It was just one ranking, but it sure rankled.
When The Milken Institute recently released its list of the top-performing small metro economies in the country, Lawrence ranked second to last out of 179 metro areas.
Among leaders in the community, the ranking produced one of two types of grumbling: What the heck does The Milken Institute know? Or: What the heck has gone wrong? Traditionally, Lawrence has tended to rank near the top of lists of local economic health.
But there have been other signs besides a single disappointing ranking. Federal data released in April that showed that Lawrence’s gross domestic product — the broad measure of the local economy — was shrinking by about 1.7 percent, while the average U.S. metro area was growing by about 1.6 percent. More recently, Census numbers showed that in 2011 — the most recent data available — Douglas County had fewer businesses and fewer private sector employees than it did in 2000.
Of course, not many communities are doing as well economically as they were before the Great Recession. So it's no surprise that Lawrence isn’t. But it does create a question: Has Lawrence fallen harder than other communities?
We asked a cross-section of Lawrence leaders about the local economy: Has the once-vibrant Lawrence economy lost a step? We asked people with strong ties to the growth and development industry in Lawrence. We asked residents who have a history of lobbying for progressive policies and changes to the city’s current economic development policies. And we asked people who aren’t strongly affiliated with either group, but are engaged in the local leadership scene.
Reasons for Optimism?
In six months or so, this question of whether Lawrence has lost a step may be moot. Several people point to the proverbial greenshoots in the economy: Retail sales were strong in 2012; home sales and home construction numbers are rebounding; construction of the final leg of the South Lawrence Trafficway is set to begin later this year; the Rock Chalk Park development is spurring new activity in northwest Lawrence; and work is underway to convert the former Farmland fertilizer plant into a business park. Even some other lists have been kind to us. Lawrence in the past month was ranked the sixth-best venture capital market per capita in the country.
(A quick note: All of the individuals were speaking on behalf of themselves and not delivering official positions for their organizations. A few asked us to note that.)
Here's what they told us:
Doug Gaumer, President, Intrust Bank
“It is hard to argue with the numbers,” Gaumer said. “I don’t know if we have lost a step, but I think there is a general acknowledgment that we have become complacent.
“We had such a good run in the ‘80s and ‘90s. Maybe we needed to slow down, but the complacency hurt us. Once you lose that momentum, it is hard to regain it.”
Gaumer said a lack of “shovel-ready” sites has hampered Lawrence’s ability to attract new employers, and that the community still had too much disagreement on the correct use of incentives to attract economic development projects to town. He said local blogs and other public comments about growth, at times, also have been counterproductive to improving the Lawrence economy.
“At times there has been an aura of negativity about growth that hurts us, but I think all those things are in the process of being addressed.”
Greg Williams, President and CEO, Lawrence Chamber of Commerce
“We have not performed as a market anywhere near our level of capability for the last 10 years,” said Williams, who was hired by the chamber in April 2012. “That is very clear in virtually all the numbers that we have access to.”
But Williams said he is most encouraged by the news he is hearing from architects, engineers and other professionals who generally are among the first to see the wave of new development that is to come.
“The economic indicators are all rearview mirror stuff that predates me,” Williams said. “But the front windshield indicators are showing some real signs of life.”
Doug Brown, Commercial real estate agent
“I think for a number of years we were running at a pretty fast pace,” Brown said. “Definitely from the early ‘90s to the mid-2000s, maybe 2003 or 2004 was our peak. Then I think there was a knee-jerk reaction that we somehow were growing too fast.
“There were some folks at City Hall that tried to put the brakes on in a number of ways. I certainly wouldn’t point any fingers, but I think we said no more than we said yes to growth for five to six years. When you say no enough, people start believing that you don’t want growth.
“I think in some ways we shot ourselves in the foot a little bit. We had to restart. I think we have restarted, and that is a good sign. I think there are some good things on the horizon.”
John McGrew, Residential real estate developer
“You are talking to the guy who has rose-colored glasses all the time,” McGrew said. “But they were kind of smokey from 2006 to last year. But now I think Lawrence’s future is as bright as ever. We’re just planting the seed right now. You don’t pick the crop until you have given it a little time to mature.”
McGrew said the Rock Chalk Park development has made him optimistic because of the amount of cooperation it demonstrated between the public and private sectors. He also said the redevelopment of the Farmland industrial-park property and the construction of the South Lawrence Trafficway make new industrial development more likely in Lawrence than it's been in years.
But he said an attitude change also has taken place among community leadership.
“For a while, some people decided that Lawrence was so good we didn’t have to roll out the red carpet,” McGrew said. “We found out that wasn’t the case. But we’re opening our arms again.”
Laura Routh, Chair, Lawrence Association of Neighborhoods
“I think Lawrence has lost a step, or two,” Routh said. “Part of it may be related to the larger politics of Kansas. I think many people are put off by the extreme positions of the current state administration, and that likely makes it harder to recruit investment capital, companies and skilled workers.
“I also think local political conditions favor a select few developers and firms. It doesn’t seem to me that we have true free market competition for many sectors in this town. When the city hands out public incentives that don’t really benefit the public, it is taxpayers who suffer.”
Leslie Soden, East Lawrence neighborhood advocate, member of Joint Economic Development Council, owner of pet care business
“We show up as one of the smartest cities in America in many rankings, but we haven’t leveraged that enough,” Soden said. “We shouldn’t still be targeting industries that don’t leverage our strengths. Innovation is where the strength of this nation lies, and it is where the strength of this county is too.”
Soden said the various public- and private-sector entities in the county haven’t done enough to work together to promote economic development. She said she hopes the newly formed Joint Economic Development Council, of which she is a member, will address that issue, but she said the results haven’t yet materialized.
“The strength of that group ought to be that we have the city, the county, Eudora, Baldwin, the business community, the university all sitting around one table,” she said. “That’s the place where we need to be brainstorming and collaborating.
“We haven’t had enough coordination over the years. That has been a huge factor.”
Boog Highberger, Attorney, former Lawrence mayor
“I can’t argue with those statistics,” Highberger said. “But I’m not surprised that we have had setbacks, given that our major industry (Kansas University) has had serious cutbacks. The cutbacks at the state level have had to have serious trickle-down impacts on the local economy.”
Highberger, who was on the City Commission when some developers believe the city began seeking a slowdown in growth, said he doesn’t buy the notion that Lawrence is unfriendly to business or that it had become complacent.
Instead, Highberger said some of Lawrence’s sharp dropoff could be attributed to the city’s heavy reliance on the residential construction industry.
“Housing construction at one point was a very large part of our economy,” Highberger said. “That didn’t prove to be sustainable. I’m not sure we’ll see those days again.”
Tim Caboni, Vice Chancellor for Public Affairs, Kansas University
“We know that 2008 was a significant dip for the economy,” Caboni said. “We also know there is a recovery going on, but it is not as steep or as fast as anyone would like.”
Caboni said Lawrence, however, remains well positioned for the future. He said a joint venture to build a new bioscience and technology incubator on KU’s West Campus has been a “remarkable success story.” The first phase of the high-tech center is filled, and work is underway on a second phase, as larger numbers of companies express an interest in being either on or very near the university’s campus.
“Companies want to be where ideas are created and innovation is fostered,” Caboni said.
Caboni said Chancellor Bernadette Gray-Little has made it a priority to make the university a better partner with the business community and local governments.
“We are at a zenith in the relationship between City Hall, the chamber of commerce, Douglas County and the University of Kansas,” Caboni said. “We are linked arm and arm to do what is in the best interest of Lawrence and Douglas County.”
Gene Meyer, President and CEO, Lawrence Memorial Hospital
“I think we have been concerned for years about the number of people who live here and have to leave Lawrence for employment,” Meyer said. “That creates a lot of additional pressures.”
Meyer said instability in some key local leadership positions and the lack of a consistent longterm message for the community also have created challenges.
“We have had instability in chamber leadership,” Meyer said of the string of chamber presidents that have come through the organization in recent years. “We also have had a dichotomy in the focus on the city commission as it relates to growth or no growth. There has not been a consistent, long-term message either way.
“Not that leadership can change attitudes, but it does provide that stability when people are looking at us nationally.”
Chuck Magerl, President, Free State Brewing Co.
“I’m immensely proud of Lawrence and proud of the heritage of our community, but at the same time, I’m concerned about the indicators that suggest perhaps our smugness and complacency has taken a toll on the vibrancy of our community,” Magerl said.
Magerl said he thinks some of the long-held notions about the strength and durability that KU provides to the local economy have come into question, and he said the increasing vitality of Kansas City has made the metro area a stronger competitor for Lawrence residents.
“Kansas City has become a huge magnet in the region,” Magerl said.
At the same time, Magerl said Lawrence may have been caught resting on its laurels.
“Lawrence still has so much going for it,” Magerl said. “It has a tight-knit sense of community, and it gives you a sophisticated experience in a small setting. But there can be an attitude in Lawrence that we’re cool and we’re always going to be the place where people want to be. It is not a given that it plays out that way. We have to prove that we’re worthy.”