Category Archives: Economic development

Fifteen Nucleii for the Rebirth of Southwest Virginia

Stephen Moret, CEO of the Virginia Economic Development Partnership. Photo credit: Roanoke Times

Southwest Virginia is on track to lose 1,000 residents each year for the next decade, Stephen Moret, chief of the Virginia Economic Development Partnership, told attendees of the Southwest Virginia Economic Forum in Wise, yesterday. The region needs to add 250 new jobs per year over and above the new jobs already coming just to stay stable.

Achieving a 1% annual growth rate will require adding three times the number of new jobs each year, he said, as reported by the Roanoke Times. “Yes, it’s a big challenge. Yes we’re up against a lot nationally, but this is something we can achieve if we’re focused enough, aggressive enough, committed enough.”

Moret proposed a six-point plan to jump-start the region’s economy. As summarized by the Times, he recommends:

  • Expanding computer science programs at higher education institutions.
  • Increasing workforce development training to match business needs.
  • Altering Virginia’s tax structure to reduce taxes on technologically advanced manufacturing businesses.
  • Offering higher incentives to companies willing to relocate or expand in rural Virginia.
  • Spending money to market rural Virginia — something the commonwealth doesn’t currently do.
  • Creating mixed-use developments attractive to young professionals as a way to improve quality of life factors.

You can download a copy of Moret’s presentation from Google Docs. The presentation begins his aspirational goals for Virginia and VEDP, then places Virginia’s rural development challenges in a national context, and ends with a few ideas to advance economic development in the coalfield region (i.e., far Southwest Va.)”

Bacon’s bottom line: These ideas all sound reasonable… but five of the six require more money, either directly through higher expenditures or indirectly through tax breaks. Unfortunately, there’s not a lot of extra cash floating around, either at the state level or the local or regional levels. Perhaps the Tobacco Region Revitalization Commission, which has an annual budget of about $30 million, is in a position to fund the workforce training initiatives, incentives and marketing programs. Perhaps the higher-ed sector can reallocate funds to expand computer science programs. But it won’t be easy finding the resources for new initiatives.

The most original idea — indeed it’s such a departure from the usual thinking about rural economic development that it slaps you like a mackerel across the face — is the recommendation to create mixed-use development attractive to young professionals. This notion has much to commend it, not the least of which it doesn’t require subsidies or tax breaks, and is fully within the power of local governments to implement, subject to market constraints.

I would like to expand upon the idea. By my count there are four cities — Bristol, Radford, Galax and Norton — in Southwest Virginia and more than 40 incorporated towns. The towns range in size from Blacksburg (population 44,200) to Clinchport (population 67) in Scott County — both the largest and the smallest in the Commonwealth. Many of these cities and towns have walkable Main Streets or downtown districts capable of supporting mixed use development.

Blacksburg is a unique case. Its vibrant downtown district is an extension of Virginia Tech, an economic powerhouse unmatched elsewhere in the region, and its success cannot be replicated. But I have frequently referred to the example of Abingdon, which I believe can serve as a template for communities not endowed with a major research university. Abingdon has built an attractive, walkable downtown around the nucleus of the historical Barter Theater, the Martha Washington Inn and a stock of historic brick buildings. The town has become not only a place where people want to visit but where people want to live.

Counties, cities and towns need to fundamentally shift their thinking — as embedded in zoning codes, comprehensive plans, and capital spending plans — from subsidizing rural sprawl to creating walkable urban nucleii. Capital spending plans should invest in expanding the grid street networks from their Main Street/downtown cores. And if they have any cash to spare, municipalities should invest in sidewalks and streetscapes (and, if demand exists, cycling lanes) with the goal of making streets more hospitable to pedestrians. But they need to do it right. Place making is a complex discipline, and investments should be guided by the principles of Smart Growth or New Urbanism. Finally, cities and towns need to get comfortable with the idea that mixing offices, retail and residential is a good thing — it’s what more and more people want.

The big challenge is overcoming stagnant or shrinking populations. It’s hard to justify investing in new buildings in walkable, mixed-use districts if there is little demand. That’s where a regional marketing plan could prove invaluable. But instead of spending marketing dollars on trying to attract light industry (as I presume Moret intends), or even young people, who will be a hard sell without abundant jobs, I would suggest spending it on attracting retirees looking for inexpensive places to spend their leisure years. Such a campaign should not aim at retirees generally but (a) emigres who may have sentimental or family attachments to the region, or (b) retirees seeking to live an active, outdoors lifestyle.

By my hasty, back-of-the-envelope calculation, Southwest Virginia has at least 15 communities of sufficient scale to create small, intimate, walkable places where people with significant disposable income might be willing to live. (My list is hardly definitive, and likely would need to be revised, but the guiding idea is sound.) These are the potential nucleii for rebirth. These are where the tobacco commission should be investing in broadband, where the state and counties should be funneling infrastructure dollars, and where institutional assets such as schools, colleges, museums, libraries, community centers should cluster.

Southwest Virginia needs to reinvent itself for the 21st century economy. Light industry, data centers, solar farms, call centers and back-office operations are all part of the equation. But creating places where people actually want to live is indispensable as well. Kudos to Moret for raising the issue.

Should Historic Neighborhoods Be Allowed to Evolve?

Empty lot in Union Hill where a mixed-use, three-story building is now arising.

Empty lot in Union Hill where a mixed-use, three-story building is now arising.

Union Hill is a run-down neighborhood adjacent to its more famous neighbor, Church Hill, in the City of Richmond. Some of its working-class houses predate the Civil War, but the years have been unkind. For decades, the population was predominantly poor and African-American. Many of the lots are vacant, and many of the houses that remain are dilapidated. There is little commerce — not even retail — and jobs are far and few between.

But the gentrification wave that swept over Church Hill has spilled into Union Hill, and some of the old gentrifiers, drawn by the stock of inexpensive historic architecture, are unhappy with what some of the new gentrifiers are planning. In particular, residents are objecting to a building with four apartments and ground-level retail that is under construction on an empty lot. The building would… horrors!… be three stories tall, and totally out of character with the neighborhood of mostly two-story buildings.

The Richmond Times-Dispatch describes the “thorny issues” associated with revitalization, which, remarkably enough, does not appear to involve the poor, African-American residents who have long lived in the neighborhood. This debate does not pit hip, young urban gentry against the poor, powerless and displaced. Rather, the controversy poses a philosophical question of interest mainly to the affluent: Should a neighborhood be frozen in place architecturally in order to preserve its irreplaceable historic character, or should it be allowed to evolve in ways that provide more amenities to residents? Then throw in a question that goes unaddressed in the article, what right should neighbors have to obstruct a building that demonstrably does them no harm beyond offending their architectural sensibilities?

Developer Matt Jarreau is erecting a modern, three-story edifice on an empty, triangular lot on N. 23rd Street. He’s not tearing down an older structure. Nor is he building a structure that is wildly out of place for the neighborhood — a large, hulking church stands across the street. A rendering depicts a restaurant with outdoor seating, a valuable amenity for a neighborhood with precious little retail presence. But the rendering also pictures a building with flat brick walls, plain windows and minimal adornment that is neither attractive nor in keeping with the architectural character of the neighborhood. Jarreau is planning an even bigger, three-story building with 27 apartments on another vacant lot around the corner.

From the city’s point of view, Jarreau’s real estate investments surely are seen as a bonus. By building on vacant lots, he is creating taxable value. Union Hill is endowed with under-utilized streets, water, sewer and other infrastructure, so the incurs no additional cost. From a fiscal perspective, the two projects represent all gain, no pain. Even better, Jarreau is not displacing anyone — no structures are being torn down, no poor people are being evicted.

“We’re creating a little village. This is exactly how the community operated 100 years ago,” says Jarreau. It would have been cheaper and easier to go with two-story apartments and minimal commercial space. The community needs more services within walkable distances.”

Not everyone is buying that logic. Dixon Kerr, a Union Hill resident for 39 years, says the large buildings diminish neighborhood character because they do not suit the context of one- and two-story, 19th-century buildings, the Times-Dispatch reports.

As seen in other Richmond neighborhoods such as Church Hill and the Fan, historic neighborhoods that are stylistically and visually consistent are viewed in the marketplace as charming. Charm enhances real estate values. Conversely, disrupting neighborhood integrity by erecting buildings that are architecturally jarring or out of scale kills the charm and ruins property values.

Bacon’s bottom line: Both points of view are valid in their own way. I’m torn. I lived in Church Hill for many years and appreciated the historic-district guidelines that prevented people from doing idiosyncratic things like painting houses bright Wahoo orange and blue that would detract from neighbors’ property values. But, then, Church Hill had something worth preserving. Truly, the historic district was, and still is, an architectural gem.

At the risk of sounding like a snob, I have to say that Union Hill is no Church Hill. Some of its buildings may be old, but they are architecturally undistinguished. Moreover, so many have been torn down that restoring the neighborhood to its 19th-century prime is impossible. If people want to preserve the old buildings that remain, that’s fine. But that desire should not discourage others from investing in the neighborhood, creating new housing options, building new amenities and bolstering the city tax base.

The Marketplace is Speaking. Are the Counties Listening?

CoStar is occupying three floors of the Westrock building (on left) in downtown Richmond.

After CoStar Group, a provider of real estate market intelligence, announced last fall its intention to move its research division headquarters to downtown Richmond, the company offered employees from Washington, D.C., Atlanta, San Diego, and Columbia, Md., an opportunity to move to Virginia. A big concern of Senior Vice President Lisa Ruggles was how many would want to make the move. “I had no idea of how many people would be interested,” she said.

She was surprised that 150 applicants responded, Ruggles told Richmond BizSense. After they took part in three-day tours of the metropolitan area, she says, “I told them that they were all welcome to come to Richmond, and the place erupted. Everybody was clapping, people were crying; it was an amazing sight to see.”

AvePoint, a New Jersey provider of Microsoft cloud services, had a similar experience, according to BizSense. “We estimated that when we would be transferring people down here that we might not get a ton of people, because Richmond is very different from New York,” said AvePoint COO Brian Brown. “That’s proved absolutely not to be the case.”

Big selling points: a lower cost of living, shorter commutes and a high overall quality of life. “I think one of the things people are pleasantly finding, especially people who have families, is how cheap it is to find a really nice place to live and how easy the commute is,” Brown said.

Here’s the really interesting thing:

CoStar’s Ruggles said it has been interesting to see where employees have chosen to live in Richmond. Of the 120 employees who made the company’s initial move, she said the majority chose places such as Deco at CNB and other apartment communities in Tobacco Row and Manchester. Only two employees chose to live in Short Pump, said Ruggles, who herself just closed on a house in the West End.

“Coming from D.C., a lot of our employees don’t have cars, and that was not something they were wanting to run out and buy, so a lot of people ended up in locations where they could walk to work,” Ruggles said. “We have found that, because that group relocated from D.C., where they’re used to taking the Metro or walking or riding their bike, they’re continuing to do that here.

Bacon’s bottom line: Richmond’s urban core exerts a strong appeal to highly skilled and educated employees — the affluent, creative-class types who pay more in taxes and spend more in the local economy — from other cities. If the region wants to attract more employees like them, along with the companies that employ them, the city and counties need to facilitate the building of the kind of communities these people want to live in. That means more moderate density, more mixed-use development, more grid streets, more investment in streetscapes, and, where economically justified, more mass transit.

That’s an easy sell for Richmond, most of which was laid out according to the dicta of traditional city planning. It’s a harder sell for Henrico and Chesterfield Counties, built according to the principles of suburban sprawl. The marketplace is yelling loud and clear what it wants. As a Henrico resident with a vested interest in the county’s long-term fiscal viability, I hope county officials are listening. If they’re not the City of Richmond will kick our butts in the economic development game.

Nobody Cares about You, Southwest Virginia, and Maybe That’s a Good Thing

Downtown Abingdon, one of Virginia’s great walkable places.

The Roanoke Times tells a hard truth to the readers of Southwest Virginia: “Nobody cares about you.”

Democratic Governor Terry McAuliffe, says the Sunday editorial, has done nothing to help the counties of the far Southwest whose finances were devastated by the collapse of the coal industry. The Democratic Party in Virginia has “evolved into almost strictly a suburban-urban party that has no natural interest in anything west of the Blue Ridge.”

And the Republicans? After promising to help the coal industry, President Trump has proposed slashing funding for energy research and zeroing out a program that pays to convert old mines into industrial sites. Concludes the editorial:

What’s the takeaway from all this? We’re on our own. We cannot count on either Richmond or Washington to help us. Maybe from time to time one of them will come through with some unexpected grant to help with some piece of infrastructure and we should be grateful. On a day-to-day basis, though, it’s clear that both the state and federal governments have come to a bipartisan consensus: Southwest Virginia doesn’t matter to them.

What is the down-on-its-luck region supposed to do? Businesses need to get more engaged, says the Times. Local government needs to focus more on economic development. Voters need to be more demanding.

The Times is right. Other regions are indifferent to the fate of Southwest Virginia. They have their own problems and their own funding issues. Other regions insist that they’re getting a raw deal from the state. (Talk to a Northern Virginian some time. NoVa may be rich, but its citizens feel short-changed and aggrieved.) And every region pursues its own self interest. The bigger piggies muscle closer to the trough, leaving the weaker piggies behind. It’s Darwinism in a political setting.

Southwest Virginians would be well advised not to pin their hopes on the largess of others. What, then, can they do?

They could start by acknowledging some harsh realities. First, coal is never coming back. Natural gas, wind power and solar power are far cleaner and far cheaper. Economics will dictate than any new electric-generating capacity in the United States over the next decade will be either gas or renewable. Existing coal plants will serve out their economically useful lives, and then they will be phased out.

Second, manufacturing might rebound, but it will never provide the large-scale employment it did a generation ago. Some manufacturing operations may repatriate from overseas back to the U.S., and corporations will continue to invest in plant expansions. But robotics, artificial intelligence and other forms of automation mean that manufacturing processes will create require fewer and fewer jobs as time goes on. The return on investment on traditional economic development strategies — recruiting manufacturing investment — will continue to decline.

Third, the agglomeration economies of the Knowledge Economy will continue to favor metropolitan areas with large, diverse pools of skilled, educated labor over small, semi-skilled labor pools of rural communities. The Roanoke-Blacksburg area, with its access to Virginia Tech, its faculty, graduates and entrepreneurial spin-offs, conceivably can achieve economic escape velocity. But no other city or town in the region has that potential. Meanwhile, young people who succeed in obtaining a college education will continue to emigrate from the region — just like they’re doing in every other rural community across the country.

Making the challenge even more difficult, Southwest Virginia lacks an advantage possessed by other rural areas in Virginia such as the Shenandoah Valley, the northern Piedmont, and the Chesapeake Bay tidewater — proximity to large, affluent metropolitan areas. A location within easy driving distance of big metros will support an economy of resorts, vacation homes, retiree communities and weekend-getaway amenities for city dwellers.

What options does that leave Southwest Virginia? Not many. But the region is not destitute of assets. The Virginia Tobacco Region Revitalization Commission still has millions of dollars to dispense. The region just has to take care not to squander its limited resources on chimera like new Interstate highways, inter-city rail service, manufacturing subsidies, our outright follies such as government-supported golf courses, convention centers and other long-shot efforts to stimulate development.

I’ve written before about the Aspen model of economic development, built on active outdoor recreation — not just skiing but hiking, rafting, rock-climbing, mountain biking, kayaking, fishing, all-terrain riding, and so on — as well as a fabulous, walkable downtown. The walkable downtown is a critical element of Aspen’s success, and there is no reason that Virginia can’t replicate the formula in many of its small towns.

Call it the Abingdon model instead of the Aspen model. The town of Abingdon in Washington County is one of the most charming places in Virginia, and it is set in an area of great natural beauty. It has become destination that people are willing to travel hours to visit. Abingdon is proof that the strategy can work.

Wise County is another innovative community, exploiting its investment in broadband to recruit data centers. Data centers don’t support many jobs, but they do pay taxes that broaden the tax base. The county also is exploring opportunities to supply green energy to the data centers. Regional authorities should map the electric transmission grid, enact solar-friendly zoning ordinances and comprehensive plans, and encourage solar developers to consolidate properties capable of hosting utility-scale solar farms.

America is a big place, and while most rural areas (outside the fracking hotspots) are hurting. But some communities are faring better than others. Some are doing innovative things. Southwest Virginia can learn from the example of others. Perhaps it’s not a bad thing that no one else cares about the region. In the long run, dependence and handouts accomplish less than resilience and self reliance.

Business and Computer Science Majors are the Biggest Bargains in Higher Ed

Graphic credit: “Costs of and Net Return to College Major”

It is widely known that certain college majors offer better career prospects than others. Engineering and business majors earn more money on average than, say, art and English majors. Less well known is the fact that certain majors are more expensive to teach. As seen in the chart above, engineering graduates cost twice as much to educate as library graduates.

The data comes from a new study, “The Costs and Net Returns to College Major,” by Joseph G. Altonji and Seth D. Zimmerman, published by the National Bureau of Economic Research. They drew their cost data from the Florida State University System.

The insight that different majors have different costs has important implications for how state systems of higher education allocate their resources. In Virginia, there has been a big push since the “Top Jobs” legislation of 2011 to increase the number of STEM (science, technology, engineering and math) graduates at Virginia colleges and universities. The shift to higher-cost STEM majors, while arguably justified from an economic perspective, contributes to the rising cost of higher education.

Another way to slice and dice the data is to look on the return on investment for different majors based upon the cost of providing the education and the present value of graduates’ earnings. As seen in the chart below, business majors, who cost relatively little to educate but enjoy high lifetime earnings, represent an extraordinary bargain. By contrast, architects, who are expensive to educate but earn relatively little, are a Return on Investment disaster. Much to my surprise, even engineers don’t look like such a bargain.

Career earnings may not be the best way to measure the social value of a particular major. It is possible that architects contribute far more to social well being than their pay stubs would indicate. (It’s hard to imagine that genders-studies majors have anything worthwhile to contribute to the world, but, hey, that’s me.) But the present value of earnings is a pretty good proxy for a graduate’s economic value.

As lawmakers ponder how to allocate scarce higher-ed dollars, they would be well advised to take into account how much bang for the buck colleges are getting for their investment in different disciplines. Perhaps Virginia colleges need to promote enrollment in business schools and less in architecture. I never imagined myself saying this, but maybe we should be encouraging more kids to enroll in psychology and fewer in engineering!

How National Monopolies Drain Rural Economies

Dilapidated buildings along Main Street in Pamplin City, Prince Edward County. Photo credit:

Virginia’s rural communities suffer from huge disadvantages when competing for job-creating corporate investment. Low density makes it expensive to install high-bandwidth Internet service. The small size of rural communities makes it difficult to support the amenities that skilled, educated workers are looking for. And, most important, corporations prefer locating in metropolitan areas with “deep” labor markets where they can tap employees with specialized skills.

Perhaps we can add one more disadvantage to the list: a national economy increasingly dominated by monopolies and cartels. So suggests Lillian Salerno, a former Texan who served as deputy under secretary for rural development in the Obama administration.

“For decades,” she writes in a Washington Post op-ed, rural America has been punished by bad policy that places too much power in the hands of distant financiers and middlemen through the formation of monopolies, which undermines small, local businesses and drains communities of resources.”

New business formation has plunged since the Great Recession, and nowhere more dramatically than in counties with fewer than 100,000 people. Why? Because, Salerno says, the federal government stopped enforcing monopoly laws.

This slow-rolling wave of corporate mergers has left almost all major markets — airlines, telecommunications, health care, retail, milk, seeds for growing crops, hardware, even cowboy boots — dominated by a cluster of mega-corporations, cloaked behind a plethora of brand names. These behemoths now hold unprecedented power over thousands of once-thriving community economies.

Corporate concentration has hit farmers, ranchers and agricultural workers especially hard, she writes. Many markets are monopolized by a single company that dictates the terms of business to suppliers. The seed industry has dwindled from 600 independent companies two decades ago to six today. Similar levels of concentration exist in the pork, chicken and dairy industries.

I don’t know if Salerno is right or not — I would like to see more specifics — but her argument is worth close examination. If her theory holds up, it is discouraging indeed for rural economies, for a decades-long drift toward a cartel-dominated economy is not easily reversed. If it’s any consolation, monopolies are not good for most metropolitan economies either.

Creative (Class) Destruction

Richard Florida in Washington, D.C., last week. Photo credit: Washington Post.

In the inaugural edition of the Bacon’s Rebellion newsletter (back before there were blogs), I reviewed Richard Florida’s book, “The Rise of the Creative Class.” I was certain his work would spark a revolution in how Americans understood economic development in the Knowledge Economy, and I became an early follower.

The then-dominant paradigm of economic development focused on corporate recruitment, as epitomized here in the Old Dominion by the Virginia Economic Development Partnership. In that model of economic development, what corporations needed were utilities, Interstate access, low taxes, inexpensive real estate, and inexpensive, semi-skilled labor. But Florida documented that corporate investment was increasingly driven by a need to access human capital. Corporations, especially fast-growth technology companies, were expanding in locations where they could find skilled, educated, tech-savvy employees — an occupational cluster he dubbed the creative class.

In a break with the past, Florida observed, creatives weren’t attracted to regions with symphonies, operas, and ballets. They were moving to metros noted for openness to newcomers, social diversity, cultural tolerance, and a rich “street” culture. Instead of employees migrating to where the corporations were, corporations were migrating to where the employees were. To attract corporate investment, communities needed to attract the creatives.

Among other insights, Florida foresaw the decline of suburban office parks, which he disparagingly called “nerdistans,” which young people rejected in favor of the city experience of walkable neighborhoods and vibrant, participative cultural institutions. Through a series of books and publication of the “CityLab” blog, Florida transformed the nation’s thinking about economic development — especially in liberal, Democratic cities where talk of tolerance and openness came naturally.

I followed Florida for several years, but slowly lost interest as his shtick became increasingly political. Not only did liberal, Democratic cities embrace him, he embraced them in turn. The new Creative Class paradigm seemed to relegate smaller, less ethnically diverse, more culturally conservative cities to the dust heap of the economy, and Florida seemed to overlook obvious flaws in the Blue State model such as excessive regulation, high taxes and unfunded pension liabilities. To my mind, he had captured important truths but had shot way past the mark.

Well, it seems that Florida has written a new book, “The New Urban Crisis.” I have yet to read the book, but Florida appeared at a panel discussion at the Union Market in Washington, D.C., a week ago to discuss his latest thinking. From the Washington Post:

Somewhere along the way … Florida realized that the workers he so cajoled were eating their cities alive.

In places like New York, San Francisco, Seattle and arguably Washington, the mostly white, young and wealthy “creative class” has so fervently flocked to urban neighborhoods that they have effectively pushed out huge populations of mostly blue-collar and often poor or minority residents.

“I think, to be honest, I and others didn’t realize the contradictory effect,” Florida said Tuesday at a panel discussion. He said he realizes now that prompting creative types to cluster in small areas clearly drove living costs to such heights that low-income and oftentimes middle-income households have been forced elsewhere, creating a divide he did not anticipate.

“We are cramming ourselves into this limited amount of space. And at the same time that the super-affluent, the advantaged, the creative class — we could go on and on [with what to call them] — the techies, global super-rich, absentee investors, invest in these cities, they push others out … and it carves these divides,” he said. …

Although he still champions investments in urban areas, at the panel event Florida said the criticism had made a mark. “To be seen as the neoliberal devil, foisting gentrification on cities, is not a situation I like to be seen in,” he said.

Bacon’s bottom line: Members of the creative class may be tolerant, open, hip and edgy, but they, like everyone else, are NIMBYs. Once they move into a neighborhood, they like things the way they are, and they don’t want greedy developers building new projects that block their views, generate traffic, alter the architectural character of the neighborhood or otherwise inconvenience them. In Creative Class enclaves, NIMBYism restricts residential development, which aggravates housing scarcity, which drives up prices, which displaces the poor, the working class, and increasingly the middle class.

Members of the Creative Class happily wield government power to mold a world to their liking. They have no compunction about enacting laws and regulations that encumber economic activity — usually the economic activity of others — as long as it furthers their own goals. Thus has California transformed the coastal ribbon into an environmental paradise attractive to the Creative Class while devastating the farming and manufacturing economies of inland cities. Gross inequality is not the inevitable result of wealth creation, it is the inevitable result of wealth creation in a liberal Democratic political/cultural setting.

That’s the way I see it. I doubt Florida will see it the same. But I have enough respect for his thinking that I will read his latest work, and I reserve the right to change my mind.

Plumbing the Depths of Economic-Development Stupidity

Rendering of Main Street Station train shed.

Rendering of Main Street Station train shed.

Sometimes I wonder if anyone in Richmond city government ever learns anything about anything. The city has experienced a string of failures over the decades, starting with the grandiose Sixth Street Marketplace that was supposed to revitalize downtown retail in the mid-1980s and came to an end in 2007 when most of the structure was unceremoniously torn down. Undeterred by what should have been a searing memory, the city has squandered millions on several other high-profile revitalization projects of dubious value, the most notorious of which has been the Washington Redskins training camp.

The most recent folly is the $45 million renovation of the Main Street Station train shed, part of a larger, $90 million renovation of iconic station in downtown Richmond. The end result, though visually splendid, fulfills no clearly demonstrated need. The bottom floor will be dedicated to retail space, of which there is no shortage in the Richmond region, and the top floor to meeting space, of which there is an outright abundance.

“Free” federal and state money is covering for most of the up-front cost of the project, but the train shed facility will require $1.7 million in operating subsidies in just the first year. The city already subsidizes the Coliseum to the tune of $1.7 million a year and the Convention Center by $8 million a year, as the Richmond Times-Dispatch reports. In other words, the city will spend millions of dollars to support an event facility that will to some degree compete with, and cannibalize, other event facilities that it is subsidizing.

That’s about as stupid as it gets. Kudos to City Council members Parker Agelasto and Chris Hilbert for asking questions.

Stephen Moret: Aiming to Restore Virginia as Jobs Leader

Stephen Moret, CEO of the Virginia Economic Development Partnership

Stephen Moret, CEO of the Virginia Economic Development Partnership. Photo credit: Washington Business Journal.

Stephen Moret, the new director of the Virginia Economic Development Partnership (VEDP) has been on the job long enough to tour the state, meet business leaders and regional economic development officials, and summarize impressions of his first 100 days. In a letter he broadcast widely through the economic development community, he articulated five aspirational goals and enumerated eleven projects he hopes to see accomplished by the end of 2017.

The five broad goals include:

  • Position Virginia to achieve an employment growth rate among the top three Southern states (and top five in the United States). This will require creating 20,000 jobs per year over and above existing forecasts.
  • Ensure that every region of Virginia participates in that growth. Over the past five years, nearly half of Virginia’s counties and cities have lost population. “While we can’t ensure that every county will grow, we can ensure that every region will grow.”
  • Restore Virginia’s standing to the top rankings (average in the top three) of the best states for business.
  • Re-establish VEDP as “America’s premier state economic development organization.” Other states have stepped up their game. “We are going to clearly describe where we are behind and articulate what it will take to get back on top.”
  • Emphasize the “P” in VEDP — develop strong relations with local and regional economic developers, the Port of Virginia, GO Virginia, the Tobacco Region Revitalization Commission, the Virginia Chamber of Commerce, railroads, utilities, and the State Council of Higher Education for Virginia.

This year, Moret said he will focus upon implementing Joint Legislative Audit and Review Commission (JLARC) recommendations for the administrative reform of VEDP as well as the following:

  • Develop a target-industry economic development strategy and action plan for the state and each of its regions.
  • Create a marketing/branding, site-consultant cultivation, and lead-generation program, and introduce a legislative proposal to fund it.
  • Launch a “world-class, turnkey, customized workforce recruitment and training program modeled after such programs in Georgia and Louisiana.”
  • Launch a targeted business retention and expansion program.
  • Develop a comprehensive strategy to position rural Virginia for growth.

“I’ve been amazed by the physical beauty of Virginia; the incredible human capital, higher education, infrastructure, and geographic assets here; the high-quality companies making world-class products and/or delivering world-class services; and the professionalism and passion of Virginia economic development practitioners,” wrote Moret, who ran Louisiana’s economic development program before moving to Virginia. “Based on what I’ve seen so far at VEDP and across the Commonwealth, I’m even more enthusiastic about the opportunities facing us than I was when my appointment was first announced.”

Bacon’s bottom line: Stephen Moret is bringing new energy and a fresh eye to an economic development apparatus that grew complacent from previous successes. As VEDP chief, however, his job is bringing outside capital investment and jobs to Virginia, which is only one leg of a diversified economic development strategy. Most jobs will be created by existing Virginia businesses and new start-up businesses, which are outside of Moret’s portfolio. But I think Virginians can feel reassured that the corporate-recruitment function is in good hands.

Retirees, Restaurants and Boutiques

Julien Patterson and Terri Wesselman in their art gallery. Photo credit: Virginia Business magazine.

Julien Patterson and his wife Terri Wesselman spent two decades building their Chantilly-based company, Omniplex World Services, into a security and investigative services firm employing more than 3,500 and generating annual revenue of more than $100 million. After selling the company in 2012, they “retired,” dividing their time between Florida and Virginia’s Northern Neck.

But it wasn’t in their temperament to spend their free time playing golf or mahjongg. According to Virginia Business magazine, the couple has started four small businesses in the Northern Neck: an art gallery, a home decor store, a coffee shop, and a clothing boutique.

“For me, I think retirement is the change in venue that allows you to do the things you want to do that benefit others and brings you satisfaction and a sense of well being,” says Patterson, now 65.

As Virginia Business notes, Virginia, like the United States as a whole, is on the verge of a retirement wave. Virginia is home to 1.4 million people who are over the age of 65. By 2030, the over-60 crowd will reach 2.3 million. Thousands of them will be successful corporate executives, entrepreneurs and professionals. And, like the Pattersons, many might be ready to slow down, but they’re not prepared to drop out.

Rural economic development has been a recurring theme of Bacon’s Rebellion. It’s clear to most people that the traditional strategy of clinging to Virginia’s mill-town roots has done little to reverse the decline in jobs and opportunity in Virginia’s rural economy. There’s nothing wrong with recruiting light manufacturing, but economic developers need to look at other strategies as well. One such strategy is exploiting the retirement boom.

Retirement represents a stage of life when people are more willing to consider relocating to a rural community than when they were pursuing career and raising families. Quality of life matters more than career opportunities or good schools. Retirees are drawn to scenery — waterfronts, rolling hills and mountains — all of which Virginia has in abundance.

But wealthier retirees can’t live on scenery alone. They also want amenities — precisely the kind of amenities that the Pattersons were providing in their Northern Neck community. (Virginia Business did not identify the specific town where they live.) Coffee shops and art galleries don’t create a lot of jobs, or even especially high-paying jobs, but they do provide employment that didn’t exist before. Affluent retirees also create a market for personal services such as handyman repairs, landscaping and the like, which locals can turn into business opportunities. Equally important, retirees and small businesses bolster the tax base of local jurisdictions — without adding to the burden of local school districts.

One nice thing about the retiree market is that you don’t have to bribe newcomers with subsidies and tax breaks. What a retiree-focused economic development strategy does require is a sharp focus on place making — creating the kinds of places where affluent people like to hang out. It gets old staring at the mountains or sailboats all day long. People crave places to go and interact with others. More specifically, they want charming, walkable/bikable places — not roads lined with gas stations and fast food joints where there aren’t any sidewalks and cars whiz past at 40 miles per hour.

The good news is that it doesn’t take a lot of money to create charming, walkable/bikable  places — sidewalks and bicycle trails are not expensive — but it does require zoning codes and comprehensive plans that don’t mandate rural sprawl. In my profile of Aspen, Colo., last year, I described the virtuous cycle that can take place when small towns invest in walkable/bikable places, attract visitors and second homes, stimulate the restaurants-and-boutiques economy, and boost property values and the tax base. Virginia communities really need to give this strategy a look.