Friday, January 31, 2014

On Ice Storms, Super Bowls and Omaha!

By Jim Vaughan, Senior Fellow

Listening to CNN report on Winter Storm Leon, the ice and snow event that shut down the city of Atlanta on January 28-29, reminded me of the ice storm that affected events leading up to the Atlanta’s second Super Bowl in 2000.

It seems that while snow and ice are unusual occurrences in the Georgia capital, they aren’t as rare as you might think. The 2000 storm made it difficult for fans to get downtown for the NFL Experience and other parties and events and likely resulted in Atlanta ranking No. 10 among the 15 cities that have hosted the Super Bowl.

So cross off “warm and sunny” from the list of advantages Atlanta will tout when the city bids for the 2019 Super Bowl—the first that the new retractable-roof stadium for the Atlanta Falcons will be eligible to host. This week’s storm will likely require that Atlanta’s bid include a snow and ice contingency plan!

Of course, the jury is out on the NFL’s decision to present the Super Bowl in an outdoor stadium in a cold-weather locale. But at least one cold-weather city is cashing in on the game: Omaha.

When the Greater Omaha Chamber and others in Omaha noticed that Denver Broncos quarterback Peyton Manning was shouting “Omaha! Omaha!” at the line of scrimmage, they moved quickly to capitalize on the opportunity.

The Chamber produced a video love-note to Denver, reports the Omaha World-Herald. Showing quick-changing Omaha scenes over a musical background, the 30-second video starts with the scribbling of what looks like the chart of a football play.

"You have to be set before every great play," a narrator says. "We know 'Omaha' works for Peyton. It works for us, too."

Chamber President David Brown was featured in an All Things Considered segment on NPR.

“We're always trying to promote the fact that we're a great city with great quality of life and cost of living and great jobs and those kind of good things,” Brown said. “So when an opportunity like this presents itself, it just adds to our ability to kind of build our brand out there for people and companies that might be looking for a place that they could invest or have a career.”

But back to Winter Storm Leon—Market Street’s Katie Bass wins the crazy commute award for walking the last five miles home on Tuesday night. And irony of ironies, Alex Pearlstein reports from Des Moines: “It’s warm and dry up here in the snowbelt.”

Friday, January 24, 2014

We’re Still Newbs When It Comes to Electronic Entertainment Incentives

By Evan Robertson, Project Associate

Over the course of my life, I’ve spent an inordinate amount of time reaching that next level, trying to defeat that final boss, or, more recently, trying to build a rocket to get to a fictional moon. I’ve reached the point at which I’d just simply rather not know how many hours (more realistically months) of my life have ticked off playing video games. The landscape of the video game industry has undergone significant alterations as it ticked away.

We’ve gone from pixelated Mario titles, to major triple-A games with the latest graphic that blur the line between reality and game, to electronic media that reaches the highest level of artistic expression (one need only look as far as Shadows of Colossus and Ico before it). It’s interesting then, to see that we economic development professionals target video game companies much like we do any other firm – the New York Times reports that 20 states offer some form of incentives for video game production. Yet, innovations within the industry itself and its shifting distribution model demand alternative forms of economic development assistance. Simply put, if the goal is to build an electronic entertainment culture – we’re all going about it wrong.

First, a case study. CCP Games is a video game developer and publisher located out of Reykjavik, Iceland. In the gaming community, they are best known for Eve Online – one of a handful of Massively Multiplayer Online Role-Playing Games (MMORPG) to enjoy any form of longevity. This past year it celebrated its’ tenth anniversary which – I can’t stress this enough – is a colossal feat.

CCP planned to expand its’ North American facilities, receiving state tax credits from Georgia to do so. These credits occurred at a time when the company was working on a few titles which it hoped would expand the company’s user base, thereby increasing revenue. Unfortunately, their expansion plans were undermined by uproar over changes to Eve Online which sparked fury among its subscriber base – damaging its primary revenue stream.

The company was forced to shift focus from its new MMORPG title – World of Darkness – which was being developed at its Georgia location to focus on Eve Online as well as DUST 514 – a first-person shooter spinoff title. As a result, the company laid off half of its Georgia workforce. Despite the downsizing, CCP still collects Georgia film tax credits through its North American subsidiary – receiving about $3.1 million in 2012 alone.

Georgia offers a flat tax credit of 20 percent based on a minimum investment of $500,000 on qualified productions in Georgia with an additional 10 percent Georgia Entertainment Promotion uplift by using the Georgia logo on approved projects.

This isn’t to denigrate the use of public dollars to support video game development. It’s about the shifting landscape of the video game industry and its emergent distribution model. Simply put, the use of production tax credits may not be the best way to build a sustainable, electronic entertainment culture within a community. The industry is transitioning from larger, more expensive production outfits to smaller, more nimble companies and entrepreneurs who no longer rely on large publishers to reach a massive audience. Consumer taste – or rather my taste – is transforming along with it.

If you paid attention to the Consumer Electronics Show this year, you’ve probably come across news stories about Valve’s Steam Machine. Steam is essentially the iTunes of the PC gaming, you log in, purchase the title you want to play, download it, and start playing. No physical media, just a digital copy. The service is extraordinary – it reaches 65 million active users last October. Steam Machine seeks to grow that number by creating hardware more suited for the living room.

More importantly, embedded into Steam’s distribution service is Steam Greenlight – a system that lets users’ rate new games to be released through the platform. Greenlight has been a boon to indie developers, allowing them to reach a massive audience in a short amount of time. As I write, seven of Steam’s top ten selling games are indie titles – indie titles such as Rust and DayZ can reach 30,000 or so concurrent players at any given time. And this isn’t the only avenue for indie developers to reach large gaming audiences. Sony, Microsoft, and Nintendo alike have similar online stores to sell indie games through their respective console platforms. Video game developers and entrepreneurs can now easily reach their target audience, no longer requiring large video game publishers to handle retail relationships and logistics. Technology, in this industry, has been a great equalizer.

Indie developer’s struggles have much in common with entrepreneurs outside of the gaming industry – they deal with succession issues, reaching their target market, handling investor relations, hiring the right staff, and ensuring that their product is of the highest quality. Indie Game: The Movie offers an inside look at the struggles and successes of indie game development. Success is life altering, failure devastating. These developers are at the forefront of video game design (trust me when I say the large developers play it safe, often) and distribution – they are innovators, they are entrepreneurs.

Tax credits for production may not be the best avenue for creating a vibrant video game culture. Instead, economic developers must use those tools from the toolbox that are best suited for creating startup culture – networking a community, providing incubator space, connecting entrepreneurial video game developers with established leaders, linking startup capital to indie developers, and offering support services required for basic business management.

Going back to Georgia, the state’s proactive steps to become a leader in crowdfunding could be more impactful in crafting an electronic entertainment culture than its tax credits ever will.

Wednesday, January 15, 2014

Looking Ahead: An Uncertain 2014

By J. Mac Holladay, 
Founder and CEO

Just when we thought the Great Recession was history, the December job numbers come in. After November’s number was increased from 203,000 to 241,000, the December increase was a disappointing 74,000. Even health care lost jobs in December. Still, we averaged over 182,000 new jobs each month for 2013.

Add to that the reality that the labor force participation rate is at a 35 year low of 62.8 percent. The only reason the unemployment rate went down is that many people have quit looking for a job. In fact, the labor force shrank by 347,000 people in December. Sadly, it is not just folks “retiring” as we see the 45-54 age group drop 0.4 percent in December alone.

Our economist friends had predicted 200,000 new jobs in December. So what happened? Was it the weather? Is it an aberration as some are claiming? It is important to note as well that average wages only increased 1.5 percent over the last year. We are still 2 million jobs down from the beginning of the recession and nearly 38.0 percent of all the unemployed have been out of work more than 27 weeks.

The evidence that the Great Recession was like no other continues to confuse and confound almost everyone. A number of cities are now back to pre-recession employment levels, but the job quality remains a challenge. Poverty rates, particularly among children, continue at very high levels in many localities. After four and a half years since the recession ended, the State of Georgia is still 100,000 jobs below pre-recession levels, the unemployment rate remains at 7.7 percent, and the poverty rate has climbed to 19.2 percent.

At the same time, there are many pluses in our economy. Overall spending in health care has moderated growing only 3.7 percent in 2012. Medicare spending was up only 0.7 percent per beneficiary in 2012. Fourth quarter 2013 GDP was up 4.1 percent, the best several years. Consumer spending is improving as people buy cars and other goods and the stock market continues at near record highs. Kiplinger predicts 2.7 percent GDP growth for 2014 and job gains of around 200,000 per month.

Nariman Behravesh, chief economist at HIS, says “my advice is to ignore the jobs number.” Michael Hanson at Bank of America, however, notes “you can’t say it’s the weather, wash your hands, and be done with it.” So, what does 2014 look like? While an uncertain recovery remains all we know for sure, we can’t judge this recovery on job numbers alone. A recovery without quality jobs is little recovery if at all. Stay tuned.

Friday, January 3, 2014

Webinar: Partnering with Your Local Healthcare Industry to Drive Economic Impact

By Ranada Robinson, Senior Research Associate.

I recently participated in an IEDC webinar entitled Partnering with Your Local Healthcare Industry to Drive Economic Impact. The two speakers, Steven Standley (University Hospitals, Cleveland, Ohio) and J. Eric Mathis (Williamson Redevelopment Authority, West Virginia), provided information on the innovative approaches their communities have been involved with spurring economic development from healthcare anchors. In many communities, hospitals are major economic drivers in terms of employment and investment, and it was interesting to hear how these communities are working as partners with their hospitals to create community-wide improvements.

Steven Standley briefly discussed Vision 2010. This $1.2 billion expansion effort by University Hospitals included a construction program which introduced a new project labor agreement with construction trades – a model for inclusion with goals for the percentage of contracts and employment relating to racial, gender, residency as well as apprenticeships for inner city vocational high school students on the projects – and a local vendor development strategy.

He then talked about the Greater University Circle Initiative. The leading anchor institutions in the community were rallied by the Cleveland Foundation to support this multi-faceted initiative. University Hospitals, Cleveland Clinic, Veteran’s Affairs Medical Center, Case Western Reserve University, and Cleveland Museum of Art together provided investments of over $3 billion. Here are examples of the projects this initiative has successfully implemented:

  • Focus on Neighborhoods at Risk – The initiative has programs focused on revitalizing struggling neighborhoods, with an aim of retaining and attracting talent. Working with community development corporations, development projects for nine neighborhoods in the City of Cleveland were identified.
  • Creation of Evergreen Cooperatives – This initiative works to provide living wage jobs in low-income neighborhoods in the area. Several workers even have criminal records that previously made it difficult for them to find quality jobs. There are three for-profit companies operated within the cooperative: Evergreen Cooperative Laundry, Evergreen Energy Solutions, and Green City Growers Cooperative. All three are sustainable businesses with green business practices.
  • Creation of New Bridge Cleveland Center for Arts and Technology – This facility retrains area adults to become phlebotomists and pharmacy technicians and after graduation, they are hired at the University Hospitals or other area healthcare employers. The facility operates other programs as well, such as an after school arts program for high school students.
J. Eric Mathis discussed the components of the Central Appalachian Sustainable Economies (CASE), noting that this effort, designed and implemented in the “Heart of the Billion Dollar Coal Field,” required a serious, tough conversation regarding renewable energy vs. coal. Within this conversation, partners around the table were able to find synergies with the coal industry. The six components of CASE are healthy communities, food systems, sustainable tourism, integrative education, sustainable building, and energy optimization. Built into all six components are innovation and entrepreneurship, through programs such as the JOBS Project, which connects rural landowners with federal and state incentives for the development of renewable energy projects that will create quality jobs, and Smart Clusters, which emphasizes sustainable development in at-risk counties of Central Appalachia.
  • The healthy communities component is centered around diabetes prevention and increasing access to walkable, bikeable trails. Through the Williamson Walkable Communities Program, community groups and businesses in the downtown area compete for the most miles walked in order to encourage healthy living.
  • A closely related component is food systems, which encompasses increasing the number of farmers markets, organic farms, and farm to school connections. One key initiative to this component is the Regional Food Systems Project. Currently, there is a pilot organic farm located on a reclaimed mine site. In addition, community gardening is a priority – an example of community collaboration is the Williamson Community Garden, a partnership between CASE, Williamson Redevelopment Authority, Wildwood Garden Club, Americorps NCCC, and local volunteers, that includes a greenhouse and 24 individually raised beds.
  • The sustainable tourism component links back to the bikeable community along with other outdoor recreation, such as hiking and all-terrain vehicles), a tourism corridor, and historical tours. The famed Hatfield and McCoy feud has been depicted in a film released on History Channel, and the Hatfield and McCoy Trails now have its first stacked loop mountain bike trails.
  • The integrated education component focuses on high schools, community and technical colleges, and universities. CASE has partnered with global leader – Global Service Learning – to establish an integrated education program that links Wayne County with local educational centers. This component directly confronts generational poverty through basic skills training like balancing a checkbook and healthy eating.
  • Sustainable building focuses on leadership in energy and environmental design, Living Building Challenge certification, deconstruction, and community revitalization. The Williamson Health and Wellness Clinic provides integrated, one-stop health services at low or no cost. Its facilities have undergone several energy efficiency upgrades, including the installation of the largest renewable energy system in the southern coalfields on its rooftop.
  • The energy optimization component includes utility-scale, municipal, commercial, and residential energy. Williamson, WV has a local energy action plan, which aims to reduce energy expenses for the city’s five public buildings. One of the goals of West Virginia Sustainable Communities is to provide citizens with sustainability education opportunities.
Health and wellness is not an island that sits away from economic development. Healthcare institutions and initiatives have a very influential place in planning and development. When leaders from various constituencies within a community sit at the table to collaborate so many initiatives that can have a huge impact on residents can be achieved.