As this is the second of a two part series, if you have not already read the first column (published in last month’s Jacksonville Review) it will be most beneficial for you to do so. Although those of us who call the Rogue Valley home realize we have a wonderful place to live, raise a family and do business, evidenced by the statistics previously shared, it is apparent that far too much of our culture of caring is borne of economic necessity. Just a brief recap on a few primary indicators of the magnitude of our challenges, Medford’s Metropolitan Statistical Area (MSA – including all of Jackson County) has been free-falling on the Milken Institute’s list of the Top 179 Best Performing Small Cities. We have plummeted from #12 in 2004 to #114 in 2014. We rank #160 for job growth and #166 for wage growth. Our wages have been in the bottom 7% for the lowest in the U.S. for a number of years.
The state of Oregon allocates a meaningful amount of the funds that are generated through video poker proceeds back to our counties specifically for the purpose of economic development. On the very (unfortunately) long list of justifiable expenditures, the first item on the list is “Job Creation.” About halfway down the list, “Public Education” is another legitimate expenditure. In 2014 the average per- county allocation of these funds back to their respective economic development enterprises was about 35%. Jackson County received $817k in video poker proceeds. Southern Oregon Regional Economic Development, Inc. (SOREDI – our region’s primary go-to economic development entity) received $26k (3.6%) which is about 1/10th of the average allocation every other county provides. This is the same amount Jackson County provided when SOREDI was formed about 27 year ago. $26k!!! Seriously??? For many years (in Jackson County) these video poker proceeds have followed the path of least resistance and gone into the libraries. Jackson County ranks dead last for the contribution of these funds to our regional economic development enterprise. SOREDI receives just over 7% of Josephine County’s video poker proceeds.
There was an excellent above-the-fold story back in February in the Mail Tribune that highlighted the contrast in funding between SOREDI and its sister organization, EDCO, (Economic Development in Central Oregon) in Bend. The cities in the Bend region that belong to and support EDCO contribute $2.38 per citizen annually. In comparison, all of the cities in Jackson and Josephine County contribute only about $0.38 per citizen annually to SOREDI. The majority of SOREDI’s regional public-sector funding contributions have not risen since the organization was founded. Although SOREDI adds great value to our regional economy, the limited resources its understaffed team of dedicated professionals has to work with is a big part of what inhibits our community from realizing its greater potential. Based upon my perspective of working within the system for the past eight years altruistically, our regional economic development reality over the past couple of decades has basically been a self-fulfilled prophecy of self-imposed limitations. The communities that support EDCO invest annually in recruitment alone an amount that is close to SOREDI’s annual budget.
There’s a very fitting saying that is attributed to our buddy Confucius, “man who stand on mountaintop with mouth wide open wait long time for roast duck to drop in.” The Rogue Valley is centrally-located on the I-5 corridor between the Silicon Valley and the Silicon Forrest. As we look skyward to all of the commerce transiting between these flourishing major markets, it’s almost as if we’re hoping opportunities will drop out of the sky upon us. We have significant cost advantages over the Silicon Valley, the L.A. basin (and many other major metropolitan markets across the U.S.). The vast majority of our very limited industrial land sits vacant decade after decade. Since the decline in the timber industry, our community lost its foundation of family wage jobs. Without that foundation, our regional economic multiplier is not vibrant enough to give adequate lift to all of the other businesses that are dependent upon what happens here.
Okay, now for the good news… On the aforementioned list, where so many other MSA’s are out-performing our own, we rank #12 for our 5-year high-tech GDP growth! Our region is recognized for having 20 of 22 sectors of technology, nine of which are equivalent and seven actually exceeding national density averages. Although our overall density level is a bit lower than the U.S. average, we have a much greater diversity. How many high tech firms are represented in our two county region? I’m glad you asked! The federal government breaks down high tech into (14) different NAICS sector codes. Among those (14) codes we have 277 firms represented, which provide about 2,800 jobs that average about $56k in annual wages (not including benefits). That’s about $154 million in annual payroll. A credible multiplier for these jobs would be x3, which amounts to about a half a billion dollar impact annually on our regional economy. WOW! Our high tech sector has been organically growing and hiding in plain sight for far too long. It’s not smoke and mirrors or wishful thinking! We have a strong emerging tech sector!
I have to admit that I am as guilty as anyone else is in terms of drinking the negative Kool-Aid regarding how we perceive that Oregon is not friendly to business. This intoxicating drink paralyzes many of us so we do not do enough to change our circumstances for the better in our community. Here’s what I found that’s helped turnaround my thinking… With #1 being good, Oregon currently ranks #12 in the U.S. for overall business taxation (we almost made the Top 10!). California on the other hand is bringing-up the rear at #48. Oregon is currently #17 for overall business rankings. While there’s certainly room for improvement in that number, California is #47. As challenging as conditions are in Oregon, they are far worse in California. California is currently ranked as the 8th largest economy in the world. If the Silicon Valley was a nation, its GDP would rank 19th in the world. Again, we have meaningful cost advantages over the Silicon Valley and the L.A. basin. Although the percentage may be a statistical blip, there are many businesses relocating (or at least expanding) out of California on a regular basis. Those communities that understand this phenomenon have positioned themselves for success because they developed the right strategy and made the necessary investment to have a conversation with these outwardly-migrating firms. This approach has proven to be a boon for many other communities. If others can do it, why can’t we?
So, I looked around the country for best-in-class modeling for communities similar in size to ours that are very successful recruiting businesses out of California and found one that brought in 75 – 80 businesses. C’mon, it’s not rocket science. We are not talking about recreating California or the Silicon Valley in the Rogue Valley. The majority of the land in our region is controlled by the federal government and Oregon has the most restrictive zoning overlay of all 50-states. We are also surrounded by beautiful mountains that trap the air, so we have to go in the direction of developing manufacturing businesses that create a minimal amount of emissions. What I am proposing is that we can make far better use of our long-vacant industrial land to create excellent family wage tech jobs. By my last account we have about 5,800 students from our two-county region that are enrolled in the eight universities in Oregon, including about 300 at Oregon Tech. Most of these young people, upon completion of their degree, will move on to another community and build its economy, rather than stay here and build ours, which many would like to do if we offered more meaningful career opportunities. Rogue Community College is also providing great technical training that can be customized to meet the needs of the industries we can grow.
My company recently purchased the most beautiful 80-acre state-certified (shovel ready) site in the region. This parcel is backed by the Denman Wildlife Area (which will never be developed) and has unobstructed breathtaking views of the Table Rocks and Mt. McLoughlin. We are planning to develop southern Oregon’s first master-planned tech park at this site, a site that has been sitting vacant since WWII. We will be raising the standards for design, construction, amenities and the overall cohesiveness of the park. My plan is to reverse-engineer what the aforementioned (best-in-class) community did and overlay their strategy on the Rogue Valley, then go after our top five high tech sectors. I’m talking about privately-held, traded-sector firms that will provide family wage jobs that fit within the fabric of what we are already doing well. For reasons too numerous to get into in this article, I am going off the grid and going mercenary with this high-tech business recruitment initiative. SOREDI is developing the “Southern Oregon Edge” campaign, which will provide an excellent resource for the recruitment initiative. I will work with the system, but not through it.
So, all of you who are so inclined may be asking, “What can I do to help?” Once again, thanks for asking! I am currently networking throughout our community and making presentations titled, “Our Opportunity to Build a Strong Tech Economy in Southern Oregon.” I will be pleased to share this information with your civic or business group. Please let me know if you would like to provide referrals within the tech sector of business owners and decision makers (and even those who are simply well-connected) who might be interested in learning about the competitive advantages of doing business in southern Oregon. There is also a great way for the business community to lend their support, which will not cost them time or $$’s. Especially now that Jackson County voters passed the library levy, you can also encourage our County Commissioners to make a wiser investment with the video poker proceeds in support of family wage job creation. Although the transformation our community is primed for will not take place overnight, if we truly want something different, we are going to have to move beyond talking and actually do something different. By the way, I have already met with two northern California-based firms that are very interested in learning more.
Mark VonHolle
Mark VonHolle and his family are residents of Jacksonville. He is the Director of Business Development for R.A. Murphy Construction where he specializes in commercial real estate development and the design-build delivery system. He serves as a past board President of SOREDI and he is the founder and past board President of the Sustainable Valley Technology Group. He is also a past board member (and 2010 “Member of the Year”) of the Medford / Jackson County Chamber of Commerce. He is a member of the Governor’s Regional Solutions Team, as well as a board member for the Logos Public Charter School. He is also a member of the Medford Rogue Rotary Club. You may contact Mark via email at mark@ramurphyconstruction.com.