Year-end Is a Time for Businesses to Focus on Planning, Improving
Kevin Vann says that budgets are, by and large, discouraging, and they are especially so in times like these.
Sometimes you look at it, and you think, my God, another year of thinking about just trying to break even, or you wonder, am I going to have to trim payroll? he explained. You can be discouraged with a budget, and from my experience, thats why a lot of clients put them away or dont follow them.
But putting together a solid budget is one of the key ingredients in successful business planning short-term and long-term and its one of the many management matters that business owners should be thinking about as they prepare to turn the calendar, said Vann, president of the Springfield-based Vann Group, a business-consulting firm.
Actually, things like budgets, retirement plans, tax planning, insurance packages, benefits programs, employee handbooks, and many more are topics that business owners should be thinking about all the time, said Vann, who owns or co-owns a number of ventures and practices what he preaches. But because people are busy and now seemingly busier than ever often they dont, and thus year-end, as hectic as it is, can be an effective time to take action on such issues.
People make resolutions every Jan. 1, said Vann. Well, businesses can and should do the same.
Joe Messer agreed. A certified public accountant with the Holyoke-based accounting firm Meyers Brothers Kalicka, he said year-end is obviously a time to be thinking about, and executing, effective tax planning. But its also a good time to make commitments to address everything from evaluating technology needs to preparing a succession plan something far too many business owners put off until they have to, or until its too late.
A lot of business owners tend to think that theyre invincible and theyll be around forever, he said. And thats why they dont think about succession, which puts them in a bad situation when the time comes and they have to confront it.
There are myriad other issues that should be confronted on a regular basis, and year-end is a practical time to visit or re-visit them, said Sean Wandrei, a tax manager at Meyers Brothers Kalicka who listed matters ranging from retirement plans to cash-flow issues; from bank finance issues, such as covenants, to tax matters including income deferral and accelerating deductions.
In this, its final issue of 2009, BusinessWest takes a look at how business owners and managers can use the act of turning the calendar to help make their ventures run more efficiently and effectively plan for the long term.
Date with Destiny
Vann said that one of the things business owners and managers might want to do at year-end is look at their computer desktop.
I have about 35 icons on mine, and Ill bet Im using three or four of them, just those things required to do my job, he said, adding that, as part of an exercise in technology planning, individuals may want to examine why all those icons are there. All those other things someone either taught it to me or installed it for me, and Im not utilizing it properly.
Technology is a huge part of business management today, he continued, not just on the strategic side, but on the process side; were all waiting for that next wave of technology to drive our backroom processes and help us manage our time better.
What business owners can, and should, be thinking about this time of year is taking their desktop review exercise and doing roughly the same thing with every aspect of their organization, said Vann, who outlines several types of planning that managers should be doing in a related story on page 23. And they should do so with an eye toward making their operation run more smoothly, while also prepping it for long-term success.
But they must do so with the understanding that effective planning, be it with technology, taxes, personnel, or succession, are truly year-round exercises.
These are things that people have to be thinking about at all time, not just year-end, said Messer, adding quickly that the start of a new year can indeed be an effective time to make what may amount to resolutions. And one area he says should be at or near the top of the list is succession planning.
Its one of the most important, but also one of the most overlooked, aspects of business, he said. Who are we going to transition the business to when were ready to retire and move on to sunnier days?
To answer that question, business owners and managers have to identify who that next generation is going to be, he continued, and revisit the issue of succession on a regular basis to make sure the right party or parties have been identified and that the transition process stays on the right track.
While succession planning is important, especially for those business owners who have preferred to put off the inevitable, there are other business-management and planning issues that should also be considered at year-end, said Messer, who listed everything from cash flow to disaster-recovery plans, or, to be more specific, the lack thereof.
As for cash flow, accounts receivable is an issue impacting virtually every company in these trying economic times. Business managers should wait for year-end to put firm policies and procedures in place for collecting payments that are due, but if they dont have them, now would be a good time to put them in place.
In these tough economic times, receivables tend to get dragged out on a longer period and can make it very difficult for businesses to keep a positive cash flow, Messer explained. So business owners need to be proactive and implement strict collection policies and processes to help the cash flow remain positive.
And a key element in such policies must be consistency, he continued, adding that the best approach for businesses is to be proactive, not passive, when it comes to collecting bills.
Other matters to consider at year-end, said Messer, include health plan coverage and whether a better package is appropriate, the broad subject of inventory (how to reduce it and examination of why its not moving), and retirement plans and perhaps the need to diversify offerings.
One size doesnt fit all with respect to retirement benefits and retirement options you can offer to your employees, he said. Business owners and managers really need to look to identify the target group theyre trying to benefit. Do they want to benefit the business owner and a few key employees, or do they want to provide a benefit across the board to all employees?
Once you make those determinations and identify your key goals, he continued, then you can structure a plan and put it in place to meet those goals. There are so many variables out there.
Another important item for business owners to consider is insurance, said Wandrei, noting that year-end might be an appropriate time to think about possible courses of action when existing policies expire.
John Dowd, fourth-generation principal, specifically executive vice president, of the James J. Dowd & Sons Insurance Agency, said there are a number of factors to consider when reviewing ones insurance package and determining whether it is appropriate.
Businesses change and expand from year to year, he explained, and insurance coverage must be adjusted to meet those changes, a point that is often lost on business owners trying to meet the day-to-day requirements of running their venture.
It happens all the time; people say, we dont need to meet and review things because nothings changed, he said. But then you sit down and talk, and the business owner says, yes, we sold that piece of equipment, and we bought that piece of equipment, and, by the way, were storing things in a different location. All those things are important because they impact the coverage you need.
Overall, Dowd said business owners must consider the worst-case scenario when it comes to calamity and possible loss, but, unfortunately, many do not, and they pay the consequences when the worst happens in a fire, flood, or other disaster.
I have to think of the worst-case scenario, because what if it happens? said Dowd, speaking as a broker. Granted, its not likely to happen, but if it does happen, youll be out of business if youre not properly covered. Business owners have to think about what theyll be faced with when they get that call in the middle of the night that their business has just burned down.
Another matter to consider at year-end is staffing, said Vann, noting that this issue has taken on a heightened sense of priority in this economic downturn. Indeed, many companies have downsized in recent months, and a good number have concluded that the smaller size is the right size. For others, more analysis is needed to answer that question.
A lot of people are looking at staffing right now and wondering if they can continue to make do without people who have been laid off, he said. Its a critical issue right now, and a very big part of the budgeting process.
The Bottom Line
Thats the often-discouraging budgeting process, as he described it, and one of those matters that business owners and managers let slide, for whatever reason.
Putting together a solid, realistic budget and then sticking to it is just one of many commitments that people should make as they approach the new year, said Vann, stressing, again, that such matters deserve year-round attention.
Let the resolution-making begin.
George OBrien can be reached at[email protected]
Those thinking about nominating a group or individual for BusinessWests Difference Makers Class of 2010 need to think and move quickly.
The deadline for nominations is Thursday, Dec. 31.
BusinessWest Editor George OBrien said a number of nominations have been received to date, involving a number of individuals and organizations who are, in myriad ways, making a difference in the community.
We already have many excellent candidates to consider, said OBrien. But there are many more people doing some incredible things who havent been nominated, and should be.
OBrien said the nomination form on page 15 is self-explanatory and simple to use, and he encourages readers to use their imagination to identify and then nominate people worthy of the Difference Makers award.
The inaugural class of Difference Makers included four individuals Doug Bowen, president and CEO of PeoplesBank; Kate Kane, managing director of the Springfield office of the Northwestern Mutual Financial Group; Susan Jaye-Kaplan, founder of GoFIT and co-founder of Link to Libraries; and Bill Ward, executive director of the Regional Employment Board of Hampden County and one group, the Young Professionals Society of Greater Springfield.
Together, these honorees represent an excellent cross-section of the types of groups and individuals the program was created to celebrate, said BusinessWest Associate Publisher Kate Campiti, who also urged readers to play an active role in shaping the Class of 2010.
While nominations continue to come in, details are falling into place for the awards ceremony honoring the next class, she said. The event will be staged at the Log Cabin Banquet and Meeting House in Holyoke on March 25, beginning at 5 p.m. The celebration will feature live entertainment, heavy hors douevres, and introductions of this years winners.
It will also include an update on an ambitious program called Creating a Culture of Literacy One Book at a Time. It was created last summer at the urging of Ward and others at the Regional Employment Board to focus additional attention on the issue of literacy and its importance to the overall health and well-being of the region.
The initiative helped collect hundreds of books for the Hasbro Summer Learning Initiative, and will be an ongoing concern for future classes of Difference Makers.
Additional details on the March 25 celebration will be published in upcoming issues of BusinessWest as they become available.
Decision Looms for ‘Death Tax’
I know youre eager to return to those thrilling days of yesteryear the Bush presidency and theres a pressing matter from that era on the national agenda: what to do about the estate tax. We have until New Years Day to settle this question, a small window on our values as a country. The background: on the charge that the death tax was a punishing money grab from small businessmen and women coming while they grieved a lost loved one, no less opponents in 2001 succeeded in increasing the exemption; the tax currently kicks in on inheritances above $3.5 million rather than the old taxs $1 million. The maximum tax rate, then 55%, was dropped to 45%.
When the Times Square ball rings in 2010, the tax will vanish altogether. Your ticket to the great beyond is tax-free next year. But not if you survive into 2011: because of deficit concerns, opponents had to agree that the tax would return that year, with a rate and exemption at their 2001 levels. This fiscal sleight-of-hand, disdained by all sides, has produced a yuletide debate. Should we repeal next years repeal to contain federal red ink, and if so, what should the rate and exemption be? Or do we just kill the tax permanently, as opponents have always urged? President Obama proposes threading the needle by keeping the tax next year but making permanent its current lowered rate and higher exemption. Boston College law professor Ray D. Madoff counters that that would cost the Treasury more in the coming decade than doing nothing. She proposes shielding family businesses under $10 million from the tax but preserving it at some level otherwise.
Both points are spot-on. The case against the death tax (opponents term) has always been daffy. Aug. 24, 2000 has passed into political lore as the day that Montana rancher Lynn Cornwell hopped atop a tractor to deliver a repeal plea to President Clinton at the White House. That same day, then-Republican House Speaker Dennis Hastert declared that the tax is so steep that sometimes the deceased owners children must break up a farm or sell a business just to cover the tax. But the tractor drive was a stunt. Far from being a victim of the tax mans greed, Cornwell has benefited from taxpayer largesse. In the years after his ride, he pocketed $400,000 in federal farm subsidies and fed his herd on federal land at below-market rates, according to William H. Gates Sr. and Chuck Collins, two well-off men who wrote a book supporting retention of the tax.
And Hasterts point? You could fertilize Montana with what the speaker was shoveling. In 2001, the New York Times asked the American Farm Bureau Federation, a repeal advocate, for examples of families that had to give up their farms because they couldnt afford the estate tax. The federation found exactly zero victims. Five years later, the Times reported that just 50,000 families will be subject to the tax in 2011. Theyre in a tax bracket that means theyll be able to pay the IRS without having to miss the mortgage payment, turn off the electricity, or eat cat food.
Wont killing the tax help during a recession? Tax cuts for average people who need to spend their money on necessities would indeed be smart in a downturn. But with the estate tax, were talking about the wealthiest Americans, people more likely to save their windfall, not spend it. As for arguments that the tax smothers job growth, President Clinton left the tax alone during the 1990s. Job growth sure was slumming it then, wasnt it? Keeping taxes low and simple is sound policy. It is perfectly compatible with an estate tax.
Many of the same politicians who oppose the tax bray out of the other side of their mouths about swelling deficits. Meanwhile, a writer for the Weekly Standard made the conservative case for the tax: success in America should come from hard work and talent, not from being one of the undeserving winners of the sperm lottery.
Rich Barlow is a freelance writer in Cambridge.
A Primer on 201 CMR 17
Peritus Security Partners staged an informational seminar on the state’s new personal-information-security law on Dec. 2 at Spoleto restaurant in Northampton. Several business owners and managers were given a detailed briefing on the specifics of the measure and the steps for being in compliance. From left are Charlie Christianson, president of Peritus; Trish Tessier, office manager for the company; Bob Mathiason, vice president of Sales for Peritus; Kurt Baumgarten, vice president of Information Security for Peritus; and Kim Klimczuk, Esq., a partner with the Northampton-based firm Royal & Klimczuk, who provided a legal overview of the measure.
A Cut Above
Since 2007, cosmetology students (under the supervision of licensed instructors) have provided more than 500 free haircuts to veterans at DiGrigoli School of Cosmetology in West Springfield. The school originally offered these free services exclusively on Veterans’ Day, but because of an overwhelming response, they increased the frequency to every eight weeks. Six times per year, veterans visit the school by the busload and enjoy a morning or afternoon of pampering and conversation with the cheerful students. This contribution was recently recognized by the West Springfield Department of Veterans’ Services and Veterans’ Council. On Nov. 14, the West Springfield Veterans’ Council staged its 8th Annual Veterans’ Memorial Breakfast at St. Thomas School. Here, Paul J. DiGrigoli (left), owner and president of DiGrigoli Salon and DiGrigoli School of Cosmetology, receives the 2009 “Business of the Year” award from WSVC Treasurer Dorothy Richard. Looking on is master of ceremonies and WSVC President Dr. Frederick Conlin Jr. (U.S. Marines – Korea).
Comcast Digital Connectors
On Nov. 30, Comcast and One Economy were joined by elected officials and community leaders at the Urban League of Springfield to kick off a major digital learning and service initiative. The Comcast Digital Connectors program teaches teens and young adults from diverse, low-income backgrounds how to use broadband technologies and how to put that knowledge to work to increase digital literacy in the greater community. David Cohen, executive vice president of Comcast, was on hand to help celebrate the launch, and various elected officials, including U.S. Congressman Richard Neal, State Rep. Benjamin Swan, Springfield Mayor Domenic Sarno and others, also attended and showed their support. In the Comcast Digital Connectors program, teams of high-school students, who attend New Leadership Charter School in Springfield, will gather at the Urban League three times a week after school throughout the year to learn digital literacy skills. The young people will then volunteer their time at community-based organizations, senior centers, churches, and even their own homes to help improve digital literacy. Additionally, they will be mentored by local Comcast employees, who will help develop leadership skills among the young people and lend expertise. From left are state Rep. Michael Kane; Swan; Kateri Walsh, Springfield city councilor; Sarno; Doug Guthrie, senior vice president of Comcast’s Western New England Region; Leon Crosby, Urban League of Springfield Digital Connectors Program director; Cohen; Neal; Henry Thomas, president and CEO of the Urban League of Springfield; Rey Ramsey, CEO of One Economy; and Karla Ballard, National Director of Digital Connectors.
Celebrating 40 Years on the Air
WTCC, the college radio station at Springfield Technical Community College, celebrated 40 years of broadcasting at an anniversary showcase at the college on Dec. 12. A number of area bands performed for the large crowd gathered in the school’s auditorium, including Jus’ Us, seen here. The event was broadcast live on 90.7 FM.
The Affiliated Chambers of Commerce of Greater Springfield collaborated with the Lexington Group in West Springfield and the Young Professional Society of Greater Springfield for a special holiday bash on Dec. 9. The event was a double celebration — the Lexington Group’s 20th anniversary, and the chamber’s annual holiday After 5 gathering, staged the past two years in conjunction with YPS. More than 150 area business people were in attendance for the event, which featured a raffle, entertainment, lots of networking, and a chance to see some of the Lexington Group’s offerings in office furniture. Above left, James O’S. Morton of the YMCA of Greater Springfield and Carol Moore Cutting of WEIB 106.3 Smooth FM shared laughs and holiday cheer. Above right (from left), Kelly Zelta of Aflac, Jackie Fallon of FIT Solutions, and Drew Ritter of Mass. Rehab Commission gather for a picture.
As the calendar turns to 2010, business owners and managers should be thinking about resolutions, especially those involving effective planning.
Here are several types of planning that decision makers should consider critical for the year ahead.
Strategic Planning: Take time to research how to go about doing strategic planning and with whom. Perhaps the company can do it on its own, or perhaps it should hire a facilitator. In any case, set aside one or two days for strategic planning. This is one of the most critical blueprints every business should have, and it should be done at least once a year. This process should include owners and key staff members and perhaps outside consultants and independent parties as well.
Technology Planning: Each business should minimally have an internal staff member or an outsourced consultant to guide every company through the rigors of changing and updating technology. Time should be set aside for owners and key staff to be educated on a continuous basis. Technology will drive efficiencies, productivity, and revenue for most companies.
Employee / Staff / HR Planning: Each business today minimally needs either a staff person or an outsourced consultant to keep them up-to-date with the constantly changing compliance issues involved with having employees. Additionally, this planning model should include internal company issues, benefit packages, recruiting, retaining, and staying competitive. Any company that has employees should have a handbook minimally. The handbook should be reviewed annually.
Succession and Long-term Planning: Depending on the size of the company and the owners philosophy about life and business, succession and long-term planning for a company, the owners, and key staff should be a priority. If the owner of a company has done a good job addressing his or her own retirement and succession issues, then the company will continue to thrive. Fear of the unknown is the greatest fear, so the more effort the company puts into proper planning for the owners and key personnel, the better chance it has to continue. Even if an owner indicates an unwillingness to do succession planning, then certainly having a plan that indicates when and how to sell or liquidate the company is important.
Tax Planning: This has been pretty much accepted as an annual task by most business owners and key personnel; however, its still surprising just how many businesses make decisions, take on risk, and do business without properly understanding the tax consequences of their decisions.
Budgeting and Financial Planning: I just cant imagine a business or an individual, for that matter not making budgeting and financial planning a priority on an annual basis. Unfortunately, many, many businesses fail to do annual budgeting and financial planning. The budgeting process should include solid projections relative to revenue, expense planning, and profit expectations. This planning should also include cash-flow projections that take into account what capital expenditures need to be made, how much debt will be paid down, or how much debt or equity will be required to run or capitalize the business. The budget or financial plan should include the companys wish list for the coming year, and typically that list includes the items or initiatives from the strategic plan and all of the other planning during the year. The budget should be the by-product of all of the annual planning that has been done.
Kevin Vann is a principal with the Springfield-based Vann Group; (413) 543-2776.
It’s Good for Public Relations, Good for the Bottom Line
Lock four business professionals in a room, and chances are youll get four different opinions about what sustainability means. Some may see it as a way that corporations can help stop global warming. Another might say that global warming is a lie, and corporations are wasting their time spending money trying to save the environment. Still others may say sustainability is simply replacing Styrofoam cups with paper or coffee mugs that can be washed.
The truth is that there really is no one definition of sustainability and all of the above answers have a kernel of truth. By adopting a sustainability plan, a company can take steps that may reduce their carbon footprint. Even if you dont believe in global warming, your company may still see a financial benefit in switching from electrical heat to natural gas. But no matter how you slice it, sustainability is the new corporate buzzword, and, like it or not, the public is watching.
Right now most American companies are about a decade behind European companies when it comes to understanding what sustainability is and how a company can use sustainability efforts to not only save money but position themselves ahead of their competition. Sustainability efforts are no longer just being undertaken by hemp clothing retailers in San Francisco. In July 2009, Wal-Mart announced a major restructuring of the way it handles packaging and vendors based on a new sustainability index. And we all know that once a company like Wal-Mart is on board, the business landscape changes.
A modern sustainability program is based upon the idea of a triple bottom line, which refers to a companys economic viability, its social responsibility, and environmental responsibility. Adopting a sustainability program doesnt mean that your company has to generate all of its own power and convert its fleet to battery-operated cars. It simply means deciding what types of graduated steps youd like to adopt to show social and environmental responsibility and then letting the world know what youre doing through an annual Corporate Social Responsibility (CSR) Report.
CSR reports are just starting to catch on among American businesses. A good example is one that is on the Starbucks Web site, explains Kretz. If you look at the Starbucks report, youll see that the company outlines various initiatives that it is undertaking to minimize its environmental impact and give back to the communities that it serves. For example, they talk about their transition to only selling fair-trade coffee beans, powering their stores with renewable-energy sources and employee volunteer programs. When you read it, you begin to understand that Starbucks hasnt undergone a drastic transition. Rather, they are implementing something gradual but purposeful and looking good while doing it.
Winning the PR Battle
One of the benefits of developing a sustainability strategy is the fact that it automatically opens your company up to positive public-relations opportunities. The number of consumers who value environmental and sustainability efforts is growing every day, and by communicating your actions to those who are interested, you are positioning your company to look more attractive versus a company that has no sustainability plan.
There are Web sites devoted to help interested people find information about what companies are doing with regard to sustainability, says Kretz. CSR reports are indexed and readily available online. And its important that theyre accessible because many consumers and business will refuse to patronize a business that isnt implementing at least some type of sustainability initiative.
A perfect example of using sustainability practices for PR comes from Kostins homebuilding clients. Many are building higher-end homes in accordance with Leadership in Energy and Environmental Design (LEED) specs because, in a tough home market, a LEED rating can be the difference between a home selling or languishing on the market for months.
A commitment to sustainability also helps with internal PR because studies have shown that employees especially younger ones look favorably upon such efforts. A CSR is an easy way to illustrate your companys commitment to sustainability, which can also be of use when hiring.
Going Green Means Saving Green
Remember that a good sustainability program is supposed to contribute to a companys triple bottom line. This means that a good sustainability campaign will also help save the company money.
There are a number of ways that a company can help the environment and save money at the same time. The easiest way to do this is by taking advantage of the numerous tax credits and incentive programs for installing energy-saving equipment or replacing older equipment with newer, more efficient items. The recent stimulus packages included more than $61 billion in credits and grants for energy conservation.
Some examples of the government credits available are for adding insulation to your home and purchasing hybrid vehicles. On the business side, there are grants available for solar panels and wind, power, tidal, and geothermal power. Of course, these programs start and end all the time, so speaking with your tax professional is a good start to find out what types of programs are currently available.
Beyond tax credits and incentive programs, sustainability programs have other benefits that may be small but add up over time. For example, a company changing from disposable cups to having employees bring in washable mugs will not only reduce waste but will save the company the money they spent supplying the cups. Implementing a data-warehousing system can not only help a company reduce the need for printed, archival copies of files, but it will also reduce the square-foot cost for storage needs and usually results in quicker retrieval of data.
There are experts who specialize in sustainability audits who can come into a company, see how it is currently operating and suggest small measures that can really add up. When the price of gas spiked above $4 a gallon, many companies started trying to figure out ways to reduce travel with videoconferencing or by stacking together trips so that multiple clients could be visited in one day. Even though gas is now below $3 a gallon, that strategy of reducing travel not only enhances a companys sustainability efforts, it will mean less money burned down the tailpipe.
The Wal-Mart example illustrates the ultimate bottom-line impact. Part of Wal-Marts plan is to measure the sustainability of every product it will sell. It is forecasting a day in the next couple of years when it will be able to label all of its products with a sustainability index number. Those companies that arent currently working to minimize their packaging and quantify the environmental impact of their product and manufacturing processes will find that the large retailer will no longer sell their product. Thats where you can easily see that companies with no sustainability plan wont be able to sustain their business model.
What the Future Holds
Theres no question that companies need to start working on assessing their sustainability efforts. The time is drawing nearer when it will be a necessity to have at least some type of report available that outlines what your company is doing with regard to minimizing its impact on the planet and maximizing its efforts to help members of your community.
For example, the American Institute of CPAs has set up a task force to figure out best practices around sustainability initiatives. In fact, Prince Charles, a proponent of sustainable farming and other practices, spoke to the groups annual conference this year to encourage further development of sustainability in the U.S.
CSR accounting has only been around for a decade, and its still evolving. But companies that commit to measuring their sustainability can demonstrate their interest in the environment to their employees and communities, build trust and promote transparency, and show their commitment to their important stakeholders. CSRs are gaining momentum, and companies that arent taking action now risk finding themselves on the wrong end of business and consumer sentiment in a few years. n
Richard Kretz is managing member and Brian Newman is member of the firm at Kostin, Ruffkess & Co., LLC, a certified public accounting and business-advisory firm with offices in Springfield as well as Farmington and New London, Conn. Beyond traditional accounting, auditing and tax consulting, the firm also specializes in employee benefit-plan audits, litigation support, business valuation, succession-planning business consulting, forensic accounting, wealth management, estate planning, fraud prevention, and information technology assurance;www.kostin.com.
Let’s face it, 2009 certainly wasn’t anything for the business community to write home about.
For many, this was a year to simply hang in and hang on, a time when “flat” translated into “pretty darned good.” For businesses large and small, this was a time best forgotten — and soon.
But there were some rays of sunlight that somehow managed to break through the clouds, some stories that offer hope of better times for those who live, work, and own businesses in the Pioneer Valley. Here are five, listed in reverse order of importance, in our view, of course.
5. A Focus on Literacy
OK, we can toot out own horn a little. Actually, its not our horn. Yes, BusinessWest created a new recognition program called Difference Makers, so-named to honor those who are making a difference in our community, and its first class was honored last spring. That was a good story; the better story came about a few months later when one of this years Difference Makers, Bill Ward, director of the Regional Employment Board of Hampden County, and that groups project manager, Maura Geary, approached us with the idea of putting all of our winners to work.
That suggestion led to an ambitious project called Creating a Culture of Literacy One Book at a Time. This past summer, the five Difference Makers helped collect hundreds of books donated to Hasbro Summer Learning Program, and agreed that all future winners of this award would continue to focus time, energy, and imagination on a matter of vital importance to the health and well-being of this region.
4. Qteros Lands in Chicopee
A little over a year ago, the news was that this region was going to lose Qteros, a company trying to revolutionize ethanol production by using not corn, by common switch grass, to the eastern part of the state. However, through the efforts of the company’s principals and some economic-development leaders in this region, the company has made good a commitment to maintain a noticeable presence in this area.
It will do so in a research and production facility that will be located in a new office facility at Westover in Chicopee. Having Qteros in this region will provide some jobs and some additional vibrancy in the Westover area, but perhaps more importantly, it will provide inspiration to fledgling green businesses, while sending a message that they can do business in this area code.
3. UMass Comes to Downtown Springfield
It was announced recently that UMass Amherst will be locating one of the university’s programs “an urban design center ” in one of the buildings in Springfield’s Court Square early next year. The move indicates a firm commitment on the part of the university to play a substantial role in economic-development efforts in the region’s largest city.
And the better news is that all those involved with this endeavor say it is merely the beginning of efforts designed to make UMass more of a force in the City of Homes.
2. More Signs of Progress Downtown
Springfield’s central business district still has a long way to go in terms of returning to the vibrancy evident decades ago. But there were a few big steps in the right direction taken in 2009. They include the arrival of the Springfield Armor basketball team, a Developmental League franchise that should bring more people downtown; the opening of a new restaurant, Hot Table, in Tower Square; and, especially, successful efforts to re-tenant the former federal building with Springfield School Department offices, some employees of Baystate Health, and other agencies.
Together, these developments represent real progress in the work to bring more downtown ‘ to live, work, and play.
1. The High-performance Computing Center
Six months ago, hardly anyone in this region knew what a high-performance computing center was. In truth, many still dont know today, but the picture is starting to come into focus. A center, which brings unprecedented amounts of computing power together in one place, is going to be built in Holyoke, thanks to an impressive partnership effort involving UMass, MIT, Boston University, Cisco, and a host of other players. Holyoke was chosen because of the vast amounts of inexpensive, ‘green” energy produced by that city’s hydroelectric facilities.
The center will create only a few dozen jobs to start, but there is enormous potential for this facility to attract government agencies, businesses from several different sectors, and support services.
This was easily the biggest and best story in a year when there was little competition.
AirPark South in Chicopee Will Give the Region Inventory, Flexibility
When the Home Depot Corp. purchased 70 acres for a new regional distribution facility in Westfields Campanelli Business Park in October, it heralded a major contribution to that citys commercial portfolio.
But it also took one of the last developable parcels of land that size off the market, creating a void in the regions inventory of commercial tracts. However, that void will only be temporary, thanks to a recent acquisition that will create a new industrial park to be called AirPark South in Chicopee.
The new facility, which will join parks covering the other compass points at Westover, should come online in 2013, said Blair, and when it does, it will be, at 110 acres, the largest contiguous parcel of developable industrial land in the region, giving the region both inventory and much-needed flexibility as well as the opportunity to compete for Home Depot-sized projects.
The searches for those big properties are infrequent, said Allan Blair, president of the Westover Metropolitan Development Corporation (WMDC). At the moment in time when you cut the ribbon and are ready to go forward with any new property of that size, then you are ready to compete for those few opportunities.
The need for developable land the region is a constant, he said, citing such property as the location for future larger growth and investment. If we dont stay ahead of the curve on the development of those sites, he continued, then at some point were not going to be able to compete with other regions because we wont have a place to put new construction.
The ink is still wet on the paperwork for the purchase of 57 acres for that new park from the city of Chicopee, and Blair noted that there are a few other deals in the final stages of negotiation. When all is said and done, he said, the opportunity will be unique, not just for the city and the region, but for the Commonwealth.
It was around five years ago, Blair said, that the WMDC purchased 38 acres from Tarnow Nursery, the first parcel destined to become AirPark South. Adjacent to that property is the recently purchased land from the city, which historically had been zoned residential. It wasnt really developable, he explained. Access was a problem, and it fell within the contours of a noise-mitigation study done by the Federal Aviation Administration. That granted us access to funds from the federal government.
In January 2009, the talks began between WMDC and Chicopee, and by this past summer, the parties had agreed to a $1.45 million price for the parcel. There were voices within Chicopee that initially had been critical of what was seen as a relatively low price paid for the property, but a market evaluation assessment set the land at the final selling price.
When speaking to the press at the time of the closing, Mayor Michael Bissonnette said that he had hoped for a higher price tag for the 57 acres, but in the long run, a poor economy and a lack of alternatives quelled any lingering doubts. Also, he agreed with Blair that, in order to stay competitive within the commercial real-estate market, the WMDC had the best plan to put the property in motion.
Currently the wooded acreage is but a twinkle in any developers eye. A small access road between the municipal airport at Westover and the Covidian property on Padgette Street is the planned portal to the property. When the parcel is slated to go online for development in 2013, it will be the largest contiguous commercial property available within the region. Its probably the last big chunk of property that can be assembled in this way, Blair said, and quite possibly the last in the region of this size.
With the airport next door, and significant frontage along the Mass Pike, he said that the last iteration of the successful AirParks might very well be the most exciting of them all.
We want to make sure that this is planned properly, he continued, and that the uses have some vision in there that will make the highest and best use of the land. By that I mean creating significant jobs, significant taxes, or supporting industry clusters in our region that we have been trying to support as opposed to just any use, just to sell the dirt. Thats not how we operate.
Even though the property could be scooped up by one tenant, the proposals set on the boards envision the probability that the park will be parceled into as many as 17 sites. Roadways and utilities would be built out in phases as the properties sell. Thats pretty much how our other parks have developed, Blair explained. We started with a big chunk and then gradually developed the smaller pieces.
More than likely, he continued, were going to find users in the 50,000-to-100,000-square-foot range, so we will end up subdividing the property. But again, its important to have the ability to compete for those larger prospects.
The WMDC estimates that between 1,000 and 1,100 jobs will be created by the park, with projected tax revenues for the city ranging toward $1 million. For the city, its a good opportunity to turn fallow land into economic prospects, and, according to Blair, good news for the airport as well.
Weve protected the approaches to the runway by eliminating the potential for incompatible land uses, namely residential, he said. That was the reason for the FAAs willingness to invest in the property.
If You Build It, They Will Come
When asked about the marketing prospects for AirPark South, Blair said that its really too soon to speculate. Environmental-impact studies over the next few years will determine what those prospects will be. But he said that, to his understanding, it would be for mixed-use development: from, in his words, plain-vanilla industrial to high-end research and development.
A lot will depend on what the market demands are for the regions commercial interests in 2013, though. How will we need to compete, and what will complement our existing properties? he said.
Marketing the property will come about when those decisions are made, he said, but given the size and scope of the property, the sales pitch wont be too difficult.
Thats a good size even today in the marketplace, he said. Its very difficult to find such a parcel anywhere that has access to such good utilities.
The new property also comes at a good time for the future of Westover. Of the three other industrial parks comprising several hundred acres, only a handful of available acreage remains. They are close to being maxed out, Blair said.
With the sound of hammers ringing in the hallways outside his office at the airport, echoing the development to come around the corner, Blair said this latest project will be a good cap to development in that part of Chicopee.
This conversion of property from military to civilian use has been one of the most successful of its kind in the country, in terms of taxes and jobs, he said. More than $2 million in taxes are paid to Chicopee from AirParks North and West alone, every year, and have been since the mid-90s.
Pointing to the map next to him containing the new plans, Blair said, these are very important economic-development endeavors for the municipality, and for the region.