If Tacoma loses Russell (Part VI)
March 8th, 2008 by Republican By DefaultBrace yourself, I’m about to oppose a tax cut. It’s a targeted tax cut that I think targets the wrong recipients. Don’t get me wrong, I want Russell to stay in Tacoma. I just don’t want to spend too much money to keep them here.
If you’ve been paying attention to the news the state legislature passed a bill to give a sales tax break to building projects of a large enough size for businesses with enough ‘qualified’ employees built in ‘empowerment zones’. As usual the bill is worded in such a way that it leaves out the name of the intended recipient (Russell Investment Group) and instead makes it sound very general, which is a load of garbage.
This really amounts to the State jumping in and helping the failed ‘urban renewal’ that politicians, bureaucrats and good old boys have been pushing for decades. They spent a bunch of money to keep Russell here in the 90’s and they’re doing it again now. Their hope is that Russell will attract other financial industry companies to the Tacoma area.
As I’ve said in this series, I think the goal of building a financial district in Tacoma is a pipe-dream. It hasn’t worked yet and with the negative publicity generated by Russell signalling their intent to move, nothing is likely to change.
As for this bill, it seems that originally they included language in the bill that would have required the recipients to have 500 qualified employees (full-time and making at least the state average income) and only for $50 million projects (and above). The language was changed to 300 employees and $30 million. In my opinion, they’d help the downtown area more by targeting businesses with 25 to 100 employees spending from $2-10 million on their projects.
The timing of the bill is interesting. Recently the Tacoma City Council yanked an item from the agenda of their weekly meeting that would have created some sort of official financial district within this empowerment zone. I guess poor trumps rich in government aid requests so downtown Tacoma will still be officially listed as poor. Funny that the ‘empowerment zone’ is set up to combat poverty and yet the benefits go to the rich on this one.
A much better approach might be to completely repeal Tacoma’s business taxes. This would help any business in the city and would allow them to grow and hire more people. Targeting the downtown doesn’t make much sense without a number of other changes. Right now there just seems to be far too much government involvement. Personally, I think they’d do more for the downtown area if they just leave it alone and remove as many restrictions as they can instead of adding more. But all of that will be the subject of other posts.
I don’t know how long it will take before these people wake up and realize they’re sending good money after bad. It failed before and it will fail again. In all of this time and for all of their efforts the only things happening downtown are government projects and a few entry-level local-venue entertainment establishments (which have few employees and pay very little). And even the entertainment industry isn’t exactly thriving (Tacoma Actors Guild Shuts After Running Out of Money - March 8, 2007). Restaurants are doing all right in pockets, but that tends to change over time as local attractions wax and wane and competition draws customers away.
In this series:
If Tacoma loses Russell (Part I)
If Tacoma loses Russell (Part II)
If Tacoma loses Russell (Part III)
If Tacoma loses Russell (Part IV)
If Tacoma loses Russell (Part V)
If Tacoma loses Russell (Part VI)
If Tacoma loses Russell (Part VII)
March 8th, 2008 at 11:07 pm
RBD,
If you really believe that “the only things happening downtown are government projects and a few entry-level local-venue entertainment establishments” then you haven’t been downtown in awhile. I’ve lived downtown for 5 and a half years and this is just flat wrong. I’m usually not that blunt but really, I believe this statement is demonstrably false.
March 8th, 2008 at 11:15 pm
It may have been a bit of an exaggeration, but not a large one. One area that some consider to be growing is high tech, or as some are starting to say ’software development’. Considering the effort put into bringing that type of business here, I would put it into the earlier category (government hindering the growth). But the successes aren’t big by any definition. As someone who worked in computers in Seattle and King County during the 90’s, Topia and the few others in Tacoma are nothing to brag about.
I’m willing to admit when I’m wrong. But you’ll have to show me. Feel free to list the big successes here. The context is businesses located downtown, so you’ll have to stick to that category. Events don’t apply (Tall Ships, etc.)
March 8th, 2008 at 11:49 pm
RBD, the list of businesses located downtown is huge, so let’s narrow the search. What companies have headquarters here? Here’s my list.
Downtown Tacoma is headquarters to at least three publicly traded companies: Davita, Labor Ready, and Columbia Bank. There are probably more I’m not aware of (more small banks?).
Downtown Tacoma has the headquarters for the national company SAGEM Morpho, which has field offices in Texas, DC, and New York. Downtown also has the North American headquarters for KOMPAN, which makes playground equipment.
We have our own budding businesses that are more Tacoma-grown based out of downtown: BCRA, headquartered downtown, just expanded with a DC office to get more national projects. Topia, headquartered downtown, has the software program Skoot it offers, as well as contracts with the FAA and Homeland Security.
If you want to skip the headquarters requirement, and look at larger firms with offices in downtown Tacoma the accounting firms of RSM McGladrey and Moss Adams come to mind as does Expedia. All pretty large employers.
I believe that the above is a respectable list of national and corporate headquarters for a mid-sized city like Tacoma and that counts as something “happening” in downtown.
And that “happening” in many way has got to be credited to the public-private partnership to begin revitalizing downtown that started in the 1980s with Union Station and the Pantages thanks to the combined work of the City, the Chamber, and the Executive Council for a Greater Tacoma.
Now I am 100% with you that the B&O tax needs to be dropped and soon. And I’m not necessarily a fan of the Russell legislation. I don’t like laws with such a narrow target (witness Terry Schiavo who had an entire bill written that applied to only her).
But Tacoma is not actually doing that bad when you look at it.
March 9th, 2008 at 1:23 am
Well, I don’t think any of those are the result of the push for a financial district, arts and entertainment or high tech.
- Davita in Tacoma is only a processing center, they’re headquartered in El Segundo,
- Topia was started by a local and wasn’t the result of the high tech push,
- Columbia Bank predates the push for growth.
- Major corporations are often attracted to any population center to locate a branch office regardless of how difficult it is to do business there. Attributing that to any ‘public-private partnership’ would be missing the point, even if that corporation works with those groups to locate here.
Honestly, only Labor Ready qualifies as anything of a success in attracting businesses during this period. It moved here from Kent (late 80’s or early 90’s, which was really before the last push, but I’ll give you this one).
In the meantime look at the number of businesses that have left or closed. Even if you counted all of those listed here as successes of the efforts to attract businesses to downtown Tacoma, we’re still losing ground. I wonder how the numbers actually look not only in comparison to Tacoma’s history, but also in comparison to other cities our size or with other cities with the resources we have available to us.
That is all without looking at the businesses that considered moving to Tacoma but changed their mind for reasons that we will never know.
Considering the opportunities that the city has had with the resources surrounding it (a major seaport, abundant natural resources, several large military installations, proximity to a one of the biggest boom-towns of the high tech revolution), I still have to say that this revitalization is an abysmal failure.
Considering we spent $100 million for Click Network infrastructure, $84 million each for the Convention Center and Link Light Rail, millions for UWT, Union Station, Dome refurbishing, etc., I’d say this is more of a bust than a boom.
That’s not to say that Tacoma isn’t a great place to live. It’s the business climate that’s horrible. I think we can do much better.
All things considered, Tacoma should have been a boom-town and downtown should have been a major part of it. But neither is the case.
March 9th, 2008 at 9:14 am
RBD,
You’re changing your rules. Your said that was that nothing was happening downtown except government, I said that was wrong, you challenged me to say what was happening downtown, so I did, and I think it was a pretty good list (save for listing Davita as headquartered here).
Downtown in the last 5.5 years since I moved there has grown by leaps and bounds in all categories, retail, employers, restaurants, nightlife, and arts. There’s a reason Class A commercial space is 99% leased downtown, where when I moved downtown the buildings had huge vacancies in them (my office alone was in a building with 4 out of 17 floors leased–it’s entirely full now).
And if you go back 5 years before that, back to 1997 … the change has been an about face, although I wasn’t living downtown and didn’t come here enough to know the major changes.
You say we’re not growing like Seattle in the 1990s, I say, “What’s wrong with that?” Unsustainable growth around a illusory tech bubble? Count me out. The problems with booms are the inevitable busts. I like slow and steady a lot better.
March 9th, 2008 at 2:28 pm
Erik, even if I gave you every one on your first list as an example of what’s ‘happening’ in downtown Tacoma, it’s still pretty lame.
We’re city of 300,000 in a county of 900,000 (I think that’s the right numbers). We’re probably sending thousands of skilled high tech employees up the highway to Seattle every day. I’m guessing that most of those would rather work here than there, if for no other reason than to get back hours of time every day that they spend commuting. We’ve spent hundreds of millions of dollars to attract business to our city. We should be seeing many times the growth you’ve listed. Even if your list is incomplete, it’s still pitiful.
My point is that opportunities have been squandered. I saw, first hand, in the 90’s where company after company tried to establish a high tech presence in Tacoma but were driven away. Not just a few. Dozens. And that’s just the ones that I’m aware of, but I wasn’t really in a position to see all of them. Even by osmosis there should have been at least a few of those that stuck. But the only one that really did was Topia, which is actually a local startup.
I was an exec at a dot com in 2000. We were looking for office space. There was very little available and the prices were astronomical. Tacoma couldn’t even capitalize on that even though there was plenty of cheap space at low prices. And believe me, dot comers were not picky about ambiance. A garage or a warehouse was just fine for most of them. In fact, the grittier the better. It was considered a badge of honor, like high tech grunge. Still, nothing.
At the time I was in Pioneer square (one location, we were spread over 3 locations, 2 in Seattle and 1 in Bellevue). Crime and homelessness were all around us. There was one guy who wouldn’t walk to his car alone after midnight. I was chatting with one of my techs on the sidewalk in front of our building one day and all of a sudden three cops converged on a guy in a drug bust right between us and the entrance to our building. I had to walk around homeless people sleeping in the streets every night. They had to hose Occidental park down on hot summer days to control the smell of human excrement. And still, Tacoma couldn’t compete.
And in Seattle, the bubble may have burst, but not everything disappeared. There are a lot of companies that made it through. The ones who didn’t were either unlucky enough to not have had time to get established before the burst or they had a bad business model. The ones with a solid business model are still around. But Tacoma never got it’s foot in the door.
I’m not down on Tacoma. I’m just fed up with bad leadership. They’re claiming to promote growth but most of what happens is paid for by taxpayers. They, not Tacoma and certainly not the taxpayers, are the failures. I have no doubt that the city can bounce back, downtown included. But it won’t happen until there’s a change in direction.
March 9th, 2008 at 5:15 pm
RBD,
I gave you my list. I would love to hear the dozens of companies driven away from Tacoma. I am also curious who exactly drove them out.
But the rules have also changed again. The original post had nothing about high tech. It said “nothing happening downtown.” Then you changed that to “downtown businesses, not events.” Then you narrowed that to high tech that had to be lured here from somewhere else. And Tacoma’s urban problems 8 years ago or more are what you hold up as your example.
I am discouraged. With the Link, with tourism, and with urban renewal I’ve engaged you on your site thoughtfully and sincerity. But more importantly than that, I’ve come willing to be persuaded, which I hope has showed in my responses wrestling with your arguments and not just writing you off because I disagree with you.
But I am getting the distinct feeling that you’re not interested. No matter what list or stats or counter argument I bring, it’s going to be “pitiful,” “lame,” incomplete, or the rules will change.
March 9th, 2008 at 5:16 pm
I would also appreciate a “preview” button as it happens.
March 9th, 2008 at 6:27 pm
Erik, sorry about the preview button. I’d like one, too. I’ll look into it at the WordPress site.
Well, I apologize for the twists and turns in this thread. I think it stems from the fact that we’ve gotten off topic from the post. I wasn’t focusing on downtown when I wrote it, but rather on the failures of the efforts to bring about the promised results and the continued misdirection of funds to a hopeless avenue for renewal.
So, I will say that I agree with you to a point. Downtown Tacoma has improved since the early 80’s when my route as a bank messenger took me to the First Interstate Plaza (later Wells Fargo) every afternoon. Things got worse for a while and are getting better. The hookers, drug dealers and homeless have moved elsewhere. Downtown is a lot safer than it was for a while. But I think you’ll also admit that parts of it have a ways to go. There have also been some relatively recent setbacks such as Shoenfeld and the almost setback of Brown & Haley, not to mention numerous less-publicized moves and closings.
My original point was that we haven’t seen enough improvement to warrant any more spending on the scale that has been happening for the last 5-7 years. I think we could have seen the same improvements for a lot less that we have spent, and we can see a lot more improvement for a lot less than the city (now with the state’s help) plans on spending to keep Russell in Tacoma and to keep their pipe-dream of a financial district alive.
So, again, I apologize for the frustration. But I think we both share in the blame for the meanderings in this comment thread.
In short. We need a new direction for downtown. This one isn’t paying off, and it’s not for lack of trying on the part of many. It’s my guess that the failure, or limited success, if you will, is the result of setting the wrong goals.
Also, I’m sure I could dig up a handful of business cards from high tech businesses that gave up on Tacoma. I’ll look around to see if I accidentally kept any. But if you ask around I’m sure you’ll find a number of people who used to attend the Tacoma Technology Consortium meetings a few years ago. There were generally 20 - 50 people in attendance at the regular (monthly?) meetings, most from Tacoma but generally several from other cities representing small high tech companies looking to do business here even after the bubble burst in 2000. I’m not sure any of those stuck. But it’s not surprising that no one in the downtown area talks about that. It’s a bit of a blackeye for the current plan.
March 9th, 2008 at 8:36 pm
I’d be interested to hear more about the high tech stuff. When I started working for the Convention & Visitor Bureau in 2002 the focus was three-fold for improving downtown Tacoma: tourism, higher education, and housing. I do think that in those three areas we have seen big changes, but it does seem like we lost our eye a bit on the major employer side.
I am all for eliminating the B&O Tax to attracting employers. Unfortunately, it’s hard to imagine the City turning its nose down at $75 million dollars in tax collected during a biennium. But it would certainly help things boom.
March 9th, 2008 at 9:01 pm
Agreed on the B&O issue.
Major employers. I think we need to grow a few small businesses from startup and treat them well before we’ll attract any from outside. But with things like the Tacoma’s business tax and a few other issues, it’s not likely to happen anytime soon.
I also think that the UWT was a bit ambitious. I think it fills a void between local technical schools / community colleges and the four-year liberal arts colleges, which is something Tacoma needed. However, I think that their master plan is a bit of an unoffical land-grab. I don’t think it’s helping matters that the space they called dibs on is relatively useless to developers or companies that want to build. Considering their recent announcement that they want to build a campus in Snohomish county that’s 15 or 20 mins. from another campus that’s not operating anywhere near capacity (taking students away from the existing campus), it’s a little hard to trust they won’t do the same thing down here.
Tourism and housing, we still have a ways to go there. Several condo projects on hold, delayed or abandoned in the last year or two. And I recently posted on what I thought about the tourism in Tacoma. I’m sure we’ll pick those up in some upcoming threads.
And again, sorry about the confusion. I should have been clearer about my comment about in the post (or at least done a better job of clarifying it in the comments).
Nice to have you here.