ONE-ON-ONE
- January 2002
by Ed G. Lane
'Everything is Absolutely Possible
in Louisville'
Steve Higdon offers his vision for moving Louisville forward
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Steve Higdon
As president of Greater Louisville Inc., Steve Higdon is the
leading promoter and advocate of the virtues of doing business
in the Commonwealth’s most populous area. Under his watch,
GLI has recruited Kentucky expatriates in Atlanta, looked at
innovative ways to revitalize downtown Louisville and promoted
the location of an NBA franchise to the River City. Higdon has
been with GLI since October, 1997 and previously served as the
group’s chief operating officer and executive vice president
of economic development. Before joining Greater Louisville Inc.,
he was an Economic Development Manager at United Parcel Service,
the Louisville area’s largest private employer. He also
served as a UPS loaned executive to the Greater Louisville Economic
Development Partnership in 1995 and 1996. The Partnership merged
with the Louisville Area Chamber of Commerce in 1997 to form
Greater Louisville Inc.
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Ed Lane: In November 2000, the voters ratified a plan to merge the City
of Louisville and Jefferson County. How is Greater Louisville, Inc.
(GLI) helping implement the merger plan?
Steve Higdon: Prior to the
referendum, GLI spearheaded that entire effort of raising about $1.2
million and literally putting together a plan for each of the 26 districts
to get our citizens out to vote. Even before that, GLI worked with
the Jefferson County delegation to get the right to vote on a merged
government plan, which we did not have before that.
At this time, GLI is involved
in a number of different ways regarding merger implementation. GLI
is on a task force that has been put in place by the mayor and county
judge. GLI will play a key role very soon, when we start holding forums
on the issues that are critical to the prosperity and the future of
Louisville. We’re going to find out which candidates believe
in the things GLI believes in.
EL: Have the campaigns for
the new mayor and councilmen for the new merged government been a distraction
to the merger process?
SH: No. The transition teams
are very focused on the nuts and bolts of what needs to happen in
January of 2003, when these governments literally merge.
EL: What will be the major
issues in the campaign for mayor?
SH: It’s all going to
be about the vision for moving Louisville forward. What issues come
out of that, we don’t yet know. NBA clearly could be an issue.
Louisville’s going to be America’s 23rd largest city on
January 1, 2003.
EL: Will GLI endorse a candidate
for mayor?
SH: No. GLI never has and
never will take a position on any political race, because we have
to work with whoever wins. It wouldn’t be smart to do that. But
GLI will very aggressively take positions on issues that are important
to the business community.
EL: There has been a lot of
comment around the state regarding Louisville’s and the state’s
efforts to attract and finance an NBA franchise. What is GLI’s
position regarding the cost and benefits of an NBA franchise?
SH: I can’t give you
a really good update on the NBA issue because the mayor is now managing
the numbers. But, I’ll tell you this, GLI is very much for an
NBA franchise and the public financing of a multi-purpose downtown
arena – assuming that the financials make good sense. If Louisville
can afford the NBA deal, GLI really wants to see this happen for a
lot of different reasons, none of which are basketball.
EL: Can you comment on those
reasons?
SH: Louisville is trying
to reverse the “brain drain.” Professional sports is a cultural
amenity that appeals to young professionals. It’s a quality of
life issue. Louisville doesn’t have an ocean or mountains for
snow skiing. We need to create, invest in and build the amenities
that young professionals see as enticing. Number two is exposure.
Louisville’s image, nationally, is primarily non-existent or
negative. Major league professional sports puts you on the map, period.
Millions of hits on the Web, being on the front page of the New York
Times Sport section, and on ESPN and CNN Sports every single night,
puts our community on the map by screaming “Louisville.”
It’s a major economic development stimulus. A downtown arena
means thousands of jobs, millions of incremental taxes created as
a result of that project. All of our key competitor regional cities
(Columbus, Cincinnati, Indianapolis, St. Louis, Nashville) have invested
in this strategy of major league professional sports and the spin-off
effect of these arenas and stadiums has resulted in literally hundreds
of millions of dollars in other investments in downtown. An NBA franchise
could do more to make Louisville a 24/7 city than anything else.
EL: What is the biggest negative
that you can see?
SH: The biggest negative
is that the NBA is a very expensive project. Professional sports have
worked in other markets of Louisville’s size. Louisville’s
return on investment would be well worth it, assuming that we have
a financial plan that works. Louisville is at a crossroads in this
community’s history. There’s a very significant threat out
there if Louisville chooses not to pursue growth and prosperity.
EL: Do you see the team being
marketed as a state team?
SH: Yes. The team would be
a state franchise – the Kentucky Colonels. Because of the constraints
on Freedom Hall, it’s my understanding that for the first two
years there would be home dates at Rupp Arena as well.
The PricewaterhouseCoopers
study indicates that the market is a 60-mile radius outside of Louisville,
which would not encompass Lexington. The feeling is that the people
of Lexington would not drive to Louisville on a Tuesday night to see
NBA. On the weekends, games will draw from a 150 mile radius.
EL: What do you feel the
chances are that an NBA franchise will decide to move to Louisville?
SH: Right now it’s probably
50/50. I’m convinced that the Hornets would love to be in Louisville,
Kentucky. I have no doubt about their sincerity to be the Kentucky
Colonels. They’ve seen the way that Louisville has embraced the
PGA, the Derby, Breeder’s Cup and the X-games. The only two sell-outs
in the history of the PGA are in Louisville, Kentucky. The three largest
crowds ever at X-games are in Louisville, Kentucky.
EL: Has Governor Patton been
helpful in recruiting the NBA?
SH: From the very beginning,
the governor has been very much an advocate of these efforts to bring
in the National Basketball Association to Louisville.
This needs to be a Louisville,
Kentucky project, and the governor has been very willing to partner
in on the project. The state has offered a tax increment financing
district up to $5 million a year to help pay off the bonds.
EL: Membership in young professional
groups in Louisville and Lexington has been increasing. How important
are these groups to Kentucky’s future economic vitality?
SH: Louisville is an old
community. What that means is, we don’t have too many old people
– we don’t have enough young people. Literally, when you
quantify the “brain drain,” Louisville exported somewhere
around 30,000 people between 1970 and 1990. Eighty percent of all
wealth and job creation comes from fast-growth companies. The people
who start these entrepreneurial companies are very young, on average.
The reason that it’s critical to have a growing number of young,
educated, bright, professional, mobile type people is that they are
the entrepreneurs.
EL: Touching on the young
professional groups, have you actually surveyed or had discussions with
them regarding the NBA issue? Are they very supportive of this?
SH: The NBA issue is a generational
issue. People over 50 don’t want it and people under 50 do want
it. It’s that simple.
EL: How successful has UPS’
“Earn and Learn” program been and what type of long-term benefits
will this effort to recruit college students as part-time workers have
on Louisville’s future?
SH: First and foremost, UPS
wouldn’t be here without the program. When UPS was forecasting
the need for Hub 2000, the growth in its package business mandated,
at least the forecast did, that UPS would need 6,000 new package handlers
because of growth in the air business. If UPS needed 6,000 more workers
and was already short on workers, how was UPS ever going to get it
done without something very innovative? “Earn and Learn”
is an idea GLI successfully developed for UPS – Kentucky’s
largest private sector employer. We hope, and time will tell because
it’s still too early to know, “Earn and Learn” will
attract kids who may not have pursued postsecondary education.
EL: Are GLI’s budgeted
revenue and actual revenues in reasonable harmony this year?
SH: Overall GLI did fine.
Our bad debt was extremely low. We had a record year in membership
revenues.
EL: Generally, what is the
yearly gross revenue for GLI?
SH: $7 million. That’s
everything. GLI is 80 percent privately funded; 20 percent is made
up of a city/county contract that we get.
EL: What are the two top priorities
of GLI?
SH: Image transformation
and creating a culture that allows for managed growth. When I say
culture, I’m talking about the cultural amenities that reverses
the “brain drain,” allows companies to expand, and entrepreneurs
to grow. The culture that allows this community to want to grow, but
managed in a way that quality of life is better when it’s all
said and done. We don’t want to threaten quality of life, because
we’re growing. GLI wants to improve the quality of life.
EL: What is GLI doing to
assist new entrepreneurial businesses?
SH: GLI created a group called
the Enterprise Corporation. It’s sole focus is to help with the
creation of gazelle companies, which are the fast-growth companies.
Enterprise Corporation has a two-fold mission. One is to create a
culture of entrepreneurs in the community, meaning that there’re
numerous service providers – lawyers, P.R. firms, ad agencies,
accountants – who will work pro-bono up front to help these companies
launch and get off the ground. The second area, where we spend most
of the time, is matching entrepreneurs with sources of capital. An
entrepreneur’s biggest issue is funding.
EL: Has the decline of stock
valuations for technology companies caused local venture capitalist
groups to focus on more traditional business investments?
SH: There’s still money
going into technology companies.
EL: So you haven’t seen
a big change?
SH: I haven’t seen it
yet; technology is here forever.
EL: Is GLI anticipating any
major business announcements in the near future?
SH: The Hyundai plant, if
it becomes a reality, very likely could be the largest economic development
deal in America in 2002. Hyundai is a Korean based auto manufacturer
looking for its first significant North American investment –
a major automotive manufacturing plant. Hardin County and Elizabethtown
are rumored to be finalists. This is a transforming type of project.
It would be 40 miles away from Louisville and would create 1,500 high
paying jobs. It would also bring in vendors.
EL: So a lot of the Toyota,
General Motors and Ford vendors would probably be vendors for Hyundai
too and then there’ll also be some new ones.
SH: Absolutely. Kentucky
needs to create net new jobs and bring in net new dollars. It doesn’t
matter if Hyundai is not paying local occupation taxes in Jefferson
county. What it means is, of these 1,500 jobs, many employees will
live in Louisville, many of them will fly in and out of Louisville
International Airport, many of them will come to the shows here, many
of them will spend dollars here.
EL: With the impact on Louisville,
are you actively helping the people of Hardin county in any way or do
you work as a team?
SH: Sure. Right now I have
talked with Joe Prather and other leaders down there. We’ve talked
to the governor and the governor’s office. We’ve talked
with Secretary Strong and his cabinet. And we have made it known to
everybody that GLI will do whatever we can to make Hyundai happen
in Hardin County.
EL: What issues have been
the most difficult for GLI to address and manage?
SH: The Hub 2000 project
was a plan to convince UPS to stay in Louisville. UPS was either going
to Columbus or expanding in Louisville.
UPS was hearing from two
national consultants about slow population growth trends in Louisville
and whether growth rates would support Hub 2000.
Our management team at GLI
said, “we can try to increase population growth, but we can’t
guarantee that, but what we can do is create a program that works
for UPS.” And the result was Metro College. GLI presented that
to UPS, they bought it, it now works tremendously.
GLI’s toughest issue
by far was getting the merged government referendum to pass. There
were many people who could and should take credit for it. It was a
large effort with a lot of leadership from a lot of areas, public
and private sector alike. Each of the 26 districts that make up Jefferson
county had different issues based on its demographics. It was a very
impressive political campaign that took thousands of hours and over
a million dollars to figure out and put together. Our goal was to
get the whole community to come together and vote affirmatively on
something historically we were told couldn’t happen. It was without
a doubt the toughest issue GLI has dealt with. With the merger approved
by the voters, everything is absolutely possible in Louisville.
EL: Are you concerned about
Kentucky’s heavy involvement with the auto industry and what impact
a downturn on auto sales could have on the state’s economy?
SH: No. Ford is the second
largest employer in Jefferson county. Louisville is right in the middle
of “auto alley,” from Michigan down to Alabama. Kentucky
needs to recruit as many high quality auto jobs that we can get. At
the same time we need to diversify the economic base. If Federal Express
wanted to move its headquarters to Louisville I would want them to
come, even though we have UPS. If Domino’s would want to come
here along with Papa John’s and Pizza Hut, I would want them
to come. The more the merrier. What Louisville has to continue to
do is to diversify and to create industries and knowledge-based jobs.
EL: Is the U.S. business
recession having a significant impact on Louisville?
SH: Right now, if you’re
in manufacturing, you’re in a depression. There’s no question
about that, and that’s been going on for a year now. I think
if you’re in other industries, service and technology, you’re
still having boom times. But overall, the economy, clearly, has slowed
down.
EL: When will the U.S. economy
be on the mend?
SH: My crystal ball is no
clearer than anybody else’s. It’s really hard to say, and
that’s why Louisville needs to keep plugging away at its day-to-day
strategies, creating new jobs through entrepreneurism, helping local
companies expand and grow. Louisville’s got to keep building
on its strengths. You build on hot companies and a hot economy, when
you can.
EL: How well is Louisville’s
medical center growing?
SH: There were two key things
that came out of GLI’s visioning report five years ago that GLI
wanted to really build upon and exploit. One is logistics, because
of UPS and location. The other is our medical center. You’ve
seen the Abicore heart transplant. We built the “six-million
dollar man” in Louisville first. We literally have Nobel-level
research going on right now, five minutes from our offices. Theoretically,
what we hope will happen is that we’ll cure aids or cancer in
the Louisville Medical Center.
That’s what it’s
about. The vision is to improve the prosperity and quality of life
of every citizen, and the only way you do that is by creation of wealth.
EL: How has GLI been involved
with E-main?
SH: E-main is a real estate
project – a redevelopment of a dilapidated, very old part of
Louisville. What Louisville is creating is a bohemian urban area for
young professionals and high-tech businesses. Physically it’s
loft space with brick on the walls and exposed beams. It’s the
space that these people want now; it’s what’s hot. Bellermine
University and U of L have already announced they’re moving a
part of their campuses there. The City of Louisville is moving its
IS department there. It’s almost ready to go. It’s a great
concept and it will be very successful.
EL: Can you address other
major issues that you think are important to Louisville’s future
success?
SH: Louisville needs two
bridges built simultaneously, as soon as possible, to help the flow
of traffic and improve the quality of life.
[We also need] Amtrak high-speed
rail as opposed to light rail. Amtrak is now coming into Louisville
from Chicago for the first time in around 30 years.
The problem is Louisville
doesn’t have high-speed rail right now because the gauge of the
tracks has to be modified and that will take a couple of years. It’s
a slow train. It goes 35 m.p.h. – it’s a 12 hour trip to
Chicago. But here’s the deal. When Amtrak goes to Miami through
Atlanta, which it doesn’t now, does Amtrak come through Cincinnati
or Louisville? We want Amtrak high-speed rail to come through Louisville,
where ultimately we will have high speed rail, 120 m.p.h. to Nashville,
to Chicago, to Atlanta, to Miami, to Orlando. That’s coming.
Ed G. Lane is chief executive of Lane Consultants Inc. and publisher
of The Lane Report.
edlane@lanereport.com
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