Thursday, May 21, 2015

Ketchum Business Group - Plan for a Visitor Center

Overview:  A group of local businesses, known as the Ketchum Business Group (KBG), has formed for the purpose of marketing Ketchum’s diverse attractions to the public in ½ of the URA-owned public space at 491 Sun Valley Road (based on mutually agreed square foot measurements).  The space would be:

§  The first place visitors stop and their home base while they visit;

§  An interactive marketing site (and strategy) to show off the 360˚quality of life in our city, i.e. the obvious, and not so obvious, facets of life here;

§  A sense of place in the city for locals of all ages, as well as visitors
KBG’s objective for the space would be to stimulate increased short-term and long-term business for proprietors in all business niches, and taxable income for the city, by capturing greater numbers of return visitors, new visitors, and new residents seeking to enjoy all that we offer.  Word-of-mouth, SVMA and COC marketing, and other business marketing efforts would generate interest in the space as a destination all on its own.

Elements in the space would emphasize the extraordinary qualities and richness that have consistently attracted people - from ski-bums to families to weekend business travelers to retirees - to live here, whether they ultimately support themselves through employment, business start-ups, location-neutral businesses, personal wealth, or retirement funds.  The space would mostly market Ketchum, but also portray Ketchum in its incredible context, i.e. the Wood River Valley and beyond to Craters of the Moon to Stanley.  As residents, we know no one can fully grasp this area in even a one-month visit but visitors need to fully appreciate that.  After all, you can’t be interested in what you don’t know exists!

The Space:  The currently available space of 2,000 square feet would be opened up entirely, except for a small office for management. It would be homey: colorfully painted and decorated with 3-4 comfortable armchairs (as well as other chairs), a gas-burning stove, rotating local artist works, books, newspapers, up-to-date magazines  – and perhaps a shelter dog named “Town Square”  or “Plaza.”  There would be a welcoming space for families with kids: toys, video games, as well as room for kid-to-kid and teen-to-teen mingling. Complimentary coffee and tea would be available. Restaurants willing to provide immediate delivery at the space on food orders would advertise that service.

The space would offer intriguing information about Ketchum on walls, posts, and pillars:

§  its outdoor amenities;

§  its various restaurants, retail, and other commercial businesses;

§  its entrepreneurial sector;

§  its extraordinary educational institutions for children;

§  its diverse arts and culture institutions and activities;

§  its athletic training programs;

§  its spirituality and abundant non-profit life;

§  its history;

§  its nationally known businesses: Smith, Power Engineers, Rocky Mountain Hardware

These displays would incorporate computer-based information, locally-prepared videos, written and visual marketing materials, photos, and local products to introduce visitors to the many aspects of Ketchum’s social, economic, athletic, healthy, spiritual, and cultural life. Low-level western-themed background music would play. The spirit of the space would be energetic, up-to-date, fun, and interactive. For example:
1. A video loop might show Steve Miller playing a guitar made by a local instrument maker, or a hat being embroidered by a local company, or a meal being cooked by a local chef.  Another loop might show Caritas Chorale, Sun Valley Symphony, and Sun Valley Opera performances.  Another might show our various artists at work.  

2. Organizations could rent a two-sided plastic marketing envelope of varying sizes that would hang from a semicircular brushed metal bar attached to a wall or post that visitors could flip through - like fabric samples. The envelopes would be grouped by sector: restaurants, retail stores, guide businesses, educational institutions, non-profits, tourist sights, arts and culture organizations, historical sites, etc.

3.  A film, video loop, and/or photos could show Ketchum’s history, accompanied by circulating items from Ketchum’s Historical Museum.

Management: The space would be staffed by knowledgeable and service-conscious people – many of them volunteers - including young professionals and older citizens. They would be trained to “sell” local fun, entrepreneurial and small business opportunities, and Ketchum’s overall strengths to visitors. In high season, the space would be open seven days a week, including holidays, from 8 am to 8 pm. Final staffing and other proposal details, especially for the shoulder seasons, have yet to be determined by KBG, pending more information from the URA

Marketing.  The space would be marketed to the public by all Ketchum businesses through word-of-mouth, brochure display, and their websites, as well as on government websites and other marketing media and opportunities. The KGB would also expect the URA to supply signage at up to no fewer than eight significant points through the city pointing toward the space 

Funding.  Funds for the space’s rental from the URA would come from:

§  An affordable formula of contributions by Ketchum businesses who market in the space, based on income and # of employees;

§  Businesses not based in Ketchum could also to market through the space, e.g. Sun Valley Company, Power Engineers, Hailey and Bellevue businesses

§  Monthly paid “special marketing opportunities” for businesses from anywhere in the valley;

§  Ketchum city funds;

§  Past rents due to the URA that were mistakenly paid to the city for rental of URA properties;

§  USDA rural development funds and other government funds that promote entrepreneurship and economic development (but not tourism).

Responses to RFP submittal parameters for 491 Sun Valley Road.  The KBG has responded  below to the parameters set by the URA for a lease agreement. Note that our responses, in certain cases, vary from the URA’s parameters. 

1.  The Ketchum Business Group intends to enter into a lease agreement with the URA should it be selected as the Operator. However, the Group needs a reasonable amount of time to establish itself as a for-profit, cooperative, or not-for-profit business and to prepare a business plan based on information requested by the KBG from the URA.  The yet-to-be-finalized plan would satisfy both KBG’s and the URA’s goals. 

The KBG asks for two weeks from today to supply the KBG with requested information so that the Group may finalize its planning.  There may also be questions asked by the URA which KBG would be expected to answer in that time frame.
2.  The KBG has indicated its intent to be open for business seven (7) days per week.  Going beyond RFP requirements, we also intend to open the space on holidays.
3. The KBG would expect the URA to undertake tenant improvements cited by law as its responsibilities, i.e. rehabilitation of the existing deteriorating space for use by a business-generating entity, including:

§  Removal of tinted film on building windows and/or window replacement;

§  Upgrade of water and sewer service to the building to accommodate  “ordinary use” city and state codes;

§  Upgrade of power service to the building to accommodate “ordinary use” city and state codes for heating and electricity;

§  Upgrade of HVAC system to allow for comfortable interior temperatures;

§  Renovation of the interior to open up and then appropriately finish the space, to provide up-to-date interior lighting and water supply, to install a gas stove, to upgrade bathrooms (including handicapped access), and other such suitable and reasonable renovations to be negotiated.
4.  If we are the selected operator, the KBG expects to have win-win consultations with the URA regarding the design of the Visitor’s Center space.
5. The estimated annual cost of the lease will be determined based on a competitive market rate per square foot per year, as determined by three independent parties.
6.  KBG may pay for all monthly utility costs including water, sewer, electric, gas and trash pickup, pending negotiations with the URA.  The URA will pay outdoor winter and summer maintenance on the Town Square, and winter snow removal costs from the front of and back doors of the space.  No property taxes are assessed.
7.  The lease term will be for three (3) years with two extensions of duration subject to terms negotiated by both parties.
8.  The KBG will obtain a valid Ketchum Business License and any other necessary licenses.

Evaluation criteria.  The KBG responds below, point by point, to the criteria set by the URA for evaluating proposals for leasing 491 Sun Valley Road. Note that our responses, in certain cases, vary from URA criteria: 

1.  History and experience of the operator.  The KBG, while a new entity, is composed of well-established business owners known to the city who possess a diverse array of experience in retail, real estate, commercial, high technology, food services, and other types of business. These businesses are well-known by the city and the URA as a major, ongoing source of tax income.   

Once formed, the KBG will be able to supply the URA with any requested credit information, financial statements and/or an affidavit stating that we are not in default in payment on any taxes, excises or license fees due.  If we form as a partnership or corporation, we are willing to submit evidence that we are authorized to do business in the State of Idaho.

2.  The KBG expects that the URA, as owner of 491 Sun Valley Road, will supply statistics as to the current daily and seasonal level of foot traffic generated by its current uses. This will be factored into our estimates of expected foot traffic, again to be indicated in our business plan after receipt of this information.

3.  Revenue benefits to the URA will be:

§  Income from the agreed upon market-based rate for the lease;

§  Increased economic activity for the city, with consequent job creation, business income and associated taxes, expanded population, and growth in assessed property value;
4.  The KBG will provide at least three (3) references.

5.  The KBG will open the space by July 1, 2011 – based on the city’s timely collaboration on renovations. If the city is unable to collaborate on renovations for any reason, the KBG will negotiate with the city regarding other means of renovation through its own contacts and opportunities. The opening date for the space will shift further into the summer accordingly.  

Before ending this proposal, the Ketchum Business Group wants to emphasize, again, its purpose in seeking to rent space at 491 Sun Valley Road. Our marketing message is: 

Ketchum is so beautiful, so diverse in its opportunities, so rich in its sense of community, so replete with arts and culture, so full of recreational opportunities, so supportive of business diversity, so “balanced” in its approach to life that YOU would love to, and should be living, here!!!

The objective of the message would be to: 

§  Bring visitors back to visit

§  Attract older visitors to live here

§  Encourage young people to move here and work or start a business here

§  Show families the quality of life they would enjoy were they to relocate

§  Attract established businesses to move

§  Bring location-neutral people to live here and telecommute for their work 

Our aim is to stimulate a growing (not shrinking) population of diverse interests and ages, an enlarged tax base, more income for established businesses and therefore more jobs, an influx of more high-tech and young professional people, and a vital and thriving economic community.




Tuesday, February 10, 2015

Choosing Community-Based Capitalism

We are lucky to live in a primarily capitalist economy that enables wealth accumulation and investment, depends on personal freedom, and fosters invention and the efficient use of resources. Indeed, capitalism is increasingly the world-wide system of choice, although its manifestations vary widely from a free-market tilt to small demonstrations of capitalist enterprise in authoritarian countries.  

Like any system, capitalism can be abused. In the U.S., great wealth is controlled by powerful interests with a bent toward social Darwinism, rather than equal opportunity, human rights, and the value of the commons. True free-market capitalism enables the untrammeled exercise of human greed and self-interest. For example, freed by the past 30 years of deregulation, leaders of the financial industry have reaped huge personal fortunes at the expense of millions of individuals.

So, capitalism can't just roll along like “ole man river;” it must guard against potential abuses through legislation, regulation and, often, legal action. It must also be strategic, anticipating shifts in human and natural resource supplies (e.g. location, availability, and suitability), so that profits can continue to be accumulated and reinvested for further growth.
Refreshingly, after decades of this country’s self-indulgence in a “me-oriented,” materialistic society, a new kind of capitalism is emerging.  It is a grass-roots capitalism that pursues reasonable profits as well as human rights, natural resource conservation, community-building, and a modest material life. I’ve called it community-based capitalism.
Community-based capitalism values durable over disposable products, sharing over personal ownership, recycling and reusing over trashing, and mindful over mindless consumption. It recognizes that resources are finite, equal opportunity is essential to economic growth, human societies are interdependent around the globe, and that chasing more “stuff” (beyond the basics) is inimical to meeting life’s major challenges of health, security, happiness, and stewardship of our environment. And, it seeks profit for reinvestment and economic growth, the hallmark of capitalism.

Consider Neal Gorenflo, a Silicon Valley resident described in “The Sharing Economy” in the magazine FastCompany. Among other things, Neal shares a nanny with his neighbor and makes loans to others, known and unknown, through a peer-to-peer banking site called Lending Club.  When in San Francisco, he uses a Prius through City CarShare, a not-for-profit version of Zipcar. Once a corporate executive for strategic planning, Gorenflo quit his job to downsize his life, “removing all the things that don’t add value and concentrating on the things that deliver value.” He has since started Shareable, a non-profit website that provides a playbook for how to share anything and everything.

Neal is only one of thousands world-wide who have found new motivation for thinking creatively, productively, and in ways that yield a good living - while doing good for their communities and the earth. These “new capitalists” and entrepreneurs see the world reflexively in terms of a triple bottom-line: profits plus community plus Mother Nature. 

Another “sharing guru,” ex-corporate innovation consultant Rachel Botsman, advocates that access to goods and skills is more important than owning them. In her book, What’s Mine is Yours: The Rise of Collaborative Consumption, she concludes that community-based capitalism “could be as big as the Industrial Revolution in the way we think about ownership.” Nor is it without economic value: Botsman predicts the sharing economy could be a $110 billion plus market.

Another type of community-based capitalism includes “social enterprise,” which addresses social issues using for-profit business models. A growing grass-roots effort is the use of community currency, paper scrip circulated and banked within a local region to empower new business growth and stronger community ties. Most grass-roots of all are Time Banks, community website accounts through which people trade hours of service, one hour for one hour, to help each other accomplish real-world tasks. This is the good news of trends in today’s capitalism!

Monday, January 26, 2015

KURA Communication Missteps   
     Urban renewal programs can be salutary for a city. They can also be abused, faultily used, and even harmful. A lot of fuzziness has accrued to the concept since its birth over 60 years ago. One observation holds true, however: urban renewal must be properly understood if it is going to fulfill its promise. Sadly, public communication about Ketchum's Urban Renewal Agency (KURA) has been poor from the start. 
     I've written previously about the bigger management missteps by the KURA: poor return on investment, favoritism to private interests, conflict of interest, unapproved changes to approved plans, backroom dealing. The KURA's less than helpful efforts to accurately inform the public of its activities are a more subtle issue. 
     It often seems that KURA's mantra has been "less is more," i.e. the less clarity about it among the public, the more likely people will ignore its operations. A signal source of information, the Mt. Express, has made frequent reporting errors (especially initially) without being corrected by the URA Board. This may not be a conscious strategy but the lack is there.
     Then there was the URA sponsored workshop in 2012, ostensibly asking for public input for the URA's future but a strangely empty exercise:
     1. There was no effort to provide meaningful group education and questioning. Instead, favorable displays of URA projects were placed around the room for public viewing. Questions could be asked of not always well-informed volunteers and staff.
     2. Nowhere was River Run's designation as an urban renewal area indicated. In fact, when asked, few citizens realized it had taken place.
     3. The URA's Assessed Value and Revenue Estimate wasn't available (having been "redone at the last minute" by the external consultant). When a staffer produced a copy, the City Administrator couldn't answer questions about apparent flaws. The estimate was withdrawn to be redone.
     4. A "URA project" on display was not, in fact, contained in the URA. An audience member pointed this out.
     Further, there has been virtually no communication by the KURA with the several other affected taxing districts or attempt to bring them onto the KURA Board (a recommended practice). Of course, one might ask why those districts have not complained about about their lost revenues! 
     Its not likely that the average resident will learn that Starbucks relies on the KURA to take care of its maintenance problems: e.g. toilet repair and cold air sweeping inside when front doors are open.
     Nor would the average resident know to pose this question for the KURA accountant: Why is there a discrepancy between KURA's stated yearly tax income for the past six years and the income reported paid to Ketchum by the County Treasurer? If there's a reason for this, why is it not clear?

Thursday, January 15, 2015

Kudos and Criticisms for URA Projects

In Idaho, the cities of Sandpoint, Eagle, Coeur-d’Alene, Twin Falls, Rexburg, Ketchum, Jerome and others, have URAs; commissioners are usually a mix of elected officials and experts in community affairs. URAs are beneficial when used properly, but often get bad bad press for abusing their expansive powers. In the end, a URA should be judged on whether it has benefited a municipality’s economic growth/job creation in the long run, or an individual’s or group’s private interests.
News reports describe positive achievements, big and small, by URAs: 

1. Brownfield sites have been cleaned up and transformed into successful mixed-use developments.  Denver redeveloped an ASARCO site into a commercial center with 1 million+ square feet of commercial space for businesses.

2. The Detroit International Riverfront project restored its polluted riverway into a 5½-mile stretch that includes a wildlife park, restaurants, retail shops, and residences. 

3. Sandpoint, ID has built sidewalks and, as money accrues, looks to extend the Sandcreek Boardwalk and rehabilitate a former mill site for mixed-use.

4. Driggs, ID has built a sewer line interceptor, improved the downtown parking lot and buried power lines.

Negative publicity arises from projects that tilt toward benefiting private developers, rather than a municipality as a whole:

1. Coeur d’Alene asked a developer to add brick walls (cost = $400,000) to his project, then reimbursed the developer with URA funds (plus interest). 

2. A Palm Desert RDA spent nearly $17 million revamping a municipal golf club that was already one of the best golf locales in the U.S.

3. Sinclair Company sought blight designation for its 28-acre parcel in downtown Salt Lake City where it planned a Grand America hotel for the 2002 Olympics. The designation was fought by one flower shop facing demolition until Sinclair gave up as the Olympics approached – ultimately foregoing its hoped-for millions in URA monies and tax breaks. 

4. Tax diversions cost Denver schools $15.4 million and other city services $10.9 million.

In addition to diverting money from other taxing districts, URAs are criticized for imposing their own vision of an area on local citizens, promoting development that would have taken place in any case, passing developer risks onto taxpayers who must cover bond defaults should they occur, and encouraging developers to invest only where a URA exists. In the worst cases, URAs subsidize renewal projects that benefit a wealthy private party who ends up with a long-term appreciating asset while the public makes bond payments over time that, with interest, are double or triple what the bonds originally sold for.

Factors that point toward successful URA activities include whether a municipality’s economy is strong enough to sustain a URA in light of the risks, whether the public is involved in URA decision-making from A to Z, if there is an accurate and detailed URA analysis of a project’s long-term risks and investment return for a community, if there are objective measurement criteria for deciding whether a project is acceptable or not (including the ROI analysis), and displaying transparent behavior that adheres to the intent of urban renewal codes. Just about any URA project can be evaluated according to these criteria, given access to the relevant documents and inclination to do the research.  

Pitfalls in Urban Renewal Area Management.  

     When managed well, URAs can transform deteriorated areas into places of economic vitality that bring jobs, enhance real estate values, and enlarge the tax base. URAs enable long-term planning, independent of yearly government budgets. They seek community participation in planning for the future and can enable lower tax levies as the tax base increases with time.

     URAs also have potential drawbacks: conflicts of interest, lack of public accountability, and poor financial management. Ultimately, a URA’s success relies on Board expertise, good faith practices, and adherence to legislative intentions. Ketchum has three urban renewal districts. Bellevue has one and Hailey recently formed one. What are possible pitfalls to be avoided by all of them, using the Ketchum URA as an example. 
    Conflicts of interest.  Idaho Code describes a URA as a legal body of as few as three and as many as nine commissioners appointed and approved by the Mayor and City Council. Commissioners should have varied backgrounds pertinent to implementing urban renewal. They must have no economic interest in the urban renewal process but they might well include representative from taxing districts whose taxes are being diverted to the URA.  

      Originally, Ketchum’s Mayor and City Council served as the URA Board, despite other suggested approaches. This led to confusion in meetings about what was a URA versus Ketchum issue as well as an insular approach lacking sufficient public input. Changes have have slowly been made, however, and the Board increasingly represents a larger slice of people with vested interests in Ketchum. The Mayor and two elected officials still sit on the Board but they are important for URA accountability and knowledge of City issues.  

     Public accountability.  Community involvement is a central tenet of URA operations since the Board is not elected and the agency controls large sums of tax money. Publicly approved URA development plans  should be followed; if not, changes require public hearings. Communications should be clear, accurate, and include an annual report.
     The primary source of information for the KURA is its website which includes 2012 and 2013 annual reports and audited financial statements from 2009 forward. The site has only two budget reports and those it has are opaque to the average citizen. Above all, there is no link to it on Ketchum’s website. You have to know what it is

     Effective and ethical financial management.  A key question is whether URA monies should be managed conservatively or aggressively. Some URA’s accrue funds before starting renewal projects; others take on debt and proceed immediately. Either way, debt amounts, project costs and a risk analysis should guide a URAs approach. As one might expect, many Idaho URAs have begun conservatively.
     Another key question is whether private enterprise should receive URA development subsidies. "Kudos and Criticisms" addresses both successful and bogus projects. For example, was including Sun Valley Company’s River Run property in a URA appropriate? Should the URA be assisting any private development that would happen on its own schedule and its own terms? Should it grant waivers to developers without evidence that there will be a reasonable return on investment for the public? 


A Primer on Urban Renewal Areas (and Agencies)

     State laws throughout the U.S. allow a city’s governing officials to designate deteriorated or undeveloped but problematic areas in their jurisdiction as Urban Renewal Areas. Once designated, the area becomes a focus of economic development. A URA Board is appointed by local government and expected to follow a detailed publicly-approved master development plan consonant with city codes and ordinances.
     URA's initially have a 24-year life span, although they can be terminated earlier for various reasons, including having fulfilled the plan. They are primarily funded by “tax increment financing” or TIF. With TIF, the County Assessor establishes the “base” property value for the entire redevelopment area. As development occurs, the URA’s property values (and taxes) increase. The difference between the base year’s taxes and each subsequent year’s taxes are returned to the URA for further development on URA land. Other typical taxing entities (the City, County, school and other taxing districts) continue to receive their share of taxes from the base property value.  However, they lose all tax increments over that value for the life of the URA. 
     URAs use their funds to acquire land; to rehabilitate and replace aging public buildings; to stimulate industrial, business and job growth; to improve safety, sanitation, electrical, street, and communications infrastructure; and to provide for public parking and amenities such as parks, walking paths, and urban streetscapes. They are also used to assist the private development of commercial buildings and affordable housing. Business costs for relocating or expanding are thus reduced. 
     In recent years, URAs have come under increasing scrutiny for improper management. Idaho's Legislature has twice attempted to curtail them. Therefore they must be properly established and managed. Advocates praise URAs for their success in resuscitating blighted urban areas in cities like Detroit. Critics contend that TIF hurts other taxing entities for a long period of time. They also cite public-private collusion to use URAs primarily for the benefit of private interests.