The new reality


0412_TheNewReality_03Declining HP jobs and OSU growing pains force Corvallis to face its economic and livability challenges.

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BY LINDA BAKER

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Above: Corvallis has a relatively healthy downtown, with a retail vacancy rate of less than 1%.
Below: A rendering of Austin Hall, future home of the Oregon State University College of Business. It will open in 2014. OSU is one of only two major employers in Corvallis that is growing.
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Fueled by the twin public and private sector engines — Oregon State University and Hewlett-Packard — Corvallis has been in a golden economic spot for most of the past three decades. But in recent years, the recession, coupled with steady job cuts at HP’s local campus, has tarnished a city ranked as the most innovative in the country. Today, Corvallis suffers from stagnant wage and job growth, a lack of economic diversity and a steep decline in the manufacturing sector, according to an economic development report released in late 2011.

“We were in a very privileged situation and frankly didn’t have to try very hard,” says Elizabeth French, a vice president at engineering and construction firm CH2M HILL and chair of the Corvallis Economic Development Commission, a 9-member committee formed last year to address the city’s economic challenges. “We had HP here, a stable employer with great benefits that employed thousands of people. But we put too many eggs in one basket.”

To help diversify the local economy, the city council in January approved an ambitious economic development plan that would make business a priority of city government. That plan is not the only significant new initiative adopted by the city over the past year. Last summer, the council also signed a memorandum of understanding with OSU — the first in city history — aimed at addressing short- and long-term issues triggered by growth at the university, where enrollment has increased from about 19,300 in 2006 to 25,000 today.

Collectively, these efforts underscore a few of the fiscal and livability challenges facing Corvallis, as well as the potential for the city to capitalize on its assets to resolve those challenges.

Blessed with riverfront parks, a popular library and a relatively healthy downtown, Corvallis also has one of the state’s lowest unemployment rates — 6% — and one of the highest percentages of PhDs in the workforce of any U.S. metro area. Despite these strengths, some key economic indicators are lagging. At its peak, Hewlett-Packard employed 7,000 workers; that number has now fallen to about 2,200. Corvallis ranked 310 out of 365 metropolitan statistical areas in percent of income growth between 2009 and 2010. Public school enrollment is declining and only two major employers are growing: OSU and Good Sam Medical Center, which employs about 1,700 people.

 


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Weatherford Hall on the OSU campus houses the Austin Entrepreneurship Program.

“The city’s growth in personal income or average wage per job has not kept pace with its reputation as an innovator,” says Skip Rung, executive director of the Oregon Nanoscience and Microtechnologies Institute and a member of the economic development commission. Rung and other members said the plan endorsed by the council aims to reverse these trends by focusing on three action areas: growing and retaining startups, supporting existing employers such as CH2M HILL, and “leveraging existing assets,” by creating enterprise zones or marketing the vacancies  that exist on the Hewlett-Packard campus.

Unsurprisingly, the city plan targets OSU as a key resource for spinning off research-based businesses. The university’s history of nurturing new companies dates to the 1930s, when a professor and three students started CH2M HILL, which is now headquartered in Colorado. Today the university seeks to keep local startups from decamping to other cities, says OSU vice president for research and commission member Rick Spinrad. Possible strategies include giving such companies access to university libraries and fee-based materials. The larger question, says Spinrad, “is what can the university do differently to support business?”

Another commission member, Nick Fowler, CEO of Perpetua Power Source Technologies, said the city aims to more fully exploit synergies between the university, HP and CH2M HILL. A former HP employee, Nick Fowler noted that Perpetua’s thermo electric technology is only “one or two degrees of separation” from his former employer’s inkjet technology.

As city leaders grapple with growing businesses and creating jobs, one sector has already taken off: student housing. Capitalizing on student population growth and an apartment vacancy rate of less than 1%, developers are planning at least four major off-campus student housing developments. “It’s a beneficial time for building units,” says Tom Gerding, a contractor who is building one of those projects: 7th Street Station, an 82-unit complex with 308 bedrooms. Gerding also is working on two affordable housing projects.

Not everyone is enthusiastic about the city’s housing boom. “It feels as if Corvallis is under siege from housing developers who say, ‘Ooh, we can build student housing there,’” says Louise Marquering, one of many Corvallis residents who have organized to protest parking, congestion and other problems stemming from OSU’s growth. The university, says Marquering, needs to have its own plan to house students instead of relying on private developers.

 


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Students outside OSU’s Valley Library. The city targets OSU as a key resource for new research-based businesses.

The university’s new collaboration with the city will help OSU alleviate neighborhood livability concerns, says spokesman Todd Simmons. “There is a different engagement between city staff and university staff that we hope is easing tensions,” he says, adding the university also wants to build at least one new residence hall over the next few years.

Four years after Hewlett-Packard made its last big round of layoffs, Corvallis is beginning to tackle a classic metropolitan problem: how to spur economic growth while retaining livability. It’s no easy task. Even as the city seeks to resolve issues of “town and gown,” city councilors have yet to fund core staff positions associated with the new economic development plan, leaving many action items in limbo. “To move ahead with the strategy, we need to have that staffing model in place,” says Ken Gibb, the city’s community development director.

Despite uncertainties, public and private sector leaders are confident the city will rise to the occasion. “Corvallis is a little jewel,” says Pat Lampton, owner of Inkwell, a downtown home store. “There’s just a new reality that the economy is something we need to pay attention to that had been sidelined before.”

 




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