A Checklist of Challenges

Although Hurricane Charley left within hours, the storm's remnants will continue

to trouble Southwest Florida's economy in the coming year. Some optimistic business leaders say Charley's effects, while devastating in the short-term, present opportunities for the future.

"I don't see the hurricanes as an enormous hindrance to economic development," says Tom Conrecode, vice president of governmental affairs for Collier Enterprises and 2005 chairman of the Economic Development Council of Collier County. "We'll recover, we'll repair and we'll get on with the business of Southwest Florida."

In general, the economy will expand at a moderate pace, although consumer spending may be a little softer this year than desired, says Terry Bower, vice president and portfolio manager at McDonald Financial Group in Fort Myers.

The Charley factor tops the challenges for the area's economy in 2005, according to statewide and regional business leaders from Charlotte, Lee and Collier counties. And with every challenge, some see opportunity.

Challenge 1: Post-hurricane rebuilding and recovery

Fawcett Memorial Hospital in Port Charlotte demonstrates the type of rebuilding taking place in the storm-ravaged county. Renovation expenses totaled $10 million, but Tom Rice, the hospital's chief executive officer, says it plans to invest upwards of $15 million to upgrade parts of the facility. And the hospital is pursuing another $20-$25 million in new projects identified before the hurricane.

"In some ways it's going to speed us up, push projects through faster,"

he says.

Likewise, the outlook among business owners, the local government, school systems and nonprofits is encouraging, says Rice, the 2005 president of Enterprise Charlotte, a public-private advisory board to the Charlotte County commission on economic development issues. Their attitude: We're going to build it back better. "There's a lot of visioning going on in the county right now on how best to take advantage of a tremendous opportunity to build a cleaner, more productive Charlotte County," he says.

That includes discussions on building a convention center, instead of just repairing the damaged county auditorium, and plans from businesses such as Holiday Inn to expand and invest in the county. "If anything, this has continued to put Charlotte County on the radar screen," he says.

State economic development officials say Florida residents and business owners have demonstrated a resilient spirit. Some companies are committed to staying in the state, says Erin Heston, senior communications manager with Enterprise Florida, the state's official economic development and international trade development organization. "They're undeterred by even the damage to some of the facilities they've been looking at," she says. "The business climate is positive."

The biggest positive is that the rebuilding will spur economic activity, says Bower, who runs McDonald Financial Group's Southwest Florida operation. He and others say the job market profile will change, in part because of the immediate need for laborers to repair or rebuild damaged property.

Still, there may be a misperception outside the community that Southwest Florida is unsafe and a risky move for businesses. "The truth is, we feel that we're very safe," says Jim Nulman, 2004 chairman of Lee County's Horizon Council. The public-private group works with Lee's economic development office, which advises the county commission on economic issues. "This is still a wonderful, wonderful environment to live in, to work in. We're in the process of getting out the message to industries that nothing's changed. Most of us fared very well. There's no reason for people to change their plans."

Challenge 2: Tourism

Business leaders hope to place a new spin on an old cliché: If you build it back, they will come.

Charlotte County's Rice says one of the short-term impacts will be on winter tourism. The storm "clearly is going to have an economic impact on tourism, unfortunately," says Lee County's Nulman. "But where it creates a problem on one hand, there are many forces already in place to deal with the challenge."

One force: a strong need for marketing. "We have to make sure that people outside the area really know what happened and know what shape we're in," says Nulman, an attorney with Henderson, Franklin, Starnes & Holt. "We have survived; we're strong."

For example, a campaign could tout all of the new shells the storm churned up on Sanibel Island's beaches, which will appeal to collectors.

A long-term concern is that snowbirds may try out another winter spot and enjoy it so much that they may not return to Southwest Florida next season. Some wonder how soon they will come back to the region. "Are they going to return down here or will their experience be such that they continue to go back to the new location? That's one of the big question marks," Bower says.

Challenge 3: Home sales

Interest rates are expected to increase this year, slowing the housing market around the country and in Southwest Florida as well, says Bower. "We're concerned about the possibility of higher inflation rates, but encouraged by the role the Federal Reserve has taken in increasing interest rates. We expect that to continue at least the first part of next year," he says.

The demographics of more people retiring will continue to make housing a positive part of the region's economy, Bower says.

Some tests done in the tri-county area indicate property values weren't even affected by Charley; in fact, people were offering to buy damaged homes. Also, the strength of the euro against the U.S. dollar makes the area more attractive to foreign buyers, experts say.

Conrecode says he expects continued growth in the real estate/homebuilding market in the next year as the demographics that have driven the last 10 to 15 years of growth continue. "The real challenge is probably five to 10 years out when we begin to run short of land opportunities," he says.

Challenge 4: Regional focus

Conrecode says the single biggest opportunity for Southwest Florida this coming year is regionalism. And the business and political communities have matured to a point where they understand the strength in numbers and the benefits of working together, he says.

"It's no longer about the community, town, county that you live in," he says. "We have for the first time in our regional history an opportunity to really take advantage of that. It's about doing what's right for the region."

Cooperation and planning among the counties help in several ways, including attaining funding for transportation, attracting business and supporting crucial entities such as Florida Gulf Coast University.

As Southwest Florida continues to recover and rebuild, Enterprise Florida will work with local economic development offices to help them recognize some of the opportunities. That involves aligning post-hurricane planning with priorities identified in a regional strategic plan developed last year in conjunction with the Agency for Workforce Innovation and the Secretary of State's office.

"This is both a challenge and an opportunity for these communities to remember the priorities they set forth," Heston says.

Those priorities include an emphasis on smart growth that goes beyond just managing growth to becoming more strategic and working in cooperation to address transportation, tele-communications and others issues. "They're going to want to stick to those as they go forward, and want to keep that focus," she says.

Challenge 5: Economic diversification

Another focus identified in Enterprise Florida's plan is a need to diversify Southwest Florida's econ-omy. The effects of Sept. 11 on tourism showed how great that need was, and so did the hurricanes.

"We are heavily dependent on tourism," Nulman emphasizes.

The regional economic development offices have a list of targeted industries such as biotech, life sciences, aviation and back office operations. Business leaders are continuing to work to get the attention of prospective companies to let them know about Southwest Florida.

"If we can get them down here, we can sell them on the area," Nulman says.

He also foresees a challenge-finding space for construction of new offices. In Lee County, business leaders are trying to identify parcels of land throughout the county that can be designated for commercial development, a challenge because of the growth of the residential market and escalating land prices.

In Collier, Conrecode is optimistic that the work of the past is starting to pay off and will continue to lure employers, despite the challenging regulatory environment. Increasing impact fees, for example, have become deterrents to business expansion and economic development, he says. He also notes an increase in the amount

of time needed to acquire permits. Transportation will also probably continue to be a significant burden to business and a hot-button issue.

"We'll begin to see the fruits of the efforts of the past two years in Collier," says Conrecode. "We can compete in a national and a global

economic development arena."