Economic Development

Post image for Commercial Revitalization: Stop Displacing, Start Improving

You can look at commercial district revitalization in two ways: The first way, which is the common way, and unfortunately not the best way, is to hatch a scheme to get rid of everything that is underperforming and replace it with something else. Bulldoze it, and start over with a blank slate. This approach to economic revitalization is the cornerstone of many well-intentioned plans — the wholesale replacement of entire existing commercial ecosystems. It is also an approach that values typical male attributes: valuing big, valuing new, valuing the deal. This is truly a shame since these districts often have wonderful businesses, owned by locals, that serve as non-traditional anchors pulling from wide trade areas.

The second way to approach these eclectic, local, one-of-a-kind commercial places is to figure out how to improve what is already there. Not only improve, but fully embrace and leverage what is there to ratchet up economic performance and brand. Remember, it’s always easiest to brand around unique and authentic assets, which these districts typically have in spades. Growing your improvement from within, locally and incrementally, instead of imposing it from without, is what I call a female approach to economic development.

The bottom line is that we need our economic development approaches to focus more on cultivation, or adding to what is already there, and less on replacement. There are many reasons why. The wholesale displacement approach to commercial revitalization depresses local wealth creation because it calls for out-of-town developers, big money, and national chains. (On a side note, I am not sure why communities encourage outside development so heavily, because out-of-town owners are consistently listed as a primary obstacle to renewal in cities and towns of all sizes.) On the other hand, fertilizing what exists is affordable, it encourages local ownership, helps foster local wealth creation, and creates opportunity for a wider assortment of entrepreneurs through incremental improvements. As you can imagine, I am a big fan of the “improve what you have” approach, even if it seems messier, and requires a new toolkit, and doesn’t always come with a deal plaque!

A great example of cultivating economic development is being implemented right now on a corridor called Auburn Blvd in the city of Citrus Heights, CA. One of their first “improve what you have” projects was wildly successful. Two local gentlemen wanted to take a long-standing, boring, beige, vacant restaurant (pictured above to the right) and open a new venue for chowing down! When this restaurant startup applied for their permits, the city used the land use process not to create roadblocks, but instead to find opportunities to collaborate so they could work together to make the business, the building, and the street better! Citrus Heights offered these two amazing Latino entrepreneurs some guerrilla design assistance, together with matching funds, to help them affordably amp up this restaurant’s ground floor identity.

Every city should be doing this!!

The restaurant, Crepe and Burger, has been a big success, they did a wonderful job transforming this space. (The “after” exterior photo is above left, and the “after” interior photo is below right.) Customers are even frequenting the outdoor seating area, which is a welcome injection of vibrancy on such a busy corridor. It’s entirely true that people sitting at tables with eye-catching umbrellas is the best sign a restaurant could ever have.

And yes, the community is talking about this building because it’s not the standard TanLand beige stucco building with stacked stone that dominates the retail environment in Northern California! But you know what? Standing out and getting attention for your business is a good thing!!

So let’s talk about the “improve what you have” toolkit for ground floor retail execution. It certainly involves thinking beyond just facade improvement programs, which can be expensive, and are typically most effective with well-funded property owners. Instead, cities should be creating programs with a wider variety of options, that contain smaller steps toward improvement, and that can be implemented by a more robust mix of stakeholders, from the well-funded to the cash-strapped. Examples might include:

  • dated acoustical tile false ceiling removal program
  • window transparency program
  • window lighting education and improvement program
  • building color consulting (also known as Ban Beige!)
  • merchandising training
  • parking lot outdoor seating
  • district performance training tracking
  • extreme makeover team development
  • in-store improvement classes

Investing in the improvement of the ground floor experience is vitally important to the economic success of your local commercial districts right now, and also moving forward into the future as retail continues to evolve. (Heads up: retail has always been about reinvention, that’s the nature of the beast.) In the years to come, brick & mortar businesses are all going to have to offer a wonderful atmosphere, a curated experience, and excellent service in order to attract in-store customers, whether it be a lawyer, doctor, accountant, bank, clothing store, grocery store, or restaurant. If a business doesn’t offer a distinct experience, they will be trafficking strictly in a commodity. And more and more, commodities will be consumed online. We will diagnose our medical problems online instead of going to the doctor, we will get that LLC contract online instead of going to see our lawyer, and we will shop for groceries and clothes online instead of going to stores.

To convince customers to invest their time in real-world businesses, districts will have to tell a great story at the street level, and businesses will need to craft unique and interesting experiences to entice people to visit. So let’s get to work and help our existing stores, restaurants, and districts do just that so they can survive and thrive in the years ahead.

Thank you to Casey Kempenaar and Devon Rodriguez for the “After” photos of Crepe and Burger above.

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Oh the Stories They Could Tell…Astoria Armory Edition

by Michele Reeves on April 3, 2017

Post image for Oh the Stories They Could Tell…Astoria Armory Edition

This nondescript building in downtown Astoria, OR was hiding a surprise: a breathtaking expanse of clear span space with a rare domed lamella roof system. As unlikely as it appears on the exterior, this warehouse-like building was actually an Armory, constructed to provide entertainment for military personnel during World War II headquartered in this lovely Pacific Northwest spot — the gateway to the mighty Columbia River.

My grandfather was one of those people. He served in the Pacific Theater as a naval doctor and shipped out of Astoria. As a young child, my mother traveled up there with the family. Everyone thought her older sister was her mother! For me, the chance to tour this building and learn more about its past was like reaching back through time to picture life there in my grandfather’s era.

When I wandered through in 2013, the building had seen better days. It was on life support, being kept alive as a storage space for Astoria’s wonderful maritime museum. (When it comes to historic preservation, often, an occupied building is a saved building, no matter the type of occupancy.) As a consequence, the basement was a compelling jumble of nautical items from every era stored for future exhibits — boats, engines, harpoons. It was as if I entered the lair of a seafaring hoarder, with tightly packed treasure at every turn (see photos at the end of the post).

But the star of this space, even with the broken windows, dusty bleachers, and a bad stage remodel, was the soaring ceiling and the diamond shaped pattern of the roof. You could easily close your eyes and picture a crowded USO performance, hear the music, envision the mood.

One of the pure joys of my work is not only having the honor of seeing amazing structures and touring incredible places, but also witnessing communities take these assets and resurrect them to live another day. And that’s exactly what happened in Astoria.

The building was purchased by Craft 3, one of the most innovative Community Development Financial Institutions (CDFI) in the country. They bought the structure and leased it to an informal group of Astorians who had dubbed themselves “Friends of the Astoria Armory” (FOAA). The lease rate? $1. Basically, the deal was this: prove it can be a going concern, and Craft 3 would sell it to the FOAA.

According to this innovative lender, after buying it, Astorians put in about 1,000 volunteer hours and, and within a few weeks were hosting their first event: a roller derby bout! And over the next year and change, they clocked in over 175 events in the venue. In this short period of time, they proved the concept, formed a non-profit, and bought the Armory, with Craft 3 underwriting the loan.

This city of 10,000 is one of the best can-do small towns anywhere in the world. They restored and installed a rail trolley car on their riverfront tracks, they recently located and floated an historic ferry to Astoria that used to service the area, and now, they have restored their Armory, to name just a few of the incredible projects this community has made happen with duct tape, chutzpah, and a little bit of magic.

Please do check out the Astoria Armory site, marvel at the historic photos from the building’s heyday, and take heart, like I do, in the power of community and humanity to endlessly renew itself!

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Post image for Oh the Stories They Could Tell… The “Is That a Beluga Whale?” Edition

There is a unique joy in walking through a building and experiencing what it was, understanding what it is now, and contemplating what it can be in the future.

Some structures clearly have a grand old past, evoked by remnants of fixtures, stained glass, and finish work. Some have a more sordid identity, making it difficult to imagine a new future.  Ruminating on building stories  — both glorious and sordid — is going to be a new series here on the blog.  And, the kick-off will be this tale from a structure often referred to as the Sugar Shack.

The story of the Sugar Shack is a tale of the more sordid variety.  And the tour of this building  was, perhaps, one of the most unusual I have ever had the pleasure of taking.

Imagine a mid-century strip mall, built in 1951, now entirely sided with corrugated metal, its storefronts lost to time.

If you took this metal-walled building and filled it with sea animal replicas, a largely empty porn video store, a wannabe natural history museum, a working strip club, and odd people living in the nooks and crannies of the rabbit warren of rooms that had been carved out over time, voila, you would have the Sugar Shack.

(Yep, you read that list correctly.)

On the day I took a tour of these fine facilities, we thankfully set out to look at the building prior to the adult entertainment business actually opening to the public.   It began in the seafood restaurant.  We filed into its darkened recesses, one after another.  As my eyes adjusted, I gasped when images came into focus and I could make sense of them.

“Is that a beluga whale over there?”

StripClubInteriorSmaller

The room was filled with all manner of creatures from the deep blue sea — on tables, on the floor, and still hanging from the ceiling.  It was eerie in the gloom, and we had to be careful not to trip over said sea life as we traipsed around the room.

We then stepped through to the strip club, poised to begin operation for the day, replete with disco ball, low lighting, and tired interior.

The walkthrough also included areas that showed how the internet killed brick & mortar pornography, including an abandoned adult video store and little used lap dance studios.

By far the strangest, and most surprising part of the tour was the retail space devoted entirely to a very complete collection of taxidermy.  I kid you not.

Taxidermy1Smaller

Once again, we found ourselves in the dark, no natural light intruded upon this area of the building.   It had a musty aroma — a combination of the dead animals and wood chips that were strewn about the floor.  The impressive collection of animals was intermittently illuminated by the swinging flashlights and cell phone beams of us tour goers, creating a surreal atmosphere.

This structure has certainly seen some hard days, it has housed some highly illegal activities, and the operators have been investigated by what seemed like every law enforcement agency in existence.  But that’s not its entire story.  That’s not what this building is, nor is it what this building has to be.

You see, the community took this building back when it was purchased recently by a group of area non-profits, and they are working now to consider what it can be, and determining how it can tell new stories — stories of hope, stories of jobs, stories of activity — stories that are good for the neighborhood.

I, for one, am very excited about the next chapter of the building formerly known as the Sugar Shack.

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When Improving Places, It Always Comes Down to People

by Michele Reeves on August 23, 2012

Post image for When Improving Places, It Always Comes Down to People

What is one of the first things I consider when I’m working in a mixed-use district, whether I’m helping private sector developers strategize acquisitions, or diagnosing and suggesting improvements to an economically underperforming city?

RELATIONSHIPS!

In fact, I can often tell a lot about the connections between stakeholders in a small downtown or mixed-use district just by walking through it, because the nature of relationships, past and present, are always reflected in its buildings, streets, and businesses. If property owners don’t know one another, if the public sector does not have strong ties to the community, if there are not close associations between businesses, then I will not likely find an environment that includes sidewalk tables filled with residents chatting and little red wagons overflowing with bright fresh flowers when I visit your district.

It can’t be overstated: to catalyze change and bring revitalization to underperforming districts, relationships between businesses, property owners, residents, and the public sector must be established and strengthened. Below are a handful of ways to begin looking at district-wide relationships, some ideas for improving connections, and a few examples from various cities.

WHAT IS THE STATE OF RELATIONSHIPS BETWEEN THE PUBLIC AND PRIVATE SECTOR?

A mixed-use district typically has a patchwork of property owners that must work in concert toward shared goals in order to create success and vitality for everyone. Owners have to invest in their buildings and they have to tenant with active ground floor businesses, or revitalization will never get started. It is generally easiest to achieve this collaboration through public sector led activities, such as providing technical assistance, facade improvement matching grant dollars, and goal-setting exercises.

The bottom line: it’s harder to be the jerk with the really ugly building if you have cordial relationships with the property owners and businesses that are located next door.

Example: In Hillsboro, Oregon, Jon Gimre, of Gimre’s shoes was awarded one of their downtown urban renewal area’s first facade improvement grants. (He was not one of the aforementioned “jerks” with an ugly building, by the way!) To ensure that this initial project was successful, city staff worked closely with Mr. Gimre through every step of his building’s dynamic transformation. By providing the necessary technical assistance and support, Gimre’s was remade through the introduction of a warm three-color paint scheme; the addition of a bright sign from one of its 50’s era logos; the removal of a large, overpowering awning; and, the incorporation of exterior building lighting. Sales have risen for the shoe store, and a model for simple, yet effective, renovation has been created for others to emulate in the district. In fact, there are now multiple applicants for the next wave of facade improvement funds, all of whom wish to implement a similar quality of project in the downtown. And to think, it all began with a building and good relationships between its owner/user and city staff.

WHAT ARE A PLACE’S MOST BELOVED BUSINESSES AND EVENTS?

Upon commencing work in a district, I usually try to understand what people feel a sense of relationship to in a place. As one part of this, I seek to identify the most beloved businesses and events, because these are the very things that build district identity and value well into the future.

One of the benefits of quantifying an area’s beloved businesses is so that property owners truly understand the types of ground floor activators that create long-term value. Small, locally-owned restaurants, one-of-a-kind retailers, and funky coffee shops usually top these lists of favorites. These purveyors create identity because a majority of stakeholders in the community connect with them. Unfortunately, when a district has been in decline for some time, landlords forget the concept of highest and best use. It becomes tempting for owers to tenant with legal, medical, and professional service office users since these are stable businesses generating steady cash flow. But, these are not establishments that people engage with, and if you try to create a downtown that is comprised of inward facing office tenants at street level, you will have a very unsuccessful mixed-use district because it will be missing…well, a good mix!

No one says, “Hey, let’s go hang out and have lunch on that Main Street with all the dentists!”

The reality is that a spiraling decrease in property values and achievable rents will ensue if office use becomes the predominant ground floor presence in a district.

All landlords have to remember which tenants the community relates to best on the ground floor: outward facing and engaging businesses with personality at street level. Any business can build stronger bonds by offering excitement and exchange at the sidewalk. I have seen banks that proffer popcorn, public Internet access, and community events in their lobbies. Or a medical office with dramatic windows at the sidewalk through which pedestrians can see the waiting area and huge floor-to-ceiling murals depicting the history of the neighborhood. Or a used building supply store that built a new warehouse out of pieced-together windows and lumber taken from deconstructed buildings and houses, the very products they carry, creating a story on the exterior of their building for everyone to enjoy. Or a yoga studio with an eclectic retail shop offering new and gently-used lifestyle, homeware, and apparel products.

Figure out what people relate to in your district and give them more of it!

Another reason to take a gander at what people are relating to in a district, is to determine if they are leveraging these events and businesses for maximum economic impact. Sadly, it is often the case that they are not. It is not uncommon for a downtown to play host to an event and then garner almost no positive brand association from that event because they don’t participate in it in a meaningful or memorable way. This is one of the reasons I am not always a fan of gated outdoor programming; they typically do not create positive brand association for the area and eventgoers do not frequent area businesses.

Example: One of the leading complaints I hear in cities is, “On farmer’s market day, everyone comes downtown. But other than that, it’s empty…they won’t come back.” How do markets create all of this excitement with a few run down tents and battered banquet tables? With people. With sights. With smells. With lots of small, affordable purchasing options. With tastes. With close proximity. With atmosphere.

On a farmer’s market day, people want to experience street activity. Customers wish to rub shoulders with their neighbors and experience the fabric of their community. They do not want to go into stores. They do not want to dine in sit-down restaurants. So bring your store and your food businesses outside! Provide free samples. Put products on the sidewalk. Consider this quote from Richard Bloom, published in the Metro News Feed, about his small floral and homewares shop in downtown Lake Oswego:

Bloom moved his business in March to Lake Oswego’s main street, A Avenue, and incorporated several of Reeves’ suggestions at his new, highly visible storefront. “The change (in walk-in traffic) has been phenomenal,” says Bloom. “We were hidden off the main drag in a complex with low visibility and no storefront…By moving locations where our storefront is highly visible and adding sidewalk interest with an antique flower cart and spillover product, we’ve probably increased our walk-in business by 40 to 50 percent.”

On Saturdays, he converts several of the customer parking spots next to his building into an outdoor market to take advantage of Lake Oswego’s farmers market crowd. “Saturdays used to mean a skeleton crew and closing early,” says Bloom. “Now it’s one of our busiest days.”

DO THE BUSINESSES IN THE DISTRICT COLLABORATE?

Adjacencies are a key component to good merchandising when laying out products in a store. What are adjacencies? Inventory that sells well next to each another. In Main Street and downtown environments, you are looking for the same things: what are the physical and emotional adjacencies that can be wielded to build more economic success?

If businesses have strong relationships with each other, they can cooperate and discover where people eat after they get tutoring, or what shops they tend to frequent serially, and they can successfully cross promote offerings to those who live, work, and play nearby.

In economically underperforming areas, it is typical for individual stores and restaurants to feel like islands; isolated, trying to keep their borders above water. But this offers the antithesis of what a successful mixed-use district should: a place with community fabric. In a strip mall, no one expects the clerk from Ross Dress for Less to know, and interact with, a clerk from Best Buy. But, the opposite is true in a downtown or Main Street. People want shared passion and purpose. The community fabric people want to experience is woven primarily using a downtown’s ground floor stakeholders. So functioning business associations that receive technical assistance and monetary support from area institutions and the public sector are vitally important to create adjacencies and downtown fabric.

Example: In a matter of months, downtown Tigard, went from having a defunct business association and little interaction between stakeholders, to creating a district-wide annual event. How did this happen? The city of Tigard provided technical assistance to engaged stakeholders in the downtown. Staff brought in Business Association Management to lend a helping hand with creating a downtown email list, fostering regular communication, developing event posters, postcards, and flyers, and hosting networking meetings. Through this collaboration, events and identity are being created, including the first ever Downtown Tigard Street Fair, which was held August 11th, and included a car show, brew fest, live music, and offerings for the kiddos. Pretty darn impressive in less than a year.

WHAT ARE YOUR STORIES?

Every place is teeming with stories. The collective tales that reside in a district are what make it unique, and bring it to life. I was reminded of this recently when working in downtown Lake Oswego.

Robert Foster, an incredibly talented landscape architect, artist, and resident of Lake Oswego, came up to me after a presentation in their downtown and gave me a copy of his self published book called: Art in the Coffee Shop. It was the 13th edition and it contained sketches of, and poems about, people he observes in coffee shops throughout the region, and it is the source for the images in this post.

About the woman at the top of this blog entry Robert wrote:

A delightful smile, haven’t seen in a while.
I’ll put it in the book and keep it in my file.
She delighted her friends, she was very attentive,
She gave them pause she gave them incentive.
People like this keep the world going round,
How do we keep them from flying off the ground.

Yes, people like this…and their individual stories, are what make the world go ’round, and they are the ones who ultimately provide the spark needed to bring renewal to a neighborhood, a city, or a town. It always begins with people.

All images are published with the permission of Robert H Foster. Thank you for sharing your talent so generously Robert!

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Retail, REITs and Cannibalization

by Michele Reeves on May 4, 2012

Post image for Retail, REITs and Cannibalization

When he got his start in the grocery business with Fred Meyer decades ago, Gary Slabaugh said he knew EVERY property owner that surrounded the store where he worked. He knew them, their families, their kids’ birthdays. Part of managing the store was participating in, and being a member of, the surrounding community. Smart business if you are a retailer and property owner.

Fast forward a few decades, and contrast that with some of Gary’s more recent experiences as VP of Real Estate for Safeway, where he said some of their leased mall locations have been sold 12 times over the last few years. Each sale of the mall, he said, exchanged hands for more money, selling to another out-of-town Real Estate Investment Trust (REIT).

How did these properties increase in value if rent wasn’t increasing as well? We puzzled over this question as I was moderating a panel at the Portland ICSC Alliance event this year on the subject of Retrofitting Suburbia. (Keynote presentations by Michael Freedman and Ellen Dunham-Jones are available on the right hand navigation bar, if you follow the previous ICSC link.)

The role of retail and restaurants in a city is vitally important. Stores and eateries act as activators. They are entertainers. They are draws. They provide identity. Yet, few cities actually manage this square footage like the precious resource that it is.

In fact, as Gary’s story so beautifully illustrates, the whole nature of retail, particularly along arterials and in suburban communities, has dramatically changed, shifting almost entirely into the hands of institutional investors, out-of-state owners, and large corporations. Accountants are not retailers, as my professional crush Paco Underhill notes in Call of the Mall. (One of the reasons he cites for malls being so ugly!)

This consolidation of properties and development into the hands of absentee number crunchers has not been good for America’s communities. It has led us to us being an utterly and completely over-retailed nation, diluting the positive impact that retail and restaurants can have on our cities and towns. And, it has left us with under invested or abandoned retail infrastructure that drives down property values, invites crime, and creates negative identity, like the arterial pictured above left.

Let’s compare America’s retail spaces to the rest of the world.

In a Costar report from 2010, the real estate database and analytics firm estimated there is at least 56 square feet of retail space per person in the United States. This equates to about 46.6 square feet of total retail space per capita in our country, according to ICSC estimates.

Juxtapose those numbers with retail space in a few other countries. Canada and the UK clock in at around half of the US glut, and places like Mexico and India are closer to 2 square feet of retail space per capita. A fraction of the real estate we have enshrined to consumption!

What do these statistics tell us? The United States has more retail space than it needs…more than it can possibly use.

Every time a city adds retail space, it is cannibalizing its own existing retail infrastructure. This trend gets exacerbated in areas with sales tax, as cities duke it out over who lures Wal-Mart from the next county over.

In a reality where we have a huge oversupply of retail space, why do we keep pretending there are unlimited dollars just waiting to be spent? Why do we think that all we need to do is build the next new mall and everything will be great in our towns, neighborhoods and corridors?

Let’s look at a local example of this from Gresham, Oregon. (Click on the map below for images and more information.)

There is a fabulous little downtown here, that had, and still has, a great street grid, charming buildings, and a nearby park with a Japanese garden that is being renovated. As this suburban downtown started to suffer the inevitable postwar decline that occurred everywhere, what happened?

A strip mall was conceived and built right along the edge of downtown. (Mall #1 on the map.)

Did this help downtown? Of course not.

Since the strip mall was a super block, it ruined grid connectivity, it visually eliminated any connection between downtown and nearby streets, and the mall was oriented so its back faced downtown, doing the strip mall equivalent of mooning this once thriving center in Gresham.

Eventually, this “new” mall became dated. Downtown continued to suffer. So what happened next?

Another mall!! Across the street from Mall #1. Literally. This shopping paradise was larger, newer and lifestyle center-y. (Let’s call it: Mall #2.)

Sadly, with this much retail space stacked on top of each other, this is now an environment that struggles with vacancy and turnover. And, this massive amount of mall space is dwarfing a great downtown, and hindering its revitalization as well.

There are several big lessons for cities in all of this:

  1. Large corporations with no connection to your municipality often don’t care about your city, they are making decisions for their bottom line first and foremost. I would venture to say that nearly every REIT and big box concept has built in places that were clearly bad for the city and the surrounding area. Remember, what may be good for an out-of-town company is not necessarily good for a city as a whole.

  2. Complete, and keep up to date, a retail capacity assessment in your city.

  3. Don’t over zone for retail.

  4. Don’t allow new large retail developments without considering how they impact all retail infrastructure in the city.

  5. Give preference to local developers who have a stake in the community and tend to hold their properties for long periods of time. Real estate is rarely developed optimally, and maintained at its highest and best use for the whole community, if it is owned, controlled, and managed by institutional employees as an accounting exercise in another state.

Map image is courtesy of OpenStreetMap, © OpenStreetMap contributors, CC BY-SA

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Hot Lake Springs…The Arkansas of Oregon?

by Michele Reeves on March 30, 2012

Post image for Hot Lake Springs…The Arkansas of Oregon?

Earlier this week, I paid a visit to an intriguing place called Hot Lake Springs, which is located in what felt like the middle of nowhere in eastern Oregon. Back in the day, Hot Lake Springs billed itself as the “Arkansas of the West” — after Hot Springs, Arkansas. (The site in its full glory is pictured to the left.)

Hot Lake Springs went from spa darling to decrepit building over the last century, facing the same challenges that are found in many rural historical sites around the nation:

What do you do with a huge building steeped in history that is in a very remote location? What if that building is falling apart? Riddled with lawsuits? Has bankrupted previous owners? What if the entire region has given up hope and assumed the building would decay until it could no longer be saved?

The story of this place is an improbable tale of renewal and adaptive reuse. A tale that requires some back story…

These hot springs had long been a neutral gathering place for various Native American tribes in the area, who came to partake of the spring’s healing qualities, according to the present owners, David and Lee Manuel.

In the early 1800s, it was discovered by what were to be Astorians, and by the middle part of the century (and in the midst of a nearby gold rush) Europeans had taken it over and had erected extensive wooden buildings on the site.

With the advent of the railroad in the early 1900s, passenger loads of visitors were shepherded to a station right in front of the hotel three times a day.

According to an article in USA Today,

The Mayo brothers, of Mayo Clinic fame, were frequent visitors.

Vacationers came to relax, patients to shed a variety of ills.

Hospital director Dr. W.T. Phy believed syphilis could not withstand the repeated hot sulfuric baths in the lake water (it survived just fine) and, in those pre-antibiotic days, dosed his patients accordingly. Arthritis patients were placed in a hot mud bog.

Under Dr. Phy’s stewardship, this became an unlikely major worldwide tourist attraction. It was most frequently reached by rail (nearly 300 miles east of Portland). It had a teaching hospital, a post office, a hotel, a spa, a dance hall…it was really like a self contained little town.

Dr. Phy died in 1931. Three years later, most of the wooden structures on the site burned to the ground in a massive fire, leaving just the large colonial-style brick building that remains today (designed by John V. Bennes).

After the fire, the long, slow, inevitable decline of this historic property began. It operated as a resort, then as a hospital. It also served as a flight school and nurses training center during World War II. Later incarnations included a nursing home, an asylum, a restaurant & nightclub, and a bathhouse.

Then, it languished for well over a decade. The place was looted, vandalized, lost most of its windows, rotted, and lost portions of its roof.

In fact, it was so bad, the hotel was featured on the television show The Scariest Places on Earth in 2001.

Enter Lee and David Manuel.

David is a successful bronze sculptor who specializes in Western art. He typically works for a year on his incredibly detailed pieces, and sells out limited edition runs before he ever finishes them. Lee, his wife, is a former restaurant owner who manages the business end of his art.

In 2003, on a trip with their blended family, they decided, on a whim, to purchase the building and bring it back to life. They disposed of their assets in Joseph, Oregon and put their hearts and souls into renovating this place.

Lee said it took 15 months of her coming every night and working a night crew just to get through clean up. She said they dry camped in the building for several years before all the utilities were functioning.

Now, 9 years later, David’s studios are here. They live here. There is a foundry on site. David’s collection of Native American art, war memorabilia, and historic vehicles has found a home here. They have a multitude of antique fire fighting equipment to view. In fact, antiques are placed throughout the hotel. There is a bronze art exhibit. Taxidermy abounds. And, of course you can partake of the 200 plus degree hot mineral water (cooled down, naturally). And now, most recently, they operate a rather rustic bed & breakfast.

The building is heated entirely with the original radiator system that uses water from the springs. Apparently, it is listed as the first building to use geothermal energy for heating in the country. The gentleman who tends to the radiators said he spends several hours a day just trying to keep the temperature at the correct levels throughout the building, something that is a particular challenge in spring, when the weather fluctuates dramatically.

The model the Manuels use for selling David’s art — only to direct buyers whom they meet face-to-face — dovetails perfectly with them being located in a building that is a living monument to the Wild West, filled with items from the Wild West, located in the Wild West.

Not everyone is enamored though. If you read online reviews, you will find many visitors who are less than impressed with the interior renovation work. Poor lighting fixtures…false ceilings…a horrible faux fireplace and mantle in the circular lobby…plastic spa tubs for a soak in the heated mineral water, and unfortunate carpeting choices are all examples cited. And while these comments are most certainly true, it also is fact that without the Manuels, this building would have decayed beyond repair. They employ many in a rural economy that definitely appreciates the jobs. And, the bronze studio provides a focal point for area artists.

As the Manuels have shown, small artisanal businesses, ones that have a wholesale or production component, are often the key to bringing back historic infrastructure. And in the case of Hot Lake Springs, it seems most important that they saved the building structure, brought life and activity back to the old sanitarium, and that the exterior is being preserved. All of this will allow the interior to live to fight another day!

Has the move been worth it for the Manuels?

According to Lee, her husband David, who is in his early 70s, is doing the best work of his life and is seeing an increase in sales, even during this recession.

His latest piece, which he talked with us about on our visit, will be a Native American couple on horseback, looking up at the moon. He said it is his first piece with a touch of romance and that he wants it to project love and peace.

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Connection and Diversity Spur Economic Development

by Michele Reeves on November 27, 2010

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There is a traditional top down model, implemented the world over, in which cities build infrastructure in an attempt to cluster technical industries and spur job growth, which Vivek Wadhwa discussed recently in the Chronicle of Higher Education:

All of those are well-intentioned efforts to build Silicon Valley-style technology hubs, but they are based on the same flawed assumptions: that government planners can pick industries they want to develop and, by erecting buildings and providing money to entrepreneurs and university researchers, make innovation happen.

Regional planners and some academics get very defensive when asked to produce evidence of cluster theory’s success. They commonly tout Silicon Valley and North Carolina’s Research Triangle Park as examples of the success of government-supported clusters. Research Triangle Park is a 50-year-old project that achieved success decades ago but lost momentum in the Internet era. And the success of Silicon Valley was achieved without government involvement.

Economic development, whether it be on a neighborhood scale or from a city-wide perspective, can be fostered by focusing on connectivity and diversity, not unlike the interactions needed to encourage physical revitalization, as I laid out in my post on ants and revitalization.

There is an excellent article by Steven Johnson in the Financial Times about the thriving New York high tech scene. I was surprised to learn that the New York area is now second only to Silicon Valley in attracting venture funds to start-up internet firms. And, as Mr. Johnson argues in his piece, the route to reproducing the conditions that existed prior to the success of Silicon Valley, or the NY tech scene, need not require top down planning and large public expenditures.

Mr. Johnson believes that “one secret to New York’s technological success lies in the Interactive Telecommunications Program (ITP), a two-year graduate course at New York University.” This course brings together students of varied backgrounds, from artists with no technical expertise to hard core coders, and out of that cauldron of diversity comes creativity and ingenious ideas. The graduates of this program go on to work in, or found, copius numbers of start-up ventures in the region.

The physical density of the city also encourages innovation. Many start-ups, both now and during the first, late-1990s internet boom, share offices. This creates informal networks of influence, where ideas can pass from one company to the other over casual conversation at the espresso machine or water cooler… .

Economists have a telling phrase for the kind of sharing that happens in these densely populated environments: “information spillover.” When you share a civic culture with millions of people, good ideas have a tendency to flow from mind to mind, even when their creators try to keep them secret.

All of these spaces – the graduate schools, the co-working offices, the media environments – exhibit the final trait that has been key to New York’s technological success: its diversity. A number of studies have established an essential connection between diversity and innovation. One such study, by the Stanford Business School professor Martin Ruef, interviewed 766 graduates of the school who had gone on to have entrepreneurial careers. Ruef was interested in the diversity of professions and disciplines, not of race or sexual orientation. He created an elaborate system for scoring innovation based on a combination of factors: the introduction of new products, say, or the filing of trademarks and patents. Then he tracked each graduate’s social network – not just the number of acquaintances but the kind of acquaintances they had. Some graduates had large social networks that were clustered within their organisation; others had small insular groups dominated by friends and family. Some had wide-ranging connections outside their inner circle of friends and colleagues.

Ruef discovered that the most creative individuals consistently had broad social networks that extended outside their organisation and involved people from various fields of expertise. In groups united by shared values and long-term familiarity, conformity and convention tended to dampen any potential creative sparks. The limited reach of the network meant that concepts from the outside rarely entered the entrepreneur’s consciousness. But the entrepreneurs who built bridges outside their “islands,” as Ruef called them, were able to borrow or co-opt new ideas from these external environments.

Let sophisticated behavior trickle up. Get your citizens talking to one another. Encourage inter-disciplinary cooperation. Bring people together from varied and different backgrounds — both from a cultural and professional perspective. Strengthen the connections between the private sector and universities. And, as Vivek Wadhwa says, teach entrepreneurship to students and experienced workers alike, finding ways to eliminate the stigma associated with failure.

Then, get out of the way!!

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On Emergence, Ants, and Bottom up Revitalization

by Michele Reeves on November 19, 2010

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I was thinking about commercial districts yesterday as I finished Emergence, by Steven Johnson. I was particularly taken with his descriptions of ants, and how they build colonies with no central vision or control. A fully functioning ant mound is created strictly through a series of small local interactions between ants, largely using pheromones. Though the amount of information exchanged in each is tiny, from these local interactions, a higher functioning order emerges.

This is exactly the sort of behavior cities should be encouraging between stakeholders to foster organic revitalization.

Instead, from a city’s perspective, from a planning department’s perspective, and from a development agency perspective, it is often easier to focus on that one big new “catalyst” project that will single-handedly improve an area, rather than encourage many small-scale projects, fostering a bottom up approach. Unfortunately, this desire to renew from above takes a tremendous amount of public capital and doesn’t always work.

Is it possible to consider rejuvenation of a commercial corridor or a downtown from a different, more cost-effective perspective?

Yes, provided that you have decent building stock (and by decent, I mean a continuous run of structures from almost any era) and a functioning grid. From those simple building blocks, you can directly improve what you have, rather than trying to indirectly help it by completing a single large new building. From the seeds of your downtown or your commercial corridor, you can grow a place, which will then require significantly less, or perhaps no, public money to encourage new construction.

In Emergence, Steven Johnson writes about the five fundamental principles that a system designed to learn from the ground level must exhibit, as an ant colony exhibits:

  1. More is different. The statistical nature of ant interaction demands that there be a critical mass of ants for the colony to make intelligent assessments of its global state.

  2. Ignorance is useful. It is better to build a dense interconnected system with simple elements and let sophisticated behavior trickle up.

  3. Encourage random encounters. Encounters with individual ants are arbitrary, but because so many of them are in the system, those encounters allow individuals to gauge and alter the macrostate of the system.

  4. Look for patterns in the signs. The knack for pattern detection allows meta-information to circulate through the colony mind. (Smelling the pheromones of fifty foragers in the space of an hour imparts information about the global state of the colony.)

  5. Pay attention to your neighbors. Local information can lead to global wisdom.

Paraphrase: Get all of your stakeholders talking and doing — the more people the merrier. The more projects the merrier. The more activity the merrier.

Or, to put it more formally, if we create opportunities for and catalyze a sizable number of small local interactions, these can bring about positive changes in cities and neighborhoods with minimal monetary investment. And, these interactions and projects will take your city in directions you never imagined, and I mean that as a good thing. “Let sophisticated behavior trickle up.”

Now, meaningfully engaging stakeholders is not easy. It’s much simpler, and more attractive, to focus on big flashy projects with a lot of quantified knowns on sites controlled by the city. But, it doesn’t help create sustainable renewal.

So, how do you stir up the pot? Who do you get interacting? What the heck is Michele Reeves talking about?

  • Business Owners. Are they talking to each other? Do they have a functioning business association or downtown association? If not, help them. Provide funding, expertise and assistance.

  • Property Owners. Nothing happens in a downtown or commercial corridor without the property owners. Do they know each other? How do their buildings look? How do they interact with the public sector? Usually, in historic districts that are languishing, there is a complete and total disconnect between some of the long-time property owners and the public sector. In other words, they hate the planning and permit department. Cities need to repair this vital connection between property owners and government before renewal can occur. Get property owners engaged!

  • Retail Sophistication. What is the level of retailing in the downtown or commercial corridor? Can business owners and property owners benefit from merchandising training? Do property owners and shop owners understand the tie between good design, attractive buildings, and retail performance?

  • Permits. Does your planning and permit department do everything it can to help small business owners and property owners? Often, the public sector tailors their process toward large development, which makes the path to acquiring a permit nearly incomprehensible to local entrepreneurs and small building owners. Start building connections to these groups and understanding their needs. Create streamlined “cheat sheets” for simple building improvement permit procedures, or step-by-step instructions for restaurant tenants and food cart vendors.

  • Brand. Is there a unified story or identity for your district? Create your story. Manage your story. Leverage your story. Makes sure everyone is telling your story, the way you want it told.

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