$1,000,000 Could Go a Long Way

Published Friday, March 21, 2008 in The Register-Guard.

They should know better than to give Jean Tate an award. I mean, the woman has a history! Since she was first recruited into leadership by Archie Weinstein and other forward-thinking politicians way back in the early 1960s, Tate has repeatedly challenged this community to step up its game.

So nobody should have been surprised when she stepped up to receive the Eugene Area Chamber of Commerce’s First Citizen Award. She then issued a challenge. This is Jean Tate’s “zero footprint” model of leadership: pick up an award, lay down a gauntlet.

Tate asked the applauding business leaders to assemble at least a million dollars among themselves to be invested in downtown Eugene, filling some gaps between what individuals can do on their own and what government can do for everyone. Then she announced that she and her husband Wayne would start the ball rolling with $100,000. In a town that often has more mouth than money, Tate put both in the same place and called on others to do likewise.

Tate believes a million dollars can make a difference in downtown, especially if it’s invested shrewdly by civic leaders looking for a fair return on their money. The money will be pooled into something resembling a venture capital fund, focused on the opportunities that downtown Eugene presents. “It is an investment, not a grant. I expect a return on the investment! This is a commercial enterprise,” she is quick to say.

Tate didn’t limit her challenge to the wealthy elite. She solicited ideas for how the money might be invested. “Maybe buying the Bijou and moving it downtown would make sense,” she said. “I don’t know. If you have an idea that you think would work downtown, let us know. We all want to see something happen.” By welcoming ideas from all comers, she gave everybody an equal opportunity to join her crusade — another hallmark of many Tate initiatives.

Here’s an idea for Tate and her cadre of investors. It responds to the current credit crunch, but also draws from decades of downtown history.

Downtown Eugene attracts and Eugene residents love best the owner-operators, the small businesses that ensure we don’t become Anytown, USA. There seems to be a never-ending supply of people who come to Eugene with a little money and a big idea. Those who are able to buy their building do better and stay longer than those who rent a storefront.

Hanging a shingle is easy and inviting in downtown Eugene. Anchoring that shingle to a building you own improves your chances of success.

It’s easy to see why. A mortgage requires longer-term thinking than a lease. A landlord can hinder a small business’s success by refusing to make improvements today or by raising the rent tomorrow. “Owning the dirt” gives a business owner an automatically diversified investment portfolio. That entrepreneurial energy can be directed toward more than the cash flow of the business. Wealth can then be created in three ways: increasing profits, growing the business’s assets, or enhancing the value of the property. Businesses with collateral (especially real estate) often attract better buyers.

Tate and her investor group could provide five-year bridge loans to help merchants and restaurateurs buy and improve downtown properties where they do business. If the business fails, the loan comes due or the building reverts to the investors. But what everybody will be hoping for is a successful track record after five years, so the owner can refinance with a bank. Tate’s investment money is then returned, ready for another downtown entrepreneur with a business plan, a property, and a need of financing.

As the fund produces “graduates” who have used the loan to get started, they may give back to the program by mentoring the current borrowers or helping the investors evaluate future proposals. Increasing ownership in downtown will build civic pride, economic stability, and a culture of optimism.

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CORRECTION AND CLARIFICATION: Springfield Mayor Sid Leiken responded after reading last week’s column about Springfield’s less contentious city council. He reminded me that Springfield has six councilors, not five. My apologies to that sixth councilor. Mayor Leiken also offered this additional insight: “In order for a councilor to bring something to council for a work session item, it needs unanimous approval from the mayor and council president.”

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Jean Tate and Hugh Prichard will speak this afternoon about barriers to downtown development at the City Club of Eugene. The noon meeting at the Downtown Athletic Club is open to the public. Don Kahle (fridays@dksez.com) is a former president of City Club and a marketing and management consultant for small and civic-minded businesses.