Author Archives: James A. Bacon

The EPA’s War on Virginia

How to have it both ways: Destroy coal mining jobs with environmental  regulations.... and then blame "capitalism" for growing income inequality.

How to have it both ways: Destroy coal mining jobs with environmental regulations…. and then blame “capitalism” for growing income inequality.

James A. Bacon

Complying with proposed Environmental Protection Agency rules on carbon emissions would cost Dominion Virginia Power customers an extra $5.5 billion to $6 billion, according to the State Corporation Commission staff — and that doesn’t include the cost to Virginia’s smaller utilities, which are even more reliant than Dominion upon coal.

The EPA plan calls for cutting carbon emissions from existing power plants 30% below 2005 levels by 2030 in an effort to fight climate change, improve public health and provide “affordable energy,” reports the Richmond Times-Dispatch. Writes Peter Bacque:

The EPA’s own model predicts that Virginia utilities will have to shut down fossil-fuel power plants reliably producing 2,851 megawatts of electricity, and replace that generation with just 351 megawatts of unreliable land-based wind power. This raises alarming regional reliability concerns, the staff said.

The power plants involved today ensure reliable service to Virginia customers, have years of useful life remaining, and cannot be replaced overnight or without regard for impacts on the electric systems. …

Even if the operational concerns of replacing dependable fossil-fuel generation with variable, intermittent and “nondispatchable” — unreliable — wind and solar energy could be managed, the staff said, “there is still zero probability that wind and solar resources can be developed in the time and on the scale necessary to accommodate the zero-carbon generation levels needed” to meet the EPA’s mandatory carbon-reduction goal for 2020.

This massive and expensive transformation of Virginia’s electrical generation system is a huge, huge issue. Once upon a time, Virginians could reconcile themselves to tighter environmental regulations on the grounds that they got cleaner air in return. There was a tangible payoff to air cleansed of particulates, sulfur dioxide and mercury. There is no tangible payoff (except to the alternate fuels industry) from the EPA rules. The whole purpose is to reduce CO2 emissions in order to save the globe from the catastrophic consequences of global warming.

The administration seeks to transform America’s energy economy despite the fact that, even as CO2 levels in the atmosphere have increased dramatically, global temperatures have remained stable for 18 years now — contradicting the forecasts of virtually every major climate model ever cited by the Intergovernmental Panel on Climate Change. While the Global Warming hysterics maintain their prattle that the “science is settled” and “97% of all climate scientists agree,” the science is most assuredly unsettled. Warmist scientists who pay attention to the reality that temperatures are not rising are desperately concocting ex-post-facto explanations of why their predictions went wrong and why, despite all appearances to the contrary, the world is still doomed unless we abandon fossil fuels now.

That’s not to say that alternate fuels are a bad thing. At some point, the technologies will improve to the point where they will be competitive with fossil fuels and it will be prudent to add them to the fuel mix. Energy conservation is always a good idea. Building automation offers a high economic return on investment. More compact, walkable human settlement patterns can save energy and offer tangible health and lifestyle benefits in the bargain. There are lots of ways to reduce CO2 emissions (if that’s a goal you really care about) without saddling Virginia’s economy with an unnecessary burden of $6 billion or more.

This is bad, bad policy, and Virginians need to fight back. Voters need to ask Virginia’s congressional candidates — most prominently Senatorial candidates Mark Warmer and Ed Gillespie — what they think of the EPA mandates and what they, as congressmen, can do to mitigate the impact on Virginia ratepayers.

Women Flex their Biking Muscles

amy_george

Amy George

by Amy George

Riding a bicycle can be transformative to physical and mental well being, to families, to neighborhoods, and beyond. As cycling becomes more popular, more women and girls are enjoying its effects. However, representation among cyclists still tips male — 76% as measured per-ride in the U.S. Yet recent surveys show women overwhelmingly have a positive view of cycling. What is keeping so many women from taking to the streets on two wheels? Furthermore, why should we care, and what can be done about it?

Since 2010, Richmond as a community has taken several big steps in bicycle advocacy. RideRichmond formed that year, as did Mayor Dwight Jones’ Bike, Trail, and Pedestrian Commission. We have seen the creation of the dedicated, professional action and advocacy groups such as  Sportsbackers’ BikeWalkRVA and the VCU RamBikes program. In this landscape of growing bike-positivity, RideRichmond realized that women’s representation still is an underserved aspect of cycling advocacy. As believers in the bicycle, we could not stand by and watch the benefits of cycling distributed unequally to Richmonders. In order to begin this conversation, RideRichmond is hosting the first Richmond Women’s Cycling Summit on October 23 at the Virginia War memorial.

Fortunately, we’re riding a wave of good research and Women’s Cycling efforts across the nation. The long-held line on women’s resistance to cycling was one of “fear and fashion”. (“The cars! The helmet hair!”) It turns out, when you really ask women how they feel about cycling, the answers are much more practical.

The League of American Bicyclists’ excellent Women On A Roll report proposes five C’s that will get more women biking. These address the eight major issues that most surveys report as the barriers to women and cycling. Some highlights:

Convenience. It should be easy to park your bike wherever you go: work, shopping, entertainment destinations. Bike-friendly retail makes good business sense, and women statistically make more shopping trips and control more of their household’s disposable income. At work, access to lockers and showers alleviates concerns about storing clean clothes and grooming. Transit connections, especially express buses, can “multiply mobility” by traversing high-speed arterials and highways, with the bike as a means of transport for the first/last mile. (Biking to the current GRTC Park-and-Ride locations is a daunting prospect.)  Plus, there are other, less tangible needs such as more flexible working hours for parents (both moms and dads), and more walkable neighborhoods that safely allow children to transport themselves to school and after-school activities.

Confidence. Aggressive and distracted drivers threaten everyone, but women are more likely to admit fear. Bike education can begin at school, first in Phys. Ed. and continuing through driver’s education.  One day in a Traffic Skills 101 class can equip young cyclists and their parents with knowledge of skills like proper lane positioning (to prevent “dooring”) and simple, safe evasive maneuvers. Parents can teach basic maintenance techniques like changing a flat tire and secure locking in an afternoon. Even the students that don’t take to cycling will become drivers who know “Share the Road” as a practice, not just a pithy slogan.

Consumer Products. Sixty percent of bicycle owners 17 to 28 are women. Bicycle riding ranked 9th of 47 popular sports for total female participation in 2011, surpassing yoga, tennis, and softball. But many adult bike models don’t include a size small enough to fit a rider under 5’4”. A woman who can find a bike to fit her must then contend with frames and apparel mostly in pink, lavender, powder blue, and florals. These designs might stand on their own, but can you imagine tennis or softball gear selling in these “soft” presentations?

Community. The fun of riding a bicycle is amplified when you ride with others. Whether for enjoyment, fitness, or as transportation, it’s important to frame bicycling as an everyday activity. Invite a friend to go for a ride. Have a destination or reward. Lead no-drop rides. Help your daughters understand that bicycles are fun, but not merely toys. Incorporate cycling into family’s activities.

Consider for yourself whether it’s better to look fat on a bike, working toward your fitness, or in a car, making zero gains to your health. We are all busy, and making the time to dedicate to fitness is a challenge, but cycling is an easy way to workout while also being social, doing errands, or commuting.

On a larger scale, focus on local advocacy with an eye to equity and connecting lower income neighborhoods with access to jobs, food, and services. Vote for candidates that support high levels of funding for alternative transportation and infrastructure.

If the idea of encouraging a healthier, happier, region for all sounds appealing, it is our hope that you  join us on the 23rd to become a part of this growing effort.

Amy George is the Women’s Cycling Summit Coordinator.

Redefining Richmond: Arts! Culture! Food!

ICTby James A. Bacon

Richmonders berate themselves (and outsiders mock them) for their inability to decide where and how to build a baseball stadium for a AA baseball team. If the region’s political and civic leadership can’t pull off this most basic of regional tasks, one might legitimately wonder if they can accomplish anything useful at all. But it turns out that Richmonders can mobilize behind civic projects — it just has to be the right kind.

A case in point is Virginia Commonwealth University’s Institute for Contemporary Art, which has raised $33 million of its $37 million funding goal. Construction of the facility, designed by an award-winning New York architect, is located at Belvidere and Broad, one of the region’s busiest intersections and a gateway to downtown. This project, which will showcase art from VCU, one of the nation’s leading art schools, has not been controversial at all. Funds were raised through contributions by local philanthropists. With help from a construction loan from the VCU Foundation, construction began in June.

A city and region define themselves by the long-term investments they make in civic infrastructure. To pick a very different example: Buffalo, N.Y., a region of comparable size to Richmond, has poured money into a pro football complex downtown more magnificent than anything than Richmonders could conceive of erecting in their own city — and locals still aren’t satisfied. Buffalo groups are exploring an even more grandiose facility. Richmond has nothing to compare. But it does have arts and culture out the wazoo. And we locals like it that way.

Speaking to the Richmond chapter of Commercial Real Estate Women, Institute Director Lisa Freiman outlined the vision. As reported by Virginia Business, the institute will  showcase a changing array of exhibitions not only by VCU artists “but the best of contemporary art from around the world.” Freiman predicts that the facility “will create opportunities for cultural tourism and community revitalization.”

The tie-in between contemporary art and economic development is stronger in Richmond than it would be in many other regions. The advertising industry is remarkably vibrant for a region Richmond’s size. Local companies serve national clients, and they employ artists, graphic artists, videographers and the like. There is a easy, natural cross-over between the art world and the advertising world. Supporting one supports the other.

rappahannock

Travis Croxton (left) and Ryan Croxton, owners of the Rappahannock restaurant. Photo credit: Times-Dispatch.

Meanwhile Richmond — and Virginia as a whole — is developing the reputation as an up-and-coming foodie region. Esquire Magazine has just named Virginia “The Food Region of 2014″ in its 2014 Food and Drink Awards. “The Old Dominion has seemingly overnight exploded into one of the country’s greatest gastro regions,” writes the magazine, as reported in the Times-Dispatch. While the recognition goes to Virginia as a whole, Richmond is a vibrant part of the state’s foodie scene. Rappahannock restaurant won recognition as one of the 12 “Best New Restaurants” in the country.

The article cited Virginia’s diverse geography and the ability to source fresh, locally grown produce and artisinal food products from the mountains to the Chesapeake Bay as a big plus for restaurants aspiring to national quality. I’m sure that’s a factor, but I think the story is bigger than that. Richmond and Virginia produce great restaurants because the local marketplace supports them. People are willing to pay premium prices that restaurants must charge in order to recruit and pay chefs of national caliber.

New Yorkers and Washingtonians may laugh at Richmond’s pretensions in the worlds of art and cuisine — to many we’re still a hicksville backwater still fighting the Civil War. What they don’t see is how the region is steadily reinventing itself. Once the city prided itself on being a regional center of corporate headquarters. That prop to the economy suffered heavy damage during the recession of 2007-2008 and has been slow to recover. But there has been tremendous activity beneath the surface. Redevelopment along the downtown canal. The Richmond Folk Festival. Converting the James River into the region’s “Central Park.” The boom in downtown living. The French Film Festival. The gentrification of Church Hill and Scotts Addition. The creation of a fantastic network of mountain biking trails. The rise of the foodie movement and the renaissance of locally grown food.

Unconsciously, Richmond has been building the foundations of the “creative class” economy. It’s becoming the kind of place where creatives want to live, work and play. When creatives settle here, they start new businesses. In time, some of those businesses become success stories and economic dynamos that will propel regional growth. VCU’s Institute for Contemporary Art symbolizes how Richmond is redefining itself as something very different and very new.

Woo hoo! Giving Money to Rich, Out-of-State Capitalists Is Fun!

Richmond Mayor Dwight Jones (left) and Governor Terry McAuliffe.

Capitalist benefactors: Richmond Mayor Dwight Jones (left) and Governor Terry McAuliffe.

Richmond is home to numerous craft brewers: Legend Brewing, Triple Crossing, Richbrau, Strangeways and Hardywood Park, just to name five that show up on the first page of a Google search. But when it comes to rolling out the red carpet, state and local government is lavishing its favors upon Stone Brewing, of Escondido, Calif. — $23 million in City of Richmond bonds to build the brewery, $8 million to build a restaurant, $5 million from the Governor’s Opportunity Fund and potentially $250,000 from the Governor’s Agriculture and Forestry Industries Development Fund.

Admittedly, none of the local brewers have achieved the scale of Stone Brewing, which announced last week that it would invest $74 million in Richmond, creating 300 jobs. In a state economy struggling for traction, Stone’s announcement is the fifth largest economic development deal (ranked by investment) so far this year.

But the massive loans and subsidies raise a number of issues of equity and fairness, as Bart Hinkle noted one such issue in his Times-Dispatch op-ed this morning:

Stone executive Steve Wagner says other factors determined its final decision: water supply, wastewater capacity and proximity to suppliers. If that’s true, then Richmond should have been able to land the brewery without the handouts. It’s bad enough to think officials felt they had no choice but to offer Stone public inducements. It’s even worse to think the inducements were necessary.

Hinkle also wonders, as I do, how the home-grown brewers feel about the special treatment accorded their potential competitor. While the Stone Brewing brewery will serve a wider East Coast market, its restaurant will compete more directly with local brew-pubs. And, really, how many brew pubs can a city Richmond’s size support? Will Stone Brewing’s presence crowd out local players? Nobody knows but it’s a risk worth pondering.

There’s one other issue: Richmond apparently will be issuing $31 million in municipal bonds to help finance construction of the brewery and the restaurant. The city has finite borrowing capacity. If it borrows $31 million to back the Stone project, that’s $31 million it cannot spend elsewhere without endangering its AA+ (Standard & Poors) bond rating. This is a city, mind you, that wants to issue bonds for an $80 million baseball stadium and redevelopment project in Shockoe Bottom, $8 million to create a Bus Rapid Transit system along Broad Street, spend millions more to the city bicycle-ready for an international bike race in 2015, push ambitious housing-redevelopment and neighborhood-revitalization goals the city’s East End, support a new children’s hospital, and presumably pursue other capital improvement projects and economic development opportunities as opportunities arise.

Its good that Mayor Dwight Jones has a can-do attitude. But the city needs to pick its projects wisely. It needs to leverage its public investment to the max. And it needs to keep some powder dry for other opportunities that may appear. The best criteria to adopt when investment public dollars is this: Would I invest this money if it belonged to me? Am I maximizing  risk-adjusted Return on Investment? I have seen no evidence that the Stone Brewing deal would pass that test.

– JAB

Virginia Tech: What a Difference a Decade Makes

Tech_robotics_lab

Virginia Tech robotics lab

It’s probably been a decade since I’ve been to Virginia Tech. I spent a year living in Blacksburg about 30 years ago and I visited with some frequency during my tenure as editor and then publisher of Virginia Business magazine, but I haven’t had much cause to return to Hokieland recently until this weekend when the Bacon family visited to expose the Bacon male progeny, who has expressed an interest in pursuing an engineering career, to the top engineering school program in Virginia. (Sorry, Wahoos, but it’s true, Tech engineering is No. 1 in Virginia.)

It is remarkable what has transpired in Blacksburg in a mere decade — both in Virginia Tech and the surrounding town. Slowly but surely Virginia Tech continues to gain ground against other engineering schools in the hyper-intense competition for resources, cutting-edge programs and prestige. Tech ranks in the top 50 nationally for total R&D expenditures but the College of Engineering ranks among the Top 10 undergraduate engineering programs in the country.

The College of Engineering also has generated considerable spin-off economic activity. We’re not talking Boston or San Francisco-style impact, but Tech’s Corporate Research Center — in essence, a corporate park for companies interacting with the university — has grown to 31 buildings employing 2,700 employees. That’s small potatoes compared to, say, Northern Virginia, but it’s pretty darned impressive for Southwest Virginia. Indeed, the performance is all the more impressive considering the fact that Tech is not situated in a major labor market, is geographically remote and has lousy airline service.

One benefit of Tech’s isolated location is that the physical setting of the New River Valley is stunningly beautiful. And I’ll say this about Tech’s campus: It may not have the world-heritage quality of the Thomas Jefferson-designed Rotunda and Lawn of the University of Virginia, my alma mater, but university leadership has done a superb job of maintaining architectural continuity over the years — all buildings are built of Hokiestone. I hesitate to say so but the Virginia Tech campus overall is more aesthetically pleasing than the hodge-podge of UVa outside of the Rotunda-Lawn core. Furthermore, the Hokies have paid close attention to the art of “place making” over the past couple of decades. The campus is much more inviting in many small ways than it was when I saw it last.

Another virtue is that the town of Blacksburg has been evolving in a positive way. County planners have permitted developers to increase the density of buildings around the perimeter of the campus. Far more apartments and commercial establishments are within walking and biking distance of the Virginia Tech campus than there were when I last visited. The town has replaced two busy signalized intersections with roundabouts, and I spotted a couple of tandem buses rolling through town.

My main concern is that Blacksburg’s prosperity is built upon a mountain of student indebtedness. But rising tuition is hardly unique to Virginia Tech.  Indeed, the College of Engineering probably could do just fine catering to out-of-state students willing to pay significantly more than in-state students do. The College of Engineering does not charge what the market would bear, to the benefit of thousands of Virginia students. All things considered, I’d be delighted if the Little Porker ended up at Virginia Tech.

Update: The densification of downtown Blacksburg continues apace. Town Council approved 4 to 3 yesterday (Oct. 15) construction of a 37-bedroom, four-story condominium on the edge of downtown. The project had stirred controversy because it bordered a neighborhood of single-family houses. The developer argued that the condo would be located within walking distance of Virginia Tech and downtown.

There’s plenty more room for Blacksburg to densify without impinging upon old neighborhoods — just up-zone the Main Strip commercial strip. Vast acreage there is dedicated to parking lots and low-rise shopping centers. If the town council encourages mixed use and runs those tandem buses down Main Street, it can accommodate the town’s population growth for many years to come.

– JAB

Virginia Tech campus -- very bike friendly

Virginia Tech campus — very bike friendly

Zydeco Comes to Richmond

 

Dopsie3Another reason why I love this town: The Richmond Folk Festival. When my wife and I arrived in downtown Richmond last night, an infectiously fun Dominican merengue band was playing, and I wondered how the final act could possibly top it. I need not have worried — the final act was Dwayne Dopsie & the Zydeco Hellraisers, a New Orleans legend. Accordionist Dwayne Dopsie is one of the great live musical performers in the United States. For Dopsie, playing the accordion is a physical workout. By the end of the show, he was drenched, literally wringing sweat from his shirt. He and washboard player Paul LaFleur descended from the state into the audience to play the final song and engage in some foot-stomping fun. The Folk Festival is a fantastic event and every Richmonder should support it.

– JAB

The Uphill Climb for Virginia Schools

by James A. Bacon

Why aren’t we making more progress improving the academic performance of Virginia’s school children? Many reasons have been advanced. Some say that school divisions don’t get enough money or that the money is unfairly distributed between schools. Others say that the public school system is over-regulated, bound by bureaucracy and resistant to innovation. Yet others blame society at large (sliding work ethic, the distraction of electronics) or point to the different emphasis on education among different racial/ethnic groups.

But there is another explanation that gets very little attention. Could the root of the problem be demographic? Could Virginia schools be struggling to raise academic achievement scores because school children increasingly are drawn from the ranks of the poor?

The correlation between poverty and socioeconomic status is well known. The challenges of poverty and economic insecurity — homelessness, frequent moves between school districts, family dysfunction, domestic violence, inadequate nutrition — distract poor children from focusing on school work. There is a cultural overlay as well: Because poor children tend to come from less educated parents, they grow up in households where reading is not emphasized and academic achievement is not stressed.

It is an indisputable demographic fact that poor women bear more children than middle-class and professional-class women. According to “Fertility of American Women: 2008,” published by the U.S. Census Bureau in 2010, the breakdown by income category looks like this:

fertility_by_income

The poorest women, typically unmarried women, have the most children. Not only do they tend to have more children, they tend to have them at younger ages than higher-income women who typically wait until they complete their educations and get married before bearing children. Thus, to cite an extreme example, a poor family in which successive generations of women give birth at age 18 produce two generations of offspring in the same length of time as a more affluent family in which a woman has her first child at 36.

When poor women give birth to more children and they do so at an earlier age, the result is that the student body of school systems is significantly poorer than the population at large. Here is a list of the 10 Virginia school divisions with the largest gaps between general poverty rate and poverty among children under 18 (a proxy for the poverty rate of children in the school system):

largest_poverty_gaps

Source: 2012 U.S. Census Bureau data

The same pattern prevails in every school division in Virginia with the exception of five small localities with large university populations in which the number of “poor” is skewed by the presence of college students. (To see the poverty gap for all Virginia school divisions, click here.)

Even with a fair amount of upward economic mobility — poor people lifting themselves out of the ranks of the poor — the tendency of the poorest women to bear more children at a younger age continues to fill up school houses with their poor progeny, with all the economic and cultural disadvantages they suffer. I subscribe to the idea that many school divisions could be doing a better job with the resources they have — the horror stories I could tell you about the City of Richmond school system! But the problem is bigger than bad schools, bad teachers or inadequate funding.

The question that should concern us all: Will the trend of schools filling up with poor children get better or worse over time?

Bonus question: What does this mean for the ongoing debate on the war on poverty? Does the persistence of widespread poverty in the U.S. represent a failure on the part of U.S. institutions to foster upward economic mobility? Or does it reflect the fact that poor people replenish their ranks faster than people can raise out of poverty?

Burbs Beware: Office Jobs Moving Back to D.C.

dc_office_spaceNot only are Millennials migrating to the Washington metropolitan region’s urban core, it seems that businesses are, too, in a reversal of the decades-long trend of businesses moving out of the central city to outlying counties.

Vacancy rates have risen in Washington, D.C., due to the contraction of legal services and government contracting tied to federal government spending. But according to commercial real estate firm JLL, private-sector tenants from Maryland and Washington accounted for 300,000 square feet of new leasing activity in the District. Reports Virginia Business magazine:

Doug Mueller, a senior vice president at JLL, noted that the migration is heavily populated by associations, technology companies and professional services firms. “The quality and location of office space with easy access to mass transit, abundant amenities and housing options also has a visible and tangible impact on attracting and retaining top talent,” he said in a statement.

According to JLL’s Office Insight report for the third quarter, since the start of 2014, a total of 21,200 private-sector office jobs have been added to the metro D.C. economy.

In an office market with tens of millions of square feet of space, 300,000 square feet is a rounding error. What’s significant is not the volume of space being occupied — although 21,200 office jobs is nothing to sneeze at — but the trend: jobs migrating back to the urban core. For decades, Virginia enjoyed a huge competitive advantage over the District with its dysfunctional government, poverty, crime and decaying neighborhoods. Now, despite bad schools, high taxes and expensive real estate, D.C. has something that educated Millennials and the businesses that employ them are looking for — walkable urbanism.

Next question: Is this trend unique in Virginia to the Washington metropolitan region or is it occurring in Hampton Roads, Richmond and the smaller metros as well?

– JAB

How to Revive a Lagging Regional Economy

Graphic credit: James V. Koch and Gary W. Wagner. Click to enlarge image.

Graphic credit: James V. Koch and Gary W. Wagner. Click to enlarge image.

by James A. Bacon

Dr. James V. Koch’s “The State of the Region: Hampton Roads 2014” report probably won’t get much attention outside of Hampton Roads, but it should. Not only is Hampton Roads the state’s second largest metropolitan economy, which means that its fortunes and misfortunes send large economic ripples across the state, but Koch’s observations about the region’s antiquated approach to economic development apply to many places in Virginia.

The message delivered by Koch and co-author Gary A. Wagner to an audience of more than 1,000 at the Norfolk Waterside Hotel was none too encouraging. After getting clobbered during the recession of 2007-2008, the Hampton Roads economy has been slow to bounce back. Employment growth has trailed state and national averages by a wide margin, as shown in the graph above. The stagnation in job growth can be explained in large measure by the impact of defense cutbacks on the region’s largest industry, the military. Comparing Department of Defense procurement awards 16 months pre- and post-sequestration (March 2013), Hampton Roads was down 24.4%. Moreover, sequestration will continue to squeeze as the military downshift continues and the Pentagon shifts its strategic focus to Asia.

“I think the Hampton Roads region is just starting to feel the effects of sequestration,” Wagner said in his presentation, according to an ODU recap.  “And as bad as things are (because of forecast freezes in DOD spending for the next two years) it could get worse. It’s a bumpy couple of years ahead for Hampton Roads.”

The Port of Virginia is a bright spot. After losing market share following the recession, the port reversed course and regained market share for three years running and now commands 17.2% of the East Coast market, a new peak. The expansion of the Panama Canal, which will encourage the use of more big ships, will confer a competitive advantage to the deep-channeled Virginia ports for a few years at least. But another traditional industry, tourism, remains stuck below its 2007 apex, as measured by hotel revenue. And housing prices have recovered less than a third of the value lost during the housing bust; the number of distressed homes, while improved,  remains historically high.

There are no “quick fixes” for what ails the Hampton Roads economy, Koch said. The region needs to adopt a long-term perspective.  “The bottom line is that economic development is a long-term process.” The region needs to invest more in projects with a long-term payoff like K-12 education, infrastructure and research and less in high-visibility projects like convention centers, hotels, arenas and entertainment centers. “We delude ourselves if we think we can short-cut [the economic-development] process by constructing flashy facilities that primarily redistribute income within our own region.”

The conventional wisdom on economic development “is no more,” he declared.  For decades, “economic development” in Hampton Roads, as across Virginia,  focused on attracting new firms and to do what it took — offering land, tax incentives, etc. — to attract them. But abundant research indicates that 80% to 85% of locational decisions are not influenced by such give-aways. “Incentives” amount to a wealth transfer to businesses that would have made the same decision anyway.

The hot idea in economic development today is growing businesses locally — economic “gardening,” to use a term coined by David Birch in the 1980s. Make life easier for small businesses by giving them access to high-speed Internet connections, providing cheap or temporary space, and connecting them to academic, financing, engineering and marketing resources. While most small businesses stay small, some become growth stars that account for immense investment and job creation.

Hampton Roads, always a laggard, recorded the lowest level of business start-ups among nine Virginia regions from 2010 to 2012. Rather than subsidizing selected businesses, Koch advocates an approach of identifying impediments to growth and helping firms overcome those impediments. “What would it take for one of our new, small microbreweries to grow and access new markets? For Liebherr to develop and implement a new cost-saving technology? For BAE Systems to become a major player in off-shore wind generation? Let’s find out! Let’s garden our regional economy.”

Among other ideas Koch explored: creating “innovation districts,” where knowledge-based start-ups are clustered geographically, often in proximity to a research university, where easy interaction stimulates innovation;  promoting university Research & Development at ODU, Eastern Virginia Medical College and the College of William & Mary; and supporting job and skill development programs and apprenticeships.

Bacon’s bottom line: Koch is spot-on about the need to think differently about economic development in Virginia. At the top of the list of bad public investments — let’s call a spade a spade… of stupid public investments — are glitzy convention centers, arenas and sports centers. For the most part, all they do is redistribute entertainment dollars within a region at great public cost. If a region is prosperous and a market exists, the private sector will build those facilities on its own. Second on the list of bad public investments are “incentives” for attracting new businesses. Most of that money is wasted. Better to invest in helping citizens gain the education and skills they need to compete in a knowledge-based economy.

Now, if only we could persuade Koch to apply his keen analytical insights to understanding the pervasive effect of human settlement patterns on a region’s economic competitiveness. Then we’d really be getting somewhere.

Virginia Students Achieve SAT Gains

SAT_scores

Table credit: Virginia Department of Education

Some good news about College Board SAT scores in Virginia to balance out the dismal news about Standard of Learning (SOL) pass rates: Public school students eked out gains in average SAT scores in 2014, continuing to outperform their counterparts nationally. Average public school reading scores improved by three points on the 200- to 800-point scale, while math scores gained a point and writing lost a point.

Virginia public school juniors and seniors ranked fourth nationally for the percentage (19.2%) earning a qualifying score (at least 3 out of 5) in one or more exams.

While Asians and whites continue to earn higher SAT scores on average, Virginia’s solid performance comes after years of steady expansion in the number of black, Hispanic and low-income students taking the exam. According to the College Board, 69% of Virginia public school graduates took the SAT in 2014.

SAT_participation

Image credit: College Board 10th Annual Report to the Nation

Also, black and Hispanic students out-performed their peers nationally. Indeed, Virginia Hispanics out-performed Hispanics nationally by a wide margin, possibly reflecting the large concentration of Hispanic students in Northern Virginia, a region of that sets higher educational expectations and has one of the best educated populations of the entire country.

Forty-five percent of Virginia’s 2014 public school SAT takers achieved the College Board’s benchmark for college readiness, according to a Virginia Department of Education press release. The benchmark score of 1550 ( reading, mathematics and writing sections combined) indicates a 65% likelihood of achieving a B-minus grade-point average or higher during the first year of college. Nationwide, 42.6% of SAT takers met the readiness standard.

Bacon’s bottom line: Virginia’s population is bifurcating along educational lines. On the one hand, an increasing percentage of high school students are achieving college-ready standards. On the other, a large and intractable percentage are failing to meet basic standards of proficiency. To a large extent, K-12 educational achievement is economic destiny. As the economy increasingly rewards cognitive skills over manual skills, that divide will become more and more pronounced. Scary prospect.

– JAB