Mark Richard’s Bold Vision —
They’ll always say “It can’t be done.” When government officials, business people, and even some of your own neighbors say it won’t work, what they really mean is “We’ve never done it like this before.” It’s a sign you’re on the right track.
Jay Walljasper, The Great Neighborhood Book
A few weeks ago, I published a post called Streets, Good ‘ol Boys, and Bureaucrats, in which I critiqued Spokane’s political elite for their lack of urban vision (among other things). Mark Richard, President of the Downtown Spokane Partnership, felt compelled to respond via facebook and we then proceeded to debate what can and can’t be done in Washington when conducting economic development activities.
Our discussion is an excellent glimpse into the mindset of Spokane’s economic development system. Mark listed a handful of reasons why Boise is out-competing Spokane and why Spokane and other cities in Washington can’t conduct robust economic development on par with cities in other states, like Boise.
I countered with the opposite argument: Spokane can conduct economic development every bit on par with other cities in other states. Problem is, as I’ve written about from time to time, Spokane’s economic development system is fatally flawed because it is incapable of conducting the sort of robust economic development that Mark says can’t be done.
Let’s be clear, however, just because the Downtown Spokane Partnership (DSP) and Greater Spokane, Inc. (GSI) have no authority to conduct economic development, certainly doesn’t preclude economic development from being conducted (as I write about here: What is Economic Development, and Who has the Authority to Do It).
We can do more. We can do far, far more, despite all the reasons that my friend Mark Richard provides below trying to convince me that we can’t. If we change the system, we can change the city.
Let’s correct several of Mark’s critical points he made during our facebook exchange.
Black text is pasted from the facebook thread. [Blue text is new content I added for further elaboration.] Of course, the original thread can be found on SpokanePlanner’s facebook page.
Parts of downtown are hip but it could be soooo much better. Ever been to Boise? Amazing downtown.
We love Boise too. While we use them as a comparable we are pretty proud of what we have here too. Boise does have a few distinct advantages; namely their state’s tax structure and ability to provide incentives that attract corporate headquarters. [On the contrary, the Revised Code of Washington provides plenty of tools to build incentives for whatever it is a municipality would like to incent – corporate headquarters or whatever you want – and our incentives are every bit as effective as the ones Boise uses. The major distinction is Boise is leveraging their incentives and Spokane is not.] As the capital of Idaho, Boise is home to thousands of government jobs and is better positioned to receive funding for key infrastructure and city beautification projects than Spokane is as well. [On this point, we agree. I write in long, extraordinarily sexy detail about the competitive disadvantages of Spokane’s political geography in my post The Golden Circle.] That said, they are doing some exciting things and we have learned a good deal from their successes but Spokane is a tremendous success in its own right. [Agreed on this point, too. We’re able to compete head to head with Boise even though our economic development system is totally inadequate. Imagine the potential if we started doing economic development the way everyone else does it, including Boise?]
I understand. With the capital and Boise State right there, it’s a different vibe. I just love the Saturday Market, the restaurants, and shopping!
I’m afraid Mark is only half right. Yes, different states different tax structures and processes, but Spokane can provide every bit the same incentives Boise provides to increase quality of life and attract industry. Those tools rest with city council, however. As simple non-profit corporations, DSP and GSI do not have the authority to provide for incentives and therefore can not directly conduct economic development. They are sure are good at fundraising, though.
SpokanePlanner not true. Washington State Constitution puts specific limitations on the use of one of the most important economic development tools in the country (Tax Increment Financing.). It is common knowledge Idaho’s is more flexible and can be applied to future revenues (only forecasted growth created by the investment made) for schools and fire, that in turn generate a more substantial increment. [I geek out over tax increment financing (TIF). Call me quirky, but I put together tax increment finance models for fun, like this one “Macy’s Tax Increment Present Value” to support my post A Tax Increment Analysis for the Macy’s Block. Perhaps it’s because I spent the first five years of my career closing economic development deals – providing incentives – by utilizing TIF. I’ve closed huge TIF deals that have stimulated hearings in the United States Senate (you can read more about that in my post: The Incentives GSI Can’t Give You), and I’ve closed small TIF deals that helped create healthier blocks and intersections. I’ve sat in state houses and testified about TIF laws, and I’ve lectured at conferences about TIF best practices. For mercy’s sake, I even wrote and published a novel and the plot line is centered around TIF. Who in the world writes a lousy novel centered around tax increment financing? I’m afraid Mark’s above statements about TIF are inaccurate. In terms of property tax increment financing, TIF in Washington is weaker than most states for two reasons: it’s capped at 75% of the future property tax increment and, the kicker, other property taxing entities can opt out, like a school district or county, which diminishes revenue potential. In terms of sales tax increment financing, TIF in Washington in weaker than most states because it requires state approval. Naturally, there are many nuances and caveats in my points above that I’m leaving out for the sake of keeping everyone awake. However, let’s digress from how TIF in Washington works and address Mark’s statement in relation to the state constitution. I’m unsure what citation in the state constitution Mark is referring to in regards to TIF, but the one oft cited is Article VIII, Section 7, which prohibits gifts of public money, property, or loans to private individuals or business entities. This provision does not, however, preclude public entities from providing public incentives into private projects. Providing incentives is not a simple gift of cash to a private developer or business entity. The incentives take the shape of eligible public improvements and are therefore perfectly legal because they have a public purpose – this is how it’s done across the nation, including the State of Washington. Kendall Yards is Spokane’s most successful public/private partnership whereby the city provided incentives (public improvements) into the transaction financed by TIF. Thus, despite the three handicaps I outlined above, TIF is still quite powerful in the State of Washington and, no, the state constitution does not hinder its deployment. (To learn more about how TIF works in Washington, I recommend reading Comparison of Tax Increment Finance Statues in Washington, written by Spokane’s best finance attorney, Jeff Nave.)] The City has its own limitations imposed by the Charter, that prohibits the city issuing debt to make said investment without a vote of the people. [This statement is inaccurate on multiple levels. Perhaps Mark is referring to the Charter language in Article IX, Section 85(A) “A vote of the people shall be required for capital expenditures….” Otherwise, I’m unsure what he bases his opinion on. For instance, the Kendall Yards deal is legal. That’s a form of city debt whereby the developer acts as lender to the city, otherwise known as a TIF reimbursement agreement. Moreover, there are far more techniques to provide economic development incentives than just the issuance of debt. That said, if a vote of the people to issue debt is what precludes Mark Richard from conducting economic development, I have the solution. Public development authorities (PDA) can issue debt all day long without votes of the people. Not only that, but PDAs can legally act as “conduit” finance tools for cities, which opens a world of economic development opportunities to engage the private sector and, yes, provide public incentives. (To learn more about PDAs and conduit financing in the State of Washington, I recommend reading Don Hogaboam’s 1995 law review titled City Involvement in Economic Development.)] Incentives, however, are not the only way conduct economic development. Anyone can Use the eye test. Take a drive inside and outside our geographic boundary and tell me we don’t “do” economic development. The BID Cedar to Browne; North River to the BNSF tracks south of First. [The Downtown Spokane Partnership does not do economic development. (For that matter, Greater Spokane, Inc. does not do economic development). The Downtown Spokane Partnership is a garden variety non-profit charity that is wholly beholden to private donations and City Council contracting. DSP manages one tool: the Spokane’s parking and business improvement area (BID). Spokane City Council is the BID, however, and by their grace they allow a private entity to manage the BID monies to administer downtown trash collection, safety patrols, some marketing initiatives, and street furniture here and there. Those services do indeed grease the wheels of the market but DSP simply does not have a direct cause and effect relationship when it comes to stimulation of private investment, such as attracting corporate headquarters. Don’t get me wrong, BIDs are a good tool, indeed, but DSP is under leveraged and, at any moment, City Council could pull the rug right out from under Mark Richard and DSP and delegate authority to run their BID to another entity that can legally pledge public money as an incentive to attract private investment, like a PDA can, as I recommend here: The Case to increase DSP’s Budget by $4 Million per Year.]
Mark Richard good detailed rebuttal, but still not accurate. I’ll retort once I’m off the golf course.
As a self-proclaimed expert of economic development and a student of cities, I cannot wait for your retort because it will set this whole thread in context.
Mark Richard I’m happy to report I just had a great round of golf. I highly recommend you scroll down the home page of my blog; you will discover article after article about how to do economic development. What I see in your arguments above are excuses. I’ve written article after article that provide for solutions to the constraints you cite above that appear to limit your creativity. No where did you acknowledge the fact that DSP and GSI don’t have the authority to stimulate economic development by virtue of their legal status as garden variety non-profits. I’m not sure what school of economic development you went to, but the one I went to taught me that the system you so doggedly defend is ineffective on multiple levels. We run in the same circles, Mark, and everyone whispers the same thing in the back room. Not to worry, however, I have a solid gold plan that will actually give you another tool, a market driven revenue stream, and real authority to stimulate economic development. Follow the link below. To your point that not all economic development is incentive driven. I totally agree. Can you put some cheap folding chairs in the middle of a street for me? The Case to Increase DSP’s Budget by $4 Million per Year.
So let me get this straight. you took a job running an organization you felt was not able to do economic development under the auspices you could do economic development (because that’s what your were hired to do) then you took their money, before leaving on less than good terms after doing little to nothing and now you have a plan and it includes plastic chairs. [In the words of my new favorite urban planner, Janette Sadik-Khan, “When you push the status quo, it pushes back, hard.” If we change the system, Mark, we can change the city.] Is that what we are reading here? Nice. Leave it be Mike and find something positive to do. [Apologies if an honest perspective does not meet your threshold for positivity.]
Mark Richard you must really feel threatened by me. Attack my credibility if you like and trivialize the conversation, but I’d prefer you address the argument at hand. The chairs are symbolic, man, a metaphor. It’s a shame I even have to point that out. Where are Spokane’s urban visionaries, Mark? I’m rooting for ya, big guy. Are you capable of doing something bold, or am I right about you?
Post script: Funny thing happened a couple days after our exchange, Bloglander published a post titled “DSP’s Mark Richard has an Xtreme dream: A zipline across the Spokane River” whereby Mark proposes to build a zip line across the Spokane River and his lead quote in the article is, “Here’s my bold vision: That we would do it across the river. That’s my bold vision….”
A zip line is a cute idea, and kudos to Mark Richard for being brave enough to throw it out there with nothing more than starry-eyed dreams to back it up, but the bold and visionary ideas I’m referring to are something bigger, systemic. If we change the system, we can change the city. I will be the first to have Mark’s back if he publicly proposes real systemic change.
Oh, and one more thing, don’t be the guy in the room who says it can’t be done, be the guy in the room who says it can.
Quick note about the author of SpokaneSplanner: He once held Mark Richard’s position at the Downtown Spokane Partnership but was terminated for attempting to change the system. He is now the Planning and Economic Development Director for the Spokane Tribe of Indians. Prior to his employment at DSP, he was the executive director for an urban renewal authority in Colorado. In his 12-year career, including the hiatus post DSP termination, SpokanePlanner has directly administered about $400,000,000 in projects, which divides out to roughly $33 million per year (a number he intends to increase).
SpokanePlanner does economic development by day, professionally. By night, he also writes about it via this blog. As you’ll discover if you peruse the home page, there’s an awful lot to write about.
*Cover photo taken from: spokanehowsbusiness.com.