Posted: March 18, 2009
by Matthew J. Mowry
As the state’s largest city, Manchester has many elements of a vibrant downtown-–a large entertainment center, sports teams, a historic district, a growing airport and cultural opportunities. Many of those things have arrived or grown within the last decade, and now Manchester is trying to reach the next level–and some say it needs to look to Portsmouth for inspiration.
City leaders says what Manchester needs–and Portsmouth, Portland and Providence already have–are downtowns filled with young people, connected to a developed waterfront, that preserve and celebrate the cities’ architectural integrity. But doing that requires long-term planning and funding, two things in short supply during a national and global recession that threatens to bring the city’s progress to a screeching halt and has leaders focused on the present.
Still, city and business leaders are hopeful. They point to the Elliot at River’s Edge, an $87 million redevelopment of the former Jac Pac site near the waterfront, which will include a four-acre riverfront park donated back to the city, the newly renovated Currier Museum of Art, the expanding Manchester-Boston Regional Airport and the continued growth of the Manchester Young Professionals Network.
Those projects, and the work required to make Manchester the place city and business leaders say it can and will be, were the subject of discussion at Business NH Magazine’s Greater Manchester Regional Roundtable at the end of January.
Weathering the Recession
Not surprisingly, the recession is weighing heavily on people’s minds. “The obvious challenge is how to lead a city through a national recession,” says Mayor Frank Guinta. “We want to make sure we come out of this as well as possible. We need to preserve the financial stability of the city.”
Evidence that stability in 2008 is being strained is easy to come by. Guinta says one postal carrier told him that where he once delivered 10 unemployment checks on a particular route, he now delivers 50. Guinta says the city needs to continue to grow its tax base and ensure there is no reduction in Manchester’s bond rating, noting that “Manchester is positioned fairly well. Unemployment hasn’t grown at the same rate as [the nation.]”
Downtown on Elm Street, Cathleen Schmidt, president of Citizens Bank NH, says residential mortgages were the highest they’ve ever been in 2008, but 80 percent of that business was refinancing. “For two decades, it was how much bigger are you going to grow next year. Money was very easy; rates were very low. Businesses are only spending what they have to. Nobody is willing to take risks.”
The Airport has already felt the strain of the economy. Traffic was down 4.5 percent last year, or 176,000, but Director Mark Brewer says Manchester fared better than Providence (down 6.5 percent) and Boston (down 7.1 percent)
Local business statistics also help tell the story of the economy. Guinta says three areas of Manchester’s economy grew between July and November of 2008: education, health care and local government. “Creating jobs in local government is not a way to spur the economy,” Guinta says.
One center of business birth, The Amoskeag Business Incubator, has not felt the full force of the recession, but Executive Director Julie Gustafson says she sees it coming. The incubator opened in 1997 and helps start-ups get off the ground. While the economy hasn’t forced any of its fledgling clients to close shop year, Gustafson says if the economy continues on the path it is on, it could be an unfortunate possibility. And she says businesses are already finding it difficult to secure lines of credit.
The incubator is fighting back by offering new services to help small businesses succeed. It introduced a new affiliate program for home-based businesses that allows them to access services and use meeting space at the incubator at a lower rate without renting space. Six businesses have already signed on. “We’re in a different time now and people’s assets have shrunk dramatically. With this quarter, businesses really started to feel it,” Gustafson says.
Investments in the incubator are key to the city’s future, says Jay Minkarah, director of economic development for the City of Manchester, as it focuses on ensuring local resources grow. He says growing local companies that will make decisions at the local level are key to future success. “The turnaround happened because the city decided to invest in the Verizon [Wireless Arena] and the airport. It was a tremendous impact and was a wise decision.”
Minkarah says the city is making similar strides by investing in the Merchantsauto.com Stadium (home of the NH Fisher Cats), the conversion of the former Jac Pac meat packing plant site, and the widening and improvements to the Granite Street Bridge, a main artery to the Millyard district and downtown.
Some companies are even finding opportunities due to the down economy. Sean Owen is president of wedü, an advertising and marketing firm in Manchester and chair of the business committee for the Manchester Young Professionals Network(MYPN). He is finding that big companies that didn’t have time for him in better times, do now. “Young people definitely see opportunity now,” Owen says. “This is when the larger companies or bigger contracts will listen to us. They may have been moving at 90 miles an hour, but now they’ll take time to listen.”
And while the news lately has been bad–layoffs, furloughs and sometimes entire businesses shutting down–there is reason for hope. Robin Comstock, president and CEO of the Greater Manchester Chamber of Commerce, arrived in NH in 1998 at the beginning of the last recession. Compared to then, Comstock says, “My sense is this recession is much more deeply veined, much more complicated. This time around we are more intelligent as well.”
Minkarah agrees, noting the last recession was significantly worse in NH than nationally and NH now is more careful in its financing decisions.
Taking Manchester to A New Level
Even during the troubled economy, major building projects have been moving forward in Manchester. Among the most recently completed is the Currier Museum of Art, which underwent a $21 million expansion and renovation. “The Currier started in 1929, so good things can come out of depressions,” says Susan Strickler, director of the Currier Museum of Art.
Strickler says while nonprofits are feeling the same economic pressure as businesses (a recent state report shows two-thirds of nonprofits have seen a decline in donations), they continue to be an important part of the city’s and state’s economy. Of the Currier’s $21 million project price tag, $16 million of that was spent in NH. She says the museum expects attendance to reach 100,000 visitors this year. “The arts and culture and nonprofit community are partners in the economic vitality of the city,” she says. “Cultural organizations can be cornerstones. Businesses come and go, banks change ownership, but there are cultural organizations that will be here no matter what.”
Another major project in Manchester is Elliot Health System’s $87 million redevelopment of the former Jac Pac site near the riverfront, which is scheduled for completion next year. The hospital broke ground on the project in October to build the 236,000- square-foot complex, which will be four stories and include a 700-car parking garage. It’s the first building of its size to be built designed to be green, and it is the largest private building construction in the city since the Mall of NH was built. Of the 17 acres the hospital hasn’t built on, four acres is being developed into a park and donated to the city. Three additional buildings will house medical offices, retail businesses and a residential building. Schmidt says Citizens plans on opening a branch in the new development.
While the facility is certainly a feather in the cap of Elliot and the community, Rick Phelps, executive vice president of clinical operations for Elliot Health System, says it is not an indicator that the hospital is immune to the effects of the economic downturn.
“What led to our growth is we got to critical mass to say even though we live in an irrational reimbursement world, we’re investing in infrastructure to help patients stay healthier,” Phelps says, adding the hospital found it would cost twice as much to renovate its existing campus as building a new one.
Phelps says many hospitals across the state are going to be “challenged” to raise enough revenue to meet the health care demands of communities due to the way health care is funded and reimbursed. He says last year Elliot experienced a loss of $4 million due to retroactive Medicare state budget cuts, $17 million to charity care and $21 million to bad debt.
And he says tough times are ahead. “We will see every health system in the state need to look at services and examine what they can’t afford to offer now. You’re not going to fix the economy without fixing health care,” Phelps says.
For health care to grow, new business to start and existing business to expand, education is a necessity, and city colleges are answering that call. Manchester Community College underwent a significant expansion, the Elm Street campus of the Massachusetts College of Pharmacy and Health Sciences on Elm Street is planning one and the University of NH Manchester Campus in the Millyard is exploring the possibility of expanding.
But unbridled growth alone won’t help. Strickler says it’s important that the city preserves its architectural heritage, as cities like Portsmouth and Portland have done, as it is important to the city’s cultural and economic identity. She also urges city leaders to preserve the city’s waterfront as well. “I hope Elliot takes care of making sure we will have access to the waterfront,” she says, referring to its new project. Guinta agrees, adding leaders can’t underestimate the importance of attracting students to downtown as that also adds to the city identity.
One vital piece of Manchester’s growth in both the past and future, says Minkarah, is the airport. The last economic impact study conducted of the airport was in 2003 and showed the airport brought $700 million a year into the economy. Mark Brewer, director of Manchester-Boston Regional Airport, says a new economic impact study is now being conducted. “I’m comfortable it will show the impact is over $1 billion,” he says.
Brewer says 26 percent of the airport’s passengers are from NH, 22 percent come from Massachusetts and 44 percent come from outside New England. “They’re coming in, doing business, visiting family and spending,” Brewer says.
The airport is now working to make itself more attractive to airlines. He says the cost per passenger for airlines in Providence is $7 and in Boston is $12, while the cost per passenger for airlines in Manchester is $4.50. “It goes to their bottom line,” Brewer says of the desire to lower costs even further. “If customers have to drive down I-93 past us to another airport for a better price, it shows we still have challenges. We need to keep our costs as low as possible.”
Brewer says the airport also needs to provide more nonstop international services in order to remain competitive.
Attracting a Crowd
Whether Manchester now has the elements to attract and retain workers was a matter of some debate among business and city leaders. Owen of wedü, and the Manchester Young Professionals Network says Manchester lacks a convention center or river walk that helps to define other cities, and the businesses that would come with it like bars with a waterfront view. “The airport is awesome, but once you leave it, where do you go?”
Owen says retaining youth in Manchester is “impossible,” noting people take a job, stay eight months and “they say there is not enough nightlife and leave town.”
That’s why he says it is important for the city to build up its nightlife and cultural offerings in order to retain young workers, something MYPN is working on. MYPN was formed in 2004 to create social, business and professional development opportunities for young professionals in the region. It’s success led to other young professional groups being formed across the state.
Schmidt applauds MYPN’s involvement. “It’s great to see MYPN growing. We need to hold on to these people,” she says.
Minkarah agrees. “We’ve got to be ahead of the curve, we’ve got to be innovative, we’ve got to be the place where people want to be,” he says.
Others says Manchester already is; it’s just not marketed well. NextStep Orthotics and Prosthetics is located in the city’s Millyard district. Next Step, which makes artificial limbs and braces, saw an increase in sales last year and actually hired people, says Matt Albuquerque, vice president. It is collaborating with Segway Inventor Dean Kamen on a $20 million federal contract to create high tech prosthetics for upper extremities. That kind of research is key, he says, as research leads to product development, which leads to commercialization, which leads to jobs.
Albuquerque, a NH native, says one of the reasons the company is in Manchester is because of its access to a skilled workforce. “I think there are many great things happening in this state that very few people know about,” he says.
Ensuring Manchester’s success will be impossible without one key element: Education. “From my perspective, education at all levels needs to be elevated. It’s critical to economic development,” Minkarah says, adding that a Job Corp Center is being developed in Manchester to provide job training to at-risk youth.
That means convincing students to attend school in NH. Comstock says part of the problem with trying to convince NH students to stay in the Granite State is the perception that since Wal-Mart is the state’s largest employer, there are no real opportunities for them here. She says kids feel like they have to make a choice between being educated in a place with opportunities or to be in NH where the most prominent jobs are in retail. “We’re seen as a retail and tourism economy,” Comstock says, explaining NH and the city needs to do a better job of letting students know about the quality jobs here.
Existing residents know what jobs are here-and what ones have been lost due to the recession– and that’s driving up admissions at Manchester Community College as displaced workers look for skills to get their next job, says Darlene G. Miller, president of the college. “Health care is a given. But what’s the focus going to be for the region?” she says, adding that the college’s nursing program was rated the top program in the state. “The question is, what’s the high tech manufacturing of the future in NH?”
While demand for education services exists, the cost of a higher education in the city and state is a big concern. “Our enrollment is skyrocketing at a time when the state is dealing with budget issues,” Miller says. “The New Hampshire Community College System is the second most expensive for tuition in the United States.”
Guinta agrees with Miller’s concern. “There is a lack of long-term vision in addressing these issues. If you really want to incent a young person to stay here, make it cheaper for students to go to school here,” he says.
Roundtable participants identified several initiatives that will be critical to the city’s success going forward. Minkarah says growing usage at the Manchester-Boston Regional Airport and the widening of I-93 are both essential to Manchester’s economic future. Strickler says the city needs to have facilities that can accommodate large conventions.
Transportation projects also topped Comstock’s list. She says the effort to bring passenger rail service to Manchester is another important initiative for spurring economic activity. It has been one of the Chamber’s top strategic goals for the past three years, having worked with the Greater Nashua Chamber of Commerce and others to support the passage of the NH Rail Authority Act and the Rail Liability Cap.
The Amoskeag Business Incubator will also have a role to play in the state’s future development. When the incubator moved into the mill buildings, it was only 22 percent full. It is now 100 percent full and has helped over 70 companies and counting.
Guinta says one key to moving forward is long-term planning, something the city did when it updated it master plan in March and through its latest marketing effort to brand the city. The challenge, he says, is bringing aboard elected officials, who “want to see short term but need to see long term.”
Schmidt says the city and state need to promote the positive aspects of the economy. “We need to share good stories that are out there,” Schmidt says. “New Hampshire is a special place. We have the best of so much. We need to talk them up. Our future depends on it. There’s no better place to be now than Manchester. We are all leaders [in an economy] going through a down cycle, and we will make it through stronger.”