Day #082: Invest in people as well as subsidizing businesses

Talent builds cities, not just buildings.

October 21, 2014; 9:02 AM • by Aaron Williams

Inspired by Michael Bierut’s 100 Day Project, 100 Days to a Better RVA strives to introduce and investigate unique ideas to improving the city of Richmond. View the entire project here and the intro here.

Idea: Invest in people for economic development as well as buildings.
Difficulty: 2 — It’s tougher to sell people with ideas than buildings with promises of employment.

A city is only as strong as its people. Improvement is only as powerful as those people’s ideas. I believe in the people of Richmond as much, if not more, than the next person, but sometimes bringing in outside ideas is a solid investment. The city regularly spends millions of dollars on buildings for economic development, but it is also worthwhile to invest in people.

The City recently promised $31 million dollars out of pocket to attract Stone Brewing Co. to Greater Fulton. $23 million is planned to be repaid, but the City will take an $8 million hit for building a restaurant as part of the $74 million project that promises to create 288 jobs.

I’m excited about Stone Brewing. Its West Coast legacy is impressive, and it’s going to be a hit in RVA, but the city is actively subsidizing a competitor of Legend, Hardywood, Ardent, Blue Bee Cider, Center of the Universe, Isley Brewing Company, and many more. I think Stone will help bolster Richmond’s credibility as a craft brewery destination, but, at the end of the day, beer is highly substitutable for beer. Stone Brewing is the pretty girl at the dance that makes everyone do things they will regret the next day while plenty of other pretty girls dance alone.¹

To bring a major, major competitor into the market – I don’t see anything wrong with it, it’s a lot of jobs – but I think it would be nice for them to reach out to the brewing community in Richmond to see where they can help out,” Gott said. “I can guarantee every brewery here has a million and one things they need to do, and the city can be very instrumental in getting those through.”Dave Gott in Richmond Bizsense

As an alternative, or at the very least a consolation prize, the city could spend a fraction of the $31 million cost hiring talent to consult with those breweries for an extended period of time. The city and people within the city regularly hire consultants and speakers to visit the city for a weekend or a week. What if the city committed $200,000 or $300,000 to hiring a brilliant mind for a year. The person could rotate from business to business or from city department to city department challenging and improving the way business is done.

Stone will definitely attract talent to Richmond. It’s tough to judge the quality of that talent in advance, but it will come at the cost of the success of Richmond based businesses.The marginal benefit of an expanding a local company like Legend Brewing is undoubtedly higher than a distribution center of a San Diego-based company. This is tough to quantify in any econometric model. This isn’t to pick on Stone. The city invests in all different kinds of projects and the talent wouldn’t have to be limited to brewing.

Talent, not only buildings, builds cities. There are thousands of people who could complement the talent in Richmond for a fraction of the cost of planned economic development. Economic development is an important part of Richmond, but it shouldn’t be limited to bricks and mortar. The variance of success would be greater, and it would be tougher to justify, but it’s important that Richmond invests in people as well as infrastructure for economic development.

Love this idea? Think it’s terrible? Have one that’s ten times better? Head over to the 100 Days to a Better RVA Facebook page and join in the conversation.

Photo by: d.norwood