment promised by real estate developer Larry Dillin."

What is the common theme in all of this? Hope.

Unfortunately, hope is not enough to sustain any type of development or re-development and that's the biggest problem in Toledo. While 5/3 Field does have some new businesses surrounding it, the County hasn't seen any substantial increase in sales taxes as a result. I do not know if Toledo's payroll taxes have increased or not - but considering the loss of other companies (Owens-Illinois, for one), I'm pretty confident in speculating that there hasn't been an overall increase as a result of these new shops/restaurants. And these 'results' would be in keeping with most studies on the economic impact of such ventures that draw from within an existing community. They do not result in NEW spending, but reflect a RE-DIRECTION of existing spending.

The new arena will be the same because, according to the feasibility study, its targeted draw is from a 50-mile radius, meaning that they, too, will be likely to re-direct their spending from one existing activity to a new one in the arena. And this is especially true during the economic times the area is currently (and perpetually) experiencing.

A recent Blade editorial on another topic contained this statement:

"With Fifth Third Field drawing hundreds of thousands of people annually, the construction of the new sports arena well under way, the Marina District moving forward, and downtown eateries and watering holes doing well, it is clear that a foundation should have been laid for a solid downtown revitalization."
(emphasis added)

Toledo and its leaders, including The Blade, continue to believe the 'build it and they will come' philosophy of economic development - counting on their hope that such amenities will generate the economic boom we'd all like to see. But in doing so, they neglect the underlying core problems that make Toledo an unfriendly place to do business. They ignore the studies which provide data contrary to what they hope and, as we are seeing in the arena project, they fail to provide a realistic financial plan to the public. This failure means that any potential challenges identified in such plans, or any documented issues identified in the studies, are never addressed either by the decision-makers or the public.

As I wrote in my Toledo Free Press article:

If we are really serious about selling the strengths of this area and recruiting jobs and businesses, we have to show how companies can make money here — as that is their main purpose. We have to show how our infrastructure and qualified work force will make it easier for them to conduct their operations. We have to show how our costs of doing business (payroll, property, income and inventory taxes along with permits and regulations) are less costly resulting in more profit for their owners, shareholders and employees. We have to show how we can help them to be successful, rather than how we expect them to foot the bill for all our individual initiatives (LivCom funding?).

Once we have the companies, the jobs and the resulting payroll expenditures contributing to our overall economy, we'll experience both the demand and the financing for such “quality of life” amenities. They are a result of job growth and expansion — not the cause of it.


We need to stop 'hoping' for economic growth from these attempts and start paying attention to the lack of impact they've had over the last 20 years. Then we have to change our approach if we expect to get different results.

8 comments:

Tim Higgins said...

Maggie,

The problem to me seems to be the faulty premise under which the city of Toledo and Lucas County seem to be working. While the building of 5/3 Field and the Arena will help Toledo to draw some outside money into the city, real growth for the area will come from the bottom up and not the top down.

A greater focus on the neighborhoods of downtown might ultimately be of more benefit to the growth of the city. Toledo will become a more livable city when it creates safe enclaves that people want to live in. The local businesses that the city is looking for will then be sustained by local residents (the only way that they really can), not "drive-bys".

Toledo often talks about wanting to experience the Renaissance that Columbus has experienced in recent years. That growth came from the revitalization of neighborhoods like the Short North, Italian Village, and the University area. It was only when these neighborhoods were successfully established that investments like the Nationwide Arena became viable.

Perhaps the Marina District will be such a place, and I suspect that Larry Dillin is focusing on the residential part of the project because he understands exactly what I am talking about. Let's hope that it is a success, and that's its success becomes a model that the city will be wise enought to copy.

Maggie Thurber said...

Agreed ...

But too often, it seems the focus has been on creating more housing. Sometimes at the expense of a business-friendly environment that would lead to the creation of jobs to actually employ the people they hope will move into such housing...

It's a vicious cycle and emphasis on one area alone will not address the whole.

Tim Higgins said...

Maggie,

I think we are saying the same thing in two different ways. We don't need more housing, we need more neighborhoods. Neighborhoods beget the small businesses that are the backbone of a stron economy and a strong city.

Roo said...

Maggie,

In observing the way Toledo 'hopes' to build a better tax base, increase business and create a draw to the area, it has become apparent that it has been a very long time since someone with a true understanding of economic development and municipal finance has held the position.

Toledo, by my observations, has (and does) continued to think that if the wrapper is pretty then it won't matter what the true substance of the package is. In this technologically advanced world this could not be further from the truth.

People are much more versed on what makes life work, and if there is something that is confusing there are so many more resources to find the information that it truly takes the blinders off the general public.

I believe in my heart that Toledo could be a phenomenal city, but it's going to take some serious investment (time and money) to clean up the mess we're in before we can attract viable businesses with realistic goals.

Flowers and bike paths are nice. But those are the reward for success, not a substitute for lack of direction and poor management.

I love Toledo, I love my home and I love what I do. But it's getting harder and harder to justify why we stay here.

Carol

Maggie Thurber said...

What's especially sad, Carol, is that many people feel the same way - and they're leaving too...

Kurt said...

I find this discussion very fascinating. I'm reading this book right, which I won't promote because I'm not getting paid to do so, but it basically says that if you believe in something, people will follow. In that respect, I firmly believe that Toledo has a lot of potential. I think we sit in a great position. Sure the job market sucks, and I hope there is some way to keep me here, but if I do stay, I will fight, and fight hard, because I believe.

I believe in this city. I believe in our potential. I believe we have the manpower, the will power, and the resources to be the fastest growing city in America. We have fresh water, we have wind, we have sun, we have four seasons, we have trees, we have beauty, we have Ohio State Football, we have infrastructure, we have the great lakes, we have fish, we have cows, we have corn, we have wheat, we have soy... I could go on for hours. Then we look to the current fast growing places. Vegas, Arizona, Florida, etc. All of these places lack what we have, fresh water and four seasons. I'm sorry, but I'd rather put up with the winter than a 120 degree summer. This place has so much to offer, mostly fresh water. They'll have to come back. This place is designed to succeed if only we could get the leadership to let it.

In this respect, we need to make Toledo a desirable place to live. This includes building an arena, building a nice baseball field, investing in downtown, investing in a city center, our parks, our zoo, our public transportation, and quite frankly, inveting in regionalism, so that the government can deliver its services more efficiently. You might not like it now, but it will pay off. I believe.

Chad said...

Strike up the band! I've said for quite a while now that infrastructure must come first. That we, as a City, must come to the realization that our basic structure is falling apart and that our first steps must be to rebuild and repair the core of the city before growth can happen.

Hope is a lovely thing, but without drive, direction and step by step deeply needed restructure, we're going nowhere.

While rebuilding the basic systems, like streets, sewers and communications, we should also be re-vamping the tax code into a flexible and friendly 3 tier system. Big business, Small business and individuals. We must reduce the costs to business for our mistakes, bite the bullet and work towards a group effort at re-establishment.

As a stimulant, we can repeal 1/2 of the 3/4 % income tax, reduce the inventory tax by 15% and ease restrictions on energy based development.

By downsizing the overall Gov, we can ease the burden to the taxpayers, making it far more attractive to companies and people for development. It's easier to sell something that works, rather than something that is broken.

Maggie Thurber said...

Kurt, I agree with your description of this area and would actually add some more wonderful attributes (like U Mich football which is important to some, and our strategic location at the crossroads of the two biggest highways in the country).

And, unlike many of my friends and schoolmates - I STAYED HERE.

Despite all these things, your own statement says it all:

"Sure the job market sucks, and I hope there is some way to keep me here,..."

Without jobs, all these other things are not enough to KEEP or ATTRACT people here. And that's the underlying and more pressing problem which no one seems to want to address, despite all the rhetoric.

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