Studer Community Institute

Pensacola’s economy: present and future

November 30, 2013
/ C.C. Elebash
/ economy

I. Summary

The Pensacola area has many desirable attributes. In the past we were the envy of other Northwest Florida and Alabama communities. However we have fallen behind. Escambia County’s population is stable. The city has actually lost population. The remedy for this situation is revitalization, particularly in downtown Pensacola. The desired outcome is the infusion of new capital and redevelopment. Local government must provide an attractive, clean and safe community — coupled with high quality public education. These “quality of life” basics are the sine qua non of progress. The basics will attract entrepreneurs, investors, workers, retirees and visitors. “Quality of life” is the highest priority for local government. These needs are more important than financial incentives for prospective businesses.

II. Assets and advantages

Metropolitan Pensacola has great potential. Among our assets are: mild climate, Gulf beaches, Gulf Islands National Seashore, National Naval Aviation Museum, Blue Angels, a variety of recreational opportunities, a distinguished university, an outstanding state college, the highly respected Pensacola Christian College, and a splendid historic and cultural environment. Also, we have: east-west Interstate 10, fairly convenient connections to north-south Interstates 65 and 85, freight rail service, a deepwater harbor, intracoastal waterway and a first-rate airport. Importantly, we have a sizeable military presence, acclaimed hospital and healthcare systems, a modest amount of industry and a growing group of “knowledge” businesses.

III. Present situation

Despite these many favorable factors, our economy is not improving substantially. It had slowed down before the recent recession began. Pensacola did not experience revitalization that occurred in other historic coastal cities. Charleston, S.C., Savannah, Ga., and Fairhope, Ala., have done better than we have. Poverty rates in Pensacola and Escambia County are high. Personal income growth is slow. Escambia County is among the poorest of the large urban Florida counties. The Pensacola Metropolitan Statistical Area population has grown only because of adjoining Santa Rosa County. However, the MSA still ranks low in population growth among Florida’s 20 metropolitan areas. External factors adversely affected our economy before the recent recession began. Several factors cost us thousands of jobs. The increase in American productivity meant fewer manufacturing jobs. It happened here as in the rest of the country. Technology made production less “labor intensive”. Manufacturers maintain output with fewer workers. The number of skilled employees at Pensacola Naval Air Station declined dramatically. Closure of the Aviation Repair Depot resulted in the loss of several thousand jobs. Other activities, including the Officer Candidate School and a military finance center, moved to other states. An intangible factor is the dimming of the aura associated with being the “Cradle of Naval aviation”. Since the beginning of military aviation, early in the 20th Century, all Navy pilot training started here. Now it is spread among several bases. The major cause of the City of Pensacola’s stagnation was failure to redevelop its outmoded industrial waterfront. The City’s most valuable asset is two miles and 100 acres of City-owned waterfront; but it was largely dormant and underutilized. There was little public access. Experience shows that safe and convenient pedestrian access to the waterfront fosters new economic activity nearby. Waterfront access was increased a few years ago when Plaza de Luna opened. The new park at the base of Palafox Street was an instant success. The Maritime Park opened in 2012. It has a baseball stadium, an amphitheater and more public waterfront. However, sports stadiums have proven to be poor municipal investments. The amphitheater and public area could become popular although they are not conveniently connected to the downtown historical and commercial districts. The walkway from the Pensacola Bay Bridge to Bartram Park has a spectacular view, but there is no safe and convenient access.

IV. A realistic plan for Pensacola's future

Underlying assumptions:

Economic recovery will continue but at a slow and uneven pace.
City and County finances will be very tight for the foreseeable future. The big investment in the waterfront /baseball park will limit new city projects for years to come

The economic future of our entire area depends on a city renaissance. It is the area’s legal, financial and cultural center. Escambia and Santa Rosa counties will not reach their full potential unless Pensacola prospers. The city has less than 5 percent of Escambia County’s land area but about 20 percent of total taxable property. Only 52,000 people live within the city limits. However, thousands more go to town for work, business, dining, cultural events and medical care. A revival has to happen on and near the waterfront. Common themes of urban experts who visit here are 1) walkability and 2) pedestrian access to the bayfront. In the next few years, if money is available, Mayor and Council should:

Provide pedestrian crossings across Bayfront Parkway to the existing walkway that extends from the Pensacola Bay Bridge to Bartram Park.
Provide an attractive walkway from Plaza de Luna to the east side of Commendencia Slip and Bartram Park.
Ease the entries to the Seville historic neighborhood by creating traffic “roundabouts” at the Garden Street-Alcaniz Street intersection and the Ninth Avenue-Bayfront Parkway intersection.
Think long term about reducing Bayfront Parkway to two lanes. Otherwise, Bayfront Parkway/Main Street will increasingly become a barrier between the people and the waterfront.
Connect the Maritime Park to the Palafox Street corridor and the Seville historic district with attractive pedestrian walkways.
Emphasize private development at the Maritime Park. Turning the Trillium property into a “green field” was a major success. The next step is commercial development. Private investment is the key. The Community Maritime Park needs lease income, and the city needs tax revenues. Unfortunately, parking is a problem. This may constrain commercial investment.
Encourage ECUA to sell or lease the old Main Street plant to private investors. City Council would be ill-advised to place rigorous land use restrictions on the property. Burdensome controls will scare away private investors and the property could remain vacant indefinitely.

V. Additional City policies

These additional city policies and actions will contribute to the revival of Pensacola:

Continue a deep-water port on a limited basis only. Port revenues and tonnage are near historic lows. Job creation is overstated and unverified. The port needs new roles. The offshore servicing contract was a step in the right direction. (The 2011 Port Advisory Committee provided Mayor and Council with wise advice on the future of the port property.)
Open underutilized port property for uses that allow public access. The City should make the Warehouse #4 area facing Commendencia Slip available for private investment. This is a very valuable parcel of real estate.
Cooperate with Escambia County to strengthen the public library system. Great cities have great libraries. Our libraries provide internet access for many low income people.
Leave non-governmental decisions to the private sector. Investors, not politicians and bureaucrats, should make “highest and best use” property decisions. (City Hall attempted to “micro manage” the Ninth Avenue Hawkshaw Project. The outcome was an embarrassing failure. The joint county-city “tech park” is empty.)
Maintain high quality basic city services.
Ensure suitable local public transportation.
Continue to promote neighborhood identity and pride.
Encourage renovation of older properties. Start with a review of archaeology restrictions and historic building codes.

People in Northwest Florida profess to be staunch conservatives. They clamor for smaller government and lower taxes. The truth is they are seeking subsidies and preferential treatment like everybody else. Elected officials and taxpayers should be wary of:

“Public-private partnerships”. Make sure that local government does not put up most of the assets and bear the greatest risk. These promotions sometimes put the taxpayers at risk while private partners get the profits.
Economic impact studies. They are usually designed and promoted to justify government subsidies.
Financial incentives for businesses. These are not substitutes for an attractive, clean and safe community with quality public education.

VI. Concluding comments

The Pensacola area is ripe for transformation despite the slow economy. Our entire region is eager to provide a home for new and relocating firms. A “shining example” of success is the Navy Federal Credit Union. We can attract businesses and manufacturers. The northern portions of both counties have interstate highway connections and rail transportation. An electric power plant and the new waste water treatment plant are nearby. Mobile’s major seaport is only 60 miles away. Pensacola’s airport is valuable asset. Pensacola faces a difficult financial future. The City is paying out about $85 million over 30 years to retire maritime/baseball park bonds. Council also promised to pay up to $19 million to ECUA for clean-up of the old sewer plant property. In addition, Pensacola has over $150 million in unfunded liabilities for pensions and other post-retirement benefits. Meanwhile, Community Redevelopment Agency revenues have declined, and the Community Maritime Park Associates are broke. We very much need an economic magnet to give a boost to Downtown Pensacola. Economic magnets are “economic engines”. These activities, public and private, generate additional demand for development. The Naval Air Station and UWF are examples. The European aircraft plant in Mobile is another. Clarence C. Elebash is a retired Air Force officer and University of West Florida professor emeritus of finance and economics. [progresspromise]

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