Wednesday, August 3, 2016

North Gateway Urban Renewal Board on Business Retention and Food Hub

The North Gateway Redevelopment Advisory Board meets tomorrow the 4th, and in the meeting packet is a report on a new business initiative, "Small Business Retention and Expansion Program."
In April, Urban Development staff launched a small business retention and expansion program with SEDCOR and other local partners. The program utilizes one‐on‐one visits with small businesses (less than 50 employees) to identify needs and connect businesses with resources to meet those needs. The initial focus for the program was the North Gateway Urban Renewal Area; expansion to other areas is beginning this summer.

Since initiating the outreach, more than 60 business contacts have been made. Staff completed 31 follow‐up visits, and identified seven businesses that need to expand, renovate existing sites, or move to a different location. [italics added]
The Porte-cochere uses Advanced Tower Components beams
via CB|Two
The highlight list of businesses they met with (but not necessarily ones looking for help with expansion) is very interesting, and probably represents a story about the diversity of Salem's small business economy that isn't told very well or very often:
  • Westpro Lab provides highly specialized parts testing and calibration tools for the aerospace industry and NASA....They are a primary contributor to Boeing and Lockeed in the use of phased array ultrasonic scanning of metal castings for the F‐22 and F‐35 fighter jet programs.
  • Pro‐Cure manufactures some of the world’s finest (and smelliest) specialty [fishing] baits and bait scents.
  • Dicke [who is looking for help with expansion] manufactures construction signs and related safety equipment for distribution to western states. 
  • Advanced Tower Components specializes in the area of telecom, wireless infrastructure, and custom metal fabrications. They manufacture platforms and framing that attaches cell equipment to monopoles and buildings. They also use their high‐tech metal fabrication equipment to construct clear‐span beams for large buildings [including beams used for Willamette Urology clinic designed by CB|Two].
We've talked about the "Enterprise Zone" tax abatement for the Henningsen project recently (here and here), and there has been ongoing debate over the "project grant" for the nursing home in the Boise redevelopment (most recently here and here). Other instances of City subsidy have sometimes seemed excessive, and so far it is always the case that the public has lacked any kind of detailed analysis on the actual need for the subsidy and the likely return on the subsidy/investment. In Governing magazine was a recent piece about subsidies, the general terms of which also apply here:
Urban real estate developers always ask for subsidies whether they need them or not, and cities often provide them even when they’re not needed. Why else would cities subsidize billion-dollar sports stadiums to house teams that are worth billions and that are owned by sports tycoons worth billions?

That’s why cities need to know a lot about the economics of private real estate development deals, specifically when and why projects pencil out or don’t. It’s something that, amazingly, cities know little about. If you’re going to subsidize a developer, for example, you should only do it when you know you can’t get the project you want done any other way. Alternatively, if you’re going to soak a developer for impact fees or other community benefits, you should do so only when you know it won’t kill a project you otherwise want. That’s why cities should have a lot of financial analysis capacity -- not just to balance their own budgets, but to understand whether developers are balancing their own budgets on the backs of the taxpayers.
Just on the surface, it seems like this Northgate project, and going out to small businesses and interviewing them, is more likely to identify actual need, and more likely to have a genuine positive impact on the total city economy, than what has looked like a policy of appeasement and automatic grants of "Enterprise Zone" abatements or other incentives for what by Salem standards are large companies, who very well might not actually need the subsidy.

Also in the packet is a draft plan for the feasibility study of the Mercado/Food Hub concept:
The focus of the Feasibility Study will be a detailed analysis of the needs and opportunities identified above and for each of the project components (e.g. Food Hub, Incubator, Public Market) identified in the Action Plan....The City and an advisory committee will use these findings and recommendations to determine whether to move forward with implementation of the project or elements of the project, including possible site acquisition and development.

While these needs and opportunities are supported by initial market data and outreach completed in the Action Plan, the feasibility study will include more detailed analysis and community outreach to determine if the project components (Public Market, Incubator, Food Hub) are mutually exclusive or complementary. If proven feasible, the Feasibility Study should determine if some or all can be addressed on a single site or multiple sites and if so, is Portland Road the appropriate location.
This isn't something we'll follow closely here, but it will be very interesting to watch peripherally, so to speak.

The North Gateway Redevelopment Advisory Board meets Thursday the 4th at 8:00 AM in the Center 50+, Classroom A, 2615 Portland Road NE.    

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