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Roundup 10-25-2013

October 25, 2013

Economic Development – Whither Venture Capital?

This week, we learned that, despite all the local incubators, we are still lagging badly in terms of venture capital investment.

So far in 2013, four Tampa Bay area startups have attracted close to $30 million. That’s out of $277 million committed to 34 deals across the state. The bulk of that money — $65 million — landed at a Miami firm called FoxyP2 that operates an online language school serving Spanish-speaking students around the globe.

Still, the latest numbers pale when compared to the peak of the “dot-com” boom that started in the late 1990s. In the first three quarters of 2000, Florida attracted a record $2.3 billion in venture capital. In the third quarter of 2000 alone, shortly before the technology bust, Florida attracted $927 million in venture capital, according to data collected by PricewaterhouseCoopers and the National Venture Capital Association.

The state has struggled to regain much venture capital momentum since then.

Consider that Florida attracted just $104 million for 12 deals in the third quarter this year. Nationwide in that same three-month period, venture capitalists invested $7.8 billion in 1,005 deals.

That means Florida — soon to be the nation’s third-largest state by population — attracted just 1.2 percent of the nation’s venture capital deals in the quarter, and won 1.3 percent of the funding.

This is distressing.  It is hard to develop an economic base of growing local companies if funding is not available.  There are at least two issues: 1) having people willing to invest and 2) having businesses worthy of investment (the goal of the incubators).  In a column in the Times, one company was highlighted as saying it is possible to get investment (and it is), but there was a key factor:

And while SiteWit keeps close ties with Silicon Valley, Lasa says a Tampa Bay headquarters is a big business advantage. Competition for top engineering talent in Silicon Valley is expensive and fluid, he says. The team behind 3-year-old SiteWit here has been working together for a decade.

We think the column got it backwards.  It is helpful to have lower cost employees, but having connections to the heart of VC funding is helpful for getting capital.  So is having a good idea, and you are more likely to have abundant good ideas if you have more people coming up with ideas. That is where everything, from capital to transportation to planning gets connected.

You need to draw money, which means you need good ideas.  Your chance of coming up with good ideas increases when there are more people doing it.  You draw those people by having a better climate for the kind of businesses they create, more knowledge based businesses, and an ability for those people to live in a way which they want to live.  Never forget that they have a choice where to live.  There are places already that provide more of the lifestyle choices they want.  There are also places that already provide more access to capital, ideas, and talent.  There are already places that provide more exposure for their product.  In other words, we are behind in all these areas (and we are not just talking about Silicon Valley).  None of the factors exist in isolation.  They all need to be addressed or we will fall further behind.

Despite anything you may hear from those creating excuses for why are those issues are not addressed or why we only need to deal with only one or the other factor, the reality is that we need to deal with them all.  Denying it will only lead to more reports like VC report we had this week.

Transportation – A Case Study in Inaction

We have written about the Gandy Connector and a recent poll about whether it is supported or not.  Despite the fact that the poll found support for the Connector, the idea was shelved.  We looked at some of the MPO documents about the Gandy Connector and thought that they provided a nice example of the failure of planning in this area.

One power point presentation presented a good summary of the history of the Gandy Connector project showing how the need has been identified for years, but nothing has been done.

Under Project History, starting on page 5 here, we learn that back in the early 1990’s FDOT recommended a 4 lane expressway extension of the Selmon Expressway to the Gandy Bridge and then a six lane expressway to 4th Street in St. Pete (we would go to 275, but that is just us).  Nothing happened.

In 1994, the new southbound span of bridge was built, which actually ended up not increasing capacity. (see page 6) Still, nothing on the Connector.

Then, between 1996 and 2000 there was another FDOT study that offered three alternatives (pg 7):

1. Elevated 4-lane controlled access road over Gandy Blvd. & re-construction of existing Blvd. as 4-lane divided road

2. At-grade 4-lane By-pass south of CSX rail line, plus enhancements to existing Gandy Blvd.

3. Widening Gandy to 6 lanes (insufficient capacity per FDOT traffic forecast)

• MPO endorsed moving ahead with options 1 & 2

Nothing happened.

Again, in 2001 and 2002, FDOT did more study and came up with two alternatives (pg 8):

Elevated 4-lane controlled access road over Gandy Blvd.

• 4-lane controlled access road along CSX right-of-way

• Tunnel (determined not viable due to cost)

• Dec. 2002: MPO motion to suspend study & enhance Gandy Blvd. instead

Nothing.

Then in 2006, there were some changes to Gandy Blvd. that resulted in “No significant traffic capacity added.”  (pg 9)

In 2007 the City of Tampa performed a study and came up with some small changes.

Then again, in 2010, the Expressway Authority did a study and came up with the two lane elevated tollway idea, but nothing happened.

So, as shown by Slide 12 (below), 20 or so years of study have led to the project scope continually shrinking and still nothing is done.

From Hillsborough MPO – click on chart for presentation

Now we have a new poll (notably of only people who live nearby the road, not the thousands of other people who use the road, see map on page 2).  And still nothing is going to be done.

For all this time, local officials have bent to the will of some businesses on Gandy and local residents, even though it is clear from the survey that not all are opposed or even care one way or the other.  So, we wondered, how many people are the elected officials bowing to?

To try to get a number, we looked at the number of voters from the surveyed area that voted in the last election?  The precincts and survey do not line up perfectly so we looked at the precincts west of Dale Mabry and used the numbers from the 2012 Presidential vote with the assumption that most people who vote cast a vote for President. (Information from Hillsborough County Elections Supervisor.)

The two possibly relevant precincts south of Dale Mabry, home of the most vocal opponents of ever solving the Gandy conundrum, were #103 (2,628) and #105 (2,565), for a total of 5193 voters.  On the north side of Gandy, there are precincts #113 (2,013), 115 (1,392), and 116 (1,118), for a total of 4523 voters.  The overall total is 9716 out of over 2 million residents in Hillsborough and Pinellas (or 0.76% of the Hillsborough population and 0.44% of the Hillsborough and Pinellas population, based on Census estimates from summer 2013).

That’s it, and many (maybe most) of those voters do not oppose the connector. (Just for context, the MPO says Gandy Blvd between the bridge and Dale Mabry has 43,000 daily trips.  Notably, the Selmon Expressway near Gandy has 32,500 daily trips, which implies strongly that a large percentage [if not majority] of the traffic on Gandy is through traffic. See slide #4 here) The conclusion is that local officials have spent two decades caving into a very small minority of people to hold up a long necessary transportation, and, if you count hurricane evacuation, safety, improvement for the whole area. (This is not a local store or local road, where local concerns are rightly more heavily considered.)

In other words, like so much planning in the Tampa Bay area, people have known that something should be done for decades, but not had the political will to do anything about it.

Last week, we noted that some at the transportation summit asked:

One skeptic at Thursday’s summit asked, “Why should we pay now for something so far ahead?”

The answer is simple: because, if we do not plan and build for the future, nothing will get done and, in the future, the problems do not just go away, they get worse.  We are now living in 1990’s future still discussing the same problems that were ignored then. Given the Gandy example, is it a surprise that we are behind?

Transportation – Pasco Road Hold Up

It seems that, like the Gandy Connector, the idea of a Pasco Toll Road over SR 54 may be stalling.

The Urban Land Institute report this month criticizing Pasco County’s plans for an elevated toll road along State Road 54/56 has put the future of the project in jeopardy.

The Florida Department of Transportation was set to open bids for the $2 billion project Wednesday afternoon but canceled the bid opening that morning and extended the deadline six weeks after the original bidder expressed concerns over the ULI report.

The ULI panel cautioned Pasco against building an elevated freeway, noting that several cities — Seattle, New Orleans and Louisville — are replacing their elevated highways with ground-level boulevards. “It’s not something you want to rush into,” warned Charles Long, an Oakland-based developer who was co-chairman of the panel.

So the ULI, our locally favored outsource planners, does not like the idea of an elevated toll road.  We are not exactly sure why, but their application of the examples of cities removing elevated roads is odd for a suburban and undeveloped county like Pasco.  We understand not having elevated roads in an urban area or along a waterfront – they tend to slice the urban area up.  However, Pasco County along SR54 has none of those qualities. And how exactly will a “boulevard” help with roads that are already wide and overcrowded?  Let’s be honest, SR54 is not going to become a walkable area.  It is already built in such a way that it would take 50 years to change its character and, even then, a freeway would be necessary because traveling along a walkable SR54 would be too slow.  So what is Pasco County now thinking?

Pasco County Administrator Michele Baker said that in light of the ULI recommendation, which came out just two weeks ago, it makes sense to hit the pause button on the project. “It does require political support and community support to do a project like this,” she said. “We haven’t even had a chance to sit down and talk about these reports and look at the concerns they raised.”

* * *

Pasco County Commission Chairman Ted Schrader said the delay “could be a telling sign that the elevated freeway may not come to fruition.” He said the ULI panel forced him to rethink his support for the concept.

“When we get the final report, our board is going to have to re-evaluate if it’s something we want to pursue,” Schrader said.

Baker said Pasco officials would be willing to meet with IIP, or any prospective bidders, before the Dec. 9 deadline. “There has to be a dialogue with the community, so let’s have that dialogue sooner rather than later.”

There is nothing wrong with looking at the ULI report, though we are not sure that it should be given excessive weight.  We also see nothing wrong with having a community discussion as long as the entire community is considered.  And it should be remembered that waiting only makes transportation improvements ever harder and more expensive.  The Tampa Bay area needs an east-west road near the Pasco-Hillsborough line.  That has been known for decades in both Pasco and Hillsborough (which also caved).  In the future, it will only get harder to do it.

Amazon – Two Warehouses

It appears that Amazon is going to bracket Tampa with two warehouses.

The Ruskin center will pick, pack and ship small items, including books, electronics and consumer goods. A center to be located on Lakeland will ship large goods such as kayaks and televisions.

Seattle-based Amazon said it would create more than 1,000 full-time jobs at the centers with health care, stock awards and other benefits. It didn’t say when the distribution centers would open or when they would start hiring.

Site work has already begun on the Hillsborough location at Interstate 75 and State Road 674, and at the Lakeland location at 1760 County Line Road.

Some more detail:

Hillsborough leaders expect Amazon to build a 1 million-square-foot “fulfillment center” inside the South Shore Corporate Park just west of Interstate 75 and north of State Road 674. The company is expected to eventually employ about 1,000 full-time workers in Ruskin and perhaps as many as 1,000 more temporary seasonal workers at peak periods.

Many of the jobs will be low-skill positions involved in sorting and picking customers’ orders, jobs that typically pay around $11.25 an hour, according to job postings for Amazon’s other warehouses around the country. However, at least 375 local jobs are expected to be higher-wage positions at average annual pay of $47,581. Hillsborough County offered the company more than $6 million in economic incentives to persuade it to open in Ruskin and hire workers, and the state will kick in at least $900,000 more.

Like we have said all along, good but not the goal. (Though getting some good news this week is nice after this and this.) At least we did not see any silly, hype-filled statements about it.

Jackson House – Too Late

A few weeks ago, we wrote about efforts to save Jackson House, the last building from the original African-American neighborhood around Main Street in downtown Tampa.  It appears those efforts, though well intentioned, were too late.

But none of that will spare the Jackson Rooming House from what now seems like certain demolition as the most recent effort to save it has fizzled. The latest would-be champions for restoring the house on Zack Street in downtown Tampa, as well as city officials, say the building is in too great a state of disrepair.

* * *

Hillsborough County Tax Collector Doug Belden confirmed Tuesday what others had suspected. The more than 100-year-old, 24-room house was too damaged to restore without essentially rebuilding it from scratch.

* * *

“It’s cost-prohibitive,” Belden said of a restoration. “There’s not a structural part of that building that can be saved right now. A strong wind would blow it over.”

We applaud those who tried to save the house despite their inability to do it.  They have no blame. If there is blame, it goes to the City of Tampa, which has an odd proclivity for sitting around, letting buildings rot, then condemning them while wringing its hands about how its history disappears. (Like here and here, now a parking lot or here)  Historic preservation policy seems to be very similar to transportation and planning policy – let someone else do it and take your chances.

Rialto – Well It Is Something

In contrast to Jackson House, there is news that the Rialto Theater might get repurposed.

Donnelly’s dream is one step closer to reality as she begins renovations on the Rialto Theatre on north Franklin Street between Interstate 275 and Palm Avenue. Under the business name 8-Count Productions, the 10,500-square-foot space will soon be home to art galleries and other space for small businesses, two dance studios for private lessons and group classes, and event space for up to 300 people.

* * *

The theater was constructed in 1925 and first opened its doors in 1926. It has been vacant since 2005, at which time it had been used as an auto repair shop. The renovation plans are to keep the historic nature of the theater in tact while adding a contemporary feel.

For those who don’t know, the Rialto looks like this:

From Wikipedia – click on picture for website

It used to look like this:

From historictheatresintampa.blogspot.com – click on picture for website

It would be nice if the building could be returned to all its glory, but realistically, that was not possible.  Reuse is the next best option.

The area north of 275 near downtown and near the Heights project is the next frontier of redevelopment.  We are glad to see that the redevelopment might be starting. (Maybe the City will get lucky.)

Franklin Exchange – The Vault

And speaking of reuse, we are happy the old (and we mean old) Exchange Bank lobby downtown has found a new use.

The former bank building survives, however, and in its new life as “The Vault” is a venue for events such as a gin seminar for Tanqueray company executives, a fashion show and an opening party for Tampa’s International Gay and Lesbian Film Festival.

The website is here.  While it is not necessarily the fullest use of the space, at least it was not demolished and turned into a surface parking lot.

The article in the Tribune did have one odd sentence that made us wonder how long old attitudes about urban spaces will linger:

The Vault is within walking distance of Tampa Theatre, The Floridan Hotel and the future Le Meredien Hotel at the old federal courthouse building.

Well, Tampa Theatre is a block away, Le Meridien is across the street, and the Floridan is about two blocks away. (see here)  We would hope that is “walking distance.”  The fact is that almost all of downtown is within walking distance.  It really is just not that far, even if the desolate streetscape in much of the area makes it seem so. (If you were on vacation in a northeast city, you wouldn’t even notice the distance.)

Going A Ways Back

Some of you may remember efforts many years ago to bring the decommissioned aircraft carrier USS Forrestal to serve as a museum in Tampa.  It was an interesting idea, but nothing happened, partly because the Port did not want to give up any land in Channelside that it wanted to use for cruise ships.   Well, the Forrestal, which is presently tied up in Philadelphia, is going to be scrapped.

List of the Week

One again, our list this week is a hybrid list.  The information comes from Interest.com’s House affordability Index.  The index gives grades to 25 major areas based on house affordability, which involves home prices and income.  Therefore, there are a few lists.

First, highest house prices: highest is San Francisco ($706,300), followed by San Diego ($469,000), Washington, D.C.  $403,000), New York ($399,900), and Boston ($382,200).

Next is lowest home prices: lowest is Detroit ($124,000), followed by St. Louis ($136,600), Pittsburgh ($140,000), Atlanta ($143,300), and Tampa ($145,700).

Now, highest median income: highest is Washington, D.C.  ($88,233), followed by San Francisco ($74,922), Boston ($71,738), Baltimore ($66,970), and Seattle ($64,085).

Finally, lowest median income: lowest is Tampa ($44,402), followed by Miami ($46,648), Detroit ($50,310), Pittsburgh ($50,489), and Phoenix ($51,359).

While Tampa has relatively low home prices, its median income is so mow that it still gets a D+ for house affordability. (Full disclosure, San Francisco’s well reported excessive home prices lead it to get an F, even with high income, as did San Diego, Los Angeles, New York, and Miami.)

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2 Comments leave one →
  1. Elizabeth Belcher permalink
    October 25, 2013 10:42 AM

    Hi,

    Please write about the BOCC’s attempt defund Straz Theater, Lowry Park Zoo and the Florida Aquarium. Tampa Bay Times has an article on the front page of the Friday, Oct. 25 edition. The BOCC wants the money to go to The Tampa Convention Center and Visit Tampa Bay. The BOCC can give 6.25m to developers to build a road for Bass Pro but cannot give the Straz a measley $470,000?

  2. November 11, 2013 10:41 AM

    I have worked in the high tech arena my entire career. I have bee fortunate enough to work for some of the largest companies such as CA, Apple and Akamai as well as had the opportunity to found, build and successfully exit more than a dozen companies. I currently have both services and product technology companies and I am an active angel investor.

    I am happy to say that I have seen some positive changes in the Tampa Bay area but we have along way to go and we have to be willing to put in some hard work. I think that many people in the community who are business owners are very happy with the status quo because lower wages in a services business means more profit for the owner as long as the quality of work is acceptable to their client. This generally does not hold true on the product side because the better developers are more expensive but you have less mistakes, and get the product to market quicker.

    There seems to be confusion about the local talent pool as well. We have many exceptionally talented local developers, security practitioners, etc. but the majority do not work for local companies, they work elsewhere and either travel frequently or work from home. Many would prefer to work for a local startup of growing tech company but they are unwilling to accept a 30-50% pay cut to their current wages. If we want to grow that has to change and businesses must pay a fair market wage. We have found that by doing so out productivity is higher, employee retention is great, our customers are happier and we also make more money. We want to be the very best at what we do and that is what we look for in the people we hire as well which means we must pay them what they are worth.

    Lastly regarding venture capital. I raised more than $300M in venture capital over the course of my career, had IPO’s and I have also bootstrapped my companies. I prefer the later for many reasons especially in today’s economy. That said, I understand this does not work for everyone and without fair wages you will neither attract top talent or early stage venture capital.

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