Notes on the Governor’s Finance Summit or What I Really Think About HWY 12

The Guv's tool for getting the financial sector to invest

So Mark Solon is pissed off at me because of things I said on Twitter in response to the Governor’s maddening finance summit held a couple days ago. Here’s the story.

The inimitable Norris Krueger live-tweeted the whole event, which was awesome. There came a point in the summit where the VC’s were summoned to the table. I imagine it was much like the previous Governor’s summit where the Governor and his bureaucrats sat on the dais high above the panel presenters, scowling down in barely concealed boredom. So Mark Solon took center stage.

A week or so ago, someone joked to me that Mark would get up there and say simply that, “there’s nothing for us to fund here.” I readily, yet sadly agreed that that would probably be the case. Imagine my *surprise* then when Norris tweeted that his #1 takeaway from Mark Solon was that “there was nothing for them to fund here.” I have several problems with that statement, none of which have anything to do with how and where Mark spends his investors’ money.

Mark may have elaborated; I don’t know. But the accurate statement would be, “there’s nothing to invest in here the way our fund is currently organized.” The distinction is important.

Highway 12 invests in early stage deals. They like to fund companies that have revenues, operating history, and a management team that is getting the job done. That’s what early stage VC’s do. In Idaho, granted, there are few of those deals around. And with the current fund, Solon and his partners probably don’t have any option but to do what they are doing: looking for deals out of state, so they can return a profit to their investors. But my issue with the simple statement “there’s nothing for us to invest in” troubles me because Mark has a ton of information about the system here in Idaho but in my years of experience as an observer and company founder who has been through this mill, it seems that the people that understand the weaknesses in the system aren’t willing to cast blame or enlighten the powers that be.

The Governor and his staff know boo about finance. They don’t even know what questions to ask. The helpful discussion in my mind is one where H12 elaborates to say:

There’s nothing for us to invest in here. Were we organized as a seed level fund, or a mezzanine fund, there would be. Idaho’s problem is getting the solopreneurs up and running so they can grow up and come to us.

But no one is going to point at the Boise Angel Fund, which wants to be a mini-VC, and say very simply “you guys aren’t getting it done.”

So in my mind, the only way that the phrase “there aint nothin’ for us to invest in” is helpful is if it is put into context, and then delivered with a remedy to the bureaucrats that don’t understand this stuff one bit.

Mark also pointed out to me that they just invested in a couple of pre-revenue companies to the tune of $200,000 and $400,000 or something very similar. That’s interesting because it represents a change in investment strategy for those guys. But it doesn’t get at the root of Idaho’s problem which is the complete unavailability of seed level funding of less than $100,000. That isn’t Mark’s problem, but I think it is his duty to tell the governor that where funding is concerned, that is Idaho’s problem.

As long as no one is going to point the finger at BAA/BAF, Idaho is not ever going to have a steady pipeline of gazelles for Solon to fund.

Final note: I like Mark Solon personally, and am glad for the work that H12 does for Idaho’s companies and in the community. I hope everyone understands that. But I also think it is important to speak truth to power. Maybe Mark did that, maybe he didn’t. But if Norris’ takeaway was simply that “there aren’t any early stage deals in Idaho” my fear is that the bureaucrats probably heard the same thing, but understood it less, and we have missed a great opportunity to tell the Governor what is wrong with funding in Idaho.

Urban Lunch a Big Success!

The inaugural urban lunch was a big success with well over 100 people showing up to hear City of Boise Economic Development Director Cece Gassner talk about the street car proposal. If you missed it, Nate Hoffman at the Boise Weekly has been doing great work covering the streetcar. The image above links to the piece about Urban Lunch. He also wrote a GREAT piece on the various TIGER grants that Idaho has out there, and another piece on where the City and CCDC plan to get the rest of the dough to build the streetcar in the event that they are TIGER recipients. I’ll be blogging more about the streetcar following some bizarre conversations I’ve had about it recently.

For now, I just want to thank Sherry McKibben, Lindsay Dofelmier, Ashley Ford, Melissa Lavitt (my boss at BSU), Jenny’s Lunch Line, Idaho TechConnect and Krissa Wrigley, and Dave at Phy.La Design. It took the work of a lot of dedicated volunteers to make this successful - not the least of who was all the people who showed up. Thanks too to NPR who did a nice story, and Zach at the Idaho Business Review (but where’s the story, man?).

Next month we’re slated for the Urban Lunch January Edition, scheduled for noon on Wednesday January 20th, at the Water Cooler. Tentatively speaking is City of Boise Comprehensive Planning Manager Patricia Nilsson giving an update on Blueprint Boise - or what the City envisions land use and development to look like for the next decade. RSVP to the event on the Urban Lunch Facebook page.

David v. Goliath II: Blanchard v. Nelson on growth along the Snake River Plain

At the NewWest.net planning conference in June of this year, Professor Arthur (Chris) Nelson of the University of Utah raised some eyebrows when he outlined his predictions for the U.S. housing market over the coming decades, and his thoughts on what that meant for Idaho.

USC Professor Richard Green openly disagreed with Nelson’s projections as did BoDo developer Mark Rivers. The Calculated Risk blog also had some critiques, but nothing major.

Nelson’s analysis indicated that Idaho’s population would fill in along the Snake River Plain from it’s western edge in Ontario, OR, over to the eastern side of Idaho ending at Rexburg. For me it’s not how many people will move here, but where they will actually settle. Though Nelson believes growth will fill in along the I-84 corridor, evidence seems to contradict him indicating that growth will instead occur between the Wasatch Front, and move north to Rexburg - skipping the Boise Valley all together. There are good reasons for this.

Wealth is already leaving the Boise Valley for eastern Idaho and the Wasatch Front.

IRS data from 2006 and 2007 show positive migration to Ada County within Idaho. However, those migrating to Ada County from other parts of the state had average adjusted gross incomes of $33,337 annually, while those leaving Ada County for other parts of the state had annual incomes of $40,582. In total, residents worth $139 million moved to Ada County, and residents worth a total of $154 million moved out. That is a loss of $15 million in gross income for Ada County, to other parts of Idaho.

Additionally, in that same period, half of the top ten cities to which Boiseans moved were along the I-15 corridor with Provo, UT ranking first; Salt Lake City (2); Idaho Falls (5); Ogden, UT (7); and Pocatello (8). The more stable economic climate of eastern Idaho and Utah is but one reason why Boiseans are leaving.

There are strong sociocultural linkages between eastern Idaho and Utah.

It used to be said that Idaho had two capitals: Spokane, and Salt Lake City. Indeed, Coeur D’ Alene, ID is part of a two-state metropolitan statistical area (MSA) that includes Spokane and Coeur D’ Alene, and the Logan, UT MSA includes counties in southern Idaho. But physical proximity is not the only connection. The Church of Jesus Christ of Latter Day Saints exudes a strong cultural presence along the Wasatch Front and Eastern Idaho. With the presence of the new Temple in Rexburg and a growing BYU-Idaho campus there as well, the cultural linkages between eastern Idaho and Utah are only getting stronger.

Gaps in the transportation system separate the Boise Valley from eastern Idaho, and eastern Idaho from Utah. The gap between Utah and eastern Idaho, however, is shrinking more quickly.

Traffic patterns along Idaho’s highway system (seen below) show a consistent level of traffic between Ontario, OR and Heyburn, ID. Traffic drops off significantly, though, between Heyburn and American Falls. Traffic flows again pick up significantly between American Falls and Rexburg.

Lower traffic counts also show up on I-84 heading south out of Heyburn, and on I-15 heading south out of Pocatello, much like the reduced counts between Heyburn and American Falls. In this day and age of regional employment exchange will eastern Idaho ultimately align itself along I-84, or I-15?

If America’s foremost planners with the America2050 project have their way, the Pioneer rail line - which runs from Seattle to Chicago by way of Boise and Salt Lake City - will one day run again. But that line also contains another important spur: the link from Salt Lake City to Pocatello. As gas prices rise, airlines will offer fewer flights meaning Boise will inevitably end up with less air service in favor of airlines servicing larger airports such as Salt Lake and Denver. The rail link between Salt Lake and Pocatello, which also mirrors the west coast’s chief north-south land route between Mexico and Canada (CANAMEX) will exert strong pressure on the region to further develop in a north-south manner, and not throughout the Snake River Plain.

With white-collar job growth flat or shrinking in the Boise Valley and the economy in eastern Idaho more stable, strong sociocultural linkages between eastern Idaho and Utah, and a developing transportation network between eastern Idaho and Utah, evidence seems to suggest that the north-south corridor along I-15, rather than the east-west corridor along I-84 seems better poised for long-term economic and population growth. Alas, only time will tell.

Takeaways from the “Planning in the West” Conference

If you missed NewWest.net’s “Planning in the West” conference on June 17 and 18, you missed a great opportunity to see a snapshot of regional planning trends. If you want to relive the conference, you can get a DVD of the production at the NewWest website. Below I offer a few of my own takeaways from the conference.

There is a real debate between those who believe we are in a recession, and those who believe the economy has fundamentally changed (the “reset”).

In his morning keynote, Professor Chris Nelson from the University of Utah, discussed his predictions for growth along the Snake River Plain. One of the world’s leading urbanists with 25 books and 200 journal articles to his credit, Nelson’s work is taken seriously. He predicts that the Snake River plain stretching from Ontario, OR to Idaho Falls, ID will in the next 40 years grow to a megaregion of three million people or more. He also predicted a quick rebound to Idaho’s housing market predicting a full recovery in 2011. All of this was quickly dismissed by Mark Rivers.

Rivers, the well known developer of BoDo and the Water Cooler, in his conversation with NewWest’s founder Jonathan Weber opined that Idaho wouldn’t see the growth in the next 20 years that it saw in the last 10. His also believes that the real estate market and real estate finance have fundamentally changed and that economic developers operating in these markets must now operate from an entirely new playbook. He urged more public private partnerships to reach common goals.

What I take away from both Nelson and Rivers is this: it really doesn’t matter who is right - either way, Idaho is in serious trouble because of the next takeaway.

Elected officials are conspicuously absent from the conversation.

Just like the Chamber’s Sun Valley Leadership Conference, the Northwest Energy Summit, Idavation - Idaho’s Innovation Summit, and the ULI conference on transit in the Treasure Valley last month, elected officials failed to show up to this conference which attracted about 175 people. Idaho’s political leadership just isn’t participating in any of the debates that are critical to the future of the State and region. If Chris Nelson is correct in his predictions, powerful legislators like Mike Moyle and Dean Cameron who think they represent rural interests will soon wake up to find that they are part of an urban metropolis. The urban/rural divide will settle itself once and for all without their input, but their inaction now will have heavy consequences for the people in their districts.

If Mark Rivers’ predictions are correct and we are operating in a whole new environment, then we are probably in even worse shape as the ennui that grips our political leadership will most certainly doom Idaho to a second-rate future. It is high-time for Idaho’s elected officials to start not only participating in the debate, but leading the debate. Political leaders aren’t the only one’s at fault, however.

The media was also conspicuously absent.

Big props go to NewWest Publishing which sponsored the event in conjunction with Boise State University’s program for Community and Regional Planning. But there wasn’t a single representative from a mainstream news organization there, and not a column inch or minute of coverage in the local press. Last month’s ULI conference on rail prompted a front-page above-the-fold story which veteran urban beat reporter Cynthia Sewell got dead wrong, prompting a Reader’s View column from the conference keynote panel correcting the story. Was it for this reason that no story appeared covering the issues raised in this conference? Whatever the case, that the media isn’t interested in the conversations that are taking place between large contingents of pubic and private interests on the critical topic of growth is a huge disservice to the state. That the media isn’t asking our political leadership why they aren’t participating is an even bigger disservice.

The news isn’t all bad, however.

The Northwest has has a significant population of incredibly sophisticated people working in the planning, architecture, landscape, and design industries.

Dean of U.S. land use lawyers Christopher Duerksen prophesied that we are now in a new age of planning. We have moved from form-based and smart codes to an era dominated by sustainability. No longer a buzzword, sustainability is now the dominant ethos in city code and municipal comprehensive planning.

Seattle based architect Richard Franko from Mithun - a firm specializing in sustainable architecture, planning, and design - highlighted a plan his firm did for Portland’s Lloyd Crossing. The project team began by investigating how the natural environment performed sans the built environment. The level of scientific inquiry and computer modeling necessary to answer such questions is far beyond what most people would imagine occurs among architects and planners. The work is absolutely incredible.

Questions of sustainability, growth, development, the built environment, and our landscape are being driven from the ground up by a passionate and engaged citizenry.

While political leadership in the state is obviously disengaged, the region’s people are not. Unlike previous eras of urban renewal and redevelopment, this era is being led from the ground up, not the top down. Bingo Barnes provides a great example with his Urbane Farms organization. Urbane Farms is a collaboration of sustainable urban farms located in Boise, Idaho which uses unused portions of property such as backyards, front yards and empty lots (with permission) to grow vegetables, herbs and flowers for sale to local businesses, the public and at local farmer’s markets. Through the website, Bingo and his organization help connect people who want to farm with people who have land. A great example of leading the next generation from the ground up.

Those are a few of my thoughts on the conference. What are yours?

Planning in the West conference at Boise State next week

If you haven’t already registered for next week’s “Planning in the West” Conference at Boise State University, now is the time to do that. Click the banner for a complete schedule and registration information.