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The Dallas Morning News

Sunday, April 18, 2004

Page 9W

People come to Dallas to make money. And for good reason generations have prospered here, aided by the citys midcontinent location, strong transportation network, business-friendly environment and talented workforce. But Dallas powerful economic engine has stalled.

ness retention, and the Greater Dallas Chamber recruiting new businesses. He was joined at a City Hall interview by Bill Sproull, the chambers vice president for economic development. A city-chamber partnership would be news to Ms. Miller. I dont understand what the chambers goal is, she said. I dont know what they do. She drew a pointed comparison with the Dallas Convention & Visitors Bureau, saying she works constantly with that agency. Theres nothing going on with the chamber, and its just unfortunate, the mayor said. From afar, Mr. Finkle of the Washington-based trade group took a dim view of Dallas efforts. They have not had strong programs, he said. I dont think theyve ever made a commitment to economic development. They didnt set aside enough money to do it. His assessment squared with that of businessman Ross Perot Jr.: Dallas has become so big and so diverse, and theres nobody focused on economic development. o o o AT THE LEAST, THE CITYS ECOnomic development operation has created some unhappy customers. Thats one of the conclusions that emerged from more than two dozen interviews with Dallas-area CEOs and other business leaders. The dysfunctional nature of the city government is driving many businesses away from dealing with the city, summed up Velocity Ventures, a Dallas consulting firm that worked with The Dallas Morning News to conduct the interviews, then analyzed the results. The verdict? Dallas has acquired an anti-business aura. Ms. Miller acknowledges the city needs a stronger relationship with the private sector. There needs to be a very high profile SWAT team of folks that are assembled at moments notice whose names say Dallas in a major way, she said. My

SWAT team would have Ross Perot Jr., Roger Staubach, Mark Cuban that when they are called to make a pitch for Dallas, that everybody knows Dallas is walking in the door. Mr. Perots recent assessment about working with City Hall presumably would not be part of such a sales pitch. People see difficulty and pain and agony when you think about doing a deal in Dallas, Mr. Perot said in an interview with The News. Contractor Bill Hood described the citys inspection process as somewhere between unbelievable and impossible. You dont know where you stand, he added. The rules seem to constantly change. Mr. Hood related problems with the much-needed middle-class homes that he is building in eastern and southern Dallas. Inspectors showing up early, failing a property that he hadnt purported to be ready. Others showing up days late. An opaque process for tracking permits. Chronic thefts that eat into profits. I cant afford to do it in Dallas anymore, he said. Work is work. But given the choice, and I have plenty of backlog, Ill take something outside. Navigating the City Hall bureaucracy is extremely hard even when theyre not asking for anything other than a license to spend money, Ms. Miller acknowledged. Were going to fix that. Change is possible. The city recently overhauled its housing department and is putting a similar effort into streamlining developers dealings with City Hall. And the headlines generated by code inspectors falsifying reports? Good news, the mayor said, because it forced the city to address that problem. o o o DESPITE DALLAS CHALLENGES, the executives interviewed for this project were bullish about the citys prospects. So were city leaders. And, assuming that Dallas squarely faces its weaknesses, so was Booz Allen.

The decline is not irreversible, the report said. Dallas Inc. possesses some enviable assets on its balance sheet: a low cost of living, high productivity rates, a vibrant high-income community and a fastgrowing immigrant population. Center cities continue to have key assets crucial to the economy: colleges and universities, hospitals, major cultural organizations, concentrations of business services, an underutilized workforce, said Paul Grogan, president of the Boston Foundation. One of Dallas biggest opportunities is its long-neglected southern half. You have a real hunger for economic development in the minority community, Mr. Perot said. A lot of public officials dont understand business and dont know how to get it done. Although city leaders tout success stories at three southern-sector business parks, Booz Allen made clear that those are, at best, a few first steps. Even if southern Dallas continues an aggressive growth rate 1.5 times the rate for northern Dallas it would still take 30 years to catch up. Celebrating small victories is fine, experts say. But a few office parks does not make a turnaround. Royce Hanson, a former professor at the University of Texas at Dallas and author of a book about the citys political culture, tied Dallas economic challenges back to the larger issue of improving the citys governance the theme of the Booz Allen report. Good government, he said, helps produce good economic results. Dallas must give itself a thorough self-examination, according to Mr. Finkle at the Washington economic development group. The first thing to do: Benchmark yourself, he said. What are we doing well? What are we not doing well? What are our economic development goals? Who is leading the charge?
E-mail ashah@dallasnews.com

If Dallas were a business

How a corporate turnaround specialist might size up Dallas economic challenges.

Market share
By all rights, Dallas should be booming like many of its peer cities that experienced population growth above the United States average over the last 50 years. Instead, the City is lagging behind on many key indicators. More worryingly, Dallas is falling further behind with each passing year.

Dallas stands at the verge of entering a cycle of decline. Moreover, it is clear from our review of the Citys governance structure and operations that business-asusual will not break this cycle.

Customer satisfaction
I A Dallas Morning News survey of area executives makes clear that Dallas is becoming an increasingly unfriendly place to do business. I Dallas has an increasingly transitional population weak schools and insufficient middle-income family housing force middle-class families to find refuge throughout the suburbs as soon as they are economically able.

Dallas is under-investing in its core product, has not embraced best practices throughout its management or operations, and is fast becoming burdened by longterm liabilities that could bankrupt the company if the market takes a downturn. We would project that Dallas is becoming structurally uncompetitive versus its local competition (the surrounding communities) as well as its regional competition (other Southwest cities).
SOURCE: Booz Allen Hamilton

The City is rapidly losing its position as the regions economic core, the quality of its workforce is relatively low, and it is increasingly home to a transitional population rather than a community of middle-class families that live and work here.

There is little mystery as to basic building blocks for improving quality of life. What is missing in Dallas is a comprehensive focus and a cross-department program for delivering the change. Dallas needs to create a living environment that can compete effectively with the suburbs for middle-class families and a business environment that attracts and retains anchor employers.
SOURCE: Booz Allen Hamilton