Issuu

JANUARY 2019

From us to you: â€œMany successes, brave dreams, wise decisions, satisfaction, peace and prosperity for the entire coming year.â€?

Goodbye 2018 Wasn’t that an amazing ride? 2018 will be remembered around the world for all that happened and didn’t happen in the United States in that year. I feel the need to take a nap. And I would, except the ride may not be over – probably isn’t over. Social media has exposed our communication weaknesses. From the bottom to the top, we need to learn how to talk to one another. Or, to write in a way that leaves no doubt about our message; and to read a message with the intent to understand it without rewriting it in our heads before we finish reading. Confusing messages from those who neither know how to spell the words they’re using or the definitions of them places doubt about items delivered by those who truly share important information. Perhaps 2018 was a learning year, at least I hope so. Trade, tariffs and taxes were themes all too confusing for the common citizen and often challenged by equally capable leaders. A drop of decency in our communication styles would undoubtably improve the understanding of what we are trying to say, whether the information is critical to survival or just a passing thought. The world needs us, and we need the world. Technology has brought us closer as citizens of the world than we could have imagined at the turn of this century. Cybersecurity is not science fiction. Every world leader must be able to communicate with empathy with one another’s needs, values and goals. Families and nations have been divided over menial misunderstandings. It’s time we brought humanness to the table when we meet to discuss how we will share the world and its resources.

Let’s make kindness a 2019 resolution.

Greg The Southern Oregon Business Journal extends sincere thanks to the following companies for their continued presence as important cogs in the wheels of industry in southern Oregon.

Southern Oregon Business Journal

A JOURNAL FOR THE ECONOMICALLY CURIOUS, PROFESSIONALLY INSPIRED AND ACUTELY MOTIVATED

Contents Inside This Issue 2. Goodbye 2018

FEATURED 14. Project of the Year

4. Economic Outlook on the QT

15. CROOKED RIVER WETLANDS

8. Engagement, Collaboration, and Productivity

17. Prineville â€“ In the Center of It All

10. Ranking Restaurants 12. Cascade Health Alliance Invests in Children

31. Making Video a Reality 35. Winning is the Absence of Losing

13. 20. Douglas County Employment Base 22. National Business - Local Balance 24. Tim Duy - Fed Watch 28. Peace Health Heartfelt House 30. Oregon Equal Pay Act

Happy New Year

34. Port of Coos Bay $20 Million Grant 38. Oregon Economic Indicators

703 Divot Loop Sutherlin, Oregon 97479 www.southernoregonbusiness.com 541-315-6127

Southern Oregon Business Journal

COVER PHOTO Clipart Image

Economic Outlook: On the QT … But QT may not be so quiet this time Commentary by Robert Whelan, ECONorthwest DECEMBER 2018 “On the QT,” a quintessentially American phrase. It means to keep something confidential. Basically, QT is an abbreviation for “quiet.” But there is a new meaning and you will be hearing it more and more in the coming months. This time it will mean anything but quiet. The new definition? ‘Quantitative tightening’.

QT is the opposite of quantitative easing (QE). You may recall that in December 2008 we were a year into a deep recession. The Federal Reserve Bank (Fed) had slashed the discount rate (the short-term interest rate it controls) to 0.5 percent. But the economy, especially housing, kept weakening. Foreclosures were happening right and left. The problem was that long-term interest rates, which the Fed doesn’t directly control, stayed persistently high. The rate on a 30-year mortgage then was 5.5 percent. They chose to do something radical. An experiment called QE.

Figure 1: Interest Rates After the Start of the Last Recession

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Under QE, the Fed bought bonds and mortgage backed securities by essentially printing new money. The goal was to drive down long-term interest rates so to compel investors to buy riskier investments. That would lift stock market and housing prices, which, in turn would increase the wealth of consumers. It worked. Long-term rates fell. The 30-year mortgages fell to 3.3 percent in just four years. People

Southern Oregon Business Journal

refinanced, and others were able to stave off foreclosure, tamping down panic selling. QE kept the foreclosure crisis from getting worse. It also pushed up other asset prices such as land, stocks, and even artwork. Corporations too were able to borrow cheaply. And borrow they did. The Fed didn’t stop after four years. When they tried to the economy would falter. Ten years into QE the Fed’s holdings of bonds and mortgage-backed securities went from $882 billion to nearly $4.5 trillion — a five-fold increase well in excess for the economy’s size. QT is a way of taking the excess out.

Figure 2: Total Assets of the Fed After the Start of the Recession

$5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

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1. Bhar, A.G. Malliaris, and M. Malliaris. “Quantitative Easing and the U.S. Stock Market: A Decision Tress

Economic Analysis. July 2015. Pp. 135-156.

8 -1 v o

Analysis.” Review of

2. S. Gabriel and C. Lutz. “The Impact of Unconventional Monetary Policy on Real Estate Markets.” Federal Reserve Bank of San

Francisco. November 10, 2017.

3. C Fried. “Quantitative Easing Kept the Foreclosure Crisis from Being Even Worse.” UCLS Anderson Review. July 25, 2018. 4. Williamson, Steven. “Quantitative Easing: How Well Does This Tool Work?” Regional Economist. Third quarter 2017. Federal

Reserve Bank of St. Louis.

5. M. Cosgrove. “The Fed seems determined to snuff out economic progress.” The Hill. October 19, 2018.

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Today the economy is running hot with rising inflation, excess speculation, and high-risk companies issuing junk bonds with abandon. And so begins the slow process of the Fed trying to get things back to normal. They’ve started the second half of their economic experiment: QT. Rather than buy new bonds with money they got when old bonds in the Fed portfolio matured, they are simply withdrawing money out of the economy. They will drain about $600 billion dollars out over the year. Other central banks in the world are following. How will this pan-out? Nobody really knows. But long-term rates are already rising and are likely to continue rising. That would hurt real estate prices among other investment asset prices. As reported recently in The Economist, high housing prices have less to do with supply shortages and more to do with financial markets where QE pushed rates down. Then there is excess corporate debt, which is now near record highs and vulnerable to rising rates. The risks are great. The Fed admits as much saying, “elevated valuation pressures imply a greater possibility of outsized drops in assets prices.” “Excessive borrowing by businesses and households leaves them vulnerable to distress if their incomes decline or the assets they own fall in value.” And, “financial institutions will not have the ability to absorb even modest losses when hit with adverse shocks.” Some believe the Fed is underestimating the risks. Benn Steil and Benjamin Della Rocca of the Council of Foreign Relations were quoted in Barron’s saying that QT has already added 17 basis points to the benchmark 10-year Treasury bond and that “Monetary policy will start to contract economic growth early next year.” A year ago, I forecast a possible recession by the end of 2019. There are counter arguments. This is economics after all. It’s possible to slow the pace of tightening. That would take pressure off the economy and let consumer and business spending grow a bit faster. But if Fed cuts back tightening too much, inflation will worsen and that comes with a whole set of new problems.

6. “There is more to high housing prices than constrained supply.” The Economist. November 24, 2018. P. 65. 7. “C. Torres and A. Tanzi. Corporate America’s debt boom looks like a bust for the economy.” Bloomberg. November 18, 2018. 8. “Financial Stability Report.” Board of Governors of the Federal Reserve System. November 2018. Pp. 3. 9. R. Forsyth. “Will the Fed Back Down?” Barron’s. November 26, 2018. P. 5. 10. R. Whelan. “Running out of fuel.” Economic Outlook. September 2017.

Even the Fed says this won’t be easy, calling the process “threading the needle.” We will know in the fullness of time if QT will indeed be quiet or be something much more disquieting. In the meantime, it may be wise for all of us to be prudent and avoid taking big risks with our money and savings. Robert Whelan Director

ECONorthwest 222 SW Columbia, Suite 1600, Portland, OR 97201

Southern Oregon Business Journal

Break Down Workplace Silos to Build Engagement, Collaboration, and Productivity By Refresh Leadership in Workplace

Does your workplace have a silo culture? It’s a common phenomenon that can affect any business, but is especially prevalent in larger companies with many different departments and more employees. Silos typically form in workplaces when communication between different people, teams, or departments consistently fails. When this type of workplace culture is left unchecked, creativity, productivity, and innovation often take the hit.

where mistakes, miscommunication, or conflict most commonly occur. Although there are many ways workplace silos can manifest, some common areas include:

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Within teams where individuals tend to separate themselves from the group or one person takes on the majority of the work.

•

In a Stanford University study on collaboration (as reported by Forbes), researchers found that participants who work in a collaborative group stayed engaged in their task 64% longer than participants who work individually.

Between teams in the same department that are working toward the same overall goals, but aren’t collaborating to ensure their projects and tasks complement and support each other.

•

So, it’s in a business’ best interest to take a proactive approach to breaking down silos before they become engrained within the company culture and start to impact success.

Between departments where the lines of communication get crossed due to factors like different work functions within the company or incompatible leadership.

•

Between senior leadership and employees lower on the corporate hierarchy due to perceptions about rank or seniority.

Identify where silos exist The first step in breaking down workplace silos is to pinpoint where they exist. In many cases, simply having an open and honest discussion with your team will help identify areas for improvement. It’s also important to take note during the course of projects Southern Oregon Business Journal

Put it in perspective A key component to breaking down silos is communication. In a busy work environment, it’s easy for people to get so focused on completing their own tasks that they forget to think about how their work 8

impacts the bigger picture, which can impact the success of other teams or departments. Clear communication and consistently reinforcing a unifying vision is important to ensuring everyone understands how their part connects to the whole. Creating regular opportunities for individual teams to discuss what theyâ€™re working on in an open environment allows for back and forth communication about how they can support each otherâ€™s goals. A monthly staff meeting, for example, is a great time to have a discussion about current projects. Alternatively, many companies invest in meeting software, cloud-based services, or a variety of other work management solutions that centralize project information and help facilitate better collaboration between teams.

Foster a change in mindset In addition to increasing communication, fostering a change in the way teams approach projects from the very beginning will help set the stage for better collaboration. During the planning stages of every new project, encourage your teams to ask questions that help further develop a broader scope of how it will impact stakeholders throughout the company.

For example, will there be any future maintenance costs the accounting department needs to be prepared to pay? Are there opportunities for the social media team to get involved? What assets have other teams already developed that may be beneficial for this project? It may even be helpful to create a formal new project form that asks these types of questions up front to help ensure all opportunities for collaboration are considered.

http://www.refreshleadership.com/ index.php/2018/12/break-workplacesilos-build-engagement-collaboration-productivity/

Southern Oregon Business Journal

Consuming the city: Ranking restaurants per capita By Joe Cortright

The number of eating places per capita is a key measure of a city’s livability Cities are great places for consumers. They provide an abundance and variety of choices, especially in the form of experiences. While our conventional economic indicators don’t fully capture the nature and depth of choices in cities, there are some measures that shed light on which places offer the most. Today we offer our index of restaurants per capita as one such indicator of where choice is greatest. There are plenty of competing rankings for best food cities floating around the internet. You can find lists for cities with the most restaurants, the best restaurants, the most distinctive local restaurants… and of course none of these seem to agree (although the “winners” tend to be similar among these lists). But what about the cities that provide the most dining options per person? And what does restaurant variety have to do with a city’s livability? One of the hallmarks of a great city is a smorgasbord of great places to eat. Cities offer a wide variety of choices of what, where, and how to eat, everything from grabbing a dollar taco to seven courses of artisanally curated locally raised products (not to mention pedigreed chickens). The “food scene” is an important component of the urban experience. Restaurants are an important marker of the amenities that characterize attractive urban environments. Ed Glaeser and his colleagues found that “Cities with more restaurant and live performance theaters per capita have grown more quickly over the past 20 years both in the U.S. and in France.” Matthew Holian and Matthew Kahn have seen that an increase in the number of restaurants per capita in a downtown area has a statistically significant effect in reducing driving and lowering greenhouse gas production. We’ve assembled data on the number of restaurants per capita in each of the nation’s largest metropolitan areas. These data are from the County Business Patterns data compiled by the US Census Bureau for 2012. Note that this category, technically NAICS 72251, includes both sit down, table service restaurants and simpler fast food and self-service self-service establishments. We’re also looking at metrowide data to assure that the geographical units we’re comparing are defined in a similar fashion—political boundaries like city limits and county lines are arbitrary and vary widely from place to place, making them a poor basis for constructing this kind of comparison. As you might guess, the metro areas with the most restaurants per capita are found predominantly in the Northeast and on the West Coast. Elsewhere, New Orleans scores high as well. While the average metropolitan area has about 17 restaurants per 10,000 residents, the range is considerable. The San Francisco metropolitan area has more than 23 restaurants per 10,000, while Riverside and Grand Rapids have only about 14 per 10,000. (On this map areas shaded green have the highest number of restaurants per capita; areas shaded red have the fewest. Detailed data on individual metropolitan areas is shown in the table below).

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The top six metropolitan areas on this indicator are San Francisco, New York, Providence, Boston, Seattle and Portland. Each of these cities has twenty or more restaurants per 10,000 population. With the possible exception of Providence, all of these are recognized as major food cities in the US. (And Portland achieves its high ranking without counting the city’s more than 500 licensed food carts.) In an important sense, the number of different restaurants in an area correlates to the range choices available to consumers. Cities that have more restaurants per capita tend to have larger restaurants (measured by the average number of employees per restaurant). Interestingly, Las Vegas, which we think of as a tourism mecca, has fewer restaurants per capita than the average metropolitan area. A lot of this has to do with scale—the average restaurant in Las Vegas tends to be much larger than in other metropolitan areas. This ranking doesn’t include anything about quality–simply quantity–but the higher restaurants per capita can indicate higher competition (and therefore better quality options), or higher demand (a signal that more diversity of options is valued, allowing for more valuable experiences). While this isn’t a perfect listing of best food culture — each person’s measure of the ‘best food town’ is subjective — it does settle the debate of where you should go to have the largest selection of eatery options .

Joe Cortright is President and principal economist of Impresa, a consulting firm specializing in regional economic analysis, innovation and industry clusters. Joe’s work casts a light on the role of knowledge-based industries in shaping regional economies. Joe served for 12 years as the Executive Officer of the Oregon Legislature’s Trade and Economic Development Committee.

Southern Oregon Business Journal

Cascade Health Alliance Invests in Children with Expansion Grant to Oregon Tech Behavior Improvement Clinic CONTACT: Ashley Van Essen, Public Relations Representative ashley.vanessen@oit.edu

KLAMATH FALLS, Ore. – Oregon

Institute of Technology, “Oregon Tech,” has announced a generous community investment of $150,000 from Cascade Health Alliance (CHA), for the critical expansion of Oregon Tech’s Behavior Improvement Group Applied Behavior Analysis (BIG ABA) clinic. Focusing primarily on the treatment of children with autism or pervasive developmental disorder diagnosis, the Oregon Tech BIG ABA clinic began serving local families in May 2018 as the only ABA clinic within 75 miles of Klamath Falls. The BIG ABA clinic and training center also provides high quality training and supervision for Oregon Tech bachelor’s and master’s students in the ABA degree programs. This investment from CHA supports the BIG ABA clinic’s goal of increasing treatment hours by 300 percent over the next five years, serving the needs of the community and helping to address shortages of qualified interventionists. The clinic expansion will help build solutions to the hurdles preventing patients from receiving treatment, expand community outreach efforts, and add in-home support for families, increasing overall services for youth in our regional communities. “At CHA we believe that by investing in our community we are also investing in the members we serve,” said Tayo Akins, President and CEO at CHA. “Our partnership with Oregon Tech is a natural fit since we are both highly engaged in serving our community. The BIG ABA clinic is a shining light in the behavioral care services provided to our members. We take pride in being a partner to empower the most vulnerable residents of Klamath County. “The shortage of Applied Behavior Analysis professionals is very significant in Oregon, let alone Klamath that has a significant demand for this service for the population we serve. This investment will allow CHA to develop and have adequate access to Applied Behavioral Analysis providers and hopefully attract providers that will stay in Klamath once they finish this program,” Akins added. The BIG ABA clinic has been identified as a priority project in the Rural Communities Development initiative of the $4 million Foundational Campaign for Southern Oregon Business Journal

the Future at Oregon Tech. This initiative focuses on creating strong partnerships which provide students unique applied experiences, improving the health and capacity of community partners, and building projects which bring the campus into the community for the benefit of both. “The community investment from Cascade Health Alliance demonstrates their passion and commitment for the Klamath Community,” said Oregon Tech president, Dr. Naganathan. “CHA has been a strong community partner for Oregon Tech in a variety of important initiatives, and this is one more example. We thank CHA for investing in our students’ education and practical experiences as we build the region’s rural health care workforce.” To learn more about the BIG ABA clinic, visit bigaba.oit.edu or contact the clinic leadership team at abaclinic@oit.edu or 541.885.1675. For more information about how you can help support students at Oregon Tech contact Tracy Ricketts, associate vice president for Development and Alumni Relations at 541-885-1118 or Tracy.Ricketts@oit.edu. About Cascade Health Alliance As Cascade Comprehensive Care (CCC, the parent company of CHA) and CHA celebrate 26 years of providing health care services to its members, the company pledges its continuing support to them and the Klamath community as a whole. CHA serves the Oregon Health Plan (Medicaid) members in Klamath County. The company also serves Medicare members through its partner, ATRIO Health Plans. About the Oregon Tech Foundation The Oregon Tech Foundation is a 501(c)(3) organization that promotes and funds the educational, cultural, charitable, and service functions of the Oregon Institute of Technology.

Forecasts of aviation activity are used to identify expected activity levels and based aircraft at individual airports in the system. A statewide perspective on aviation activity also affords the opportunity to examine the context for changes at Oregon airports. Where individual master plans or Airport Layout Plans (ALPs) look in detail at the local situation, the system plan offers the view from 30,000 feet. This makes it possible to look at regional and statewide trends that are resulting not only in absolute gains or declines at particular airports, but also changes that come from redistribution of activity. The last system plan forecasts had a base year of 2005. This forecast starts with the base year of 2015(1) and estimates changes in the next 20 years from 2015 through 2035. The following components of aviation activity are considered in the forecasts:

• • •

Commercial airline enplanements General aviation based aircraft Total commercial, general aviation, and military operations

Seven commercial service airports and 90 general

aviation airports comprise the Oregon system. Oregon’s economy reflects a rich diversity of economic activity in the state that includes both high tech and natural and agricultural resource industries. During the past three decades, Oregon made the transition from a resource- based economy to a more mixed manufacturing and marketing economy, with an emphasis on high technology. Oregon’s hard times of the early 1980s signaled basic changes had occurred in traditional resource sectors— timber, fishing, and agriculture— and the state and industry worked to develop new economic sectors to replace older ones. Most important, perhaps, was the state’s growing high-tech sector, which centered in the three counties around Portland. However, rural Oregon counties were generally left out of the shift to a new economy. Population in Oregon is concentrated in a growing metropolitan area that spans from Portland and the Willamette Valley along Interstate 5 as far south as Eugene. It is on this corridor that the largest concentration of commercial air service activity and general aviation operations take place. Not surprisingly, since population correlates directly with aviation activity, Oregon’s population is also concentrated in Oregon Department of Transportation’s (ODOT) Connect Oregon Regions 1 and 2 where 75 percent of the state’s population reside.

CONNECT OREGON REGIONS POPULATION OVERVIEW Connect Oregon Region Region 1

Population

Region 2

1,803,980 1,260,920

44% 31%

Region 3

494,625

12%

Region 4 Region 5

328,370 188,455

8% 5%

Total

4,076,350

100%

Source: Population Research Center (PRC), Jviation analysis (1) Based

aircraft forecasts were updated to 2017 due to revised FAA based aircraft figure

http://sites.jviation.com/oregonaviationplan/study-documents.html

Southern Oregon Business Journal

Anderson Perry and City of Prineville

Win Project of the Year

The American Council of Engineering Companies (ACEC) of Oregon announced the winners of the 2018 Engineering Excellence Awards, and for the first time since the program’s inception more than 50 years ago, an eastern Oregon firm’s project was selected for Project of the Year. In total, 31 projects were honored at the Awards Gala, which took place at the Multnomah Athletic Club in Portland on January 17, 2018. Six projects received Grand Awards. Anderson Perry’s Crooked River Wetlands Project designed for the City of Prineville took home the main award of the night, Project of the Year. The ACEC Engineering Excellence award program is an annual design competition that recognizes engineering achievements demonstrating the highest degree of merit, ingenuity, and creativity. Southern Oregon Business Journal

Each year, dozens of firms from around the state submit projects that are judged on a rigorous set of criteria, which includes complexity, innovation, and value to society. These projects are judged by a panel of industry experts including government officials, ACEC leadership, educators from college and university engineering departments, and leadership from other organizations dedicated to the built environment. “We are honored to be recognized alongside the City of Prineville for this groundbreaking project,” said AP project manager Brett Moore. https://www.andersonperry.com/anderson-perry-city-prinevillewin-project-year/

About the Award Winning Project….

CROOKED RIVER WETLANDS RECOGNIZED AMONG NATION’S TOP MUNICIPAL PROJECTS

Innovative wastewater treatment system in Prineville heralded for environmental benefits, cost-effectiveness Media Contact: ShanRae Hawkins, shanrae@hellostingray.com | 541-390-6411

(PRINEVILLE, Ore)—The City of Prineville is once again in the national spotlight. This time, for its environmental stewardship.

protection and the clean water community that our Members continually strive to achieve,” said Adam Krantz, NACWA Chief Executive Officer.

Two national organizations have recognized Prineville’s recently completed Crooked River Wetlands project as an outstanding

In 2005, Prineville was tasked with upgrading its wastewater treatment facilities. Rather than build a $62 million mechanical plant that would consume a large amount of electricity and chemicals, city leaders opted for a more cost-effective and environmentally sensitive approach.

In November, the project was one of only five nationwide to be named “Exceptional” by the Environmental Protection Agency’s Clean Water State Revolving Fund program (CWSRF), which honors excellence and innovation in clean water infrastructure projects. Also last month, the National Association of Clean Water Agencies (NACWA) recognized the Crooked River Wetlands with its National Environmental Achievement Award. The honor was especially significant given that the nomination came from City of Vancouver staff, who felt the project deserved national attention. “NACWA’s National Environmental Achievement Awards are a reflection of the incredible work that goes on 24/7 at our nation’s clean water agencies. This year’s honorees reflect the outstanding contributions to environmental

Southern Oregon Business Journal

Completed in 2017, the Crooked River Wetlands is an innovative natural wastewater treatment system that established a 120-acre wetlands complex along the Crooked River. While the complex incorporates effective wastewater treatment, it also serves as an interactive community asset with hiking trails, wildlife-watching, and educational kiosks. The city explored alternatives to costly conventional wastewater treatment process expansions but determined that pursuing a wetlands was the most cost-effective. The project avoided a three-fold increase in System Development Charges and a doubling of customer sewer rates. Approximately half of the $7.7 million project investment was sourced from grants and partner funding.

“The Clean Water State Revolving Fund's PISCES program recognizes community projects that utilize innovative techniques that improve the environment, public health, and the local economy, “ said Dr. Andrew Sawyers, Director of EPA’S Office of Wastewater Management. “The economic and creative aspects of this project provide many benefits for Prineville supporting the selection of the Crooked River Wetlands Complex as an Exceptional Project in this year's PISCES Recognition Program.” Features of the Crooked River Wetlands project include:

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Recreational Opportunities - Amenities include 5.4 miles of new walking, running and hiking trails, 3.25 miles of which are paved for use year-round. A covered pavilion and restrooms provide a gathering place prior to birdwatching, recreational hiking tour, and community events.

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Educational - What could have been a standard public works project instead was designed as a hands-on educational asset that serves both school children and civic organizations. Local schools are incorporating the wetlands as part of their curriculum, including the design of thirteen kiosks, on topics ranging from the Crooked River Watershed to macroinvertebrates.

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Environmental Benefits - More than two miles of riparian improvements to the Crooked River have been implemented, as well as the construction of over 120 acres of wetlands, benefitting many species of fish and wildlife, including lower river temperatures.

Prineville’s reputation as a leader in sensible, cost-effective and future-focused planning,” said Frank Dick, Engineering Supervisor for the City of Vancouver, Wash. “We were impressed with how the effort managed to both stabilize the City’s wastewater capacity and stabilize rates, and improve riparian and water conditions in the Crooked River. Plus, the benefits to Oregonians and visitors enjoying the whole river system is something for which the citizens of Prineville can be proud.”

About the City of Prineville Located east of the Cascade mountains in Oregon’s high desert, the City of Prineville is a resurgent rural community that has preserved its small-town, ranching roots and Western lifestyle while embracing smart growth in a business-friendly environment. With a population nearing 10,000 residents, the county seat of Crook County attracts a diversity of business and lifestyle interests, including tech giants Facebook and Apple, recreational enthusiasts, and a thriving agricultural industry. Incorporated in 1880, City of Prineville operates the oldest continuously running municipal short line railway in the U.S., as well as a public golf course, and airport. Prineville boasts numerous recreational assets, including the Ochoco National Forest and Crooked River, and remains a popular destination for anglers and hunters. For more information on City services and programs visit cityofprineville.com.

“The Crooked River Wetlands project cements

Southern Oregon Business Journal

Prineville – In the Center of It All By Greg Henderson It might have been 45 million years ago that the Crooked River Caldera was under nature’s construction. The ground shook and mountains grew and exploded into molten lava and ash that made Mount Saint Helens a rather ho-hum spectacle. Today the 10,000 people living in Prineville, call the center of the caldera “Home”. On August 21, 2017 thousands of people dropped by to take a look at another amazing natural spectacle, the total eclipse of the sun. Until you’ve actually seen an Eclipse in Totality you can’t appreciate the soul-shaking experience that it is. It belongs on everyone’s bucket list. Tourism, the US Forest Service and BLM provide an economic stability since timber faded in the past few decades. Prineville is now experiencing a robust rebirthing that many believed might never come. But this is a town who believed in the early 1900’s that in order to avoid becoming a Ghost Town they needed a railroad for shipping lumber and logs. When the railroad tycoons bypassed the town, citizens voted to build their own railroad by doing so in connecting to the main line 19 miles away. You can be born with an independent mindset or you can be forced into it. Either way the citizens of Prineville are willing to face the challenge. So, the town survived on its determination. Known for ranching, and timber since Orgon’s statehood, growth and change came slowly. In 1952 Les Schwab appeared with his small tire business and the bold notion that providing excellent service to customers was a good business success plan. A few years ago, it was reported that Les Schwab reached a level of success in the $1.5 billion range with about 390 stores in six western states. Apparently, good customer service is a useful idea. It was 2006 that Les Schwab decided to move its corporate headquarters to Bend. That same year Starbucks began serving coffee in town, a sure sign of the town’s 21st century arrival. By taking advantage of the Enterprise Zone opportunities through the State of Oregon agency, “businessOregon” (https://www.oregon4biz.com/Oregon-Business/Tax-Incentives/Enterprise-Zones/) Prineville was able to negotiate favorable incentives for new businesses to locate in the community. Southern Oregon Business Journal

Outgoing Mayor of many terms, Betty Roppe will tell you in her loyal and enthusiastic love of Prineville way, that the news of high technology giant Facebook deciding to build a data center in Prineville was a welcome one. Six years later, in 2012, Apple came to town. There are those who thought city leaders were giving away too much in tax revenue in their desire to persuade technology giants to town. If nothing else, it put Prineville on the map again. People in the businesses of economic development, education, and modern industrial creation will be looking at Prineville as a model of how to move forward and what hazards may be in the way.

â€œI believe we are positioning Prineville into a very stable future by focusing on creating infrastructure for industrial growth and stability. Our upgraded water and wastewater systems are some of the most forward -looking investments that will provide long benefits while keeping user costs stable. We are addressing street issues prior to crisis, again keeping upgrade costs to a minimum. Our railway system accommodates heavy industry at no added cost to the taxpayer providing us the means to recruit industrial business that would not have been able to function efficiently here otherwise. Providing opportunity for businesses is on the minds of all communities. We want to provide an environment where business can be most successfully operated, where they will choose to come. Through that effort we provide opportunities for family wage, benefitted jobs and diversification that will endure the ups and downs of the economic cycles. â€? Steve Uffelman

About the City of Prineville Located east of the Cascade mountains in Oregonâ€™s high desert, the City of Prineville is a resurgent rural community that has preserved its small-town, ranching roots and Western lifestyle while embracing smart growth in a business-friendly environment. With a population nearing 10,000 residents, the county seat of Crook County attracts a diversity of business and lifestyle interests, including tech giants Facebook and Apple, recreational enthusiasts, and a thriving agricultural industry. Incorporated in 1880, City of Prineville operates the oldest continuously running municipal short line railway in the U.S., as well as a public golf course, and airport. Prineville boasts numerous recreational assets, including the Ochoco National Forest and Crooked River, and remains a popular destination for anglers and hunters. For more information on City services and programs visit cityofprineville.com.

Southern Oregon Business Journal

South Douglas County’s Employment Base Differs from the Rest of the County by Annette Shelton-Tiderman The south Douglas County communities of Winston, Dillard, Myrtle Creek, Tri-City, Canyonville, Riddle, Days Creek, Glendale, and surrounding areas, do not have the same employment base as the rest of Douglas County. This small area accounts for approximately 20 percent of the county’s overall employment and is noticeably different. The following graphs show the distribution of employment for these two areas; for this analysis, county employment excludes the southern area (census tracts 1600, 1800, 1900, 2000, and 2100).

Some industries play a more prominent role in South County (SoCo) than for the county as a whole. On a percentage basis, this small geographic area has more than four times the manufacturing employment than the remainder of the county. This strong presence of production jobs reflects, in part, continuing reliance on local forests and wood products. This close connection with natural resources and mining is supported by area employment in that sector, with 8 percent of employment as compared with the county’s 5 percent in

Southern Oregon Business Journal

natural resource-related jobs. Trade, transportation, and utilities ranks second for both SoCo and the county. Interstate 5 readily enables the transportation of goods and services between all points north and south. The rugged outdoors, tribal gaming and other recreational pursuits brings leisure and hospitality employment to third place (17%). This is notably much more than the rest of the county’s 10 percent. Health care and social assistance, supporting 20 percent of the county’s employment, accounts for only 4 percent of SoCo’s employment. Again, I-5 also provides efficient connections to health-related facilities and services in Roseburg, the county’s largest city. Other more urban-centered activities such as professional and business services, public administration, and financial activities have smaller presence in this rural area than countywide. Construction is another sector that has seen more urban growth in recent years.

Looking at local employment patterns may help employers and community planners understand their strengths and areas of potential opportunities. Manufacturing, natural resource-based work, and recreational activities – coupled with good transportation routes – play a role in maintaining the uniqueness of SoCo.

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BY: DUY@UOREGON.EDU

Fed Hikes Rates, Market Tumbles The Federal Reserve hiked rates as expected at December’s meeting while delivering a more hawkish message than Wall Street was hoping for. Equities tumbled and the yield curve flattened further as Federal Reserve Chairman Jerome Powell’s press conference wore on. I can’t imagine that the Fed is pleased with this outcome. That said, they have only themselves to blame. The Summary of Economic projections continues to maintain an unnecessarily hawkish bias that only allows Wall Street’s worries about growth to fester. In retrospect, the outcome of this meeting is largely what would have been expected if you focused more heavily on the data flow than on the turmoil in financial markets. The Fed delivered largely according to my expectations, with a key exception: The Fed was more hawkish than I anticipated in that they did not drop entirely the “further gradual increases” language in the FOMC’s statement. I had expected them to create more uncertainty about the future; they chose instead to reinforce their expectation that rates would continue to rise. Arguably, they were forced by their own forecasts to retain the language. To be sure, the revisions to the Fed’s forecasts were dovish in many ways. Expectations for growth, inflation, longer-run unemployment, and longer-run interest rates were all revised lower. But these dovish shifts failed to offset the fundamentally hawkish aspect of the forecasts: The forecasts continue to say that central bankers anticipate they will continue to raise rates until the Fed turns policy from accommodative to restrictive. It’s not just the median; the pattern of dots imply the same. What’s going on here? The Fed is currently a slave to its own models. In simplistic terms, those models will revert in a predictable fashion to whatever supply side conditions are chosen by policymakers. Growth will slow toward trend and unemployment rise to its natural rate as policy rates rise into restrictive territory. It’s all a straightforward mechanical exercise. That exercise, however, implies far too much certainty about the path of interest rates. That path is only valid in one particular future, but many futures are possible. Consequently, in the presser Powell tried to downplay the dots. This though is really almost impossible to do because no matter how you spin it the dots tell a clear story about the Fed’s expectations, and those expectations amount to a hawkish policy bias, and that’s a message Wall Street doesn’t want to hear. I would say that Powell made the situation worse with this in the preamble to the presser: Southern Oregon Business Journal

What kind of year will 2019 be? We know that the economy may not be as kind to our forecasts next year as it was this year. History attests that unforeseen events as the year unfolds may buffet the economy and call for more than a slight change from the policy projections released today. The implication here is that there is substantial downside risk to the economy. So much that the Fed is reducing its forecasts across the board. So much so that the Fed anticipates they will fall short of their inflation target yet again. And yet they continue to hike rates and signal more rate hikes to come. It is an unnecessarily and explicit hawkish message that is an artifact of a communications strategy that only made sense when you could reasonably promise zero rates for an extended period. It makes no sense to create the impression of a promise to continue to raise interest rates at a mature point in the business cycle when growth is already slowing.

As for the rate policy itself, I tend to try to focus on what the Fed will actually do instead of what they should do. The latter at this juncture though likely impacts the former. My crystal ball is as fuzzy as any, but my instinct tells me this rate hike was more likely a mistake than not. It appears to be an overly mechanical reaction to the model outcomes. My ace-in-the-hole for the US economy is that inflation remains low enough to allow the Fed to remain nimble. Or it had been. I don’t know what Wall Street is picking up; it isn’t in the macro data, which ultimately is why the Fed chose to press forward. But whatever it is has been going on long enough that it suggests caution is warranted. In a risk management framework, the Fed would have been wise to skip this meeting and put January in play. By not doing so, I fear the Fed may flip uncomfortably close to my alternative scenario – that they continue hiking until something breaks. If this rate hike is a mistake, the rate hikes for at least the first half of 2019 will quickly fall off the table. My instinct tells me that should now be the base case. Eventually – and probably sooner than later – the Fed will realize they need to offset the Trumpian uncertainty. They won’t like it. But they will have to do it.

Bottom Line: The Fed hiked rates in a very predictable fashion. It might be a decision that quickly comes back to haunt them.

Timothy A. Duy Senior Director, Oregon Economic Forum Professor of Practice Department of Economics University of Oregon Eugene, OR 97403-1285 duy@uoregon.edu

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The Present We Didn’t Ask For Merry Christmas You Filthy Animal Home Alone 2, Lost in New York – 1992

That’s how equity investors received the Federal Reserve’s rate hike and comments earlier this week. While expectations were for the Fed to raise the federal funds rate by 0.25 percent, there was a small glimmer of hope that they may hold pat. There was also a perception by some on the Street that the Fed was on “autopilot,” which if one looks at 2018, as well as the comments from Chairman Powell, this is not the case. We believe that the Fed will be “data dependent” and does not have a preset course for balance sheet reduction or pace of rate hikes. 2018 is a good example of that belief. A year ago, the Fed was expected to raise the funds rate three times in 2018; however, due to the stimulus of the tax cut and fiscal spending, they ended up hiking rates four times. Fed

Source: Barclays Research Southern Oregon Business Journal

by Jason D. Norris, CFA Executive Vice President of Research

Governor John Williams stated today on CNBC that the Fed will be flexible and that there isn’t a predetermined course regarding interest rate hikes and the reduction of the balance sheet.

That’s the Gift that Keeps on Giving the Whole Year National Lampoon’s Christmas Vacation -- 1989 While trade took a backseat to Fed headlines this week, it continues to be an overhang. The periodic headlines, both on the positive and negative front, have increased volatility in the markets due to the uncertainty it has created. Currently, tariffs have focused industrial companies, such as Caterpillar and John Deere. This has been seen primarily in the steel and aluminum tariffs. As we’ve written recently, while the tariffs garner high levels of uncertainty, the actual dollar impact on the economy is relatively small. When looking at the equity markets, if there is a full-blown trade war with China, the effects will spill over to the consumer. Barclay’s highlights below the effects on earnings for each of the 10 economic sectors, as well as the S&P 500. With increased tariffs on Chinese goods, the largest impact is going to be on retailers in the consumer discretionary sector. The biggest wildcard is the effect a trade 26

war would have on consumer spending. With retailers potentially feeling a big impact, will they raise prices to offset tariff costs, forcing consumers to feel the burden?

Don’t Bother Me … I’m Thinking A Christmas Story – 1983

With the recent carnage in the markets and increased uncertainty, investors have to stay disciplined and not get emotional. We understand that volatility can be unnerving; however, we have to stay focused on the fundamentals. We do realize that volatility and uncertainty can persist and we have been making tactical adjustments accordingly. Over the last few months, we have been reducing risk in client portfolios, shifting from highly cyclical sectors into those that are more defensive. We have not, however, begun to sell stocks and add to bonds. Week in Review and Our Takeaways

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Stocks finished the week falling over 7 percent as investors reduced risk assets in the face increased uncertainty. The Dow Jones Industrial Average suffered its worst week since October 2008

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Questions about Fed policy, continued trade issues and chaos in D.C. have left this month on pace to be the worst December since 1931

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Investors are nervous about Fed policy in 2019 and will lead to continued volatility

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The U.S. economy remains healthy and while we have pared back risk, we are not reducing equity exposure Disclosures Tagged: Ferguson Wellman Capital Management, West Bearing Investments, Jason Norris, CFA, Federal Reserve, Federal Funds Rate, Chairman Powell, China, Trade, Volatility https://www.fergusonwellman.com/fw-team/jason-norris-cfa FERGUSON WELLMAN

(503) 226-1444 | (800) 327-5765 WEST BEARING

(503) 417-1444 ADDRESS

888 Southwest Fifth Avenue, Suite 1200 Portland, Oregon 97204

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Local Lions Clubs raise funds to help build the Heartfelt House Contact: Sherri Buri McDonald Media Relations, PeaceHealth Oregon 541-520-8219 or SBuriMcDonald@peacehealth.org

SPRINGFIELD, Ore. – The Heartfelt House, an $8.4 -million project, has sparked the imaginations and pulled at the heartstrings of a diverse group of donors, including individuals, corporations and community service clubs. Entirely funded through philanthropy, the house is emblematic of the region’s tremendous generosity. So far, more than 600 donors have contributed from $10 to $1 million, raising a total of $5.8 million. Set to open in June, the Heartfelt House will offer comfortable, affordable lodging to out-of-town families of patients at PeaceHealth Sacred Heart Medical Center at RiverBend in Springfield and University District in Eugene. The 20,208-squarefoot house will be just a five-minute walk from RiveBend.

away from home, but even more important, it can help ease the anxiety when a loved one needs hospital care. So much can’t be controlled when a family member is in the hospital, Gear said. “This part is in our control,” he said. “We can help provide a warm bed, a kitchen and a place to let down.” The project is especially close to Gear’s heart because of his role in bringing the Patterson Street patient guest house to Eugene. As a Lions Clubs International director in the late 1990s, Gear toured a guest house the Lions had helped establish in Christchurch, New Zealand. He and other club members saw the need for one in the southern Willamette Valley. They raised $280,000 to help launch the Children’s Miracle Network/Lions

Lions Clubs International and local Lions, including the service club in Sutherlin, have raised $220,000 for the Heartfelt House. Lion Ed Gear has witnessed that generosity first-hand as he has talked about the Heartfelt House at clubs throughout the Willamette Valley, coastal and southern Oregon. “I have not had to work hard to get that kind of donation,” Gear said. “They just immediately started contributing and very much wanted to be a part of it.” The cause resonates with people, Gear said, adding that many Lions either know people who have stayed at a patient guest house somewhere in the country, or they’ve used one themselves.

Patient Family Guest House on Patterson Street near the University District campus.

A guest house lessens the financial burden of being

More than 20 area Lions Clubs have contributed to

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Ed Gear & Yvonne Hamson

the Heartfelt House, including those in Eugene, Springfield, Alvadore, Junction City, Cottage Grove, Elkton, Sutherlin, Florence, Yachats, Mapleton, Coos Bay, Jefferson, Monmouth-Independence, West Salem, Brownsville, Halsey and Albany. Many other groups and individuals also are generously supporting the Heartfelt House. One example is Oregon Community Credit Union (OCCU), which created a foundation earlier this year to deepen its involvement in community service. The foundation’s inaugural gift was $500,000 to support the pediatric wing of the Heartfelt House. “We have a longstanding relationship and are a longtime supporter of Children’s Miracle Network and believe that investing in the health and well-being of the youngest in our community is a good way to support the strength of the entire region,” OCCU President and CEO Ron Neumann said.

because of inability to pay.

“It’s our hope that the Heartfelt House will provide a place where families in our region can be loved and receive the support that they desperately need during their most challenging times,” Neumann said. There are still opportunities to give to the Heartfelt House, which anticipates serving up to 1,500 families a year. More information about the project and how to donate is available here. About PeaceHealth: PeaceHealth, Based in Vancouver, Wash., is a not-for-profit Catholic health system offering care to communities in Washington, Oregon and Alaska. PeaceHealth has approximately 16,000 caregivers, a group practice with more than 900 providers and 10 medical centers serving both urban and rural communities throughout the Northwest. In 1890, the Sisters of St. Joseph of Peace founded what has become PeaceHealth. The Sisters-

Rendition of Heartfelt House Exterior The 20-room guest house will have a 10-room pediatric wing and an a 10-room adult wing. It will be a collaboration between PeaceHealth, which will own the land and building, and Ronald McDonald House Charities, which will oversee day-to-day operations. Guests will pay from nothing to a modest fee, depending on their circumstances. But no one will be turned away

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shared expertise and transferred wisdom from one medical center to another, always finding the best way to serve the unmet need for healthcare in their communities. Today, PeaceHealth is the legacy of the founding Sisters and continues with a spirit of respect, stewardship, collaboration and social justice in fulfilling its Mission. Visit us online at peacehealth.org.

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12 Tips for Making Video a Reality in 2019 By Holly Paige, Wave One Group

If 2019 is the year you’re finally going to start producing video content to promote your business or organization, here is a handful of tips to help you plan a flawless video campaign in the New Year. 1. Know why you’re producing a video. This should be obvious, but you’d be surprised how many otherwise smart professionals decide they want to produce a video about their company without thinking through their goals and outcomes. Don’t be that person! Get clear about the pain you want your video to relieve before you start imagining what you want your video to look like.

2. Decide who this video is for. Every video you produce needs to appeal to a specific audience. Take the time to identify the audience you want to reach and the messages you want to communicate before you start production. Doing your

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homework will help you decide the type of video you want to produce, as well as the creative tone and style you want your video to convey.

3. Get clear about your outcomes. What do you want your target audience to do after they’ve watched your video? Visit your website for more information? Donate money online? Fill out an online job application? Whatever your outcomes, make sure your video has a strong call to action, directing viewers to take the next step.

4. Be honest about the investment you’re willing/able to make. Successful video projects are an investment in time, money, and talent. The average video project takes an average of 12 weeks, from concept to completion. On the low end, a typical budget for a two-to-threeminute video starts at around $5,000. Expect budgets to vary widely, depending on the complexity of the video you want to produce.

5. In-house or outsource? If you’re producing a video in-house, your main investment will be staff time. If you outsource your project, your investment will be in dollars, to hire outside video experts who can assist you in everything from story planning, project management and creative development, to filming, story production and editing. The deciding factor typically comes down to the amount of extra staff time an organization has (or doesn’t have) to devote to the amount of time needed to produce a video.

6. Plan, baby, plan. Leave winging it to the birds. Without a solid plan, your video project is DOA.

7. Short, long, or in-between? There’s a lot of buzz around the “perfect” length of a video. The truth is, there is no perfect video length. However, there are guidelines, based on how a video will be used. For example: 60-90 second video testimonials of company executives or customers work well as email attachments, on a website, or on a social media platform. Ditto for a two-to-three-minute product demo. Videos in the three-to-five-minute range (company culture videos; award videos; fundraising appeal videos; video case studies) work well in live presentations, or on a website. My rule of thumb around video length is: make sure your video is long enough to cover your most important messages, but not too long that people lose interest.

8. There’s no “I” in team. Keep your internal team small and focused. Make sure everyone on your team shares the same goals and outcomes and is motivated to keep the process moving forward.

9. Find video partners that work and play well with others. Every video company has a great demo reel. But look beyond the pretty images when evaluating a potential video partner for your next project. Find a team whose work ethic and values mirror yours. Seek out video pros who “get” your vision, are focused yet flexible, communicate well, enjoy the collaborative process, are easy to work with, and deliver projects as scheduled.

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10. Expect the unexpected. Scheduling snafus. Production bumps. Last minute script changes. Re-edits at the 11th hour. Something unexpected will happen during the life of a project. Having a solid game plan will help you overcome these bumps in the road. When the unexpected appears (and it will), stay calm and carry on.

11. Think Vimeo for video hosting. Most people immediately think of YouTube for video hosting, because it’s a free service. But Vimeo is a better bet, especially for business and corporate work. Vimeo is a paid service, but the investment is worth it for a couple of important reasons: First, Vimeo allows users to keep their original online video links, so you can make revisions to an existing video without having to create a new video link, as you have to do with YouTube. Second, Vimeo doesn’t paste unwanted ads over your video like YouTube does. These are small, but important distinctions, and worth paying attention to, if maintaining a professional visual presence is

important to you, and your audience.

12. Enjoy the ride. The video medium is such a powerful communication tool, and there are so many applications for it that you owe it to yourself to at least consider producing a video sometime in 2019. And if you are already on the video bandwagon, here’s to another great year of creating video content that engages, educates, and inspires.

Contact: Holly Paige holly@waveonegroup.com 503-223-9537 www.waveonegroup.com https://www.waveonegroup.com/

Who Am I? I am Principal and Chief Storyteller at the Wave One Group in Portland, Oregon. We produce videos for small to medium sized businesses and organizations that want to reach more people and need professional storytellers to help them tell the right story. Our clients include employers struggling to recruit quality employees; business owners seeking a better way to connect with their customers; and nonprofit organizations that need to raise money or raise awareness. Our sweet spot is working people who are new to video and are excited about using the medium to grow their businesses.

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News and Information from - Oregon International Port of Coos Bay Oregon International Port of Coos Bay Receives $20 Million Grant to Support Rehabilitation of Bridge Structures on the Coos Bay Rail Line

Bridges Selected for Rehabilitation Work

Coos Bay, Ore. The Oregon International Port of Coos Bay (Port) is pleased to announce the award of a $20 million Better Utilizing Investments to Leverage Development (BUILD) grant to support rehabilitation of 15 bridge structures along the Coos Bay Rail Line. The Coos Bay Rail Line, owned and operated by the Port, is a 134-mile short line railroad which runs throughout Coos, Douglas, and Lane Counties supporting the regional and state economy. This grant award would not be possible without the advocacy and support from Port stakeholders. The proposal was submitted to the U.S. Department of Transportation with 40 letters of support, which included Southwest Oregonâ€™s Federal delegation, Oregon State Legislators, shippers utilizing the rail line, municipalities, and community leaders. Special thanks to Representative DeFazio, Senators Merkley and Wyden, Oregon Senators Roblan, Holvey, Heard and Manning, and Oregon Representatives McKeown, Brock Smith, and Fahey for their support of the BUILD proposal and ongoing support for the Coos Bay Rail Line. This rehabilitation project will invest a total of $25 million, which includes $5 million in matching funds pledged by the Port, into key bridge structures on the rail line. Bridges that will receive repairs and improvements include the Coos Bay Swing Span Bridge, the Siuslaw River Swing Span Bridge, the Umpqua Swing Span Bridge, the replacement of Vaughn Viaduct near Veneta, and 10 additional bridges in Lane County (see Figure 1). Ensuring rail connectivity for the region is critical to maintaining the existing businesses utilizing the line, as well as cultivating an environment which can foster future economic development. The shippers on the line directly employ close to 1000 people throughout southwest Oregon with family wage jobs, supporting the economic fabric of our community. These businesses depend on rail as a competitive transportation option while ensuring adequate capacity to move goods to market. Southern Oregon Business Journal

The Coos Bay Rail Line has been in operation for over 100 years, continuing freight connectivity for businesses between Coquille, Oregon and the National Railway network with the Union Pacific interchange yard in Eugene, Oregon.

For more information on the Portâ€™s proposed BUILD grant project, please visit https://www.portofcoosbay.com/build2018. For additional media information, please contact: Margaret Barber, External Affairs Manager, Oregon International Port of Coos Bay Phone: 541-267-3713 | E-mail: mbarber@portofcoosbay.com 125 West Central Avenue, Suite 300 | P.O. Box 1215 Coos Bay, Oregon 97420-0311 Phone: 541-267-7678 | Fax: 541-269-1475 email: portcoos@portofcoosbay.com | Web: www.portofcoosbay.com

Best of 2018: Winning is the Absence of Losing by Charles Marohn There are two notable things about this post that made me glad to feature it in our annual “best of” week. The first is that it’s a good year whenever Nassim Taleb publishes a new book. In 2018, it was Skin in the Game, a book that I’m absolutely going to include in my top five books of the year when I publish that list next week. I did an interview recently where I was asked about my influences and, intellectually, there is no bigger than Taleb. If you want to understand Strong Towns thinking, start with the Black Swan. Here’s the second, and I just love sharing this: When I ran this piece, one of our readers recommended in the comments section a related book called Finite and Infinite Games by James P. Carse. Wow! I’ve read it twice now and feel like I could read it a third time and still absorb new things. It put into simple words a concept I’ve been clumsily gnawing on for a long time now. How liberating! Where businesses, organizations, and even the Strong Towns movement is involved in a finite game—something that has a beginning, a middle, and an end—cities are involved in an infinite game. For most cities, the beginning is obscure to us now. There is no ultimate end point, thus there is also no middle. It’s an ongoing game where survival is the ultimate objective, or as I describe it below, “the absence of losing”. This is not how most of us think about the places we live, and it’s certainly not how city-building professionals think about it. Yet, we must.

I called Moneyhall: Building a Strong Town in an Unfair Time. It was a crash course in applying Moneyball thinking to city hall. It was poorly received by potential publishers who judged the overlap in the Venn diagram of urban planning and baseball analytics to be too small to properly market. They were right, and consequently the book will never be published. (Don’t fret—it seriously wasn’t that good.)

One aspect of the book that even my friends objected to was my definition of winning. It’s a fairly clear concept in baseball—you win games, win a division, and the team that wins the World Series is the ultimate winner—but for cities, the concept of winning is more ambiguous. Here’s how I described it:

What does it mean for a city to win? For local governments, there is no defined start and end point like there is in a baseball season. Things don’t ever reset, as they do for baseball after the playoffs. Therefore, the idea of “winning” is not quite as easy to define. For cities operating in an unfair time, winning is the absence of losing. Winning means being around year after year as the stable, reliable platform which enables a city’s residents to be successful.

A few years back, I wrote a draft of a book that Southern Oregon Business Journal

To fully understand what I’m suggesting, it is important to distinguish between the local government that manages the city and the people, businesses and institutions that dwell within its boundaries. People win. Businesses win. Non-profits and local institutions win. Cities serve them all in that regard. The local government as an entity is a platform for communal action, not an end unto itself. What is the point of having a city government that is thriving—with high tax revenues, nice facilities and new projects—when the people it serves are struggling? Local government can’t (or shouldn’t) progress independently of the people it serves. But if people in a community see their lives improve in ways that don’t allow the local government to take a victory lap, that's fine. It's a problem if a city government prospers while serving a community that struggles. The opposite is acceptable. Finally, and most importantly, it's okay for private individuals to take risks in a different way than we should tolerate from our local officials. Families and businesses can lose and be okay. The risks they take sometimes don’t work out and they end up in bankruptcy. As a society, we’ve recognized that we should provide a degree of protection and assistance to people who try and fail. People can start over. They can recover and move on. In many instances, I would call such risk takers heroes. At the very least, they are courageous, and we need courageous. For a local government, the stakes are much different. The failure of a city brings harm to more people outside of city hall than within. In many ways, those in the local government are the least harmed. While politicians and city staff stand to benefit from actions the government takes, the entire population bears the burden if those actions fail. This is, thus, an asymmetrical risk, one where the person exposed to risk (the resident) is different from the decision-maker and primary beneficiary (public officials and professional staff). In his most recent book, Skin in the Game: Hidden

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Asymmetries in Daily Life, Nassim Taleb affirms my thinking: for local governments, winning is the absence of losing. As he states in the book:

The central problem is that if there is a possibility of ruin, cost-benefit analyses are no longer possible. Then later:

The central asymmetry of life is: In a strategy that entails ruin, benefits never offset risks of ruin. Every single risk you take adds up to reduce your life expectancy. Rationality is avoidance of systemic ruin. This kind of prudence is not fun. For professional staff—the planner, the engineer, the city manager— it’s way more inspiring (and better for the resume) to have a grand vision, one with big budgets and bold actions. The fact that our systems of state and federal governance, not to mention corporate consolidation and centralized finance, promote such thinking merely serves to normalize it. It’s rarely seen as enough to just be competent—to merely, for example, run the buses on time and collect the trash within budget. Yet we should value these humble achievements. There is no downside to simple competence. There is zero risk. None. And all kinds of reasons to believe that doing the little things well has a ton of upside. For the past two weeks I’ve written about local governments that are taking large, systematic risks—Cobb County and Akron—when what is needed most desperately is a strategy that, first and foremost, avoids ruin. And now, returning from a vacation where I was disconnected from our media stream, I’m hit with lots of feedback—from public officials and others— that not only defends these risks, but fails to grasp in even the most basic way that there is any risk at all. It’s just the way things are done. I find that so divorced from reality that I struggle to even respond to it. I’ll close with another quote from Skin in the Game:

One may be risk-loving yet completely averse to ruin.

Contrary to what has been suggested, I am not against local governments taking risk. Quite the opposite, in fact; I am “risk-loving.” I just want those risks to be of the type that do not include the chance of ruin. This means small bets for which the worst-case outcome is entirely tolerable. Millions in debt for a new stadium in the hope that mixed-use development around it may prove profitable—despite no track record locally of such success—risks ruin, especially when the rest of the community’s development pattern is so financially unbalanced.

Three decades of subsidy for a new business on a remote site with a history of failure—a development which, despite the risk, has no meaningful chance to positively impact the community’s bottom line, even if successful—risks ruin, especially while the city’s productive core neighborhoods decline from lack of basic service and maintenance. Let’s stop it already with the delusions of grandeur. Let's ditch the notion that the elusive prosperity we seek can be manufactured all at once, that our genius can not merely downplay risk but overcome it. Let's just focus for a while on basic competence. Our communities win when local governments avoid losing. https://www.strongtowns.org/journal/2018/8/20/ winning-is-the-absence-of-losing-7d3e5

Charles Marohn is the Founder and President of Strong Towns. He's a Professional Engineer (PE) licensed in the State of Minnesota and a member of the American Institute of Certified Planners (AICP). Marohn has a bachelor's degree in Civil Engineering from the University of Minnesota's Institute of Technology and a Master of Urban and Regional Planning degree from the University of Minnesota's Humphrey Institute.

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Southern Oregon Business Journal 703 Divot Loop Sutherlin, OR 97479

“There is a time in every man’s education when he arrives at the conviction that envy is ignorance; that imitation is suicide; that he must take himself for better, for worse, as his portion; that though the wide universe is full of good, no kernel of nourishing corn can come to him but through his toil bestowed on that plot of ground which is given him to till. The power which resides in him is new in nature, and none but he knows what that is… which he can do, nor does he know until he has tried.” —Ralph Waldo Emerson 1803–1882