By Pat Fain and Leslie Agron
The usual theory behind economic development for a community is that the local economy is too small. So, economic development experts seek to bring in new companies, especially industrial ones, to enhance that economy. The theory is that increased local purchases by new companies and their employees are multiplied several times as the money spreads throughout the community. Every additional purchase results in additional sales tax from the same original dollar that exited the new company. Companies that manufacture goods or provide services externally have the greatest value theoretically as they actually bring new money into the community. The rate at which this happens is called the velocity of money.
In Oak Ridge, however, the size of the economy that occurs within our city limits is enormous for our population. The problem for Oak Ridge is that much of that economy occurs within non-taxable institutions and the vast majority of their staff does not live in Oak Ridge. Thus, in Oak Ridge the velocity of money is 70 mph—the speed at which those folks are cruising down Interstate 40 on Friday evening as they take their paychecks home!
So, a development plan for Oak Ridge is about increasing Oak Ridge’s capture of revenue, more than increasing the size of the economy. The city of Oak Ridge, operating within the guidelines set down by the state of Tennessee, derives most of its tax revenues from property tax, sales tax, and bed tax at hotels and motels. New federal facilities are not subject to property tax unless they are owned by private entities. When that occurs, it is usually temporary. For example, several buildings at Oak Ridge National Laboratory are on a lease/purchase plan—taxable to private owners now, but not when the deed is turned over to the government at the end of the contract to purchase.
Additionally, new companies brought into town are also highly sought by other communities. They have very likely been offered incentives to locate elsewhere, and Oak Ridge will probably have to offer their own incentives to seal the deal. As a result, they are unlikely to pay a lot of property tax for their first 15 to 20 years here. Federal facilities may voluntarily pay sales taxes here in Oak Ridge; new private companies will pay sales, and if we are lucky, some property taxes. Thus, most of the positive impact of economic development occurs when new jobs lead to new residents of Oak Ridge who, directly or indirectly, pay property tax and sales tax as they participate in the circulation of money.
The remote locations of ORNL, Heritage Center, and, to a lesser degree, Horizon Center from the center of town do not encourage living in Oak Ridge because the lengths of commutes to those locales are not necessarily much shorter than from neighboring communities.
There simply is no history in the past 40 years of new jobs creating enough new residents to keep city revenue growing at the rate of inflation. Ninety percent of Oak Ridge workers do not live here. The most they contribute to the economy is purchasing lunch upon occasion. They do not even stop for fuel until after crossing Solway Bridge when heading to Knox County.
Oak Ridge needs economic development leadership neither mired in worn-out solutions that are not working nor more engaged in other agendas than our actual interests. The real potential for sustainable economic growth is in permanent residents who find this an attractive place to live and in a visitor-based economy of people who find this an attractive place to visit. Residents have associated costs of city and school services, but they contribute most of their earnings to the velocity of money in the city. Visitors have a triple benefit in that they contribute to economic growth while paying taxes and demanding few services.
When we spend our money on economic development it behooves us to understand where we get the best return on our investment. The new economic strategy should include slowing down the speed of money fleeing town across Solway Bridge at 5 p.m. It strikes us that a toll booth would accomplish this admirably, but alas…
Pat Fain and Leslie Agron are Oak Ridge residents and columnists.
Charlie Jernigan says
There is another point that fits with this story with a small exception. The entry to ORNL is only about a 3 and a half miles from the center of town, about the same as from Solway. The entry to Y-12 is about a mile from the center of town.
The distance to both of these from Historic Woodland is even closer. But Woodland and the rest of Oak Ridge have not proven to be able to attract that 90% or so of employees that have left living here while still keeping their jobs at these Federal facilities.
The focus needs to include housing so that residential re-development can happen as needed to rid ourselves of housing that is unfit for human habitation. These places adversely affect the values of their neighborhood and the choice that new employees will make for themselves and their families.
Re-development is not just to improve the economy, but it also is a way of keeping up, and as a community with great economic value, we have not kept up with both housing and retail recently. The near term looks good for retail (finally) leaving housing as the final key to keeping our community up-to-date and economically vibrant.
Abbey says
Last week at my place of employment we spoke of the “good old days” with the old ‘downtown’ and its anchor stores, Sears, Penney’s, Proffit’s, the Federal Bake Shop, The Camera’s Eye, Woolworth’s and Emery’s, Nancy Lynn’s and Sturm’s Youth World. Then Oak Ridge just had to have a mall and then they allowed the town killer, Walmart, to destroy what was a wonderful, small, historic, friendly city and all it’s small businesses. City fathers would not heed warnings from other towns Walmart had destroyed. Farragut has thrived because they rid their town of Walmart with an ordinance prohibiting fence enclosures and, voila! Goodbye Walmart/Hello beautiful thriving city. Only part of Turkey Creek is in Farragut. Until Oak Ridge kisses Walmart goodbye, it can never regain the lovely small town, picturesque, historic place it once was, and where people want to live and raise their families. Me, I never shop at Walmart, and never will.
Steve Mason says
And having Walmart (and Target) a block outside of Farragut accomplishes exactly what in their retail environment? The fancy stores in the Pinnacle center aren’t in the Town of Farragut. If you actually would go look, Farragut proper has very little to offer that is different than what is in Oak Ridge (i.e., grocery stores, drug stores, and restaurants). All of the big stores built outside of Farragut so that they wouldn’t have to deal with Farragut’s regulations. It’s just been recently that “Turkey Creek” extended westward into the Farragut city limits because that was the only available land. And as to your list of stores, Proffitts. Woolworth’s, and Emery’s went bankrupt or were sold out and their “disappearance” from Oak Ridge would have happened with or without the construction of the mall. Sears and Penny’s are also having financial trouble nationally, again it’s not really anything to do specifically with Oak Ridge. With the digital revolution, The Camera’s Eye would probably be long gone too, overtaken by technology. The owners of Nancy Lynn’s and Sturm’s retired, as did the owner of the Federal Bake Shop IIRC. So most of your “rose-colored” recollection would not exist today, mall or not.
Abbey Nelson says
Actually Sturms and Nancy Lynn moved to Knoxville, Sturms onto Kingston Pike as I recall. and perhaps you might consider exactly why these store owners chose to “retire”. I have personal knowledge of a family business that did very well prior to walmart. Walmart was able to sell identical brand name items at a price less than what this business was able to purchase at a wholesale price. It is impossible for small businesses to compete with the massive buying power of walmart. All wholesalers discount with volume which walmart spreads throughout their stores. Our small local businesses cannot possibly compete with that. Walmart kills small towns and there are many, many small towns and cities that exist across America today because they chose to fight walmarts coming into their cities. Many Americans enjoy that small town lifestyle. FYI there would be no Turkey Creek without Farragut’s participation in its planning. I know, I was there. I will take my “rose colored” recollections over the $$$ in your eyes any day, thank you.
Steve Mason says
Er, they chose to retire because they got old and didn’t want to or couldn’t work anymore? And let’s see, in your first post you were lauding Farragut for keeping Walmart out of Farragut, and now you claim that Farragut helped develop Turkey Creek (even though Turkey Creek isn’t in the Town of Farragut). Pretty amazing. Why don’t you take a crack at explaining how having a Walmart on the border of Farragut (as opposed to within the city limits) has kept Farragut as a “beautiful, thriving city”? Especially since now they’ve let Costco in. You forget that Farragut is an anomaly as far as being a town goes. It was created and exists for one reason and one reason only, to keep the area from being annexed by the City of Knoxville. Other than that, it’s just a named part of Knox County. And by the time it’s residents pay for garbage pickup and their fire department subscription, their total “tax cost” is not really much different than it is for someone living in Oak Ridge. And as to your “rose colored” recollections, you’re so blind that you’ve missed the point entirely. With or without Walmart and with or without the mall, Oak Ridge would be different retail environment today than what you so fondly recollect. Times change. Trying to live in the past is not a good plan to go forward and there’s far too many people in Oak Ridge that continue to try to live in the past.
Trina Baughn says
“And by the time it’s residents pay for garbage pickup and their fire department subscription, their total “tax cost” is not really much different than it is for someone living in Oak Ridge.” Not true. I checked with a couple of residents and their annual payment for trash and emergency is $350 per year. Their annual property tax (county only) ranged from $2000-$3000. By not paying city property tax, they are saving as little as $1500-$2650. They have all of the services we have AND great schools, which, according to their mayor, are funded at about half of what ours are. We should learn from winners, not perpetuate lies about them.
Steve Mason says
Your numbers do not ring true, but then maybe mine don’t either, so let’s try to get some hard facts in the discussion. According to the Waste Management website, trash pickup and recycling in Farragut runs a minimum of $22/month, which would be $264/year. Even without recycling it’s $17/month or $204/year and I would be pretty sure that would be a competitive price. As to a fire subscription, if your residents are paying $2000/year in property taxes, that means that they have a house valued at close to $300,000 – nearly $450,000 at $3000/yr – you seem to know some pretty well off folks (btw in Oak Ridge, the county property tax on a $300,000 house would be $1762.50, a difference of $237.50). It does not seem possible to get a quote from Rural Metro without actually setting up an account, but based on comments that I’ve read in the Sentinel, such as here: http://www.knoxnews.com/news/2012/dec/11/letter-bill-ruralmetro-surprising-costly/ , a $300-$400 subscription fee would not be an unreasonable guess. So adding, $300 + $204 + $237.50 (the county tax difference) comes to $741.50 vs. a city property tax in Oak Ridge for a $300,000 house of $1,792.50. So the additional taxes on a fairly substantial house in Oak Ridge is about $1000, give or take, depending on what the actual fire subscription rate is. More importantly, they don’t have control of “all the services”. One has to remember that Farragut does not have control of their schools (you do understand that not all children who live in Farragut attend “Farragut schools”, don’t you? and some children who don’t live in Farragut do attend Farragut schools) or their school curriculum, their police department (how many sheriff’s deputies are on duty at any given time in Farragut?), their fire department, or their library. In what they do get, they are subsidized by the rest of Knox County. Oak Ridge could reduce their property taxes significantly if we could collect $100 or $200 from every homeowner in Anderson County outside of Oak Ridge, but I somehow don’t think they would go for that. Farragut has one seat on the Knox County Commission (of nine), and one seat on the Knox County Board of Education (again of nine). You of all people, Ms. Baughn should understand what that means.
Trina Baughn says
I went back to my notes and confirmed that I was incorrect. The $350 only covered emergency services. Your math, though, demonstrates my original point.
There are many children who live in Oak Ridge that do not attend our schools. St. Mary’s has a perpetual waiting list last I heard. What’s your point?
The parents I spoke with didn’t express concern
about control with schools, library, police or fire. In fact, their extraordinary population growth seems to suggest that control is a non-issue. Interesting word choice on your part, however. Matches your tone.
Trina Baughn says
Yes, I am aware of the fact that students are bussed in from outside of Farragut. The same thing happens here in Oak Ridge.
Steve Mason says
You really don’t get it do you? People from outside Oak Ridge who send their children to Oak Ridge schools pay a rather high price to do so (considerably more than either one of us pays in city property taxes). And one more thing on the “control” issue. Let’s say that Oak Ridge “gave up” it’s school system to their respective counties. It would save a lot of city property tax money, right? But then hypothetically, since you live in the Roane County section of the city, how would you like it if you were suddenly told that your children would have to go to high school in Roane County? Of course you’ll say that it will never happen, but that’s certainly a scenario that could be postulated if Oak Ridge was like Farragut. If you like the Farragut way so much, why don’t you propose to City Council that we become like Farragut. Give up our school system and police department to Anderson and Roane counties, contract out the fire service, give the library to the Anderson County Library System (oops, there is no Anderson County Library System, is there?), and make everyone pay for their trash pickup. That would certainly reduce the city property tax, wouldn’t it? How exactly do you think such a proposal would be received in the larger community? If you believe that such a proposal would be popular, then why don’t you make it? If you don’t, then why continue to harp on the “Farragut way”?
Trina Baughn says
Not sure why you are so angry, Steve. Farragut has students bussed in from economically disadvantaged neighborhoods; Oak Ridge does the same
thing at the elementary level. Some Farragutians send their students to private school, so do many Oak Ridgers. Non-residents pay tuition to send their
children to both Farragut and Oak Ridge public schools. These are just facts. Nothing to get worked up about.
As I’ve stated earlier, for the precise reason you
mentioned, I’m not interested in turning our schools over to the county. For that very reason, we need to become realistic about our spending so that we CAN
retain them.
We can’t maintain our current level of spending and survive. Rather than resorting to childish arguments like “If you love Farragut so much why don’t you marry it?†– why don’t you try learning from their success
instead of trashing them? What’s wrong with learning from winners, Steve?
Steve Mason says
Angry? You think I’m angry? LOL.
You do have some interesting perceptions. Oak Ridge buses kids from disadvantaged neighborhoods to our elementary schools? You’ve got to be kidding. Oak Ridge has neighborhood schools, they don’t bus anyone anywhere based on the economic status of the neighborhood. And neither does the Knox County Board of Education. School assignments are made based on population mapping, not economic status.
I challenge you to prove that non-Knox County residents are sending their children to Farragut High School. My bet is that you can’t. No anecdotal stories, but some real solid evidence. And you really still don’t get the difference between choice and required attendance, do you?
You’re entitled to your opinion about our current level of spending and Oak Ridge’s viability. But you should also be very clear about the cuts you propose. You’re going to find it very, very difficult to build a consensus on that subject especially if you don’t bring something positive to the table. I also suspect you’re going to get really tired of all the 6-1 and 5-2 votes you’re going to have on City Council. And as usual, you have made a flippant argument that isn’t at all what I said. You can’t even understand that I’m not trashing Farragut. They’ve managed to arrange themselves a really sweet deal, but it’s a deal that can’t be emulated and one that isn’t as good as it looks on the surface. Once again, Farragut was created and exists for one reason, to keep the area from being annexed by the City of Knoxville. While it is technically a city under the laws of the State of Tennessee, they are in reality just a section of Knox County with a name and no other city can realistically duplicate their situation. It would appear that even you admit to that fact since you are unwilling to take the steps that would be required to do so. They do not provide the services that normal cities provide to their citizens. They are heavily subsidized by the rest of the citizens of Knox County. They are not “winners”, they are an accident of birth. If you want “winners” to learn from, you should look to places like Maryville and Alcoa instead of having your severe case of “Farragut envy”.
Trina Baughn says
Steve – You are wrong on the bus situation (both ours & theirs), the original motivation for Farragut becoming a town and many of your assertions about county vs. city. But obviously I’ve upset you and there is no bringing this conversation back around to a civil level. I bid you a good night, sir. I hope you have a better tomorrow.
Steve Mason says
Ah, yes, we really wouldn’t want to “perpetuate lies about them”, would we? And my math demonstrates that people who live in Farragut do pay extra for the privilege of living there. While they pay no city property tax, they do pay extra above and beyond the county property tax and the fact remains that the services that Farragut residents do receive are subsidized by the rest of Knox County. If you weren’t so blinded by “Farragut envy”, maybe you could see the point. BTW, if one wants to really start making fair comparisons, one should compare Oak Ridge property taxes to say, Maryville or Alcoa. They support a school system and provide all the services that a town normally supplies, just like Oak Ridge and unlike Farragut. So you bring up St. Mary’s? You really don’t get it, do you? People choose to send their children to St. Mary’s and pay extra for it. People who live in Farragut who have their children assigned to Hardin Valley (for example) have no choice in the matter. And the control issue? Did you miss the widely discussed reassignment of children that took place when Hardin Valley opened? Read about it here: http://www.farragutpress.com/articles/2006/10/5656.html Did their “protest” keep children from being reassigned? Nope.
And as to Farragut’s “extraordinary population growth”, you really don’t understand that either. It’s due to some very simple reasons, the availability of land, new housing stock and the good jobs in Oak Ridge. There is no industry in Farragut (at least none that I can think of) to support such growth. There is easy transport to jobs in Oak Ridge. A quick Google search says that the median income in Oak Ridge in 2009 was $48,776 and the average home cost $136,628. For Farragut, those numbers are $93,306 and $312,468. It’s a high income area with very few poor people. If you really want to do something to improve Oak Ridge, you should quit being envious of Farragut and trying to assign blame for everything and work to improve the housing stock and the retail environment.
David A. Vudragovich says
Walmart in Turkey Creek is not in Farragut? Right on the boarder? And what is the fence enclosure? I had not heard of that before. Thanks!
Steve Mason says
If I remember correctly, the old Walmart used to be in a building that was on the corner of Lovell and Kingston Pike (where Costco now is located and is actually on the northeastern boundary (that is, Lovell Road) of the town). Walmart wanted to expand at that location and Farragut wouldn’t approve their plans. So Walmart moved more or less around the corner to Parkside as one of the first tenants in the new Turkey Creek development. The eastern part of Turkey Creek is not in the town limits of Farragut with the line being just west of the Pinnacle Shopping center (actually running between the two Belk’s buildings) on the north side of Parkside and the shopping center where Calhoun’s is located on the south side of Parkside. Why Ms. Abbey thinks it makes a difference to the retail environment in Farragut whether Walmart would have expanded in their old location or some 4000 feet north of that location somehow escapes me.
David A. Vudragovich says
Thanks for the history/clarity.
Ray Kircher says
Wal Mart was in the Steinmart building at the corner of Campbell Station and Kingston Pike next to a White Stores which is now Fresh Market. According to my resources, it wasn’t the Town of Farragut that forced Wal Mart to move, it was White Realty. Their property has done much better with Wal Mart not there. I’m sure the person responsible for catering to Wal-Mart within White Realty doesn’t work there any longer. The leasing decision to allow Wal-Mart in killed all of the other leases in the strip mall. Not just a slow bleed of stores to shop in, but an overnight shuttering of store fronts. Farragut is still suffering with many old buildings with no tenants. Wal-Mart left when their lease wasn’t renewed by White Realty. That is just what I remember of that strip of shops.
Steve Mason says
Thanks for the correction, but the point remains the same. It still escapes me how having a Walmart just outside of the town limits (rather than inside) has somehow benefited the retail environment in Farragut.
AC/OR Growth says
All the comments above are valid. It would be nice if Oak Ridge could funnel those federal workers through the city but it also has the potential to create major traffic jams. In order to get those workers spending money, perhaps O.R. businesses could offer discounts to “out-of towners”. No need for coupons but perhaps these people could show I.D. that indicates that they live somewhere else, (outside of O.R. or Anderson County) and could receive a discount. It might sound unfair to locals but locals do need out-of-towners to spend money and local businesses can always run specials for locals.
As an someone who has lived outside the state for many years, I do see a problem with O.R. The population is older and you need to attract younger residents. An interesting idea would be for O.R. city leaders to pursue a wireless/high speed connection for the city area. In conjunction with attempting to launch hi-tech start-ups in the area. That might lure in younger residents esp. those with tech skills and those that might live in West Knox County. The technology parkway never took off but it might be able to be created in Oak Ridge as a research/incubator park.
A mix of housing, both upscale and downscale are desirable for cities. Walkable developments are the rage right now and should be encouraged to attract outside residents. Also, visitors/tourists, like to find amenities in central spots. If a national park/memorial is approved, O.R. residents should push to have it located close to the center of the city. It would encourage those visitors to possibly shop/eat in the city without driving all over the place.
An old saying is to leverage what you have and O.R. has plenty of potential but needs to find the right plan to make it happen.
John Huotari says
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Pat Fain says
Just got back in town after a 10 day visit with grandchildren in Louisiana and read all the comments. great discussion all around. will add some more tomorrow when I have more time, but for now an additional note on building upscale homes. There are 2000 vacant lots already approved within the central residential area of OR at this time. Mostly they are in subdivisions in the $250,000 and up category. I have not examined the building permits question of Farragut vs OR in the last 12 months, but if someone wants to look at that comparison it might be interesting. Thanks for all the good dialogue. Keep it up. Pat Fain
Sam Hopwood says
For whatever it’s worth, a family member bought a lovely new home in Powell located in a nice subdivision about 12 years ago for $135K. At that time if they could have found something comparable in OR it would have been $235K. Yes, they pay a little extra for garbage pick-up etc. but the difference in the cost of that home is enormous. People vote with their feet when seeking decent housing. We don’t seem to have grasped that in OR but people looking for homes here and the surrounding area have. Incidentally a significant percentage of OR school employees, including teachers, and many, many city employees choose to not live in OR. To me, the reasons are clear…… Just my view.
BTW does our “industrial recruiter” still live in Knoxville?
Steve Mason says
And one can’t really argue with your family member’s “perceptions” about value, but my bet would be that the reality is not quite as bad as you describe. A $235K home, especially 12 years ago, would have been in the top tier of homes available in Oak Ridge. Again according to the “city-data” website that I’ve previously quoted, the average price of a newly built home in 2001 in Oak Ridge was $147k. But you’re right, as I previously have tried to point out, the lack of available, perceptually competitive housing is a major (maybe even THE major) problem in Oak Ridge.
Joe V. says
This is really nothing new in this article or these posts… same old, same old…it’s too easy to point out all that is wrong in this community…What continues to lack in Oak Ridge are viable solutions…We as a community generally like to stand on the sideline, tell everyone how to play the game, but don’t want to get our uniform dirty…
That being said I researched something several years ago that I still believe could be a viable opportunity for our community. It’s called Hometown Competitiveness – A Comeback/Giveback Approach to Community Building. This program was started to help rural farming communities in the Midwest, but I believe there are a lot of elements that are fitting for Oak Ridge.
I challenge people to be a part of the solution and not a part of the problem….If you point out a problem than you should be obligated to offer a solution…just one man’s humble opinion
Steve Mason says
And Joe, you’re pretty much exactly right. The Land Bank program that’s been started in Oak Ridge is a step in the right direction, but we need to figure out more ways to do urban renewal to improve the housing situation. We have way too many housing units that are plainly unattractive to potential new citizens.
Myra Mansfield says
Reading thru the comments I notice alot of talk about housing and schools. However, I personally know people who work at Y-12 and live in Farragut because they are concerned about drug crime in Oak Ridge. They even tell Y-12 guests from out of town not to stay at OR hotels because of drug crime. They do not care about paying for increased costs of commuting or higher costs of services when it comes to providing their family and visitors a sense of safety. If we have housing lots that aren’t selling, (2000 lots is outrageous) and schools that have a decent reputation but still don’t have the power to attract substantial growth, then drop the subject. Yes, learn from winners and look elsewhere in Oak Ridge for an explanation as to our lack of growth. Find more support for our law enforcement agencies and drug task forces.
Steve Mason says
What you describe is unfortunate but sounds more like people trying to justify their decision on where to live. My first question to you would be – Have you ever witnessed a drug deal or any sort of drug related crime in Oak Ridge? My bet is that you haven’t. I’ve lived in Oak Ridge for multiple decades and in all that time have had only one interaction with the police force (for minor vandalism) and I don’t really think that my experience is all that unusual. I’ve never heard of a drug deal in my neighborhood and I would bet you haven’t seen any in Hendrix Creek either. Are there places in town where drugs are a problem? Yep there probably are, just as there are places in virtually every town. But not for the majority of the population or for visitors.
Sam Hopwood says
Call it what you will but students from Scarboro are bussed from Scarboro to all four elementary schools and to both middle schools. And yes I have seen drug deals go down in the parking lot of several fast food eateries on South Illinois, the parking lot at the BP “Gangsta Mart” on South Illinois and several times in Walmart’s parking lot. The dealers are out quite often and I don’t really get around that much., but I DO keep my eyes open. You are fortunate to live in a neighborhood that you feel is drug free. Congrats!!
Steve Mason says
Strangely enough, looking at the listing on the OR Schools website, I find that you are quite correct. But I suspect that the reason is more for racial balance than economic reasons. And tell us, did you feel threatened or endangered by these “drug deals” that you think you witnessed? How exactly did you determine that they were “drug deals”? Did you report them to the police? Why not? Do you think that there is a drug problem in Burnham Woods?
Sam Hopwood says
Yes Steve the busing is for racial reasons and always has been. And you really should get a handle on your denial of the drug problems in OR. It runs from Rivers Run to Wisconsin Ave.and all areas in between. The local daily loves to keep tabs on the drug arrests and the address’s.
Check it out, you might just find your neighborhood in there.
Good night and good luck!
John Huotari says
We have removed several comments from this thread that we believe were in conflict with our attempts to foster civil discussion. Among other things, we ask those who comment to keep their comments civil and to avoid getting personal or insulting others. Thank you for reading Oak Ridge Today and participating in the discussion.
Myra Mansfield says
Thank you John for monitoring the discussions.
John Huotari says
You’re welcome, Myra. Thank you for your contributions.