November 6, 2009
Ms. Kelly Madden
North Florida Wholesale Region President
225 Water Street, MAC23055-027
Jacksonville, FL 32202
Re: 2009 Chamber trip to Kansas City
Congratulations on a truly extraordinary Chamber trip to Kansas City. I know I speak for those attending when I tell you it was one of the best Chamber trips ever. I am hopeful it will be a catalyst for some very positive public policy initiatives in Jacksonville.
I thought you did a particularly thoughtful job in selecting Kansas City and the substantive topics that would be addressed there. The discussions and presentations we had on healthcare, revitalizing downtown, philanthropy, urban public education, and civic leadership were timely and important to Jacksonville's future. In addition, the role of private, public, and community leadership throughout all the discussions was also timely and important.
On the last day of the trip, as we were picking up our luggage at the airport, you asked me whether I had some notes for you as a take-away from the trip. My answer to you was that I did not have notes at that time, but that I would get my comments and thoughts to you. As promised, here are my thoughts and comments.
Take-aways from the Kansas City trip
The speakers in Kansas City provided some very thoughtful ways of approaching public policy. In particular, their former mayor, Kay Barnes, and other civic leaders emphasized vision, partnership, and implementation. Also, it was apparent to me in the discussions of healthcare and downtown revitalization, that they had done a remarkable job of being very focused, attracting talent, and leveraging broad-based participation.
Ms. Barnes' comment that a bold vision is in some ways easier than a small one, because it can inspire and generate passion, was insightful. We saw with the NFL and Better Jacksonville Plan that a bold vision can in fact energize and inspire a community. With the topics addressed in Kansas City - healthcare, downtown, civic leadership, and urban public education - we need a bold vision that can inspire and energize our community.
The Kansas City partnerships and implementation approach was also instructive. Clearly, the private sector in Kansas City has played a crucial role - financially and otherwise - in carrying out Kansas Citys bold vision for medical research and downtown revitalization.
The city's role, at times, was not clear to me. I spoke to the city manager, Wayne Cauthen, and he said Kansas City was geographically in four counties, had 15 school districts and had little ad valorem revenue. He said there were about two million people in the Kansas City metropolitan area. Kansas City has a "weak mayor" form of government, in which the mayor serves on the city council.
Mr. Cauthen said most of Kansas City's revenue was dedicated to funding specific projects. Five cents of eight cents in sales tax, he said, was for Kansas City, but the sales tax was dedicated to specific areas. For example, 1¢ was for capital, 1¢ for police, 1¢ for new fire initiatives, and some dedicated ad valorem for indigent health care.
Mr. Cauthen said Kansas City lacked discretion and flexibility in their budget. Significant revenue appeared to come from an earnings tax on Kansas City payroll, which makes the corporate moves downtown even more significant. Mr. Cauthen told me the $250 million in renovation to the baseball park and $250 million in renovating the football stadium was paid for by the county government. He was obviously disappointed these facilities were not downtown.
He also said the work of building a great city is never done and requires constant attention and focus. Like Ms. Barnes, he was insightful.
Against that backdrop, there are four specific substantive areas from the Kansas City trip that I believe we should consider in Jacksonville:
The discussion on the Stowers Institute, medical research, and the healthcare effort in Kansas City was extraordinary. While they obviously had an exceptional philanthropic gift from the Stowers ($2 billion), they also marshaled their entire community in a focused effort to develop what was to them a very clear vision: the creation of a world-class research institute centered on the life sciences. They then attracted Harvard and MIT-class talent, CEO support, and participation from regional partners, to develop in a relatively short period of time (nine years) something that many thought could not be accomplished.
I thought the panel discussions and presentations from Kansas City leaders on this were thought provoking and had direct applicability to the long-term future of Jacksonville's healthcare industry.
While Kansas City was clearly the beneficiary of an exceptional endowment, I believe we have an inventory of healthcare assets that in some ways put us in a better long-term position than Kansas City. I have believed for a long time, and the Chamber trip to Kansas City reinforced my belief, that healthcare should not just be a targeted industry for Jacksonville, it should be a defining industry for Jacksonville.
One of the great things about this trip, as with other Chamber trips, is what is learned from other participants. Dr. Rupp with the Mayo Clinic said that he believed Jacksonville already spends nearly $100 million a year, all combined, on research in the life sciences and biosciences areas. He said that Mayo alone spends $35 million a year on such research.
Hugh Green pointed out how critically important it is to expand the collaborative partnership with the University of Florida and the challenges involved in that relationship. He, and others such as Carol Thompson and Bill Mason, discussed the need for an expanded urban campus and medical school presence in Jacksonville with the University of Florida.
Carol Thompson and I, on the flight over for nearly two hours, discussed Dr. Yank Coble and the Center for Global Health and Medical Diplomacy ("Center") and the Health Care and Bioscience Council of Northeast Florida ("Council"). In this discussion, Carol and I talked about the extensive and significant inventory of healthcare assets that Jacksonville has and what Yank is trying to accomplish with the Center and Council.
That inventory of assets, discussed on the trip, includes:
Mayo Clinic and the research outlined by Dr. Rupp;
Shands Hospital, including the proton beam therapy institute; the presence of the University of Florida faculty and residents; Shands as the UF teaching hospital, with research, clinical work, and residencies;
Outstanding area healthcare systems, including Baptist, St. Vincent's and HCA, and the clinical work, specialties, and residencies there;
Our community's proximity to the University of Florida, the largest research university in the southeastern United States, only 70 miles away;
Excellence in numerous specialty areas, including oncology, cardiology, and pediatrics;
UNF and Florida State College.
This list is by no means complete. Dr. Coble and others are attempting to bring a focus to Jacksonville's exceptional healthcare assets and its potential for our future.
Having served for the last five years on the St. Vincent's HealthCare System Board, and currently as Chair of the St. Vincent's Foundation Board, healthcare is an area in which I have intense interest and truly believe this can be a defining industry for Jacksonville. This not only includes high quality healthcare, but also medical tourism, research, and the development of related businesses and industries. Sixteen percent of Jacksonville's economy is in the healthcare industry. This percentage is going to grow as baby boomers age and Jacksonville grows.
We need a focused, concerted effort and a bold vision. That broader, bolder vision includes:
A statewide and even national branding and reputation for healthcare in Jacksonville;
A biotech corridor from Jacksonville to Gainesville;
Expanded partnerships between Jacksonville and the University of Florida;
A life sciences or biosciences institute in Jacksonville;
A greater presence of the University of Florida Medical School in Jacksonville;
A master plan for Shands and the surrounding area;
Expanding residencies in Jacksonville;
Attracting research and venture capital dollars.
We need a sense of urgency in this competitive arena, however. South Florida, with the Scripps Research Institute (biomedical research), and Orlando with its focused approach, which includes a new medical school, Nemours, the Burnham Institute for Medical Research and Anderson Cancer Research Institute, and expanded affiliations with UF, are moving forward and attracting public and private investment.
Like Kansas City, I believe we should take a focused approach, bringing together the talent we have in the healthcare industry, as well as community CEOs, Dr. Coble's Center, and other community leaders, and map out a bold vision, partnership, and implementation strategy. To use your words, we should think about where we want to be five or ten years from now and beyond.
As we saw, Kansas City did a remarkable job of bringing life and vibrancy to a decaying downtown. As with healthcare, Kansas City brought focus, talent, and private sector participation to the downtown revitalization effort.
In particular, Kansas City: (1) succeeded in getting people to live downtown (18,000 so far, with a goal of 35,000), (2) created a nine-block entertainment district, and (3) had major corporations and employers move and invest downtown. The public and private partnership investment was a staggering $4.5 billion, over time.
As in healthcare, Jacksonville has an inventory of very substantial assets. Those assets include a new arena, new baseball park, renovated municipal stadium for the Super Bowl in 2005, the new downtown library, moving the courthouse off the river, moving City Hall off the river, and a new county courthouse. In addition, prior to the housing bubble bursting, a significant effort was made to increase residential living downtown. The Peyton administration also has significant plans for Metropolitan Park, Friendship Fountain and Riverwalk extensions (north and south banks).
Having identified these assets, however, it is also clear that we need a bold, focused revitalization effort that brings life to downtown. The soon to be acquired 40-acre Shipyards property and the JEA property across the river, as well as the inventory of assets in our sports complex, presents a remarkable opportunity for downtown's future.
I had great discussions on this trip with Preston Haskell, Lynn Pappas and others on revitalizing downtown and specifically on creating a downtown entertainment district. This discussion included:
The potential creation of an entertainment district in the sports complex and extending down Bay Street;
The possibility of a new convention center and hotel on the Shipyards property;
Restaurants in the sports complex, with possibly one in the Stadium that would attract people year-round;
Moving the fairgrounds out of the Sports Complex to the Equestrian Center at Cecil Commerce Center;
Developing a pedestrian-friendly, entertainment oriented, sports complex;
Possibly taking down the overpass that extends from the Hart Bridge to Bay Street and rerouting it;
Converting the existing convention center into part of a multi-modal transportation center and museum (Preston's idea);
Utilizing the ideas in the current Downtown Master Plan.
Preston Haskell said that if a new convention center was built at the Shipyards or near the Hyatt Hotel, using the current Convention Center for a multi-modal transportation center would be a "no brainer."
In order to accomplish this, and other public policy initiatives, I discussed with Preston the need to restructure our City's finances. In fact, as I discussed with Preston, getting the City's financial house in order, which includes a comprehensive restructuring and changes to the City's operating and capital budgets, is essential to future public investment in downtown.
This comprehensive, long-term restructuring, which includes pension reform, changes to purchasing and procurement, consolidation of City brick and mortar assets, a new approach to City contracts (existing and future contracts), close scrutiny and potential restructuring of City enterprise funds, and many other changes, will: (1) help ensure the City's financial viability, and (2) enable the City to invest in downtown, healthcare, infrastructure (e.g., seaport, Cecil Commerce Center, parks, etc.), and other priorities.
The restructuring should include addressing the downtown tax increment districts ("TID"). The north bank TID received approximately $6.2 million last year, according to the City Finance Department. The south bank TID received about $3.6 million. While these funds are used primarily for downtown, the remainder has historically been used to balance the general fund budget. Restructuring these and other funds is necessary to support downtown. The Mayor and I discussed the need to dedicate the downtown TID funds to downtown.
At the same time, in addition to developing an entertainment district and multi-modal transportation center, there obviously should be continuing efforts at getting people to live downtown and getting employers and corporations to both relocate and invest in downtown.
Kansas City's formula was straightforward and makes sense: get people to live downtown, create an entertainment district that makes it more enjoyable and attracts people downtown, and get the private and corporate community to both invest and relocate downtown. The public-private partnership on the $260 million plus arena was impressive with AEG investing $50 million. While this is heavy lifting, it makes for a vibrant and lively downtown.
A vibrant and revitalized downtown is important to the future of our City and, I believe, the long-term viability of the Jaguars.
3. Civic Leadership
The CEOs of the Kansas City Civic Council, as we saw, have played a critical stewardship role in shaping Kansas City. We saw this in medical research, philanthropy, the revitalization of downtown, and corporate relocations and investments downtown.
The model used by Kansas City, quite frankly, surprised me. With over a $2.2 million a year operating budget, a six-member staff, and an executive director, and substantial dues for participating CEOs and corporations, Kansas City obviously has made a substantial investment and commitment in the Civic Council.
It was also apparent that the Civic Council takes a long-term, stewardship view towards Kansas City's future.
While there is much to be learned from the Kansas City model, I in no way want to minimize what I consider to be the extraordinary civic participation, leadership, and stewardship here in Jacksonville. In fact, I believe that Jacksonville's CEOs, business community, chamber, and civic volunteers have substantially contributed to shaping and transforming Jacksonville over the last forty years. It was that civic leadership that was instrumental in bringing about consolidation, passing the Better Jacksonville Plan, bringing the Jaguars to town, and supporting the Jacksonville Journey.
I do believe, however, that while valuable roles are being played by numerous community groups, much can be learned from the Kansas City model. Based on what we saw in Kansas City, I believe there should be a candid discussion among Jacksonville's private and corporate leadership regarding their role in Jacksonville's future and how to go about it.
A civic council modeled after Kansas City, borrowing attractive elements and rejecting others, could very well make sense. Regardless, it appears that the Kansas City model involves a substantial commitment on behalf of corporate and civic leadership and a stewardship which we also have in Jacksonville. A rethinking of how we go about this stewardship and commitment is both timely and appropriate.
Private, Public and Community Leadership
While there are great lessons to be learned from Kansas City, I caution against becoming too self deprecating or losing our self-confidence and optimism. You stated on the trip that one Kansas City leader said to you that Kansas City had finally met a city with as bad an "inferiority complex" as Kansas City. While this was said in jest, I think it needs to be addressed.
When I was a kid growing up in Jacksonville in the 1960's, we did have a serious "inferiority complex." In fact, I wrote about this in an editorial to the Florida Times Union last year, in recognition of the 40-year anniversary of consolidation (copy enclosed), and stated we were viewed as a "smelly, backward southern town with an inferiority complex." Due to consolidation and public, private and community leadership, however, we have undergone a remarkable transformation.
I do not believe that is who Jacksonville is today and I believe the Jacksonville story is very compelling. It was transformation in our thinking, including outgrowing the inferiority complex, that gave us optimism and made us believe anything was possible, including an NFL team, a Super Bowl, Better Jacksonville Plan, private development over a jet base, and Jacksonville Journey, to name a few.
Candidly, however, for a variety of reasons, we have suffered recent setbacks to our community's spirit of optimism and sense of direction. This is a serious matter and part of why I believe the Kansas City trip was so timely.
Over the last few years, Jacksonville has lost the equivalent of three Better Jacksonville Plans in funding for its operating budget. The Better Jacksonville Plan ݢ sales tax initially raised about $55 million a year and today raises over $60 million a year. When state rollbacks ($100 million), the recession ($40 million revenue shortfall), and pension costs ($35 million more this year over last) are totaled, the annual $175 million operating loss is the equivalent of three Better Jacksonville Plans. Mayor Peyton diversified our revenue and recovered some of this through new fees and the property tax rate increase.
This has been an extraordinary setback. In recent years, we have been unable to invest. Unless we restructure our finances, our ability to invest in the future will also be limited.
The Kansas City trip highlighted our need to get moving again. We need to think boldly and bring together public, private, and community leaders for visionary initiatives that inspire and energize our City. This letter outlines some of what I think we need to do. With consolidated government, and our public and civic leadership, we can move out of the doldrums, overcome the financial setbacks from Tallahassee and the recession, and inspire and energize our City.
4. Urban Public Education
While public education was not the focus of this Chamber trip, the presentation by Thomas Block, the former President and CEO of H&R Block, was insightful and instructive. He articulated well many of the public education challenges facing cities across the country. He also made the case for competition, charter schools, and incentives for performance.
He also, in my opinion, did a good job of articulating how cities with struggling or mediocre public school districts come to accept it, or become complacent, over time. In fact, as he said, when asked what is the top priority for a city, often education is not listed number one due simply to the community getting worn down over time.
Mr. Block's words are timely.
In a knowledge-based, global economy, there truly is no greater long-term priority than education. Yet, despite some mediocre metrics and failing schools, many have come to accept a public education system that needs significant improvement. Mr. Block was correct. Community leaders, both public and private, need to have urgency and purpose regarding improving public education.
I am unaware of any local government in Florida, in part for structural reasons, that plays a true leadership or partnership role with the school district or public education. Having said that, however, due to consolidated government, I believe Jacksonville is in the best position of any community in Florida to form a true partnership with the school district and play a leading role in public education.
This leading role includes bringing about collaboration among many positive community efforts (e.g., Community Foundation, early literacy initiatives, Florida State College charter schools, KIPP Schools in Jacksonville, Teach for America, Guardian of Dreams, etc.). It also includes a partnership and leadership on long-term planning, best financial practices, technology infrastructure, after school programs and many other education priorities.
This is a big topic that requires substantial attention. Mr. Block's comments, however, were timely and constructive.
It is my sincere hope that the Kansas City Chamber trip will provide a catalyst and support for public policy initiatives in healthcare, downtown revitalization, private sector stewardship and public education in Jacksonville. While there were other very valuable lessons and take-aways from the Kansas City trip, these four areas stood out for me.
I welcome the opportunity to participate in any follow-up regarding the Kansas City trip. Following the Chamber trip to Austin, Texas, I worked for three years on technology issues, including serving as special counsel to a special City Council committee on technology, putting on two technology summits for the City and serving as Chair to a Telecommunications Master Plan Task Force that received a statewide award from Governor Bush for innovation in technology. I look forward to participating in follow-up to this trip. Please feel free to share this letter with others on the trip or in any way that you think may be helpful.
Thank you Kelly for an extraordinary Chamber trip to Kansas City. Future years may show that it is one of the most important Chamber trips we ever took.
Richard A. Mullaney