Chris Berry On The Net

There has been a great deal of discussion over the past few years about the need to attract young professionals to the Roanoke Valley. In spite of all the talk, we’ve made little in the way of actual progress. Roanoke is looking down the barrel of a demographic crisis similar to that faced by our Social Security and Medicare systems. We are steadily losing population among people aged 24 to 39, and gaining at an even faster rate among those in the 55+ age groups.

Becoming a retirement haven is not necessarily a bad thing for the Valley, but we cannot count on a steady influx of older people to solve our economic problems. Retirees will drive demand for specialized housing, healthcare, and financial services. The problem lies in the fact that older people as a group simply do not generate sufficient demand for the full range of other products and services required to maintain a balanced and thriving economy. Without that balance, opportunities for those of us in other fields will continue to diminish.

Much of the public discussion to date has focused on what kinds of amenities are needed to attract young people to the region. Unfortunately, this approach is entirely backwards. Amenities do not attract people; people attract amenities. Successful businesses make location decisions based on market research and demographic trends; not on city sponsored websites and email surveys. A city with an aging population is simply never going to attract the same high-end retailers and restaurateurs found in larger or faster growing areas.

If we are to bring about meaningful changes for the future of the Roanoke Valley, we must demand more from ourselves and from our elected officials. There are three key areas that require our attention, and unless we make significant strides in all three, we cannot hope to succeed. We must change our attitudes regarding change in general; we must improve our public schools; and we must make dramatic reforms in the way we pursue economic development.

Among certain groups in the Roanoke Valley, opposition to any proposed change is the default position. Whether it’s building a new art museum, demolishing an obsolete stadium, or renovating Center in the Square, a sizable portion of the population will always protest, driven as much by reflex as by reason. We’ve got a serious problem when we place a greater value on the convenience of street vendors on the Market Square, than on the survival of the economic engine that makes their presence possible in the first place.

Economic growth and education go hand in hand, and the state of our city schools is a major obstacle to growth. Without a quality education, our young people will not be prepared to take advantage of employment opportunities anywhere. Providing first-rate facilities is no substitute for a first-rate education. Future employers are not going to be impressed by the quality of our football stadiums, particularly if the quality of our graduates is not up to their expectations. Working together as a community to develop meaningful and effective educational reforms should be our highest civic priority.

When it comes to handling economic development initiatives, our local officials have proven themselves to be remarkably inept. Unless we are content with failed projects like Explore Park, Miller’s Hill, and Countryside Golf Course, we must demand a change in the way we approach the entire concept of economic development. We need to recognize that it should not be the role of bureaucrats and politicians to initiate development projects in the first place. It comes as no surprise that the responses to RFPs for projects like Countryside, and the proposed amphitheater on Reserve Avenue do not meet the grand expectations of local officials. If these projects were economically feasible to begin with, there would be no shortage of developers clamoring for a chance to build them.

The proper role for development officials should be to pave the way for desirable projects, backed by entrepreneurs willing to risk their own resources to create real economic growth. I believe that one of the best ways to do this is to adopt an entirely new method for the distribution of economic development incentives. Current city guidelines state that in order to qualify for incentives, a business must be planning to invest at least $5 million in construction and equipment, and must create at least 100 permanent full-time jobs.

Politicians are especially fond of this sort of incentive package, since granting them affords the opportunity to bask in the publicity created by large numbers of “new” jobs coming to town. The sad truth is that these are rarely “new” jobs at all. Just ask the FreightCar America workers in Johnstown, Pennsylvania what happened to them when hundreds of “new” jobs came to Roanoke. Enticing employers to move existing jobs from one locality to another will always be a zero-sum game. With practically every municipality in the country competing for high-paying jobs, the resulting incentive wars usually result in bad deals for local taxpayers.

One of the worst deals I can recall is the $9 million dollar incentive package granted to the developer of Ivy Market to build a Ukrop’s grocery store. In a city with a stagnant population, building a new grocery store doesn’t mean that people are going to buy more groceries. It simply cuts the pie into smaller slices for everyone already in the grocery business. Without a net increase in sales, there will never be a permanent increase in jobs. This incentive package threatens the jobs of workers at Kroger and Food Lion, and shifts a larger portion of the tax burden onto every other business and property owner in the city.

There is a better way to put incentives to work. According to the SBA, small businesses account for up to 80% of net new job creation nationwide. Instead of trying to steal existing jobs from other localities, we could use incentives to create an environment where new small businesses thrive. Instead of giving millions of dollars to established businesses, we could offer micro-incentives to encourage small business start-ups, or expansion of small businesses already in the city.

Consider the $9 million in tax breaks for Ivy Market. What if that money were divided into smaller chunks of $25,000, $50,000 or $100,000, and awarded instead to hundreds of different small businesses in the form of low-interest loans or loan guarantees? The resulting increase in jobs would dwarf any possible benefits from the Ivy Market deal.

Access to capital is always the biggest obstacle for new business ventures, and under-capitalization is the primary cause of new business failures. By providing a unique and innovative source of funding for new businesses, we could make Roanoke the location of choice for entrepreneurially minded people, both young and old. The jobs they create could ultimately provide the kind of promising career opportunities needed for young people in the Roanoke Valley.