Developing a World-Class Destination Tourism Zone

Tags

business attraction, catalyst projects, destination tourism, economic development, economic diversification, economic incentive zones, Economic Recovery, entertainment districts, public private partnerships, theme park development

Dear Friends and Colleagues;

I have been recently over the course of the past few months viciously attacked by a blogger who is what we refer to as a self-proclaimed armchair expert on anything that she decides. This is not uncommon on major projects as with most public hearings to gain public support for such projects, the naysayers always show up and complain. We refer to these folks as CAVE (citizens against virtually everything). It takes thick skin to work in the public sector arena as anyone who works in our profession well knows. In addition, there are some very controversial fringe media articles from less than mainstream news sources about a major project I have been working on for nearly 6 years in Texas. Being able to handle the attacks and controversial accusations that sometimes come out of this stance are essential to anyone who wants to achieve the positive outcome of such projects. So why do Cities undertake this rigorous process?

Tremendous upside in the way of good paying jobs both direct employment, temporary construction employment and indirect employment. Plus the large scale investment into facilities creates a massive new personal property tax base that is only further made more lucrative by all the ancillary windfall developments in the same area due to this catalyst project coming to fruition. Lastly, it is for the revenue they can generate in sales taxes, parking taxes, and use or special venue taxes. They create tremendous amount of new “Found Money” for local and state governments. But they also build your identity brand as a place or become globally or nationally recognized place based destinations that drag visitors in from hundreds and thousands of miles away that are not normally in your economic market.

My largest project to date is in EMCID territory in the Greater Houston market. I chose Greater Houston because it is a central time zone destination. It is the fourth largest market in the United States and is not well served by destination tourism concepts. Our project in the Greater Houston market, is anchored by a proposed green sustainably designed theme park. The original developer on the project, Marlin-Atlantis controlled holding company for the land, Houston Whitestone Land, LLC, filed for bankruptcy in 2011 after they’re other controlled entity Earthquest Adventures failed to perform to their development agreement with my client the East Montgomery County Improvement District, (EMCID).

Theme park projects can take between 8-14 years on average to bring to fruition because they are a major undertaking and not many markets can substantiate the ability to support one. They always require a massive support system based on a flexible and engaged public-private partnership. EMCID has done a visionary job in building jsut that type of public-private partnership as the cornerstone to their own destination tourism zone build out over a period of the next 10-15 years. These are very long-term projects and require that the public partner have great insight and patience in dealing with all of the myriad of complex issues that confront any project of this magnitude. These type projects are on a much larger and more complex scale than a six flags or what we refer to as a hard rides amusement park. Theme Parks have an underlying story and often are anchored by movie based concepts, studios and character Intellectual Property.

In addition, while you are doing all of this the public partner has to continue to do business development and attraction of complimentary and ancillary tourism concepts to further diversify the economic zone and build additional economic capacity. EMCID has done this very well by aggressively seeking other tourism venues that are not dependent upon the success necessarily of the theme park to cause them to have economic validity and feasibility in the market place. This allows the public partner to begin to see fruits of their labor even before the theme park opens or is even funded for construction in many cases. That in itself begins to produce windfalls such as additional restaurants, retailers and hotels in and around the zone.

None the less in my opinion EMCID has been very strategic in working through this very complicated project to make sure that the following things occur;

1.) The site can be brought back under control of the EMCID new developer they have signed a preliminary development agreement with. This requires that the US Bankruptcy Court allow this sale to take place and that the bank which holds the land as collateral goes along with the sale price. We have successfully navigated those waters late here in April we believe. It is our understanding that the site sale is going to be approved in May by the US Court.

2.) We had to negotiate a new development agreement and chose a new developer/operator for the project and design appropriate milestones to make sure that this time the performance expectations EMCID has for the developer are met and adhered to strictly. We believe our new development agreement has achieved those results.

3.) The new developer has to purchase the site from the Court awarded purchaser under the terms of the option clause inserted into the land sale at EMCID’s direction and intervention. That is supposed to occur in June or early July.

4.) EMCID will then work with the new developer to put a capital acquisition plan together to pursue the $600M in necessary funding for phase one of the project to break ground and commence construction. Construction once this is achieved should take approximately 2 years until the soft opening date.

5.) EMCID require the repayment of their bond proceeds used to develop the theme park concept and further the project to fruition and all other professional costs from the their developer over a period of specified performance payments as the project becomes financially viable and solvent through operations.

As you can see this is a very intricate and highly difficult project to manage. I have been the lead consultant on this project since it’s inception and as so the project manager on EMCID’s behalf through all this adversity. I am proud of the accomplishments we have worked through. Today the project is in far better shape to move forward than ever before. I will look forward one day to sending you an invitation to attend our grand opening. Until that day, God bless you and good luck in your own adventures in your professional careers.

The entire process of bringing one of these types of project from concept to RFP for pursuit of the right development partners and operators is a rigorous and lengthy set of due diligence steps. This process goes through 4 cycles by the professional consultation staff (of which I am one) to create what we refer to as the business model (case) and necessary support opinions so that potential private sector partners can be sought out and engaged. This is also called the investor solicitation stage. It is normally led by a professional investment banker and a competent advisory board of entertainment and tourism related experts.

The 4 steps are normally as follows:

1.) Market evaluation, Site location analysis, economic business climate and available tools for use in a public-private partnership. I refer to this as the “Go or No Go Decision Point.” This is usually undertaken by the Public-Sector client as was the case with EMCID in Texas.

2.) Conceptual Development of a Venue and Tourism Experience- “the big idea” as I refer to it. What should be built at what scale and based upon what sort of visitor attendance and the financial costs for this footprint build out and any site specific mitigation that might be required due to the design build out vision.

3.) Business Case Development- often referred to as the final step of making sure the revenues and economic development tools can create a business model that shows private sector investors how they can recoup their investment and achieve a projected anticipated return on investment, including internal rate of return on equity contributions. We call this the investor solicitation model.

4.) Funding Development and Selection of the Developer/Operators/Investor Groups- that will be responsible for delivering the final product to the market and operating it. It is also the private sector ownership that will be the partners in the agreement standing behind the economic management of the over-all development over time. I call this “Running the Gauntlet.” During this phase the public sector led consultant team assists their public sector partner in preparing the necessary RFP tool to be used to solicit the capital markets, provide second opinions of the financial validity of the investment from private sector financing experts, and create a set of metrics for determining how to skillfully select the most qualified private sector partners.

As you can see this process can normally be developed over an approximate 18 month time period and sometimes 2 years. However, as is the case in our EMCID project there can be outside circumstances that create delays to the project that may not have anything to do with the economic validity of the project itself, such as the default of a developer, a global recession, or a major change in costs or business climate conditions. This just means that the public sector client has to hold the high ground and either work through the required mitigation processes and/or wait for the economic storm to clear so that the project can best proceed.

Currently I have done opinions on 6 major destination tourism markets in Australia, Ohio, South Carolina, Arizona, New Mexico and Nevada besides Texas.

In each case I was able to identify whether or not the economic capacity was present and political acumen and support to build a meaningful public-private partnership. This was buoyed in each case with an evaluation of the local, regional and state economic development incentives and business attitude of the appropriate public sector partner. In all transparency and honesty I cannot always say that such an attitude exists. Many times the project must go through a lengthy gestation period before it gets enough support to take the initial risk of doing the first step of professional fee based due diligence. In most cases I have to determine if special legislation can be created that will specifically be able to address any market, business climate and/or investor expectations for making the amount of anticipated capital investment that will be most likely necessary to bring the project to fruition.

Each project is unique and cannot be done in cookie cutter fashion as each locale has a different story or appeal to very different market audiences and as such the 4 step process must be done as a custom business case analysis for each client. This means that the variables and milestones of expected outcomes can vary widely.

None the less, these type of economic development projects can be really positive game changers for a locale.

If you would like further information on this topic please feel free to contact me directly at; economicdeveloper@gmail.com or go to my website: http://www.economicdeveloper.com or just give me a call yourself direct. I am always open and willing to discuss your own distinct needs and interests.

Sincerely.

Don A. Holbrook, CEcD, FM

928-706-444o

Getting America back on Track

Tags

economic development, Economic Recovery, frozen credit markets, global financial crisis, great recession, USA public policy

As you probably know in November of 2011 I launched my 3rd book on the transition of our economy from the grips of the global financial crisis (GFC) of 2008 back to a healthy world-class economic standard of a highly evolved and capitalism driven democratic republic governed by the rule of law. I do not believe we have to as a nation give into the underlying concepts of more and bigger government to achieve this paradigm shift. I believe it does require fundamental changes in how and why we engage in public and private sector collaborative engagements.

Pundits and critics are quick to point out all the reasons that my simplified approach would not work because they throw their own set of assumptions of how our current status quo government and quasi-governmental special interest groups would interfere in the implementation of these simple concepts. I take the tact, however that let’s assume we did have the capacity to make holistic change. If so, then the following would greatly improve our countries ability to meet our current and future financial needs as well as lead the world as the best place to live, work, invest, and recreate once again across the board.

If you would like more detail on this discussion then please read my book, “The Next America-Moving beyond a Fragile Economy.” the following is my link to it on Amazon: http://www.amazon.com/Don-Allen-Holbrook/e/B001JS1PGA

The concept is fairly simple it breaks down to the following over-all concepts;

1.) Restrict Campaign Financing Donations to individuals and families and cap each at no more than $2,000.00 to $10,000 depending on their income and make such contributions non-deductible.

2.) Create Term Limits for all Branches of Government limiting service to no more than 12 years per office held.

3.) Restrict lobbying funding for special purposes that pay for staff, elected officials and/or family member junkets or excursions outside of their district.

4.) Pay government servants according to the same scale as other Americans with the same benefits and overhead requirements, including making Congress and other forms of government become part of the same type of healthcare and benefit system as the mainstream of American workers… same conditions apply to everyone no special perks for government service.

5.) Abolish the current tax code… in favor of a new consumption based tax code at the local level of government all the way up to the federal government. use a national sales tax and use tax to pay for all governmental costs other than carbon (gas tax) and other user taxes that are paid by the users. Abolish the death tax. go to a new Workforce Labor tax of 15% of your gross receipts (whether 1099 or employee) and as such this 15% would be placed into a secure and permanent fund that would issue each worker and contributor a voucher for their use on an allocated formula to purchase the following benefits, (healthcare, retirement, disability and unemployment) insurance from qualified and regulated private vendors approved by the US Government. This would then create a matching 15% dividend investment tax on all profits for individuals and as such give parity to the concept of what workers pay and the rich. The national sales tax would ensure that everyone is paying their fair share of the cost of government, which is not meant to be draconian just fair. Obviously we would need to exempt certain items like groceries, insurance, healthcare, etc. from the tax. The abolishment of the medieval era local property tax system in favor of a voucher system where a fixed percentage of your local sales tax expenditures would go to the cost of education and give consumers choices in the quality of their children’s education through a voucher system. A flat 3% gross receipts tax for corporations that have 3 employees or less and have revenue of less then $1M per year and 5% gross receipts tax of corporations over $1M per year. This would reduce a good bit of the gaming of the current system.

6.) 100% inspection of all goods shipped into America- thus protecting our ports of entry from dangerous materials and shifting the burden and cost to those shipping them to the US. This would also make manufacturing items in the US a bit more favorable.

7.) National security border protection and immigration policy to allow and screen people that desire to come the US to work, invest and live and be productive. Expanding the current VISA and Citizenship opportunities under strict vetting of the applicants. Including adhering to speaking English competently as our national language.

8.) Zero tolerance for terrorism and acts of terrorism against the United States.

9.) Continuing Education expenditures from local sales tax for under-graduate, skill certification and post graduate studies for all age students… making our country the most skilled and educated workforce in the world oncemore.

10.) Voting rights suspended if voters do not vote in at least 50% of elections held in their voting district.

These 10 things would go along ways towards getting our country back on the right track and creating the world best business climate, most evolved and responsible democratic republic and attracting the best and brightest to our shores to seek a better way of life, as was once our standard beacon to the world.

Cheers

Don Allen Holbrook, Author

The Next America- Moving Beyond a Fragile Economy

How to Value our Economic Impact as a Professional Economic Developer?

Tags

Economic Impact Values for a Profession, IEDC, International Economic Development Council, professional ethics and conduct, standards for professional platforms of accomplishments

As a very public persona but still being a private citizen and thus not a public figure as described by the law, who does work in the public arena of discourse I am often attacked for not being willing to discuss things such as current projects (which I am usually under a non-disclosure agreement). I also get criticized for my belief that the public sector needs to provide the most competitive business climate in order to attract, retain and expand business investment in their locales, and thus create and/or preserve jobs.

I would say that anyone in our industry of economic development is normally not the most beloved person of the media, because we recommend the invest of taxpayers monies in order to create the right atmosphere for these types of outcomes to occur. If they were going to occur naturally I think the outcome would already be well down the road. Thus it takes strategic thinkers, visionary leaders, and supporters that want a better tomorrow to agree on taking some form of calculated risk at the expense of their constituents. For sure these are not easy decisions to make. But over the course of a lifetime of service to our profession we do learn the most efficient process for getting to the nub of the matter and making hard choices. Usually those of us in this public spectacle get our fair share of naysayers and critics. With the advent of bloggers we sure draw in many cases our share of unwarranted abuse by uninformed and sometimes malicious and usually people who had no experience and/or involvement in the actual projects being discussed, they are just arm chair experts, with no experience themselves in being game changers, and adding measurable value to our society. Perhaps that is why we draw their negative attention so much.

None the less, one of my biggest questions is so where has the mighty guru the oz of economic development or sometimes even more cynical faux names like the Johnny Appleseed of economic development, gotten the right to proclaim his expertise? Then they use such (alleged slams) like saying that my books are self-published inferring that this means they are not well read and popular amongst my peers. When in actuality my books have sold well and that has been what has propelled my consulting business and my public speaking engagements.

But finally what is frustrating and irritating and what makes me angry is when they devalue my awards, certifications and accolades given to me over my time of service. They make comments that I am a self-proclaimed expert. This gives no validity to my certifications as a Master Business Retention Consultant, Certified Economic Developer, Certified Economic Development Finance Professional, my life time achievement award given to me by my peers at IEDC allowing me to be called a “Fellow Member,” or ignoring my projects that have won the Governor’s award in Minnesota as the Economic Development Project of the Year, “New Flyer Industries.” The New Flyer project so transformed the Minnesota economy that it created the number one automotive industry in Minnesota and attracted yet another expansion by the company in St. Cloud. It’s a good thing that my team and I brought them to Minnesota because the former #1 automotive employer Ford closed their plant and laid off 700 people a few years later. Today New Flyer employs somewhere between 1200-1400 Minnesotans. About twice the size of the former largest automotive industry. Just this one deal has had approximately over $100M in economic impact annually over since we landed them in 1995. Today the cumulative impact of New Flyer alone has been well over $1B on the Minnesota economy… all because one man (me) decided we could compete against all odds in a little town of 8,000 people in Crookston to get this deal to our state.

So when people ask me what is your experience and then they down play my expertise, my accomplishments and my impact on my industry and our society of course it is hurtful. But the main reason is there is no single method that has been endorsed and/or recommended by our IEDC organization on how to answer this question. Perhaps that is for good reason. Economic developers are not supposed to be braggers and also there is a wide variety of disagreement of what methods are best and each professional chooses their own business case for how they keep their tally if they do so at all.

My training has been on the use and experience with two primary economic impact models, those being IMplan and REMI. There is also the US Commerce RIMSII. I have found REMI to be the most conservative and thus I have stayed proficient with their models and generally try to stay close to their economic multipliers for economic impact valuation.

Now there are several manners to benchmark the value of economic projects and business development deals that we have had some involvement in, assisted in giving an opinion, been paid to manage, or provided third party support to the project’s validity and/or giving of our time on a pro-bono basis to help get small businesses funded as in my case with my service to the CDC Small Business Loans for nearly the past six years.

My service record breaks down as follows;

22 years of Economic Development Related Experience categorized the following disciplines;

1. EDO CEO Level Experience 12 years
2. Private Sector Fortune 50 Company- Verizon- 3 years
3. Private Sector Consulting in my own Practice- 6 years
4. Pro-Bono work in Economic Development Finance- 6 years
5. Pro-Bono Non-Profit Board Service – 18 years (MAEDC, CUED, IEDC, CDC)

I also have used the following benchmark for general characterization of how to track projects I have had some impact on bringing to fruition and their on-going cumulative effect on their local economies;

• Direct Employment attributed to my work that I was responsible for engaging, designing and implementing over the 22 years.

• Indirect employment that was a result of my direct job creation outcomes.

• Inward investment or facilities built, and payroll impact on local economies.

• Induced investment by the leveraging of the investments that I was involved in getting projects approved and funded. This included business economic impact retained and validated by third party reference to values, impact generated by requiring match of public funds and/or attracting new funding to such projects.

• The final number of businesses served and projects undertaken.

So when I consider the number of projects I have been involved in from South St. Paul MN, Crookston, MN, Red Wing, MN, Verizon Telecommunications national subject matter expert on economic development targeted foundation investments, Wayne County, IN and then consulting literally all over the world these past 6 years, it can be a very huge number. Even some of my colleagues would be shocked. But my life has been anything but normal or usual. I have worked on some of the biggest and most exciting projects in the world. And yes, some are still in the works (thus they are not part of my tally officially until they close eventually). Some projects take a number of years to work through all the mitigation issues, such a developer failures, the global financial crisis and local politics and criticism by the media. So I tend to use a conservative multiplier between REMI and IMplan and have even accounted for the most conservative rule of thumb valuation business case. But in the absence of a formal policy by my colleagues each of us most choose a business method we are comfortable with and that we can maintain some degree of familiarity with over the years.

The following is my current tally I have been continuously questioned about by the bloggers, general public CAVE people but for some reason not ever have my clients and/or my industry asked me to produce this list. But to make it clear it is not out of my inability to provide such approximate value, give an estimate to over-all long-term economic impact or report the types of projects, it was so as to not seem arrogant. My results have been what some might say quite remarkable and some would say unbelievable, so rather than argue I just kept my statement simple, but impact. I have maintained for the past few years that my economic value to my industry has been approximately “100 projects, 50,000 jobs created and over $1B in economic impact and investment.” So after yet another barrage of naysayers and even an attack on my ethics and conduct related to my work in our industry. They even sent all my professional board colleagues a nasty set of invalid media articles from the less than the main stream media and based mainly on blogger commentaries, citing that I should be somehow ashamed of my accolades, my conduct in achieving my results, and somehow accusing me of breaking our official code of ethics. I spend 16 hours researching my historical timeline and the projects I have touched and worked on to help them achieve success. While I feel such malicious and defamatory bloggers will never be capable of accepting the truth or admitting they were wrong in their comments and accusations. Nor will any amount of disclosure or discourse sway them from their conspiracy minded thoughts. None the less, my timeline of work and career economic value using the aforementioned business case came out much greater than my much more humble previous statement of how I felt to portray a 22 year history of prolific hard work to help others find a dignified way to provide for their families.

Here is my official tally sheet to the best of my knowledge as of this my 52 year of my birth month:

• Total Direct Jobs Created from all Measured Sectors- 37,503-38,153 jobs
• Total approximate indirect jobs created-150,012- 152,612 jobs
• Total approx. indirect jobs (using Morgan rule of thumb multiplier)-93,757
• Pending direct Jobs in process- 4310 (current projects)
• Estimated In-direct jobs impact- 17,240 (current projects)
• Pending construction Economic Impact- $613M (current projects)
• Pending estimated Economic Impact Once closed annually- $155M (current)
• Pending Estimated One time construction value- $673M (current)
• Total One-time construction economic impact (completed)- $419.3M
• Total financing Invested into businesses-$2.3B (completed)
• Total Annual Economic Impact Cumulative of projects- $5B (completed)
• Total number of businesses served- 168 (without pro-bono-completed)
• Total number businesses served cumulative w/pro-bono-1657 (completed)

No I am not going to name all the projects, but I do have a written record of them now thanks to these most recent allegations. Suffice it to say that just the one project for which my peers gave me “Economic Developer of the Year” for New Flyer more than covered my billion dollar impact statement alone, and just my pro-bono service to the CDC more than covered the number of businesses I have helped to provide funding to create way more than my estimated 50,000 jobs when you measure direct and indirect jobs created and preserved.

So in my opinion this case is now officially closed. By the way I arrived at all these values by doing third party research and using third party economic values done in most cases by paid research experts and the state’s own economic valuation projections and in the case of the CDC, I used their web site and their annual report statements, so these are other folks opinions of the values of work I have been directly engaged in assisting to come to fruition.

Now the record will stand as posted. I will not argue this point any longer. In addition, I have given my colleagues a current value on the projects I am now working on currently that I am hopeful will come to fruition in the future. All in all, yes I am very capable of saying I am a world class economic development consultant and I do believe my accolades, certifications and experience is truly that of a globally respected public-policy economic development professional.

Responding to Bloggers and Negative Uninformed Social Media Inquiries

Tags

character assassination, cyber stalking, defamation, economic damage, emotional distress, inappropriate blogging, intellectual property theft, libel, professional attacks, slander, social media, The Dark Side of Social Media and the Internet

The advent of the internet has been a very positive outcome for the majority of things in our society, but there is a very dark and harmful side to the internet as many professionals are finding out today. This growth in voice and communication to the masses has created a very uninformed and very misguided group of people that are using blogging under the guise of trying to say they are truly media representatives and even more dangerously they are claiming to be capable of doing genuine investigative reporting. A review of most of their posts is nothing but a blathering of sensationalized and highly irrational posts about their personal views and most are not supported with any facts. Yet these posts and accusations show up when associated with those of us doing professional work as hits on search engines. Then they create confusion and paranoia and create conspiracy theories where none exist. I have been the victim of these type of news reporters and bloggers recently and in the past. Even when I was able to prevail in a court of law, the negative press and spin by these folks continues and it harms the economic livelihood of myself and others for no valid reason. Let’s not forget that these folks had no knowledge of the actual situations they discuss, don’t have any experience with the matter normally and are not supported by my former clients, current clients, former employers and/or constituents. You have to consider the source folks… they are citizens that are against virtually everything (CAVE) people. Thank God the world is not led by such negative Nellies or there would be no innovation, no new ideas pursued, no risks worth taking to change the current accepted processes and outcomes, no visionary leaders, yes nothing would be worthy in their minds of taking actions that could produce something other than the status quo. Today however slow it has taken, the laws are beginning to catch up to these defamatory individuals hiding behind their computer screens and slandering good people and committing libel and interfering in many cases with those targeted economic livelihood. Now the courts are beginning to allow those of us harmed by such malicious people the ability to prosecute them and seek damages. Let’s hope this begins to bring some balance to yellow media and social slander and libel. The best rule would be that the guilty party should be made to pay the average annual income for the past five years to the plaintiff for as many years as they have left until normal retirement as defined by social security, but no less than 10 years of forward projected damages. Maybe that will put some teeth into protecting those of us harmed by irresponsible media reporters and bloggers once and for all. To really put teeth into the judicial system should make such awards exempt from being dismissed in bankruptcy court. Then folks might think before they write and post. This should be applied to the media as well. They take the freedom of speech rights to a dangerous and unlawful and immoral extreme today. Hiding behind this while they do character assassination claiming it is investigative reporting. In fact it is simply opinion based reporting, sensationalized to make the media reporters point and sell scandals and promote conspiracy theories. Sadly most common folks believe what they read. Today the media has accepted libel, slander and defamation as just another cost of doing business. Gone are the days of fair and impartial investigative reporting. The truth just doesn’t seem to matter and probably doesn’t sell enough viewership. Sad state our press is in today.