Steve Salvatori

The View From Inside the Box

In Response to My Friend Steve Salvatori —

Below you will find a facebook exchange between former Spokane City Council person Steve Salvatori and SpokanePlanner. Steve was fired-up based on a post SpokanePlanner published titled “How to Weaken Spokane’s Good ol’ Boy Culture,” posted on March 30, 2016.

In an effort to respond to Steve’s arguments, I have crafted this post. Much of what Steve argues I have already provided arguments against in previous posts, so links will be provided in the appropriate places.

Don’t think of this as a debate between Steve Salvatori and SpokanePlanner, because it’s a debate between old-Spokane and new-Spokane, between those who wish to preserve the status quo and those who wish to change it, between those who wish to perpetuate city-building models from the 1960s and those who wish to establish city building-models fit for a 21st-century city. Indeed, it’s a debate between those trapped within the box, and those that are not.

As one of the city’s leaders, I’m hoping Steve is open-minded enough to understand that for Spokane to become a dynamic, innovative hub for 21st-century entrepreneurialism, most of the tools that will get us there are outside the box.

___________

Steve is responding to this post: “How to Weaken Spokane’s Good ol’ Boy Culture.” SpokanePlanner’s retorts are [highlighted].

___________

Steve Salvatori I read the link and I am shocked. You do not see value in a voluntary dues paying organization, who generates the lion’s share of their revenue from their member’s own dues? And you believe this organization of businesses should just allow city council to tell them what small businesses want, instead of allowing them to lobby and communicate with you, as do all of the other special interests you listen to? Are you high?

 

SpokanePlanner No, I see value in it, but what you’re referring to is a chamber of commerce, not an economic development organization (and I’m afraid I’m totally sober).

 

Steve Salvatori Thanks for replying so quickly. Let me be more specific on the points in your article that appear fatally flawed.

 

Steve Salvatori Your conclusion that advocacy, lobbying and fund raising do not have a place in economic development is blatantly false. They played a critical role in landing the medical school, funding of the N-S Freeway, the Bike/Ped bridge in the U District, the retention of Fairchild AFB (so far) and countless other examples. [Let’s start with advocacy and lobbying, since they are two sides of the same coin, and we’ll address fundraising in a moment. Advocacy and lobbying are not “economic development;” it’s just advocacy and lobbying, and it’s the only tools in GSI’s tool-bag that it controls 100%. This does not qualify GSI as economic developers. It does, however, qualify them as a voice for the business community. Anybody can advocate and lobby city council or the State of Washington for money and to adopt (or reject) policies. Like I said, that’s not economic development; it’s just advocacy and lobbying. What I’m arguing is that we establish economic development tools to do it ourselves. Then we don’t need to ask others to do it for us. A city that controls its own economic development destiny is a much stronger city than one that does not. As things are now, if all we have is advocacy, lobbying, and fundraising, Spokane is in a needy and weak position as we move into the future. Worst of all, it places the fate of our city in someone else’s hands. Finally, we can’t lose sight of the fundamental difference between economic development and fundraising. Fundraising is for charities. Economic development isn’t charity driven, it’s market driven. Understanding how to underwrite economic development projects using market-driven tools as provided by state law is the difference between an economic development professional and people that contend advocacy, lobbying, and fundraising is economic development.]

Your bullet point of “Stop making municipal payments to GSI” because we are “paying them to come and complain at city council meetings” demonstrates an ignorance of what we do pay them for. [No ignorance here, Steve. I know exactly what we’re paying them to do because I have a copy of the contract, which you can download here: GSI 2015 contract.]

GSI is the entity the city pays to handle outreach and recruitment of industries and companies to Spokane, follow up on in bound inquiries and arrange site visits, and be the conduit for receiving and distributing federal and state grant monies regarding special empowerment zones. [I have and will continue to argue the city is wasting its money because GSI doesn’t have the tools to provide real economic development incentives, as I point out in this post: The Incentives GSI Can’t Give You.]

These are all administrative functions that go along with running the old EDC which was merged into GSI. [Private non-profit entities that profess to act in the public’s best interest and manage the public’s tax money, but are beholden to the charity of others, place administrators in an awkward position of serving their donors, whose best interests may or may not coincide with the public’s. Not to mention the fact that you literally have to pay GSI to have any influence on their decision making process. Finally, private budgets and meetings that are not open to the public do not support a transparent and accountable decision-making system. If GSI were simply a chamber of commerce, none of these points would trouble me. We need to stop pretending that they are economic developers.]

When GSI comes to council to testify on an issue, they are coming in their chamber role, after their members through their public policy board, have taken a position on an issue after a lengthy deliberation process. [Is there really a distinction between their “chamber role” and their “economic development” role? It’s all one entity. It’s all the same people. What happens when the “economic development” side disagrees with the “chamber of commerce” side? Nothing. All decisions filter up to the same CEO and to the same board of directors.]

 

Steve Salvatori Your bullet point to “Stop inviting GSI to sit on local committees” speaks for itself. GSI is a group that represents literally hundreds of our smallest to largest businesses. Definitely would not want to encourage them to have any kind of voice on local committees. “they bring no value, just old guard opinions…cut GSI out of the information loop”. That is what you propose as a solution? Small business has no right to information or participation in local committees? Truly on this one, I would hope you would walk back those comments in a calmer moment. [I’m perfectly calm. I’ll make you a deal, you stop using the hyperbole that GSI is a voice for the small business community and I’ll stop using the hyperbole that GSI is run by the city’s good ol’ boys. Fallacies aside, I’ve written extensively on what GSI’s function is within metro-Spokane. I recommend starting with this: The Best Magic Act in Town, and then move on to this: Spokane’s Economic Development Environment.]

Most of the bright new young businesses like E Tailz, 14-4 & 2-7, Limelyte Technologies, DataRang, etc are all GSI members. Tom Simpson, who has been more engaged in mentoring and helping to find private funding for more start up businesses in Spokane than any one I can think of is on the GSI board….just cut them out???? Please rethink at least that bullet point or you will just be proving how close minded, ignorant and misguided that bullet point would look to anyone who reads it. [Those are three anecdotal victories that sound really great, Steve, but I’m considering a larger picture than what a chamber of commerce can do to stimulate networking amongst its members. I’m thinking 21st-century city-building strategies (as I write here: Grading Spokane’s Economic Development Performance). I’m thinking how to position Spokane to compete in a world economy and truly become a “City of Choice.” I’m happy Tom Simpson was able to help three small businesses and that he also happens to be a GSI board member, but I’m afraid that’s not economic development either. It’s just a private sector entrepreneur helping other private sector entrepreneurs. There’s a term for this; it’s called the market at work.] 

 

Steve Salvatori Your bullet point “Stop making municipal payments to DSP (Downtown Spokane Partnership) also demonstrates a lack of understanding let alone appreciation for just what the organization does. [Steve, I’m the wrong person you should accuse of having a lack of understanding of what DSP does, see Author Bio.]

DSP manages the BID (Business Improvement District) for the city. DSP was formed by the very people who own and run our downtown businesses….everything from large property owners such as the Cowles, to small coffee shop, bar and restaurant owners, small and large architectural firms, etc. In short, DSP is made up of representatives of our downtown economic ecosystem. It was created when the stakeholders downtown realized that the city could not afford to provide them with a level of service that would help us all realize the potential of downtown, and they agreed to tax themselves with an extra levy, so they could add Security Ambassadors, Clean Team, Marketing of downtown activities and beautification efforts. This extra tax was agreed to voluntarily by those business owners downtown, who were willing to pony up extra money to improve the downtown experience for everyone. The East Sprague Business Association is looking at forming their own BID as we speak, for the exact same purposes. [I think you should be careful not to conflate DSP with being the business improvement district. DSP is a garden variety non-profit that anyone can create. The business improvement district was/is created by Spokane City Council. BIDs are amongst the most commonly utilized municipal economic development tools in the country. DSP is not the business improvement district, the City of Spokane is. The only legal authority DSP has to spend BID monies is created by virtue of the contract it negotiates annually with Spokane City Council.]

Because downtown contains the greatest concentration of employers, employees, sales tax revenue, property tax revenue, and is a key metric of Spokane’s role in the region, the city provides roughly $100k in additional funding or roughly a 10% match on the $1 million that was ponied up privately. [It is not accurate to call the roughly $1-million per year in BID revenue “private.” That’s a pool of public money, just like my property tax dollars and all other local tax and assessment revenue streams. The private funds that you inaccurately refer to come from sponsorship and membership contributions. As I argue in this post, The Tail that Wags the Dog, it’s the private fundraising that drives the decision making for the other $1,000,000 in public assessments. How do administrators reconcile the individual best interests of their largest donors with the best interest of downtown as a whole? Because they often don’t coincide. Unfairly, the public doesn’t get an answer to this question because DSP (and GSI) board meetings are private and not open to the public, despite the public monies they manage.

That is great leverage on city funds, not a waste. [I disagree. The city’s tax payers are paying the downtown business elite $100,000 to manage another roughly $1,000,000 in public revenue. How about I create a non-profit and bid to manage the $1,000,000 per year in district revenue at no cost to the city’s tax payers? Then the city will receive the exact same service for free. Even better, here’s how to pledge another $4-million per year to DSP’s coffers that’s not based on a simple hand-out from city hall; it’s based on a market driven mechanism: The Case to Increase DSP’s Budget by $4 million Per Year.]

On top of that, roughly $40k of the city funds are returned to the city by DSP, because DSP has contracted back with the city to collect the additional tax levy. This really has very little added cost to the city because the tax collection structure is already in place, but it is a great example of how synergistic DSP and the city are. [If DSP’s relationship with the City of Spokane is your definition of “synergistic,” then I think you have a misunderstanding of what the word means. DSP’s only authority is that which is derived from their annual contract with city council. Worst yet, as I well know, not only does DSP have to contend with pleasing seven members of city council, but it also has to contend with pleasing the mayor, his administrator, and all of his employees in city hall. Not only that, but DSP formally answers to a board of 23 folks. And then stack on the BID Advisory Board of, what, about 21 folks? By my count, that’s two different boards consisting of about 44 people, seven elected city council people (who have all the real power), and then the mayor’s office is the cherry on top. That’s not synergy, Steve, that’s bureaucracy.]

DSP also paid for an extra office to patrol downtown for years, and in addition provided free space to the downtown precinct until the city inexplicably decided to move it to the Intermodal Center where they do have to pay rent. [Agreed. Inexplicable!]

 

Steve Salvatori You suggest converting DSP into a PDA, which will get them out of the charity business, and allow city council to appoint their board. When I bought the Lorraine Bjuilding on First Ave, and established the Spokane Entrepreneurial Center, I was a proud member of DSP. I paid an extra assessment on the entire square footage of my building. and then each of the 22 businesses that got their start at the SEC also paid their DSP assessment (approximately $75 per year for a small business). [DSP is not the BID. In your example above, you’re not paying DSP. You’re paying the business improvement district. Once again, you’re confusing the two. DSP is a non-profit membership-driven organization with dues and sponsorship opportunities (i.e., a charity-driven business model). The BID is the City of Spokane, which collects roughly $1,000,000 per year in assessment revenue and delegates authority to administer said funds to DSP via an annual contract.]

The DSP Board consists of small and large businesses no just some “Old Guard” as you suggest. I was invited to join their board after being a member for a short time and ultimately served one term as chair of the BID. [I’m afraid you’re wrong, Steve. You didn’t serve as chair of the BID. You served as chair of the “BID Ratepayer Advisory Board,” an entity that is not the business improvement district. In fact, it has even less legal authority than the DSP board. As a former City Council person, and as a former chair of the Advisory Board, it’s frustrating that I have to educate you on the basic facts that the system rests upon. The BID Ratepayer Advisory Board is a committee created within the city ordinance that established the BID. It advises the DSP board and serves as another conduit for consensus building. Please don’t confuse the BID Ratepayer Advisory Board with having any legal authority whatsoever. Congratulations on being its chairperson.]

Our role was to create the budget to spend the extra tax money we all levied against ourselves. [See above. I’m afraid you had no authority to create, approve, adopt, or spend a dime of the business improvement district revenue. Only city council does, and they delegate authority to spend the BID monies to the DSP board. All the Advisory Board does is make recommendations. On a deeper level, however, I’m glad that throughout your attempts to educate me, you are consistently wrong on who has real (legal) authority to do what, because it is a great example of the dysfunction of the overall system. When a former Spokane City Council person, former DSP board member, and former chairperson for the BID Ratepayers Advisory Board doesn’t even know how authority and money is derived for the entities you so doggedly defend suggests Spokane’s economic development delivery system could use some clarity of roles and responsibilities, which I delve into here: Spokane’s Economic Development Environment.]

Most of that money funded the Security Ambassadors and Clean Team, but other monies went to supplemental snow plowing of the downtown when the city was overwhelmed, hanging baskets, gateway and other beautification projects. [Again, you are mixing DSP’s private donations with the BID’s public assessment revenue. Nonetheless, these are all worthwhile endeavors.]

We were spending our own money….. [No, $1,000,000 (the bulk of the money) is public, the City of Spokane’s. If you like, you might argue on philosophical terms that all tax money is ultimately private (and I’d probably agree with you) but, for the purposes of the BID money that you’re referring to, Washington State Code (35.87A RCW) quite explicitly says you’re wrong.] what in the world makes you think city council would do better in appointing a DSP board than the very members who agree to fund it in the first place? We had board elections every year, and have been a responsive and action oriented organization since its inception. [Efficient and responsive when it comes to the Security Ambassadors and the Clean Team, but for everything else, DSP is totally paralyzed by the inefficient system you are attempting to defend.] 

What convincing argument do you have that our voluntary additional tax levies should be spent by a biased city council with very little real business experience and absolutely zero ownership of any downtown property or downtown based business? [By transitioning DSP into a public development authority and pledging the BID revenue to it, several magical things happen:

1) It will become a market-driven economic development entity.

2) DSP gets out of the fundraising business. This way administrators will no longer need to go around pan-handling for money and being paralyzed by the favor-trading that comes with it.

3) An arm’s length relationship is established between the business community and the board, which will enable a more efficient and professional decision-making process predicated on the public’s best interest and best practices economic development.

4) All functions of the organization become transparent — board meetings, agendas, minutes, budgets. No more dark money equals less back-room shenanigans.

5) A public development authority can conduct city-building activities — above and beyond just trash cans and planters. I’m talking about gateways (without having to fundraise for it), I’m talking about beautification projects on a scale that repairs streets and sidewalks, I’m talking about public/private partnerships, I’m talking about doing what successful 21st-century cities are doing, and, best of all, we can do all of it ourselves.

6) A public development authority is better equipped to leverage market-driven economic development tools provided by state law, which will enable a proactive approach to big-ticket economic development, such as the redevelopment of the Macy’s block, as I outline here: A Redevelopment Plan for Downtown Macy’s, and here: Of Leakage, Retail trade Areas, and Losing Downtown Department Stores, and here: A Tax Increment Analysis for the Macy’s Block.]

 

Bradley William Bleck What Steve Salatori says is beneath meaningless. He left Spokane for Texas. Beyond that, the fundamental argument is that tax payers should not be funding lobbying for small or other business. If the advocacy provided is all that valuable, then those who are advocated for should do the paying.

 

Steve Salvatori Bradley, first thing, Dallas project completed, and I am happy to be back in Spokane. Second thing is that taxpayer money is not being used for GSI or DSP lobbying. It is being used for the specific purposes originally contracted for and spelled out above in my previous comments. GSI does have a lobbying fund, and it is funded by their members not from the money the city allocates. The city is a minor part of GSI’s budget and while I agree there is always room for improvement in how we define the deliverables for those dollars, the city is getting performance for the funding they are providing. [Can you get me a copy of GSI’s full budget? I’d love to see it.] And on the lobbying portion that seems to have everyone’s panties in a knot, when GSI has come before council to testify, it is doing so on behalf of it’s members, on issues the city council is proposing legislation on, such as family leave or apprenticeship programs. When GSI does that, it is giving council testimony on behalf of the businesses that are affected by the legislation.

 

SpokanePlanner Steve Salvatori thanks for your thoughtful, passionate comments. It appears my writing really motivates you. And that, my friend, makes me happy. I’m glad we can be having this debate because we’re both trying to get to the same destination (at least I think we are) — building a 21st century city using the best tools available to us. I’ll respond to each of your points in a future blog post but, what I won’t do, Steve, is call you names in the process.

________

Post script to Steve Salvatori:

I really appreciate how much your perspective illustrates the philosophy of old-Spokane. I want to build a 21st-century city (as I outline here: What Prosperous 21st-Century Cities Do). I’m happy to buy you a beer anytime and we can discuss how to get there together.

By the way, now that you’re back in town, do you plan on running for office again?

~Mike Tedesco (SpokanePlanner)

 

This blog is written by Mike Tedesco, officially a candidate for Mayor of Spokane, 2019. Check out his other totally awesome website at votetedesco.com.