You’re asking me about economic development?

Since the Council has several weeks off, I want to wish you all Happy Holidays. For my family, that means a combo platter of Hanukkah gelt, midnight Mass, followed by every movie in the entire Die Hard franchise. ²Which makes us traditionalists.

For Duty And Humanity!

At my last chat with our new City Manager, she asked me what direction I would like the City to take in terms of Economic Development. I’m usually caught off guard whenever anyone asks what I think about anything. 😀 But in this case, I was caught off guard for a couple of other reasons.

First, if memory serves, the Council spent four hours and a lot of money in November developing a mission statement. I can see the eye rolls even across over the Interwebs, but in my experience a mission statement from the board should be a real blueprint for the CEO. A mission statement shouldn’t be some empty motto like ¹For Duty and Humanity!

For example, the Port of Seattle uses its mission statement to drive everything they do. Whether I agree with it or not, their mission is clear. One might argue that because they are a special purpose government that mission is easier to define. But your Council settled on a very specific message:

“To be the premiere marine destination in the Pacific Northwest.”

If that really is the direction? I think the direction is pretty clear. Take it and get to work.

But totally, do not do that!

Actually, I’m glad she asked me, and I’m just enough of a politician to talk out of both sides of my mouth on this one. I completely disagreed not only with that draft mission statement, but also the lack of seriousness of the exercise. If it had been a true ‘mission statement’, the next question would be “What does that even mean? How do we do that?” After all, the origin of ‘mission statement’ is strategy, right? “Men, the mission is clear: we’re gonna sneak past the American Fleet and sail down to Cuba…” Or whatever war planners do that hasn’t been covered in other extremely realistic John McTiernan movies.

OK, here’s my real advice

Don’t ask me. In fact, don’t ask any of the Council. Take a year. Hire a for realz and independent analyst; not the City Manager (we’ve tried that more than once) and definitely not some guy we pay to promote ‘ferry’ as the solution to every problem. I get that there is all this immediate pressure to raise revenue. But all that has ever led to in my time here has been short-term, cockamamie decisions that ended up boxing us in over the long haul. This should be left to a dispassionate independent professional. And the fact that the Council came out of that marathon session with ‘marine destination’ as the end all, be all for Des Moines is reason enough to ignore all of us. Because it ignores a majority of the people, businesses, and land.

This is no disparagement. All of us have gifts and I’ve seen all of us, at various times, make great choices. But all of us, to one degree or another, come in with a variety of biases. Unless a true professional provides an objective set of all available options, we will always tend towards those pre-existing biases. That’s just called being ⁴human.

Where to begin?

• In 1966 we started building this wonderful Marina while simultaneously permanently crippling ourselves by selling off the ‘walkable downtown’ urban planners dream of.
• In the 90’s, we had a chance to have a clearly defined boundary along Pacific Highway. Look at the boundary we ended up with. I’d be fascinated to learn how one provides economic development (or public safety) with challenges like a main gateway to the City literally split between two cities!
• There’s the Des Moines Creek Business Park, which looked great, wiped out a ton of property tax (and trees and critters), brought in almost no money (until this year – thank you City for solving ⁷half the problem), and never yielded the ‘thousands of new customers for local businesses’ promised by its proponents.
• Then there are the things people still talk about as ‘new ideas’, which we’ve actually ³tried, including but not limited to, making Seventh Ave a one-way street and ‘making Des Moines into a theme town eg. Leavenworth’ (see Cape Cod in Des Moines circa 2012.) If nothing else, we could at least stop wasting energy re-litigating old ideas as somehow ‘new’.
• In the same category of ‘tried that’, but meriting its own bullet point: many people rightly complain about empty lots, assuming the City simply needs to provide ‘tax incentives’ or ‘more height’. This fails to appreciate just how many times we have offered great deals to every developer who shows interest. You just don’t hear about them because real estate negotiations are conducted ‘on the down low’ as the youth of America like to say. The real question is: if our ‘waterfront destination’ (or any waterfront) is so desirable, why do developers need these kinds of incentives (or ferries or steps or…)? Shouldn’t they be flocking here without them? Hasn’t anyone noticed how hard it’s been to obtain lift off at the theatre (which, yes has received substantial help from the City)? Is it impolite to mention that the only new downtown building for over a decade was: wait for it, yet another tax exempt senior living building? These are lovely ideas, but again: we should be honest enough to ask these kinds of questions and take this discussion out in the open.

With the benefit of hindsight, one can see all kinds of decisions the City has made, by well-meaning amateurs (meaning us), often under pressure, and which at the time may have seemed ‘brilliant!’ (or at least, the best we could do.) But now these are all easy to recognise as having no long-term strategic benefit – and in fact, being boat anchors towards obtaining the larger goal. It’s not merely that many are impossible to unwind. It’s that, after a while, you have basically taken most of your chess pieces off the table – leaving not much room left to maneuver.

Premiere marine destination taken seriously

Again, I did not take that draft Mission Statement seriously. But hey, if it’s what the majority wants, who am I to argue with democracy? 😀

But let’s do take it seriously for a moment. What is the actual economic opportunity of being the premiere marine destination? How do you even define or quantify that? What is the goal? Tourism? That’s not necessarily the same thing as revenue.

One of the few things I know is that we could build a dry stack facility at the Marina in a year and rake in $250,000 every year thereafter. That was on the Marina Master Plan as far back as I can see (1999).

Another thing I know is that you only get .03 per dollar on sales tax. And B&O tax is no panacea either. To create $250,000 new ‘marine destination’ revenue, people drawn to the area by the theatre (when it opens) or a (potential) ferry or Marina Steps would need to find them compelling enough to spend $8,500,000 more in the downtown every year than they do now. That’s a lotta tickets and tourists – not to mention the additional services they would require.

I have no idea whether a ferry or a hotel or a Steps project at the Marina will some day bring in that kind of money. Maybe it could. But the steps (sorry, it’s a disease) to get there involve a lot of variables like finding investors, building storefronts, marketing, and above all time. The basic argument is that eventually a ferry and Steps will provide the enticements to kickstart all that and (finally) get past whatever has held developers back during all those previous ‘down low’ talks.

What we need

But here’s one other thing I know: even if the last Property Tax Levy had passed, in order to build a sustainable budget, using 2019 staffing levels, we will need over ten times that $250,000 every year in structural revenue.

⁶Read that again: Even if you had voted to tax yourselves another $3,000,000 a year, the City of Des Moines will still need another $2,500,000 in regular revenue to return to 2019 staffing levels, maintain a healthy bank account and pay for the necessary upgrades to the Marina and various amenities and programs throughout the rest of the City.

As ironic as it may sound, I voted against the Property Tax Levy to address that.

Back up a sec… despite the City’s hair-on-fire sales pitch for the tax levy, Ms. Caffrey came in and, presto, we have a balanced budget for two years. Painful as heck, but not magic. (Sorry, she is a very talented person but having been through this before, I was pretty confident that she could do it. That said, I do not envy her position and I hope to make her life easier in the future.)

Secondly, these cuts are unsustainable. Again: un (as is not) sustainable. I wanted us to finally confront the need for a ton more structural revenue than I believe we can hope to obtain via notions of ‘premiere marine destination’. I felt/feel that this really is magical thinking because that goal, even if possible, is unattainable for so many years. And my fear was that, if we got the added money now we would continue kicking that discussion down the road (as we’ve done with ‘the airport discussion’ by the way.) Frankly, we did that after the Great Recession. Back then we got the added revenue via red light cams and utility taxes – and finally the organic economic recovery everybody else did. But as soon as we hit another economic downturn we’re right back where we started.

Putting the public back in public planning

I will continue to say that I don’t care how much people scream for immediate ‘economic development’. Please Ms. Caffrey, take a gap year. Hire someone who is not our ‘ferry consultant’ and do a comprehensive and objective analysis of the entire City. Find out what the real opportunities (and challenges) are. Everywhere. Develop a strategic plan for the entire City!

It should include building housing – which is not only an intrinsic good, but also generates property taxes. It should also be commercial. It definitely should be an outcome of the SAMP! (the discussion we’re not having.) But in every case, leave the construction revenue off the table. That. Does. Not. Count. That’s the gravy. Look at all what will generate the most ongoing revenue. And no matter how painful or unpopular these choices are at the moment, just put all the options on the table.

But once again: public planning commission. It never should have gone away in 2012. We need it now. I’ve heard all the arguments against it, but having seen groups Human Services Advisory Committee, we have expertise here that is amazing. If we can get even a few residents with similar, and relevant acumen, the results could be wonderful. (Not to mention the fact that it would cure all of the problems people have about transparency and constantly feeling ⁵blindsided about land development.)

But somebody has to do a critical analysis of what the real revenue opportunities are of this city. So, to the extent that anyone listens to what I think: the only economic development to ‘do’ in 2025 (well, other than build a dry stack 😀 ) is to develop that objective strategic plan and re-establish the Public Planning Commission.

One last thing: So many people here ask some variation of, “Why Des Moines never reached its ‘potential’?” This essay has been my attempt at an explanation. And I think it’s telling that three out of four finalists for City Manager asked the Council in their one-on-one, the following question: “Where is our strategic plan?” After so many decades, and before we do anything else ‘strategic’, 2025 should be the year we finally get a real mission.

---

¹ Cinephiles will recognise this as a high point in the Three Stooges oeuvre.

²I forgot to mention the whole ‘rolling of the tamales’ deal when my son-in-law’s people show up.

³Note to residents: if there is some obviously great ‘new’ idea you have? Chances are someone already tried it. Yet another benefit of a public planning commission could be making that list of ‘tried it!’ more available.

⁴AKA ‘local politician’.

⁵Woodmont Recovery Clinic, Marina Hotel, Des Moines Creek West and on and on…

⁶Yes, it’s a bold statement. I call your attention to this Finance Committee – 06 Jun 2024 Five Year Forecast. Ms. Caffrey made reductions in service levels – in spite of the City implementing a new Warehouse Tax. To get back to our best year ever (2019), maintain that 16.67% Reserve, pay for the Marina, actually implement the Parks and Rec Master Plan, get to 1% of budget for Human Services, etc., my back of the napkin math says that we don’t need $3,000,000 a year (the Prop #1 tax levy proposal), we need more like $5.5M. Think I’m full of it? Show me what I got wrong.

⁷Although the Square Footage Tax is a great start, the property is yet another example of how much tax exempt land we have, which lets the Port of Seattle rake in millions in lease revenue but pay us far less than properties like ProLogis, right across the street on 24th Ave. Ouch.