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COVER STORY | Vol. 10, No. 40, October 30, 2008
(Has Pensacola Reached Its Tipping Point?)

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Has Pensacola Reached Its Tipping Point?

by Rick Outzen

Economic Successes Are Starting To Mount    

The tipping point is defined as the point at which a slow, gradual change becomes irreversible and then proceeds with gathering pace. Imagine a pitcher of water that you start to tilt and visualize that point where the water starts to actually pour from that pitcher.

Cities, counties and businesses can have tipping points where economic growth and prosperity gather momentum and begin to proceed faster and faster.

Is the greater Pensacola area at its tipping point? There are signs that say it is:

The Emerald Coast Utility Authority is relocating its Main Street Sewage Treatment Plant, which will open the west side of downtown Pensacola to redevelopment.

The Florida Supreme Court reversed its decision on the Stand case and paved the way for the City of Pensacola to issue the bonds to finance the Community Maritime Park.

Two of whom many consider the last of the Good Old Boys, Commissioner Mike Whitehead and Sheriff Ron McNesby, were defeated soundly in the Aug. 26 primaries.

Community leaders and elected officials are openly discussing consolidation of city and county governments.

Escambia County, City of Pensacola and Pensacola Bay Area Chamber of Commerce are eager to build off the successes of GE, Navy Federal Credit Union and iTen Wired and are discussing how to reorganize and revitalize our economic development efforts.

Sure, problems still exist: poverty, illiteracy, health, limited job opportunities, increasing cost of local government and pollution. But we may have a better grasp of these issues than ever before. We no longer debate whether these are problems. Instead our focus has shifted to what we can do about them and how we can further capitalize on our successes. How can we keep gathering momentum?

Downtown Pensacola

Kim Kimbrough, executive director of the Downtown Improvement Board, has seen great progress in downtown Pensacola, in both the creation of jobs and the number of people living downtown. Downtown saw a net gain of 11 new businesses during the past year and 92 since 2004.

"We've also had a net gain of 831 jobs in the downtown area over the past four years," says Kimbrough. "What's even better news is that most of the growth has been professionals and in the areas of science and technology. These tend to be younger workers and higher paying jobs with average pay over $60,000 a year."

The ages of the downtown workforce are getting younger. For males, the average age is now 39.44 years, and for females, the mean age is 40.02. The number of downtown employees in the 26 to 45 age group grew by 25 percent during the past year. More than 54 percent of all downtown employees now fall within this age group.There also has been an increase in the number of people living downtown. There was a net growth of 136 people from September 2007 to September 2008.

Business prospects have noticed the growth and the untapped potential of downtown.

"Even in this tight economy, we are dealing with new inquiries every week," says Kimbrough. "We had two prospects in town this week.

"What they are seeing is great opportunities in retail, offices and residential. They all ask why hasn't anyone done anything with this yet. And that's a tough question to answer."

When asked how we can continue building on these successes, Kimbrough points to four key components:

1. Add more mixed income residential units. "We can't be a barbell city with well-to-do on one end and low income housing on the other. It's difficult to attract new retail and restaurants in that environment."

2. Greater access to Pensacola Bay. "People want to do more than just look at the water. The Community Maritime Park can help to do this."

3. Quit beating ourselves up. "Mississippi Gov. Kirk Fordice said when he was on in office that only Positive Mississippi' would be spoken. It sounds overly simple, but it has an impact."

4. Expand the boundaries of downtown Pensacola. "We are spending way too much time explaining to prospects why Seville Square, Plaza de Luna, City Hall, the Pensacola Civic Center and Belmont-Devillers aren't in the downtown improvement district."

County Job Growth

Charles Wood, senior vice president for economic development at the Pensacola Bay Area Chamber of Commerce, reported to area leaders at the chamber's First Friday meeting earlier this month that the greater Pensacola area has seen phenomenal job growth this past year.

Wood reported that 1,677 new jobs were added with some of the biggest gains at Navy Federal Credit Union and General Electric in 2007 and 2008. The total increase in payroll is $61,485,000 with average salaries of $36,663 per year.

The five-year economic impact of the $76,000,000 investment in plants and facilities to employ these new workers is tremendous. The companies will generate $12.2 million in ad valorem taxes, almost $1.95 million in sales taxes and $544,292 in franchise fees. The total five-year economic impact is projected to be $958 million.

ECUA Spending $350 To $450 Million

The Emerald Coast Utility Authority has launched an ambitious series of capital projects that will provide jobs for hundreds in the area. Over the next two years, ECUA will be spending $350 to $450 million on capital projects, including the new sewage treatment plant in the Cantonment area that will replace the downtown Main Street facility. Most of the work will be done by local contractors, subcontractors and local workers.

"We are making tremendous progress on the new treatment plant," says Steve Sorrell, ECUA's executive director. "We are in the heavy construction phase. The land has been cleared and we are well on our way to completing it in 18 months."

The Cantonment plant is one of several ECUA projects which include installing new water meters and building new transmission lines.

"We have a $13 to $15 million project to pump the wastewater from NAS Pensacola to the Bayou Marcus treatment plant," says Sorrell.    

Much of the work will be done by local workers. "I recently received an e-mail from Brasfield & Gorie (B&G), the contractor for the Cantonment plant," says Sorrell.

"They anticipate that there may be up to 275 different B&G and subcontractor employees that will have worked on the project by the time it is completed.  Roughly 90% of those employees will be from Florida and the Gulf Coast area of Alabama with about 65% local workers. Nearly 80% of the subcontractors are Florida and Alabama Gulf Coast area companies and about 60% of the subcontractors are local."

The Cantonment plant is 150 feet above elevation and will be built to withstand a Category 5 hurricane.  All the treated effluent will be reused by Gulf Power and International Paper.

"The new plant will open all of northern Escambia County and even north Santa Rosa County to central service for residential, commercial and industrial customers, which will really help spur economic development," says Sorrell. "It will set the counties up for development like you can't believe."

Barring any unexpected delays, the Cantonment plant will be complete by June 2010. That facility will run simultaneously with the Main Street plant for three to six months while all the "bugs" are worked out. By mid-2011, ECUA will begin dismantling the downtown sewage treatment. "Old Stinky" will be gone forever.

$120 Million Construction In Santa Rosa

On Thursday, Oct. 23, GEO Group conducted a press conference in Milton to announce its construction of a prison in Santa Rosa County that will house 2,000 medium and close-custody male inmates with chronic medical and mental-health problems. The Boca Raton-based company estimates the prison will cost $120 million and will use local contractors and subcontracts.

Once completed in mid-2010, the prison will be run almost exclusively by local people. The average salary for workers at the prison will exceed $37,000 a year, about 15 percent above the current Santa Rosa County average. The prison's anticipated 400 employees will include doctors, teachers, counselors and about 200 correctional officers, among others.

Hiring is expected to begin for the facility in Spring 2010, and will be overseen by Workforce Escarosa. All resumes will go through Workforce and a work fair will be conducted nearer to the time of hiring.

TEAM Santa Rosa President Ed Gray, III is enthusiastic about the economic opportunities the detention center will bring to Santa Rosa County.

"This facility presents a great economic boost for our local community. In light of current economic trends, it is important to identify businesses that are, to a large extent, immune from economic downturns. A construction project of this size will inject capital and create good paying jobs," says Gray, who also serves on the Santa Rosa County School Board.

Haas Center for Business Research and Economic Development at the University of West Florida projects that construction alone could inject an initial $202.5 million into the local economy. The annual economic impact for the facility operations is estimated to be $46.9 million.

What Else?

There are three potential projects that could add to the increase in jobs and economic growth: Community Maritime Park, Downtown Technology Park and the opening of the Port of Pensacola to mixed uses.

Two years after Pensacola voters approved the referendum for a waterfront development across from Pensacola City Hall that would include a public park, multi-use stadium, maritime museum, conference center and other commercial, retail and residential uses, the Community Maritime Park Associates board of trustees are poised to begin construction.

Land Capital Group has been selected as the master developer for the project. The Florida Supreme Court reversed its earlier ruling on the Stand case that would have limited the city's ability to use Community Redevelopment Agency revenues to pay for bond financing of the park without a county-wide vote. There is also an indication that the state and U.S. Corp. of Engineers will issue the necessary environmental permits by the end of the year.

We could start preparation work on the site by early 2009. Land Capital Group still plans to have the multi-use stadium completed by mid-2010.

The Pensacola Bay Area Chamber of Commerce has joined forces with Escambia County and the City of Pensacola to create a downtown technology park on the vacant government-owned land south of the Pensacola Civic Center and adjacent to Institute for Human and Machine Cognition. An interlocal agreement for the project was approved by the city council and county commission in February 2008.

Post, Buckley, Schuh & Jernigan has been hired to evaluate and design infrastructure and is expected to have its work completed by February 2009.

"Theoretically, we could start selling lots then," says Charles Wood, senior vice president for economic development at the Pensacola Bay Area Chamber of Commerce, "and companies could start building their offices while the roads are constructed."

The Downtown Technology Park has the potential for creating as many as 1,000 high-paying jobs.

The Port of Pensacola has two of its four long-term leases that have expired or are up for renewal. On Feb. 25, 2005, the Pensacola City Council passed the Port Administration and Operations Policy. It states:

"Mixed-use development opportunities on appropriate parcels of land within the Port, particularly on border parcels where such development could serve buffer between neighboring uses and the port's industrial-maritime operation should be considered when appropriate parcels of land become available, either through lease expiration or other forms of termination, mixed-use development opportunities should be pursued and considered."

This policy should provide the framework for the council vote on the leases at the Port.

The Halcorp lease for the 10 acres near The Fish House expired July 8. On Sept. 25, interim City Manager Al Coby notified the city council that staff intends to bring forward a proposed amendment to the existing lease with Halcorp that would provide for a one and one-half year guaranteed lease through June 30, 2010, renewing daily thereafter until such time as either party provides 365 days advance written notice of cancellation.

The Pate Cold Storage is for five-year renewal in February 2009. Pate has asked for an amendment to its lease that will extend it into 2024.

If the Pensacola City Council follows its own port policy, the leases will not be renewed without first soliciting proposals from the public for alternative uses for the property. Opening part of the Port of Pensacola to development could compliment the other construction and development in the area.

So it is conceivable that we could see construction at the Community Maritime Park, Downtown Technology Park and the Port of Pensacola within the next 12 months. All would add more momentum to the area's economic growth and further propel us well past our tipping point.

The only remaining question is who do we elect on Nov. 4 that will lead us further along this path and help us add to these successes. Read on faithful readers. We have a few suggestions that might help with your voting decisions.

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