In attendance: Meeting Attendees: Elaine Brown (Chair), Donald Anderson, Danita Andrews, Jim Beeler, Sarah Boren, Harry Corbett, Jim Crooks, Logan Cross, Mick Cuthbertson, Lad Daniels, Marilyn Feldstein, Nancy Garcia, Bill Gassett, Daniel Gilham, Gabriel Hanson, Robert Hawkins, David Johnson, Kellie Jo Kilberg, Bill Larson, Conrad Markle, Bill Mason, Karen Mathis, Ted McGowan, Julie McNeil, Granville Reed, Joan Roberts, Maurice Rudolph, Kathy Sandusky, Michelle Tappouni, and Deborah Thompson [If your name does not appear, but you were in attendance, please let us know.] Staff Members: Mickee Brown, Skip Cramer, and Demetrius Jenkins Meeting Time: Noon – 1:30 PM Chair Elaine Brown welcomed the study committee and thanked the group for their participation. The committee reviewed the results of the March 2nd group process check. The committee approved both the February 16th and February 23rd meeting summaries which were sent via email on March 4th. The Chair introduced the day‟s speakers: Bridget Merrill, Vice President for Target Programs, Enterprise Florida, Inc., Cleve Warren, President/Chief Executive Officer at Essential Capital, and Dr. Parvez Ahmed, Associate Professor of Finance Coggin College of Business University of North Florida. A summary of the speakers presentation are provided below. Bridget Merrill Speaker Questions

1. What can the Northeast Florida region do to prepare for the new focus on job creation in Tallahassee? What should the region focus on with regard to helping Governor Scott create 700,000 jobs in seven years?

2. Please describe the State of Florida‟s business retention strategies. Are the strategies effective? What more needs to be done, if anything?

3. Are there regulations in place at the state level that you believe particularly cumbersome for companies wanting to relocate to Florida or expand an existing business in Florida?

4. What additional tools would you like to see in Florida‟s and our region‟s tool bag to recruit new businesses and retain and grow current ones?

5. From a community development perspective, what policies, processes, or strategies should this region focus upon in an effort to create jobs and become more economically competitive? Are you aware of best practices from other communities?

Presentation

No part of Florida stands alone. Communities can do more working together than they can do alone. Northeast Florida is at the forefront of knowing how to work together as a region. This is the model for rural counties. Working together and speaking with one voice provides greater access to policy makers and legislators.

The saying is that all politics is local, but all business is local as well. How businesses feel about their local community makes a difference in whether companies stay or leave. There are „existing industries programs‟ in all Florida counties focused on business retention. These programs give attention to what businesses need, determine the gaps, plus thank, recognize and nurture those companies. Relationships are very important in retaining businesses.

Every region needs the right infrastructure to be competitive. In addition to the basics like water, sewer, and airspace, communities need a “people” infrastructure as well. The right kinds and numbers of people are needed to make sure a community can achieve its vision for the future. It is important to work with the education system to make sure students are ready for the business

Recession Recovery and Beyond

Study Committee Meeting Duval County

March 9, 2011

Clanzenetta “Mickee” Brown

JCCI Study Planner mickee@jcci.org

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2434 Atlantic Boulevard Jacksonville, Florida 32207 904-396-3052 Fax: 904-398-1469 www.jcci.org

world. Similarly, targeted industries and education should be integrated to make sure there are people available for those jobs.

It is important to look at best practices from elsewhere, but those practices may not work in Florida, which has its own unique characteristics. We have assets like beaches, roads, tourists, and the military. Florida‟s rural communities are even different from those in other communities. For example, the mid-west has concentrated rural areas that may be difficult to get to, whereas our rural communities are typically within 10 minutes of an urban center.

E-Florida is working with the Manufacturing Association to make Florida more attractive for manufacturers. These businesses need capital investment to grow, but current incentives favor businesses that create large numbers of jobs. The Florida Manufacturing Association is suggesting a QTI tax refund based on capital investment rather than job creation. And, also working to make equipment replacement tax exempt like it is for new gear.

E-Florida and local EDOs have access to a national data base, E-synchronist, to compile economic development issues by locale and region for efficient resolution.

Cleve Warren Speaker Questions

1. This study committee has heard repeatedly that access to capital is an issue for both large and small businesses. Based on your expertise, what are the access to capital issues in Northeast Florida? What types of businesses have been most affected by these issues?

2. Does the Northeast Florida region have non-traditional alternatives and/or community-based programs in place to support the capital/financing needs of new and existing small businesses? Are you aware of best practices in other communities?

3. As you consider the challenges that businesses face in Northeast Florida, with regard to accessing capital (bank financing, venture capital, etc.), what are your thoughts on what must be done in the public and private sectors to create jobs and foster greater economic competitiveness?

Presentation

Jacksonville is not the major banking and financial center that it once was which means much has been loss in terms of philanthropic giving and civic engagement.

This is a tough time for small businesses looking to borrow money. Large business are similarly affected, very few can issue commercial paper for short term financing.

Bank underwriting is not done locally anymore. The banker who reviews your loan will not know anything about your local community. This is a particular disadvantage for small businesses.

Before the recession we were asset rich and cash poor. The pre-recession economy was built on the back of real estate value growth. Now we are asset and cash poor. The spoils now belong to those who have cash and can buy at fire-sale prices. If you do not have cash, then you are not likely to find a lender. Lenders are looking at the cost of assets, not appraised value for collateral.

Banks are in survival mode and are focused on their balance sheets and meeting regulations, which requires greater prudence. Businesses looking for bank loans must shed debt or grow cash vs. lending. If you are trying to buy a house today you need 20 percent equity, a good credit score, and at least one year of savings equal to the mortgage for a year. If buying a home requires that level of scrutiny, imagine how tough it is for a business borrower today. Lenders are not making marginal loans.

Small and emerging businesses should focus on business to business transactions, government contracting is dead. The best course for businesses needing capital is to reduce costs. It is time to retrograde, step back, retool, and build capital of your own. Lenders have to see that you have “skin in the game”.

The five C‟s of credit are capacity, credit worthiness, collateral to secure a loan, cash, and character.

Unsecured business loans may not be best for small businesses. Such vehicles may as well be government grants. Essential Capital has a loan program via the Small Business Administration

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where the loan is secured by the business‟ government contract. The loan‟s principal and interest payments are made before the firm receives its disbursement.

Essential Capital also offers SBA 504 loans, which provide long-term, fixed-rate financing for major fixed assets, such as land and buildings and equipment. We find that for most business long-term capital is not an issue. Working capital is the principal concern.

Dr. Parvez Ahmed Speaker Questions

1. Define what is meant by sustainable economic and/or sustainable business practices and what this means for communities seeking to encourage and incent innovation, smart growth, and greater economic competitiveness?

2. As a result of the economic difficulties brought about by the recession, what are the lessons for Northeast Florida in light of becoming more economically sustainable? How does this relate to employing the best possible strategies for attracting, creating, and retaining businesses in Northeast Florida? Does the region have new opportunities and/or new priorities for creating jobs in Northeast Florida?

3. How do communities connect the dots between social, environmental, and economic challenges to achieve a balanced economic development approach that is different from our competitors and inspiring to regional residents? Who should be involved in these processes?

4. Are there communities that have profited from embracing sustainable best practices (people, planet, and profit)? Can those practices be applied in Northeast Florida?

Presentation

Unemployment rates are above historical averages in the United State and all parts of the world. We must think “glocal” (act local, think global). Sustainability is not exclusively an environmental issue, but also includes two other spheres - social and economic. These three pillars are also referred to as profit, people, and planet.

Sustainability, which is a focus on the triple bottom line, drives innovation. This is not influenced by government, but rather market demand.

The drivers for greater sustainability include the demand for smaller government, more disclosure, the financial crisis, lack of regulatory enforcement, lack of transparency, and investor pressure.

Jacksonville ranks in the middle when it comes to sustainability as compared to other U.S. cities according to a 2008 study. This provides us with an opportunity to improve. Public, private ventures that tap into non-governmental organizations (NGO‟s), government, businesses, and universities can make a difference working together to build a more sustainable community.

In a 2010 CEO study by Accenture, 93 participants agreed that sustainability was critical to the future success of their businesses; 91 percent will employ new technology to address sustainability, and 96 percent believe sustainability should be fully integrated into business strategy and operations.

It is not a coincidence that the cities suffering the least from unemployment are also tops when it comes to sustainability, including Portland, Boston, San Jose, and Seattle.

Jacksonville is experiencing a brain drain. The best and brightest use our resources and leave for a better quality of life.

Governments should follow a public policy of creating a division of sustainability, define clear and measurable goals and recruit a big-name name to champion the cause.

Questions and Answers with the Resource Speaker Q. Jacksonville has an Office of Sustainability. What are the results? Ahmed: The Sustainability Office is not producing results at this point. Q. What is the cost in time and effort to implement sustainability initiatives? Ahmed: There is a notion that costs are high. After an initial investment businesses will realize cost savings due to greater efficiency. Western economies that embrace sustainability have fared better in

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the global recession. Dag Naslund: Properly implemented process management tools like reduced waste, collaboration, skilled workers, service levels, and managing inventory lead to greater efficiency and more profits. This is sustainability. Warren: Having the will to implement these techniques can overcome the possible barriers. Q. What can businesses do to access financing in these difficult times? Warren: Businesses can stockpile cash, become more efficient which is a cost savings, and engage in joint ventures to reduce costs and increase capacity. Q. Is there model for business and government and financing to support sustainability? Warren: This is an opportunity for business and government to come together and explore what works best locally. Ahmed: Models for sustainability exist. Many communities have adopted the practices from the 2000 U.N. Global Compact regarding sustainability. We can incubate the technology we need and create our own research triangle. If we consider making our community‟s medical services more streamlined this attracts business, creates a healthier community, and saves money on health care costs. Q. How can we encourage greater cooperation between large and small businesses? Warren: The Chamber has a program that connects large and small businesses using virtual technology. Small businesses should also seek opportunities to sell their products to larger businesses. It is the larger businesses that are cash rich right now. Ahmed: The University of Arkansas has one of the top centers for Sustainability in the nation. The Center is funded by WalMart the largest retailer in the world, which requires its suppliers to use sustainable practices. Such centers are a hub for academics, civic leaders, and businesses to research and share sustainable practices. Group discussion comments

I was not aware of the correlation between unemployment and sustainable practices.

We need better leadership regarding sustainable practices.

I am not sure that the access to capital picture is as dire as was presented.

We still do not know the cost for implementing sustainable practices.

Florida is going in the wrong direction. If education is a solution and brain drain is a problem why are local and state governments cutting the education budgets.

Small businesses do not have enough access to large businesses. The larger companies are not even aware these smaller companies exist.

One of the causes of unemployment is transportation. We do not have a way to get people to the jobs.

German firms make solar panels because the government provides subsidies.

When will all of the changes predicted happen? People need jobs now.

The community‟s leaders and residents must accept the sustainability challenge and the possible costs because it is right for the future.

The Chair reminded the committee to attend next week‟s meeting and asked them to complete their group process check forms. The meeting was adjourned at 1:30 PM.