Brewed Fresh Daily

Illinois a little jealous of Michigan tourism. CBS news in St. Louis detailed a state house hearing in which many complained that Michigan is outspending Illinois in tourism promotion. The state of Illinois earns more from tourism than Michigan does. But as Changing Gears noted yesterday, Michigan is pumping more dollars into its Pure Michigan campaign to try to increase the money visitors will spend there. At the hearing, lawmakers said each dollar Illinois spends on tourism promotion will reap six to nine dollars in return. Pure Michigan puts its return on investment at five dollars for every dollar spent on the campaign.

Michigan governor lobbies to improve state’s bond rating. According to the Associated Press, Governor Rick Snyder traveled to New York yesterday to meet with all the bond rating agencies. He is trying to convince them Michigan is more credit-worthy than their ratings imply. A bond rating is essentially a state’s credit score; a higher bond rating makes investors more comfortable investing in state projects. There are three bond rating agencies. One of them, Standard and Poor’s, lowered Michigan’s rating in 2003 to AA-. We’ll be putting up a table of Midwestern state’s bond ratings to go along with our coverage of delayed payments to nonprofits.

Ford shares fall after lawsuit favors dealers. Our partner Michigan Radio reports Ford’s shares fell yesterday after a judge ruled the company owed thousands of dealers a combined $2 billion dollars for overcharging for trucks. Ford is planning to appeal the decision and analysts are saying Ford should be able to absorb the cost.

This week, Changing Gears is looking at how nonprofits are faring in the aftermath of the recession. Right about now, you might be asking yourself, “What exactly is a nonprofit?  And why should I care?”

Nonprofits are groups that exist to advance a public good.  Think hospitals, colleges, food banks or child welfare groups.  Many nonprofits are public charities and many seek tax-exempt status. People who work in the nonprofit sector often speak about the “social compact” between nonprofits and government.

They see nonprofits as doing the work of government, partnering to deliver things like social services, often at a much lower cost. Now, a lot of nonprofits have lost resources at the same time that the need for their services has grown.

For example, many human service providers rely on government grants and contracts to stay afloat.  But from city halls to the halls of Congress, governments are slashing budgets. To fill the gap, nonprofits often turn to private donations and bank credit. But they can run into trouble there too. During the course of reporting these pieces, we learned that some banks are reluctant to extend credit to organizations whose primary debtor is the government. Government just isn’t seen as the reliable partner it once was. Owning real estate doesn’t get these groups as far as it once did either.

In addition to serving a lot of people, nonprofits employ a lot of people. According to a study from Johns Hopkins University, 1 in 10 Michigan workers was employed by a nonprofit in 2009. That made the nonprofit sector the fourth largest industry in the state at the time, in terms of employment.

So stay tuned as we bring you two stories from the nonprofit world.  I’ll report on a substance abuse program so badly strained by late government payments that it lost its accreditation. And my colleague Niala Boodhoo tells the story of a literacy group called Open Books. That organization is trying to tackle the problem of illiteracy in Chicago, where more than one out of every three adults can’t read well enough to fill out a job application. And Open Books is doing this without any government funding – in fact, they’re trying to become completely self-sustaining. It’s a page from the new world of social enterprise, which is blurring the line between the for-profit and not-for-profit world.

By the way, it’s not all bad news from the nonprofit world.  Many nonprofits with well-diversified funding streams have weathered the storm and continued to provide services without incurring damaging debt levels.  Moving forward, though, everyone seems to agree – diversification is the name of the game.

The Chicago Mercantile Exchange, following its threats to leave the city over a tax increase, has put its building up for sale, according to the Chicago Sun-Times. The sale does not necessarily signal the CME is ready to leave — it will essentially lease back a large portion of the building from the future buyer. The building is the national landmark Chicago Board of Trade Building. The CME will lease back space for at least 15 years, including the trading floor where agricultural commodities are traded. No word on an asking price yet.

The list of entities with offices in China includes Microsoft, General Mills, Yahoo! … and Wayne County, Michigan? That’s right.

Some Midwest government agencies are so serious about building business relationships with China that they’re opening offices there. Changing Gears is putting together a list of Midwestern cities, towns, and counties with offices there. If we’ve missed one, let us know!

Go to the map to find links to more information about the offices.

• St. Louis, Missouri has offices in Bejing.
• Wayne County, Michigan, which encompasses Detroit, has four offices in China: Chonquing, Wohan, Nanjing and Beijing.
• Ohio has an office in Shanghai called the Ohio Greater China Office.
• Northwest Ohio Regional Growth Partnership has an office in Shenzen.

Three must read stories about the Midwest economy:

Illinois law makes it harder for teachers to strike. The Chicago Tribune reports Illinois Governor Pat Quinn will sign a sweeping education reform bill into law today. Under the bill, kids will be in school longer each day and for more days a year. Performance will be more important than seniority in making tenure decisions, and it will be more difficult for teachers to strike.

Pressure to open mine in Wisconsin breeds bogus ads. In Wisconsin, the state’s biggest business lobby is running ads touting supporting mining legislation. But, there isn’t actually any legislation written yet. The Milwaukee Journal Sentinel explains that the ads are being run in the hope that Republicans will maintain their majority in the state legislature and approve opening an iron ore mine in the northern part of the state.

Pure Michigan campaign gets $3 million more. The advertising campaign touting Michigan’s natural beauty has gotten more in donations this year compared with 2010. The donations are from businesses and local governments that think the advertisements are a good investment. The total for the advertising campaign is approaching $28 million.

Ask Detroiters to list their favorite musicians and you’ll hear names from Motown to classical music,

hip-hop to folk. And there’s no doubt that the music business has been an economic ambassador for the Motor City. Now some of Detroit’s notable artists are about to take the stage in Chicago where the Chicago Symphony Orchestra usually performs. On Friday night, the Auditorium Theater will host a tribute to the music of Detroit, as part of its United Sounds of America series. The bill includes singer/guitarist Marshall Crenshaw, violinist Regina Carter, soul singer Bettye LeVette and trumpeter Marcus Belgrave.

Sunday night’s concert in the series was a tribute to New Orleans, whose musicians have many ties to Chicago (think Louis Armstrong and the New Orleans Rhythm Kings).

The night featured the Rebirth Brass Band, Donald Harrison, several members of the Andrews family, and was hosted by Wendell Pierce, the New Orleans born actor who starred in the HBO series The Wire and currently appears in Treme. More than one parasol was lifted and hankies were waved as the Chicago audience spent most of the night on its feet.

Can Detroit give New Orleans a run for its musical money? Which Detroit artists are on your iPod? We’d love to compile a Detroit music playlist. Post your nominations.

A new experiment I’m trying here – sharing online some interesting background or side stories that I find in the course of reporting a bigger story, like the one I just did about Latinos across the Midwest. One of my biggest frustrations as a public radio reporter is how much research we do that doesn’t end up on air. Here, in a new section I’m calling Niala’s Notebook, I’ll highlight some interesting smaller stories (or as we say in the biz, angles) that don’t end up in larger stories.

Migration waves of ethnic groups to the United States have traditionally happened over about a hundred year period, I was told by a couple of folks as I researched this story. It begs the question: how does this wave of Latino immigrants differ from previous ones, like the Irish to the United States during the 18th to mid-19th centuries?

 

I had some interesting discussions about this with Allert Brown-Gort, the associated director at the University of Notre Dame’s Institute for Latino Studies. I’m sure this has been the topic of many graduate studies, in our discussion there are two interesting modern differences about current immigrants that I found especially interesting:

-Given the increasingly global nature of the world, and the mobility and improved communications, immigrants don’t lose as many ties to their home countries – how can you when a trip home is as simple as a plane ride or a Skype call? That results in an increased duality in the way immigrants approach life in the United States, although the traditional patterns of first- and second-generation immigrants still follow more familiar patterns of assimilation. (When I write this, I think of myself as a good example: I’m a first-generation American, my parents immigrating here from Trinidad for my father’s career as a university professor. I think I’m still of this hypen/bridge generation that straddles both worlds. If you’re really interested in this, my public radio colleagues over at Southern California Public Radio are doing a really neat job of reporting on this in their MultiAmerican project, check them out.)

-Even with this level of modern globalization, the unskilled immigrant who comes to the United States finds  a vastly different work landscape than previous generations. As Gort told me, “What’s different now is that we are in a society that requires much formal educational attainment, and we’re living in an economy where businesses no longer really train people from the ground up. If that is the case, then when we think about the typical upward mobility we have to think the only door that is still wide open to them to assure that opportunity is entrepreneurship.”

That was, for me, an interesting take on why there may be even more entrepreneurs now than in previous generations. Your thoughts on how else this is different?

CLEVELAND — Should other Midwest cities be looking to the Chinese to revitalize vacant property? It’s working out pretty well so far in Toledo, as I report this week. That city has been really aggressive in courting investment from China, and they’ve created some strong relationships there that seem to be bearing fruit.

Not every deal goes so well, though. Just ask the Cleveland Cavaliers. In 2009, the team announced it was selling a 15% stake to a Chinese investor. A year later, it fell apart.

I asked Tom Waltermire how much time his team spends trying to get Chinese business interested in the Greater Cleveland market. He heads Team NEO, this region’s business attraction and marketing organization. He wasn’t dismissive Chinese investment, but it’s clearly not a priority. This part of Ohio has a long track record or trade with Europe. (Especially The Netherlands, as you’ll hear in the second audio file here.) Team NEO got funding last year to try and get more foreign investment, but Waltermire says Europe is the better bet for getting a return on that investment.

Waltermire says the emphasis should be on creating jobs, not just having the Chinese own land. The Chinese investors in Toledo say they intend to develop the Marina District, but it’s unclear how many local jobs will be created. Obviously, it will generate construction work, but lasting employment?

While Team NEO is focusing on Europe, it’s not ignoring China, and…Canada: another country with a long track record of investment in the Midwest. (Hey, it’s an easy commute.) And, while he’s not flying to China often like his counterparts in Toledo, Waltermire says the Cleveland area has seen its fair share of Chinese delegations in the past year.

Do you think more Midwest cities should be putting time and effort into getting investment in China? Let us know in comments.

 

TOLEDO, OH –Toledo Mayor Michael Bell is serious about Chinese investment in his city. When he gives you his business card, one side is in Chinese. His office is adorned with Chinese screens and other gifts from his travels there.

“America is always waiting for people to come to them,” says Mayor Bell. “Well, we’re on the other side now and we have to be able to reach out and market ourselves.”

A year and a half in office, the independent Mayor’s efforts are paying off. His first trip to China was in September. Five months later, he sold a struggling city-owned restaurant complex to two Chinese investors for more than $2 million. Bell and economic development folks in Toledo say these deals are all about relationships. They’ve worked hard to make those connections and pitch the Chinese on the many opportunities in this unfamiliar city.

These first Chinese investors were so enamored with Toledo and its available real estate that they decided to make a bigger deal.

Along Toledo’s waterfront is an area called the Marina District. Right now, it’s just weeds and a road to nowhere.

“We’ve got undeveloped land that’s been about ten years right now in the making,” says Dean Monske, who heads an economic development group called the Regional Growth Partnership. Right now, it’s more than a hundred acres of prime real estate. It has a skyline view, easy access to the Maumee River, but nothing there.

The city spent millions cleaning up the site to get it ready for someone to develop, and had plenty of false starts. Monske says there were about eight ceremonial groundbreakings over the years, but local investors just couldn’t get the financing together to build something.

China, though, is full of the newly rich looking for places to put their cash. Land in China can be expensive, and the state can take it away whenever it wants. So, smart investors want a piece of stable countries with a lot of land: Australia, Canada, and increasingly the US.

“When they actually come here and see it for themselves and say ‘you’ve got to be kidding me, there’s empty land right across from your main downtown right on the water,’ that’s simply unheard of,” Monske says.

Toledo’s city council recently approved the sale of the Marina District to the Chinese investors. They paid $3.8 million in cash—more than the appraised value. For a mayor like Mike Bell, this is the dream deal: no abatements, no loans or tax breaks. The Chinese, he says, just wanted the city to accept the cash and get out of the way.

The Mayor says the Chinese plan to build housing and shops on the site. It’s supposed to be a kind of international village, and they want to attract more foreigners to the apartments. He estimates the total investment could be more than $200 million. That would make it among the largest Chinese real estate investments in the country if it goes as planned, but that’s a big if.

“If you have a lot of expectations about what’s going to happen next, that’s where you have to be careful, says Derek Scissors, an Asian scholar at the Heritage Foundation in Washington. He thinks the Toledo plan looks like a good deal with savory investors. The city was also smart enough to give itself the option to buy the land back for the same price if nothing happens there in five years. But Scissors warns that the Chinese are new to American real estate.

“We haven’t seen any sign that the Chinese know anything about property development in the US. What they’ve done is bought assets that they want in their portfolios. When this idea that they’re going to come in and they could be a big factor in the Great Lakes region, the money could be there, but if they’re involved in the decisions, there’s no sign they know what they’re doing,” Scissors says.

Scissors estimates that Chinese businesses will invest $6 billion in the US this year. That’s tiny compared to how much China owns in US bonds. Real estate is an even smaller part of that, but it’s grown from just about nothing less than a decade ago.

Scissors thinks there are real opportunities here for Midwest cities looking for investment, as long as they do their due diligence on the investors.

Critics like Ohio Democratic Congresswoman Marcy Kaptur raised concerns about potential communist money being involved in deals like this. She’s been a big supporter of labor and some unions worried they wouldn’t get much work from a foreign investment. Add Julie Slota in a Toledo suburb to those wishing it were local money.

“I think it should be the local investors and keep the Chinese out of it,” she said.

Nearly everyone you talk to near the Marina District, though, expressed relief that someone has finally taken over this land. Stan Sagan owns a shop across the street selling board games.

“ We’ve had so many hopes as far as having a development anchor for this part of the downtown Toledo that I think it’s a relief that something is going to happen, and everyone is just crossing their fingers,” he said.

The Mayor and the economic development companies are hoping these first Chinese deals are just the beginning. Northwest Ohio’s Regional Growth Partnership has opened two offices in China. Officials hint there could be more deals announced in the coming months: maybe a Chinese company opening a factory or headquarters. If any of that happens, it could be a role reversal of globalization: a Midwestern city gaining jobs and money from China.