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Scott Jarvis recalls Great Recession ups, downs

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 Few people had a more important role than Scott Jarvis in overseeing how Washington’s financial institutions weathered the twists and turns of the disruptions the Great Recession brought to the economy and the financial industry.

As director of the state Department of Financial Institutions (DFI) from 2005 until his retirement this week, it was the role of Jarvis and his team to closely monitor the financial health of the state’s banks and thrifts during that economic crisis. And on 20 or more occasions, they had to pull the plug when critically inadequate capital or severe loan losses threatened continued solvency.

Jarvis, appointed by Gov. Christine Gregoire to the DFI director role in 2005 and reappointed in 2013 by Gov. Jay Inslee, reflected on that crisis during an interview that amounted to a revisiting of the bumpy ride on which the financial downturn took financial institutions in this state, and the role his agency had in each of the “bumps.”

But the most high-visibility failure, the seizure of Washington Mutual in September of 2008 by the Federal Deposit Insurance Corp. and the sale of the assets of what was by then one of the nation’s largest banks to J.P. Morgan Chase, was without consultation with the state regulators.

And the closure that was perhaps the most painful for Jarvis and his staff, that of Frontier Financial Corp. in April of 2010, was unavoidable after the feds turned down what both the bank board and state regulators viewed as a satisfactory buyout plan.

“If I had to name a ‘down’ moment, it was the circumstances associated with the closing of Frontier Bank,” Jarvis said. “Willing and adequate capital was available for infusion but the Fed was unwilling to sanction the transaction.”

A key bright spot for the regulators was the successful emergence of Sterling Savings Bank from under threat of closure. The once high-flying Spokane-based institution had been placed under a cease and desist order in early October of 2009 and its chairman-founder and the CEO ousted.

Agreements Sterling secured to raise $730 million in new capital under new CEO Greg Seibly and a reconstituted board allowed both DFI and the FDIC to terminate the order and allow Sterling to proceed back on the road to healthy operation and growth, and eventual acquisition by Umpqua Bank.

In fact, Jarvis said of Sterling’s re-emergence: “Sterling’s success is proof that a cease and desist order is not a death-knell for Washington’s banks, but rather a call to action. When a financial institution’s leaders take aggressive, well-planned, corrective action, success can be found at the end in safe and sound business practices – and in strong community and employee support.”

The financial crisis had actually paved the way for Oregon-based Umpqua to move into Washington since the Bank of Clark County, closed by DFI in January of 2009 as the first closure in this state, reopened under Umpqua ownership. And a year later, when DFI took action against Seattle-based Evergreen Bank and Rainier Pacific Savings Bank, they wound under the Umpqua banner.

And Jarvis may well have had Umpqua, among others, in mind when he said: No matter how dark the financial or investment environment might seem at any given moment, there are always individuals and organizations who see opportunities for success that benefit our economy and move us forward.”  

Of the circumstances that forced DFI to close the 18 banks and at least two thrifts that the department had to act on, Jarvis observed: “as a pituitary giant will tell you, sometimes there is a problem with too much growth.”

Jarvis, a New York native who graduated from Allegheny College and got his law degree from University of Puget Sound (now Seattle University), first joined DFI in 1997 after serving as an insurance regulator for the state Insurance Commissioner and General Counsel to the State Treasurer.  

In discussing the relations between state financial regulators and their big-brother counterparts at the federal level, Jarvis admitted that “overall, state regulators are concerned with the feds pre-empting powers of state regulators,” evidencing an unsaid sense that in some areas, the local regulators have a better sense of market needs.

A key area where that is important, he feels, is in failure of the feds to understand the need to right-size regulations for small institutions, where “the risk and exposure are dramatically different for small banks.”

“I think the number of small commercial banks will shrink further and small towns need these kinds of institutions,” Jarvis said.

Of the WAMU takeover by the Fed, Jarvis’ banking chief, Rick Riccobono, has been outspoken in his view that the Fed’s action and its sale of assets to J.P. Morgan Chase for what many viewed as a bargain-basement price didn’t need to have happened. Jarvis has routinely scolded Riccobono for making those statements to various groups, but intriguingly, hasn’t said he disagreed with the comments.

Under his leadership, DFI became a nationally-recognized leader in state financial regulation, which helped move the state from 17th in the nation to 10th on Washington's Corporation for Enterprise Development Scorecard Ranking in "Financial Assets & Income.” In 2012-13 he chaired the legislative committee for the Conference of State Bank Supervisors.

An area where Jarvis was obviously pleased to see the states step in when a void was being left at the federal level was in creation of local legislation to make it easier for start-up entrepreneurs to raise capital from local investors, basically a state version of the JOBS Act passed by Congress in April of 2012.

It was clear after Congress passed the legislation and told the Securities & Exchange Commission to enact rules to put the law into effect, that the SEC’s then chair, Mary Shapiro, didn’t think easing investor protections to enhance entrepreneurial opportunities was a good idea, so she foot dragged for several years.

Eventually a number of states, including Washington, decided they could do it better locally anyway, so they enacted JOBS Act-like crowd-funding legislation, strongly supported by Jarvis and his agency. He told me once that his role was to balance protection for investors with opportunity for entrepreneurial startups and that the balance wasn’t that difficult a challenge.

He was careful how the process of putting the crowd-funding into effect was carried out, with hearings, testimony and staff evalutions, though there have only been four companies that have filed to raise money under the state legislation.

In thanking Jarvis for his years of contribution, the governor named Gloria Papiez, who had served as Jarvis’ deputy for more than a decade, to replace him.

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Why preclude future voter revisit for ST-3?

When American poet John Greenleaf Whittier penned his memorable couplet "For of all sad words of tongue or pen, The saddest are these: 'It might have been!'" it was an ode to the maiden in the field and the nobleman who rode by, noticed her, but decided not to stop. It was an ode to lost love but has become a reference point to remind individuals or groups about lost opportunity.
 
Thus ever since Puget Sound voters, almost a half century ago, briefly met at the ballot a light rail package from which they turned away, the "might have been" has been dangled like a badge of shame whenever a new rail-based transportation package is discussed.

After all, Atlanta got our federal funds and built a light-rail system.

 

 

The might-have-been lament is being played again this year in the Puget Sound area, among other arguments put forth by proponents of $54 billion ST-3, a proposal that would provide a 25-year basically blank check to Sound Transit to create a system that will connect an array of communities across three counties.

 

As posed at the start of his op-ed piece in the Seattle Times, my friend Charles Collins, whose background as a civic leader and transportation expert provide impeccable credentials for the integrity of his comments: "$54 billion. Really? The sheer size of Sound Transit 3 staggers the imagination. A Google search yields nothing remotely comparable ever asked of local voters...anywhere."

 

Collins went on to point out that Sound Transit's own statistics show it won't reduce congestion, despite its election-season claims. "Buried in Sound Transit's original Environmental Impact Statement is a very different story: their own analysis indicated that there would be no difference in congestion whether the rail system were built or not built."

 

One story for an environmental impact statement and another for the voters might seem dishonest. But the fact is, I and most citizens have a respect for the integrity of individual members of the board, each a local elected official in one of three counties.

 

But I'm equally convinced that as a board, the members' candor tends to give way to the group reality that commitment of major public dollars means major income to an array of contractors, architects, professional firms, and so on. And each makes campaign contributions to those board members when they run for re-election to their local offices, which is obviously the main function of each of those elected officials, with Sound Transit board membership a secondary, or supportive, duty.

 

That's why there should be no surprise in the story this week in the Seattle Times that 62 percent of the money for the campaign on behalf of ST-3 has come from contractors, engineers, suppliers, unions and others for whom the $54 billion would be an income and jobs windfall.

 

There are many who have made the points Collins made but I quote him primarily because his views were so cogently stated in his Times' op-ed piece and because, while others may be assailed for having vested interested in opposing ST-3, even proponents of the plan would concede there's not much way to try to question his credentials.

 

Collins, incidentally, was being a little generous in saying nothing similar has been asked of local voters. The fact is that the amount local voters here are being asked to approve with ST-3 is 25 percent greater than voters in the entire state of California approved in 1968 so 800 miles of high-speed rail lines connecting Los Angeles and San Francisco could be built. So the three-county proposal is greater than even the pricetag on the most costly plan put forward in the nation's largest state.

 

The California plan, naturally described to voters in 2008 as "visionary," is to whoosh riders from Southern California to San Fran in an unheard-of two hours and 40 minutes. The trains would reduce air pollution and ease congestion on the state's famously clogged freeways and construction would create tens of thousands of new jobs. So the voters approved $9.95 billion in bonds of the $43 billion plan to usher in a new era of transit for the Golden State.

 

But times have changed, and the recent past has been a rough time for the project. The latest poll shows that 59 percent of Californians would vote against the bonds if they could do it again. Cost estimates have grown from $43 billion to at least $98 billion, and the completion date of the first phase has been pushed back 13 years.

 

If ST-3 is approved and in a few years it becomes obvious that $54 billion and 25 years are dramatic underestimates, which would parallel what is happening in California, the same inability of the voters in this region to rethink what would have become a very bad idea will amount to the same unfulfillable wish to do it over.

 

In fact, there's a double down on the logic of a voter review somewhere, ideally as stages of the project are completed, and that's what Collins and others point to as it being obvious "that we are at the threshold of the most fundamental transportation revolution since the combustion engine."

 

Autonomous, or self-driving, vehicles may provide a chuckle to some, but to companies ranging from Ford to Google, there's full speed ahead with the knowledge that autonomous vehicles will be here with a prominent if not dominant transportation role.

And, as Collins notes in his op-ed piece, "Opinions vary on when self-driving (autonomous) vehicles will arrive in large numbers on American streets, some say in as little as five years, some say as many as 15. No one says 2040, the year ST3 is complete."

 

"What public policies and investments will be required to take advantage of self-driving technology?" Collins questions. "New lanes? Publicly owned fleets? Contracted services with the Googles, Fords and Ubers? But whatever makes sense, it is clear that approval of ST3 rail system will commandeer all reasonably available local transportation funds for a generation and preclude any chance to advance new technology."

 

That's why I find it intriguing, in a most troubling way, to have people I basically respect being absolutely adamant in insisting there's no reason that voters should have an opportunity to review the progress of a $54 billion quarter-century plan at various intervals.

Never mind that it might be an outdated transportation mode in a quarter century.

 

To echo the most compelling of Collins' comments: "Really?"
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Shabana Kahn's efforts capturing squash-world attention

Shabana KahnShabana Khan, perhaps the most recognized women in the world in the fast-growing sport of squash, was honored last week in Philadelphia with the sport's most prestigious national award in recognition of her success in putting on the 2015 Men's World Squash Championship in Bellevue last November.

But despite her growing national, and international, recognition in bringing the world men's event to the this country for the first time, and for the series of squash events being scheduled in Bellevue over the next year, she is still struggling for recognition and support in the city she is seeking to turn into a global squash capital.

Khan, a lithe and athletic 48 year old who is former national women's squash champion and ranked among the world's best in her playing prime in the early 2000s, was honored in Philadelphia during the national squash championships with the 2016 W. Stewart Brauns, Jr. Award for major administrative contributions to the sport.
This season, under Khan's leadership working with PRO Squash Club in Bellevue, what the official publication of US squash describes as "an unprecedented skein of events" is planned for Bellevue, including four junior tournaments as well as a college showcase. To follow is a $200,000, sixteen-man pro tournament, described as "possibly the most lucrative event in tour history."

One of the prize events that will take place in Bellevue will be the first Bellevue Squash Classic in May, squash's equivalent of a PGA golf tour stop. The event, which will bring the world's best squash players to the Pacific Northwest, will showcase the four-wall glass court inside the Hidden Valley Boys and Girls Club, a location that Khan enthuses about.

When I first met and wrote about Khan a year ago, it was as she was struggling to make sure the men's event would come off as planned to fulfill her goals of providing Bellevue an opportunity to promote its role as host of a world-championship sports events, foster a sense of community involvement and support empowering a woman entrepreneur.

But as soon as Khan's challenges with dollars and event support came to light, developer Kemper Freeman provided her some financial support on the spot and Bellevue City Councilman Conrad Lee became her advocate in the quest to have the City of Bellevue participate. It was too late for that to happen, in part because it was too close to the time the world event was to take place.

But it's not too late for the city to get involved now for the coming year. That's something that would be a given in other communities that had the opportunity to have the brass ring as emerging center of what is becoming an increasingly popular sport in many places around the world.

As the men's world event quietly but successfully came about last fall, despite challenges with the Meydenbauer Center location, the leading world figures in squash, both players and presenters, began pressing Khan to create additional involvements. And those are coming to pass as she fulfills a request from Hong Kong to put on a squash event there, and in Los Angeles, where she will be guiding a major new event focused on young people.
In most places where it is played on a highly competitive level, squash is thriving. What was once known as a sport that was primarily for the wealthy could afford to is now more accessible to people of all income levels.

And with the growth of the sport and the accessibility to new squash players, the U.S., along with England and Egypt, are the three countries where the squash game is thriving most.

Khan founded YSK Events three years ago to bring the men's world event to the U.S. and has served as CEO since then as she and her brother Murad, as president, and sister Latasha as vice president for business development have turned it into what she hopes will be a full-service events company. Murad has played professional squash and it was Latasha who was national women's champion when Shabana defeated her to win the crown, providing me an opportunity to note in my column last year that "best in the family is best in the nation."

"Y" in YSK stands for both her 10-year-old daughter, Yasmine, who is always in her conversations, and her father, Yusuf, who was nine-time India champion when the Seattle Tennis Club hired him in 1968 to come to Seattle to be head tennis pro. Shabana was 2 ½ years old at the time. The "S" and "K" are for her initials.

It was her father who turned the Seattle area into a center for squash and it was he she partnered with to put on the Women's World Championship in 1999, the first time that event had ever been staged in the U.S.

"After hosting the Women's World Championships, I felt very confident in being able to bring the world's major squash event to this area," she told me, referring to last year's men's event.
"Additionally as a former player I wanted to take the sport to a new level and treat these amazing athletes how they truly should be treated," she said. "I had set out to create a new standard for the sport and expectation of the most prestigious event on the Professional tour."
But she noted that the most important consideration for getting the men's world event was that she wanted to thank her ailing father for his role in building the Seattle area into the center of squash in the Western U.S.
A laudable aspect of Khan's events is that they are focused on young people, from ages 11 to 19, giving them the opportunity to interact via Skype with the top squash pros in the world.
"In all the events, we offer free clinics for kids to work with the pros, who are amazing because they realize what we are trying to do and are working hard for them so they take the time with the young people," Khan said.
A key event will be the West Coast College showcase the second week of May, where high school squash players will be competing in what amounts to a recruiting show for college coaches, mostly from Ivy League schools but also a few western schools like Stanford.
Khan is looking for a major sponsor, as well as event sponsors, for her array of events since Wells Fargo, which had the $25,000 sponsorship and wound up with its name carried around the squash world as all the matches were streamed worldwide, has for various reasons not renewed.
"Bellevue is being recognized around the country and around the world so it seems fair to hope we begin getting some recognition in Bellevue," she said.

 
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CTI's Bianco: Controversial and complex CEO

Dr. James (Jim) Bianco, M.D., was an up-from-poverty son of Italian immigrants, just out of medical school in New York, when he was recruited by E. Donnall Thomas to come to the Fred Hutchinson Cancer Research Center to join its pioneering bone marrow transplantation team. The work of the team would bring Thomas a Nobel Prize for Medicine and launch some team members, including Bianco, on careers pursuing cures for cancer. Bianco has resigned suddenly from the company he founded in 1991 to find a cure for blood-related cancers. During more than a quarter century as chairman and CEO of what is now CTI Biopharma, he became one of the area's most intriguing CEOs, a complex and controversial leader praised by those who experienced his moral and philanthropic support and criticized by others who focused on his high-spending ways. Bianco has just turned 60 and whether he or his board decided it was time for him to leave isn't certain, and really doesn't matter except as fodder for cocktail conversation for those who knew of him, or knew him. Among the latter there's a conviction, summed up by one mutual friend: "He'll be doing something interesting within a year and his interests are so broad, it won't necessarily be in medicine." Bianco's challenges in seeking to find new cancer-fighting innovations and his confrontations with regulators over those drug-focused efforts were well documented over time by local media and wrapped up in a Seattle Times article following his sudden departure on October 2. The headline over The Times' story, "CEO Bianco retires after 25 years running profitless CTI Biopharma," was, for those aware of the long adversarial relationship that existed between him and the media, an amusing final putdown. But the person behind the controversies is always more intriguing to me. So it has been with Bianco, with whom I visited frequently over the years, usually while planning for columns exploring various aspects of Bianco and his involvements, including but beyond his company's business performance. Bianco, who received his B.S. in biology and physics from New York University and his M.D. from Mount Sinai School of Medicine, was high visibility in his business and also highly visible in fund-raising efforts for his special causes, though not in a way to designed to attract personal credit. Those personal causes included the Hope Heart Institute, where he and his wife, Sue, won the Wings of Hope award in 2002 and where he's helped revamp the key fund-raising event, and Gilda's Club, the cancer-support organization whose continued existence was largely due to Bianco's personal support. In addition he was long closely involved in the annual Celebrity Waiter event during the years that the Leukemia Society was the beneficiary of the most successful event of its kind in the country. He was long involved with Gilda's Club, named for the late comedian Gilda Radner, and when I once asked him about that involvement, he explained "Gilda's provides that other kind of Medicine, the kind you can't get in hospitals or clinics but that place where family, kids, friends etc have support. It's a great cause, but because they don't do research they're not sexy so funding in these times is tough. That's why I stay involved. It's in our (CTI's) DNA." Bianco's struggles with media coverage, usually over some aspect of the fact that CTI raised and went through about $1.8 billion without turning a profit in its quest for a successful cancer drug undoubtedly played a role in the wild ride investors went on. The stock price peaked in the mid $80s but spent most of the past decade bouncing between a few dollars a share and a few dimes. As one Bianco supporter put it, "let's just say the media and Jim Bianco don't like each other very much," the tension possibly due in part to the fact Bianco enjoys the perks go with the CEO role and is a competitive kind of guy who doesn't shrink from a fight. The latter isn't surprising given his Bronx upbringing as a second-generation Italian kid in a household shared by up to 20 relatives at a time in an environment where "you were okay as long as you didn't leave the few square blocks of our neighborhood." Then he smiled as he recalled that his bus to high school made its closest stop 10 blocks from his home. "Every day I sprinted to the bus because if you couldn't get there faster than anyone else, you were a statistic." He admits he didn't do very well academically in high school, but by the time he found himself at NYU, he recalls that a major disappointment was the lone "B" he received among his "A's." Bianco had a love of the arts from a young age, an involvement that actually brought him into life-saving contact with his most famous patient and ultimately one of his closest friends. As I wrote in a column a few years ago, the first meeting between Jose Carreras and the young physician who would have a key role in the life-saving treatment for his rare form of leukemia turned out to be a bonding moment for the opera singer and a fan "blown away" at being his doctor. "I was a fellow at The Hutch working with Doctor Thomas when they told me a singer from West Side Story, the opera, was coming in for a transplant and since I was from New York, they thought I might know him," recalled Bianco. "Since I had been a season ticket holder at the Met, I immediately identified him and was blown away that I was going to have the privilege of being his doc," said Bianco. "When he met me he observed 'you're not from here, you dress different!' When I told him I saw him at the Met and I loved his performance of Carmen, we hit it off." That first meeting almost 30 years ago was likely on the minds of both Bianco and Carreras when the famed creator of "The Three Tenors" came to Seattle for a special event at Benaroya Hall. The event, billed as "A celebration of life and friendship," was to celebrate both the 25th anniversary of Carrera's victory over cancer and the 90th birthday of Dottie Thomas, wife of the Nobel-prize-winning doctor. The "private performance" recital for about 500 invitees who paid $250 each to support a research fellowship benefiting the Jose Carreras Research Institute and The Hutch, was sponsored by Bianco's company. "When I learned Dottie was turning 90, coupled with the fact that September, 1987, was the month I admitted Jose to the Hutch for his transplant, there was no better tribute to both of these milestones than to bring Jose back to the U.S. for a celebration," Bianco said.
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Forman's quarter-century focus on rural development

 

 

Washington has been more attuned than most states to the reality that creating successful economies in rural communities results from helping them grow and nurture what they have rather than merely trying to attract businesses from elsewhere to relocate.

    Maury Forman
Now as Maury Forman, the man who built this state's image of focusing on rural economic development for nearly 26 years, passes the baton, a new program aimed at attracting successful urban entrepreneurs to mentor rural business people is seen by his successor as a "priority program" for the future.

Recruitment and retention, generally in that order, have been the key words that guided the programs of economic development organizations in smaller communities across the country for years, usually with marginal success. But retention has been a generally amorphous patchwork.

But for a quarter century as senior manager in the Washington State Department of Commerce and head of the Office of Economic Development and Competitiveness, Forman has kept his focus on enhancing the success of rural communities by emphasizing the words nurture and growth.
Forman, who has served under five governors, a similar number of department heads and in an agency that has occasionally changed names to connote sometimes different emphasis, is retiring from the role he stepped into in 1991 and soon thereafter began crafting a rural-support image for the state.

And his vision for rural enhancement has grown over the years, coming to emphasize the importance of entrepreneurs and more recently the importance of young people to their communities.
He once shared with me the view that if programs are to enhance local economic development they "must nurture the belief that young people who grow up in rural communities can be guided to start businesses in their own community rather than moving to urban centers."
"Just as young people are looking at new ways to enter the work force other than working for someone else, so too are communities looking for ways other than recruitment of businesses from elsewhere to grow their economies," Forman told me in an interview last year.
Anne Nelson      
Now Forman is turning over the role of guiding rural communities on successful economic development paths to Anne Nelson, who has started several businesses and worked as a community and economic developer before becoming an instructor at Walla Walla Community College in business, entrepreneurship and marketing.
In an example of Forman's typical sense of humor, he says "she will essentially be serving those rural areas as Executive Innovator and Enlightener of Ideas Officer (or EIEIO as we say on the farm)."
In fact, Nelson shared with me an incident in the Eastern Washington community of Dayton that she thinks may serve as a model for what she hopes will emerge as urban-rural mentoring.

Seems a much-loved bakery in Dayton was closing because the owner was retiring. Nelson heard discussion about it at a local restaurant, was aware of a young woman who was hoping to someday own a restaurant and created a contact with retired Seattle restaurant owner Paul MacKay. The founder of El Gaucho and a chain of other restaurants had retired with his wife a few years ago to Walla Walla to a 100-acre spread to grow wheat and grapes.

But once he learned of the Dayton bakery situation, MacKay soon got the young woman set up as owner manager of the bakery.
"I see the support for that young, aspiring bakery owner from Paul MacKay as a model we can see more and more of across this state," Nelson said. "The key is that rural entrepreneurs are clear about their sense that mentoring is even more important than capital."

The program, called Startup365, has been running for about a year under the management of Greater Spokane Inc., the region's chamber of commerce, aimed at connecting Spokane area business people as mentors for entrepreneurs and small businesses in Asotin and Whitman counties.

But Nelson says Startup 365, created by the legislature, is aimed at retaining the intellectual wealth and economic vitality of rural areas by focusing on entrepreneurship and small business growth. "That will help communities flourish organically and will be a priority program that I can spend more time on, functioning a large part of my time in Walla Walla."

"I do believe that urban-rural mentorship will be a key piece in building rural businesses, especially as I see the urban entrepreneurs being more in touch with the technologies and tools that help businesses be successful," said Nelson.

One of those technology tools, Skype, she hopes will be employed at least once a week in connecting rural entrepreneurs with their urban mentors. The Spokane program is being supported by Avista, the Spokane-based utility that has a long track record of supporting business development in the region.

But before Nelson gets to focus on developing the urban-rural mentorship idea, her first order of business will be overseeing in November the fifth annual Global Entrepreneurship Week activities in all 39 counties.

Although in Washington, the annual celebration of innovators and job creators involving 88 countries last year became Global Entrepreneurship Month. Nowhere is GEW, or GEM in this state, treated as a bigger deal than what Forman put in place in Washington, which is the only state with events in all counties.

Jack Schultz, whose focus on assisting rural economic growth helped him come to be known as the guru of rural economic development as keynoter at more than 400 conferences around the country and author of "Boomtown USA: The 7 ½ Keys to Big Success in Small Towns," credits entrepreneurial support as a key to rural success.

Schultz, of Effingham, IL., whose Agracel Inc. is the largest industrial development company focused on developing projects and creating jobs in rural towns, told me he had not heard of a mentorship program like Startup 365.

But Schultz, who said he has long been an admirer of Forman's, said "I think it makes a lot of sense and is something very innovative."

Referring to findings from his visits to hundreds of small towns to gather information for his book, Schultz said in an email: "Embracing entrepreneurism in communities was a key factor which differentiated great communities from also-rans.  Increasingly, we are seeing those great communities taking it a step up by tying their local entrepreneurs up with their young people, educating them on both entrepreneurship and also the great things happening in the private sector of their towns."
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'Tipping point' pledge for planned Bellevue arts center

A "tipping point" matching pledge of $20 million, half from the Arakawa Foundation, for the planned Tateuchi performing arts center in downtown Bellevue was announced Wednesday evening at a festive gathering of supporters at the Hyatt Regency Bellevue next to the site for the planned $200 million facility.

The $10 million pledged by Yoko and Minoru Arakawa, to name the 2,000-seat centerpiece of the center the Arakawa Concert Hall, puts the facility $122 million in cash and pledges on the way to the spring of 2018 groundbreaking of the $200 million facility, which is increasingly viewed as serving the region rather than just the Eastside.

Cathi Hatch, chair of the campaign, said the Arakawa gift, matched by $5 million each from the Freeman Family and Microsoft Challenge Matches, means "we need another $58 million to go to groundbreaking." Arakawa is founder and former president of Ninetendo.

While the facility will be the venue for many Eastside performing arts groups, the collection of Seattle arts leadership on the Tateuchi advisory board is evidence that the Center is coming to be viewed by Seattle arts organizations as an asset rather than the threat it was viewed as when it was first announced a few years ago.

The center, when completed, is viewed as complementing Seattle arts venues like McCaw Hall, Benaroya Hall, the 5th Avenue and Paramount theaters while filling a regional need by providing a more convenient venue for Eastside residents while offering an Eastside platform for Seattle arts groups.

Other significant donors were also honored at the Wednesday evening event, including the Tateuchi Foundation, for whose donation the center is named. Tateuchi board chair Alex Smith acknowledged tbe role the Bellevue City Council played with its unanimous vote in May of 2015 to provide $20 million toward construction.

The initial boost, when the center was first envisioned, came from the Kemper Freeman family committed the land where the center will be built.

" Between now And groundbreaking in the spring of 2018, our campaign committee will continue to focus on recruiting Founders Society-level donors," said Hatch, who added that donors at all levels will soon be sought, "including children with their penny jars."

The changing attitude of Seattle performing arts leaders toward a Bellevue concert center is in response to an increasing reluctancd of Eastsiders, who account for more than 50 percent of Seattle arts subscribes and Seattle ticketholders, to face the twin traffic challenges of Lake Washington bridges to Seattle and traffic tie-ups in downtown Seattle.

The strategy of Seattle arts organizations is to use the 2,000-seat center for the double benefit of attracting new audience while helping retain existing ticketholders and supporters.

The way it might work, for example, is a ticketholder for a season of 10 performances of a Seattle play, symphony or opera might wind up with seven of those in Seattle and three on the Eastside.

As I noted in a column last fall, the center isn't being done on the cheap, but its supporters like to talk about how the $200 million pricetag compares with projects like the recently opened Las Vegas center, the same eize, that had a pricetag of $400 million.
 

 
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Key questions to ponder in education-funding battle

 

As legislators and their paid consultants struggle with how to answer the State Supreme Court’s latest education-funding question about determining “competitive market rates” for educators, a couple of thoughts press themselves to the fore as the drama moves toward a final act.

 

First, there’s an unfortunate sense that, in the press by the justices to make it clear to legislators which branch of government is ultimately in charge, what’s emerged is an effort to ensure that financial support of educators becomes the answer to education quality woes. No consideration is given to support for education in a broader sense.

 

Second, the well-worn phrase “You can’t just throw money at a problem” is one that seems to have eluded the state high court in its on-going education-funding struggle with the legislature over how much is enough.

 

At issue is the court’s January 2012 ruling, in what is now known as the McCleary case, that the legislature violated the state constitution by failing to amply fund basic education. Since then the court has found the lawmakers in contempt for not providing sufficient funding and has even threatened to take over the budgeting process (presenting what would seem to an amazing cartoonists’ opportunity).

 

Now the court has told the lawmakers to determine “competitive market rates” in terms of teacher salaries across the state and a final report on that point is due from a legislative consultant in November.

 

After that, lawmakers will try to find common ground on the sum of money required for salaries and where it is going to come from. The Legislature is supposed to take votes in 2017, or in the view of lawmakers in 2018, to put those final pieces in place in what has come to be known as the McCleary case.

 

Comes now the observation of Donald Nielsen, whom I best describe as an education “change agent,” whose views are dramatically suspect and irritating to those who disagree with him because he has no hidden agenda. He’s merely a business executive who made his fortune and decided nearly a quarter century ago to spend his time and money in the next phase of life seeking to make basic education better.

 

Nielsen is not an educator. But he is someone who is passionate about public education and has focused much of his attention on it since the early ‘90s, first traveling the country in search of education ideas that are working, then serving eight years on the Seattle School Board and a final year as president. His book, “Every School,” has brought his thoughts on education reform to the fore over the past couple of years in radio talk shows and newspaper interviews around the country.

 

“Schools do not have a funding problem, they have a regulatory problem,” Nielsen suggests. “If school administrators could spend their existing money as they believe is needed, they would spend it quite differently, and we would get better results.”   

 

His most in-your-face message is that “teachers are not underpaid, they are underemployed. This is not a compensation issue, it’s an employment issues.”

 

“The average teacher in Seattle, in 2013, was making $70,000 a year, employed  for 1320 hours,” he said. “All normal jobs employ people for 2080 hours a year so If that same teacher were employed for a normal year, his or her compensation would $110,300 a year on that 2080 basis.”

 

“Even beginning teachers who start at $40,000 a year are being paid the equivalent of $63,000 year,” he added. “In both cases, the teacher gets a benefit package that no private employer could afford to replicate.”  

 

Neither of these compensations is low,” Nielsen added.  “They are very competitive, and in rural areas, teachers are already among the best paid people in the community.”   

 

Discussion by the justices has never touched on suggesting the lawmakers focus on how the money is being spent, only how much is being spent, which makes another suggestion from Nielsen the kind of thing that at least might be in the discussion hopper.

 

“We need are variable contracts for teachers:  A nine month contract, a ten month contract and an eleven month contract, meaning the latter would make the $110,000 and the former would make the $70,000,” he said.  “Let the teachers decide what contract they want and let the district decide who gets each type of contract,” suggesting that approach could allow for some education options for different students.  

 

Unfortunately, it’s still uncertain whether the final act in this drama will be played out on the judicial or legislative stages since the nine justices of the state’s highest court have pressed the lawmakers, including with a contempt funding, to spend more dollars on education. At issue is the state’s constitutional mandate for adequate funding of basic education.

 

The justices, as far as I can tell, have never mentioned that lawmakers should also consider how the education dollars are being spent and could better education result from more insightful use of the dollars the lawmakers appropriate.

 

Maybe there’s still time, as the lines for the final act are just now being written in Olympia, for the idea of quality of expenditure rather than just quantity of expenditure to be raised.

 

In a case replete with issues relating to powerful education forces focused only on dollars, it might be worth combatants who finally seem hopeful of averting a real constitutional crisis to be aware of an unsettling statistic that Nielsen has included in his book.

In summing up the details of the chart in his book, Nielsen notes: “We now spend three times as much per child in inflation-adjusted dollars as we did in 1970 and we also have four times as many adults in our schools with only eight percent more children. And we’ve had no measurable improvement in academic achievement.”

 

 

 

 

 

 

 

 

 

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Naturopath eyes ancient Amazon drug as possible depression treatment

 They are called "Ayahuasca Circles." And in with-it places like New York, Washington, Chicago, Silicon Valley, Los Angeles and, yes, Seattle, the in-crowds are being drawn to evening gatherings to share a tea made from a natural drug with ancient Amazon ties that takes them on group "trips" where spiritual revelations occur.

For those old enough to remember the sixties and Timothy Leary's "tune in, turn on and drop out" call to LSD gatherings, or the cocaine parties of the '80s, the tea-sharing at the ayahuasca circles may have a familiar ring.

But Leanna Standish, a Seattle naturopathic physician and prominent medical researcher, is convinced that ayahuasca (aiya was' ka), which she refers to as "a vast, unregulated global experiment," is going to "change the face of western medicine."

And with that conviction guiding her, she has sought and been granted conditional approval by the Federal Drug Administration (FDA), pending approval from the Drug Enforcement Administration (DEA), to begin manufacture and distribution for research on potential medical uses for ayahuasca.

DEA approval is needed because the basic ingredient in ayahuasca is DMT (dimethyltryptamine), DMT is illegal in the U.S., classified as a Schedule 1 drug for its likelihood of being abused. Tiny amounts of DMT apparently exist in parts of the brain associated with visual dreaming.

Getting FDA approval for a Phase I trial to pursue medical use of ayahuasca is considered a significant accomplishment and is partly a credit to Standish's reputation, as medical director of the Bastyr Integrative Oncology Research Center and researcher at University of Washington Medical School.

And unlike the LSD "trips" of the '60s, or as one authority described the gatherings two decades later as where "cocaine expressed and amplified the speedy, greedy ethos of the nineteen-eighties," ayahuasca devotees say it reflects our present moment--what some call the Age of Kale." They say "It is a time characterized by wellness cravings, when many Americans are eager for things like mindfulness, detoxification, and organic produce, and we are willing to suffer for our soulfulness."

I learned of Standish's interest in the drug from an article in a September issue of the New Yorker, titled "The Drug of Choice for the Age of Kale," with the headline "How ayahuasca, an ancient Amazonian hallucinogenic brew, became the latest trend in Brooklyn and Silicon Valley." And, I might add, the Seattle area.

Ayahuasca enthusiasts frequently use the language of technology, which may have entered the plant-medicine lexicon because so many people in Silicon Valley are apparently devotees. Thus technology-driven references like "cleansing the mother board," or "wiping the hard drive clean" crop up.
The New Yorker article by a long-time, award-winning writer for the magazine, who included the experience of participating in an ayahausca circle, quoted Standish at some length on the medical-research aspects of the drug.

Standish noted that "many people are going from all over the world to South America, part of a virtual drug-tourism industry, suggesting what I think is a huge need in Western Culture for this type of healing medicine."

The New Yorker article notes that vomiting can follow ayahuasca ingestion. According to the writer "this purging is considered by many shamans and experienced users of ayahuasca to be an essential part of the experience, as it represents the release of negative energy and emotions built up over the course of one's life." 

"Now, a critical mass of L.A.'s urban hippies are gathering in groups and projectile vomiting (and worse) on their way to enlightenment.," the writer says.

But Standish has been drawn to what she perceives as the medicinal potential. 
"I am very interested in bringing this ancient medicine from the Amazon Basin into the light of science," she said.

Her key initial scientific focus is in "creating a new treatment for depression," which she describes as "a pandemic in this country and in Western culture,"

She says she has started her own company, Standish Medicine Inc., as the vehicle to guide the research, once she gets the final okay from DEA and Bastyr's Institutional Review Board, and adds that she has some potential investors "interested in helping me with a new therapy for depression."

 
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Thoughts to ponder in recalling 9/11's global grief for us

(As the 15th anniversary of 9/11 nears, a compelling question to ponder is whether the global regard for us that existed then, as evidenced by the outpouring of grief that came that day in our behalf, remains our national treasure or whether it is merely a squandered legacy.

On the 10th anniversary, I shared a piece written a few days after that tragic 2011 September day by a former, now late, United Press International colleague, Al Webb, who did a wrap-up of the grief that citizens of every country shared on our behalf. Webb's article, written then from his post in London, captured that display of shared pain in a way that deserves, or rather requires, remembering. So I share it here again.)

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By Al Webb

LONDON (UPI) -- A small girl with a Cockney accent shyly waved a tiny American flag, and a queen brushed away a tear. In a Scottish town that has known its own tragedy, a lone church bell tolled. On a German river, foghorns sounded a low moan.

Across countries and continents, waves of sympathy for a nation in anguish rolled on. A young woman in a Kenyan park wept over the sad headlines in newspapers spread on the ground. A one-time terrorist donated blood for the victims. Hundreds stood in line in cities from Dublin to Moscow to sign books of condolences. 

And over the outpouring of grief and mourning for the lives lost in the boiling flames and rubble of the World Trade Center towers and a wing of the Pentagon, time and again came the strains of "The Star-Spangled Banner," sometimes in places where it had never been sung before.

In a gesture reminiscent of John F. Kennedy's "Ich bin ein Berliner," symbolizing his solidarity with another troubled people a half century ago, the Paris newspaper Le Monde perhaps summed it up best: "We are all Americans."

In London, where the little girl with the funny accent and her American flag pressed her damp face against the gates, the band performing the traditional Changing of the Guard at Buckingham Palace suddenly did something it had never done before -- it struck up "The Star-Spangled Banner."

For 45 minutes, the Mall in front of the palace became a little piece of America for hundreds of its citizens who were there because there were no planes to take them home. And the band of the Coldstream Guards played on.

As tear-stained faces lifted and sang along, as Americans and British and other nationals waved Old Glory, the marches rolled -- "The Liberty Bell" after the national anthem, followed by "The Washington Post March" and "Semper Fidelis" and finally, heart-rendingly, "When Johnny Comes Marching Home."

What the Coldstream Guards had triggered was the greatest mass demonstration of grief in Britain since Princess Diana was killed in a car crash four years ago. And as with Diana's death, a carpet of flowers, children's toys, poems, letters, all illuminated by tiny candles, built up this time at the fortress-like U.S. Embassy in London.

Amid the hundreds of bouquets, a single American flag was wrapped around a tree. One woman pressed her tear-dampened lips to its fringe in a soft kiss. 

The sweeping tide of mourning reached its crescendo at 11 o'clock Friday morning when Britain, France, Germany and scores of other countries in Europe, Africa and Asia went silent for three minutes, in honor of the innocent dead in America.

In Paris, the elevator at the Eiffel Tower stopped halfway to the top. Buses, trams and cars halted in their tracks across the continent.

In Spain, more than 650 city and town halls became gathering centers for tens of thousands who bent their heads in silent prayer -- and then, at the end of the three minutes, they lifted their eyes and applauded in that people's traditional tribute to the victims of terrorism.

On the River Elbe leading into Hamburg, ships flew their flags at half-mast. The minutes of silence crept by -- and at the end were broken by the sound of a thousand foghorns rolling across the water into the city's very heart.

In Lockerbie, Scotland, there was no applause, no singing, no bands, only the ringing of a single church bell and the flutter of flags at half-mast. This is a town with singular links to America, forged in a terrorist attack in the skies 13 years ago.

In all, according to an estimate by The Daily Telegraph newspaper in London, some 800 million people across Europe joined in the three minutes of silence.

At Berlin's Brandenburg Gate, once part of a dividing line between freedom and tyranny, a crowd of some 200,000 -- among them Germans whose relatives had died in terrorist attacks -- gathered beneath a black banner bearing the words, "We Mourn With You."

In Paris, crowds jammed the Place de la Concorde, itself a symbol of reconciliation, while church bells rang for five minutes before the silence.

In the government's Elysee Palace, "The Star-Spangled Banner" rang out, while over the French air waves, radio stations played John Lennon's "Imagine."

The bankers of Switzerland are not noted for their sentimentality, so they dealt in their own currency. At the end of the three minutes of silence, they announced they were donating more than $500,000 to the families of the victims of the atrocities in America. 

Lloyd's of London, the insurance market based in the British capital and one of several insurers of the World Trade Center, rang its Lutine bell and observed a minute of silence in memory of the dead in America -- some of them in the several broker offices Lloyd's has -- had -- in the WTC. 

In Belfast, the bullets and bombs of Northern Ireland's own form of terrorism, known as sectarian violence, went silent as tens of thousands from both sides of the divide -- Roman Catholic and Protestant - gathered in front of a makeshift stage at City Hall, to stand in silent tribute.

It is a city that knows the heartache of terrorism. "We have suffered for 33 years," said Betty McLearon. "People here have to be admired for the way they can cope with it. It will take the people in New York a long time to get over this."

In Moscow, the Russians observed a minute's silence as they laid wreaths and floral tributes outside the U.S. Embassy, once a symbol of the Cold War. Thousands of Muscovites lined up patiently to sign books of condolences.

In turbulent Israel, a nurse gently inserted a needle into the right arm of Yasser Arafat, himself a one-time terrorist who is now head of the Palestinian Authority. In a demonstration of support, he was donating blood to help the American injured.

Back in London, the minutes of silence were followed by a service of remembrance in the capital's majestic St. Paul's Cathedral, led by Queen Elizabeth II herself. In the audience of 2,400 inside, Americans hoisted the Stars and Stripes for the rest of the world to see via television.

Outside the cathedral, the tens of thousands who could not get in waved their own tiny flags and listened over the loudspeakers that carried the words and music for blocks around.  The cathedral's huge organ rumbled into life, to open the service, appropriately, with the American national anthem.

Then something happened that has never happened before, certainly not in public and doubtless not even in private. Softly, the queen began to sing "The Star-Spangled Banner."

Now, the British monarch does not "sing" national anthems. When they are played, she never even opens her mouth. Until now.

 But Queen Elizabeth sang it all, this song whose words were written 187 years ago during Britain's last war with her lost American colonies, through the final words, "O'er the land of the free, and the home of the brave." With the last note, the queen gently brushed away a tear. 

That said it all. 

-------

(Note: Al Webb, who died in February of 2015 at the age of 79, spent most of his career -- 28 years -- with UPI, separated by a few years in the 1980s for a stint with U.S. News and World Report. His reporting ranged from the civil rights struggles to the battlefields of Vietnam to the Houston Space Center covering the conquest of space.

Webb, along with Joseph L. Galloway, another UPI colleague, were two of only four civilian journalists who were decorated for their battlefield heroism, in Webb’s case for evacuating under fire a wounded marine during the Tet Offensive in 1968.)

 

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Sound Transit ballot plan faces emerging challenge

As Sound Transit marks its 20th birthday, it faces the biggest-ever threat to its future in the form of an emerging transportation alternative that may well cause voters in the three Central Puget Sound counties to reject the agency's $54 billion transportation package to allow the alternative time to develop.

Not even in their darkest nightmare would Sound Transit's board and the proponents of its megabillion-dollar ballot measure likely have envisioned the emergence of a growing fervor over a new transportation innovation just as the time for a November voter decision on dramatically extending the rail-based package nears.

The transportation innovation that's attracting increasing attention is autonomous vehicles, previously referred to as self-driving cars, with both automobile and truck manufacturers projecting emergence of fully autonomous vehicles within five years. And the Seattle area is being talked up as the nation's launch region for this development because companies like Google, Car2Go and ReachNow have committed to bring that about.

The challenge facing Sound Transit is that its proposal would put a lock on the region's transportation future for the next quarter century, tying it to a system for which rail is the keystone. By then autonomous vehicles and the congestion-easing result of their emergence might well render rail the transportation innovation of yesterday.

And the uncertainty surrounding the transportation future has created a growing sense, expressed not just by Sound Transit critics but also some longtime supporters, that rather than a full-blown package committing the region to a 25-year plan, a series of packages should be placed before the voters. The most recent example of growing concern over the measure called ST-3 was the Bellevue Chamber of Commerce board's decision Tuesday to oppose it.

Those pressing the idea of sending Sound Transit back to the drawing board would seek ballot proposals in staged packages, with a vote to provide funding for one segment, which would be followed by another vote when that project was completed, and so on. Then at any point, the voters could decide times have indeed changed and no more Sound Transit rail construction is desired.

As one of those longtime supporter put it when I called to get his candid thoughts: "If you are saying the voters should be offered segments of the total plan over a period of years as each prior segment is completed, of course that's logical."

But Sound Transit, officially the Central Puget Sound Regional Transit Authority, formed in 1996 by the county councils of King, Pierce, and Snohomish Counties, is looking to corral all 25 years' worth of funding from voters. There is a clear Sound Transit reluctance to even contemplate going back to the drawing board.

As longtime Sound Transit critic, Bellevue developer and business leader Kemper Freeman Jr., sees it, Sound Transit realizes that ST-3 is likely the last time voters might be willing to consider a mega transportation package with taxes that will hit every property owner in the three counties. Too many things, including transportation alternatives and other uses for that massive property tax amount, are certain to emerge in future years.

Intriguingly, this is the second time in its 20 years that an alternative to Sound Transit's rail focus has been offered. Despite the business and political credentials of the five people who teamed up, a year after Sound Transit began operation, to suggest a lower-cost and more efficient idea than the then-planned $1.6 billion Link Light Rail, the idea was basically brushed aside back in 2000.

The plan was called Ride Free Express, offered by two former governors John Spellman, a Republican, and Democrat Booth Gardner, along with John Runstad and Matt Griffin, two well-regarded business leaders, and Charles Collins, one of the region's long-respected transportation experts.

The plan would have eliminated fares for existing as well an expanded express bus fleet and created vanpools, reducing peak congestion by 5 percent at a price a sixth of the cost of new riders on Sound Transit's Link Light Rail, "even assuming they could build, LINK for the original $1.6 billion," Collins said. A recent Seattle Times analysis showed that in the end LINK wasn't built for that price, actually exceeding its budget by 87 percent.

"All of our projections, including that our plan would attract six times the number of new riders, flowed from well-established and independent market studies or actual transit experience," Collins notes. "Not a single board member except Rob McKenna thought that the issues we raised were even slightly interesting."

"They were committed to a project whereas we wanted to reduce congestion," Collins summarized pointly.

"Nothing has changed," said Collins, whose credentials include having been Spellman's Chief King County Adminstrator, Director of Metro Transit and chair of the Northwest Power Planning Council, the State Higher Education Coordinating Board and the State Commission on Student Learning.

Indeed while Sound Transit operates express bus services in addition to rail and light rail service to the region, there has been little doubt in the community that members of the board view themselves as creators of the region's light rail system.

Sound Transit and its proponents have routinely tried to picture the opposition as primarily Kemper Freeman., since a wealthy Eastside businessman makes an easy target for those Seattlites who view rail as something approaching Holy Grail. 

Collins, with impeccable credentials for public service, business success and transportation expertise, as well as being a decorated Vietnam veteran and retired Army Reserve Brigadier General, makes an opponent who many Sound Transit believers will find it uncomfortable to attack.

"If we are committed for 25 years and a good idea like autonomous van pools takes shape, good luck since the bond attorneys have made sure the money can't be diverted," Collins told me. "And autonomous van pools would be a good idea and could also be an energy answer."

Freeman sought this year to boost his years-long campaign for roads over rails with report he funded called Mobility 21 that outlined a fact-based alternative to the existing long-range plans. He has presented Mobility 21 at an array of speaking engagements around the region. 
Freeman told me the first presentation on the Mobility 21 study was made to officials of the Puget Sound Regional Council, which oversees dispensing federal dollars to the four counties.

"They admitted to us that the idea of autonomous cars had never been envisioned in their 25-year plan," freeman said.

Will autonomous vehicles become an ubiquitous presence on the region's roadways soon? Of course not. But technological advancements, including accident-avoidance devices, in vehicles before that happens will enhance congestion-reductions efforts. And some such technological advances could require commitment of dollars from the public, which would be more difficult to draw out if $54 billion in taxes is still being imposed.

And it's interesting that Daimler Trucks North America CEO Martin Daum talked recently about how he allowed a robotic truck to drive him nearly 25 miles, without his ever touching the steering wheel or brakes. He said his digital pilot used a combination of GPS, map data and sensors to drive the autonomous truck across highways and two-way streets.

And Freeman admitted to me, in one interview, that he has taken a half dozen trips, logging up to 125 miles, both freeway and city streets, with his autonomous Tesla. He said his hands were poised beneath the steering wheel in case his intervention was needed, bur that he never actually had his hands on the wheel.

Freeman and other ST-3 opponents haven't yet been seeking slogans for the final months of their campaign, but given the new realities facing the $54 billion plan, it could be referred at this time as "not a sound plan."
 
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Patrick Patrick's career was turning troubled banks

The fact that Patrick Patrick was more likely to boast about his selection as batboy of the Seattle Rainiers as a youngster than about his career turning around troubled banks said a lot about the man.
pat patrick
Patrick Patrick 
That's the kind of memories of Patrick, who died last week at the age of 74 from a rare blood disease, that were shared recently at a gathering of his friends and family for a celebration of his life.

It was two years ago that I did my last of several columns on Patrick , this one focused on his retirement as president and CEO of Seattle Bank, which had been on the financial precipice when he arrived on the scene in September of 2010. His success there was the latest, and turned out to be the final, chapter in the turnaround career.

The role Patrick had at Seattle Bank was one he played several times over 30 years, a role I suggested that role could have been characterized as the financial version of an old television western series called "Have Gun, Will Travel" in which the hero went from town to town to resolve problems created by the bad guys.
Patrick was certain there would always be bad guys, or more accurately, as he preferred to describe those who guided banks into problems, he figured there'd always be greedy guys.
Patrick, then 72, told me that after retiring five times, he'd still be interested in another turnaround opportunity and was quite certain, he said, that there will always be banks in need of turnaround. And he shared the thought that perhaps what he saw emerging in the industry might continue to produce more of them.
"There will always be troubled banks," said Patrick in our interview following his retirement. "The question is the degree of trouble in determining if they need to bring an outsider in."
"We're going back to doing the same things we did when the financial industry got into trouble," he added. "Because competition is fierce and interest rates are extremely low, some banks are making loans on terms we shouldn't be considering," Patrick added.
Patrick's perspective extended back over four financial crises, with his first opportunity to assume the role of turnaround CEO coming after the savings and loan crisis of the early '80s when, in 1983, he was asked to take the helm at Seattle-based Prudential Savings, which was in danger of being closed.
Two years later, he found himself overseeing Westside Federal as well, running both thrifts simultaneously for a year before melding Westside into Prudential and, on "Black Monday" in 1988, selling Prudential to Tacoma-based Pacific First Federal.
Patrick was part of a fun Harp I wrote before his last retirement, highlighting the region's three Irish bankers, each prominent in the local banking industry.
Patrick Patrick, Patrick (Pat) Fahey (who was both banking innovator and reluctant turnaround expert) and Patrick Dineen (former president of U.S, Bank and now chairman of Bellevue-based Puget Sound Bank) shared an Irish heritage and, all three as friends of mine, fitted logically into a column.
In fact, Fahey and Patrick, at a time when both were dealing with turnaround challenges, connected occasionally over breakfast or lunch to share notes and strategies on the progress of their efforts. Fahey, who founded Pacific Northwest Bank and was brought in to turn around a couple of other banks, joked that, like Patrick, he couldn't stay retired. 
The idea of three Irish bankers was good enough for the Irish Network Seattle organization to suggest a panel discussion with them. All were willing but the opportunity never fit all four of our schedules.
And over recent months, as Patrick would offer me a comment on one of the Harps or another, one of us would inevitably close an email by saying something like: "Let's get together, my friend."
It inevitably failed to rise to the top of either of our priority list. "Too bad," I'll scold myself at the celebration of life for Patrick.
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At 50th anniversary, memories remain forever young

A half a century is a long time. But boy does it pass swiftly.

     

       Betsy and Mike


Betsy and I met in math class at Gonzaga 52 years ago when, as a super senior having to fulfill a freshman math requirement, I came to the first day of class, spotted the blond young sophomore and took the seat behind her. We celebrate 50 years of marriage this week. And we'll take time to remember all that has transpired over five decades.

"All that has transpired" includes the son and two daughters, as well as eight grandchildren, who will all join us over Labor Day weekend for a family celebration of our anniversary. One daughter is no longer with us but she will be in Betsy and my thoughts as we mark 50 years.

Amusingly, it was a statistics class that I chose to pick up those math-requirement hours so I've often wondered: what are the odds that the coed I sat behind would turn out to be "the one." We were engaged three months after we completed that class, and married a year later in August of 1966.

One of my early romantic outreaches was one I've shared with readers of the Harp. It was my love affair with a '55 T-Bird, a sleek aqua and white machine then almost 10 years old in which I taught Betsy how to drive a stick shift. I mused in the column that she was so excited sitting behind the wheel that I wasn't certain even now if she first fell in love with the car or the guy.

A marriage gets stronger when a couple shares pain as well as pleasure and so it was when the pleasure of the birth of our third child turned to the pain of her being taken by Sudden Infant Death Syndrome.

Sarah Elizabeth, born four days before Christmas in 1973, gave a special meaning to that holiday season. As I wrote about Sarah in an earlier Harp, her brother and sister would sit on the couch and push as close as possible, looking on with smiling fascination while mom held or fed the baby. Two months to the day later, we found he dead in her crib.

The loss of our baby to "crib death" came to be a bonding thing both during and after the pain. After drawing support from the SIDS medical and family community, we gave back as active in the SIDS Foundation, which I served as state president while Betsy did most of the work of our involvement helping new SIDS parents work through their grief.

The pain of Sarah's loss found a counterpoint two years later with the excitement of the arrival of Eileen, who bore the burden of being the "subsequent child," a description hung by psychologists on children born following the death of a sibling.

Over the coming years, three children grew through teen-age years to adulthood and headed off to college or marriage.

It was four years ago that it came time to move from the house that, over the four decades it was home, had been where three children grew to adulthood and where their laughter and tears, and those of their children, echoed from walls and windows that were always decorated by Betsy for the appropriate holidays.

And so it was that as we watched, the house was emptied of the furnishings, the closets emptied of decorations and toys our voices began to echo through the empty rooms.

The empty spot by the front French doors after movers had cleared the area made it harder to picture the Christmas tree that occupied the spot each holiday season, to be surrounded by excited children, then in addition by their children. And the absence of the sofa and chairs made it difficult to recall the candy-filled plastic Easter eggs that were inevitably hidden in and around them.

As we returned for a final check of the now-empty house, with its unfamiliar echoes as we moved through each room, an important reality for us emerged that I noted in a Harp I wrote son thereafter about the house.

It was that for us, and for all those making large life changes, it was and is important to remember that the memories don't remain behind in the place where they were made. Rather they travel with us, an essential part of the experiences we gather and carry through the years. Memories to be recalled and savored.

Forever young, as is the memory of each new experience, now and in years to come.

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Wireless icons Stanton, Thomsen focus on baseball

John Stanton and Mikal Thomsen were in their late 20s when they teamed up at McCaw Cellular to become part of the birthing of a fledgling communications technology whose growth globally they helped guide through several major companies over the next 20 years, becoming iconic figures in the wireless industry.

Now just into their 60s, both have parlayed their business success into owning and guiding professional baseball teams, what they might well agree is a passion that rivals their business focus.

A business focus remains, however, as they continue to manage their Bellevue-based wireless venture and investment firm, Trilogy Equity Partners, formed by a collection of long-time wireless partners after the sale of their Western Wireless to Alltel Corp. in 2005.

Thomsen once told me that the opportunity six years ago to create the ownership team that bought the Tacoma Rainiers was like his “dream come true.” He would be owning his hometown team that he had grown up rooting for from the time his dad took him to his first game at age three. That was the year that the then-Tacoma Giants returned after a 55-year absence.

Stanton, who will soon assume the role of CEO of the Seattle Mariners after the ownership group he leads completes its purchase of the team from Nintendo of America, also recalls attending the games of his hometown team with his father. That was in 1969 when, as a teenager he became a fan of the Seattle Pilots in their first and only year of existence and recalls crying when they left town for Milwaukee.

Thomsen would undoubtedly echo Stanton’s “I am first and foremost a baseball fan” comment  that he made to the media gathering at Safeco Field when he was introduced as the leader of a 17 member local group that would become 90 percent owner of the team and he become the CEO, once Major League Baseball owners bless the deal.

Thomsen and his wife, Lynn, and Stanton and his wife, Terry Gillespie, are all alums of McCaw Cellular in the ‘80s and are now on the team of co-owners of the Tacoma Rainiers, though the oversight of the franchise, including attending many games and spending about 10 hours a week in the office during the season, falls to Thomsen.

The owners are fortunate that the baseball team acquisition included Aaron Artman as club president, a former Microsoft executive who oversaw the $30 million renovation of Cheney Stadium and remained with the new owners in the role of president.

Stanton’s and Thomsen’s baseball involvement extends across the state and all the way down to the West Coast League, an amateur collegiate summer league, where they are among owners of both the Walla Sweets and the Yakima Valley Pippins.

But it was when Thomsen had the opportunity to put together the purchase of the Tacoma Rainiers in 2011 that he turned to Stanton and his wife, an avid baseball fan herself, to become part of the ownership group.

Thomsen has immersed himself in his hometown baseball team and has enthusiastically committed to its increasing success, despite being the smallest market in far-flung Pacific Coast League and being the closest Triple-A team to a major league city.

In fact, the Seattle Mariners and the Rainiers are not only geographically close, which Thomsen admits may sometimes cost the Rainiers attendance of fans heading for Seattle, but close in that the Rainiers are the Mariners’ triple-A farm team.

As Thomsen puts it: “Most of the Rainiers fans are Mariners fans who enjoy keeping up with both teams and hearing about the players they saw in Tacoma performing with the major league club. I think the nearness of the M’s cuts both ways.”

In addition, the relationship is good for the Rainiers’ bottomline since the Tacoma roster is determined by and players’ salaries paid by the Mariners.

A lot of the changes brought about since Thomson’s group bought the team relate to community things, but he is pleased about what has happened in the stands and on the field.

At this point, atop PCL pack, the Rainiers seem headed for their first playoff appearance since Thomsen’s group bought the team, though Thomsen cautions that “it’s a long way from certain. We are only three games up on Fresno.” Plus the team appear on the way to another franchise attendance record, though beating the 352,000 attendance mark of last season is well behind the nearly 680,000 of the Sacramento River Cats.

In addition, Thomsen notes that the decision by the ownership group three years ago to build a new set of stands in left field “has been a stunning success,” adding that he celebrated his 60th birthday there in early May this year “with a couple hundred friends.”

He says the change of the team’s logo two years ago to “the now somewhat iconic ‘R’” has helped drive merchandise sales “through the roof.”

In terms of community involvement, he says the Rainiers “teamed this past off season with Tacoma Parks, the Cheney Foundation and Mary Bridge Hospital to add a playground behind the right field berm that includes a whiffle ball stadium,

“It is packed for most games and open as a public park when games are not going on in the stadium,” he adds.

“The community views this as a partnership and we go out of our way to be great partners,” Thomsen says with obvious pride.

 

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Alaska Airlines begins wooing process for Virgin America fans

Alaska Airlines’ goal of winning friends and influencing people in the Bay Area, whose hometown airline is about to be absorbed by the Seattle-based carrier, began in earnest Tuesday night in San Francisco as Alaska executives and board members hosted a gathering for local leaders.

Some 250 business, political and community leaders were on hand at the Four Seasons Hotel in San Francisco for an event whose theme was “Flying Better Together.” The goal of the gathering of Bay Area who’s who was for them to meet and begin to get to know the leadership of the airline that is buying Virgin America, the Richard Branson-founded carrier that began service as San Francisco’s hometown low-cost airline nine years ago this month.

During that nearly a decade of service, Virgin built what many in the Bay Area have described as “almost a cult following,”with many regular flyers enthusing that they “love Virgin.”

Aware of that challenge, Alaska CEO Brad Tilden and his executive team have sought to express sensitivity to the cultural issues and the initial backlash from Virgin fans. That awareness was pointed up a few weeks ago when Tilden told the Wings Club, a group of aviation professionals in New York, that he was thinking of running the Alaska and Virgin as separate airlines within Alaska Air Group.

Such an outcome may or may not still be a possibility, but when I asked Joseph Sprague, Alaska senior vice president, after the Tuesday event, about Virgin continuing to function as a third carrier, he said: “ Initially it will be a third airline but by 2018 it will be merged into Alaska.”

But Alaska leadership is playing up a cultural fit they see existing between Alaska and Virgin, rather than addressing the different styles.

Sprague said “a lot of the integration pre-planning work has revealed an encouraging number of similarities from which we can build.” 

He noted that Tilden, in his comments to the group Tuesday, pointed out three such similarities: “both have an obsessive focus on the customer, we both want companies that are employee-driven and we both have a strong leaning towards innovation around the customer experience.”

Alaska’s San Francisco community gathering came exactly s week after shareholders of Virgin America approved the acquisition by Alaska Air Group, with Virgin’s chairman announcing the voting results at a brief shareholders meeting on July 26.

That Virgin shareholder approval was the next-to-last major hurdle for the takeover, with the remaining step being U.S. Justice Department approval. Closing by October is expected for the $4 billion deal ($2.6 billion in cash and the rest in assumed debt and other costs) that Alaska had to put together to beat out Jet Blue.

It’s quite possible that the shadow of Delta Airlines’ seeming predator pursuit of Alaska that left key Alaska supporters concerned Delta was seeking to force a takeover played a role in Alaska’s decision to acquire Virgin America for a very large premium.

But in addition to likely ending concern about Delta coveting a takeover, Alaska also gets Virgin’s lucrative California routes as well as keeping Jet Blue, the losing suitor in the Virgin bidding contest, from acquiring the routes.

In fact, it’s perhaps amusing to consider the community response if Delta, after a hostile takeover of Alaska, held a reach-out event with the theme “get to know us.” They’d have faced a ferociously hostile audience in Seattle.

But obviously Alaska, which has been successfully serving the Bay Area from three airport for years, isn’t perceived as a bad guy, more just a carrier that locals don’t know a lot about other than it has an excellent record in all the areas airlines get rated.

In fact, as Phyllis Campbell, Alaska board member and Pacific Northwest chairman of JP Morgan Chase, put it after the event: ‘I think it is emblematic of Alaska Airlines to reach out to the community in a spirit of collaboration and collegiality. Having dinners like this send the message that we want to be the best airline going forward for the Region and also the best citizen in terms of community partnership.”

In fact, the event was apparently successful enough from Alaska’s perspective that Sprague said “we will likely do additional events, both of our own and sponsoring others.”

Still there are Virgin supporters whose love affair with the airline was partly due to the fact it was the Bay Area’s hometown airline. And the takeover will mean not just the end of Virgin’s “hometown” ties, but also that California will no longer have an airline based in a state that has served as home to a variety of important carriers over the years.

As Mary Huss, publisher of Puget Sound Business Times, summed up when I asked her about it: “I think people were very proud that Virgin chose to locate and start up here when it did.”

But while Jet Blue lost the bidding to Alaska, it is seeking to woo Virgin fans away before Alaska can convert them by looking for ways to exploit what it senses as uncertainty of flyers about the transition. It has been touting giveaway deals to potential frequent users of Jet Blue’s longhaul service from New York to San Francisco and Los Angeles, including its tongue-in-cheek wooing of Jet Blue “virgins,” those who haven’t previously tried Jet Blue.

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Stephen Vella: turns around airlines, creates flying mansions

Stephen Vella, a congenial Brit who spent his career building airlines before turning his attention to creating flying mansions for the global elite, is the man whose Kestrel Aviation Management oversaw creation of the first VIP interior on a 787-8 Dreamliner.

The first VVIP outfitted BBJ, as its officially referred to, has gotten global visibility for those who partnered with Vella’s company, which had turnkey responsibility for the project from purchase of the plane to planning and design of the special interior to meet the requirements of the Asian client who will operate the aircraft. The partners included Greenpoint Technologies of Kirkland and Pierrejean Design Studio of Paris.

The specially outfitted Dreamliner is back in Moses Lake, where the work to install the unique interior was done, as it awaits final signoff by the FAA and final closing of the sale to an undisclosed owner.

“Undisclosed owner” is the usual description of individuals, countries or companies who decide they wish to own a castle in the sky and contract with Vella and Kestrel to manage the purchase, design and delivery of the aircraft. Nohl Martin, Vella’s vice president for business development and communications, says outfitting the special interiors can cost as much as the airplane itself with the finished product, once the widebody is aloft, sometimes described by buyers as airborne oases of peace.

But these are oases that are reserved for the elite, both in stature and resources, and the fact they seek out Vella has made him a valued relationship for Boeing, but also for Airbus, since the contract for design and implementation of one of these widebody interiors begins with the purchase of the plane itself.

I had an opportunity recently to interview Vella while he his partner Martin, a longtime friend of mine, were on a visit to Kirkland, where she has family.

The Dreamliner, representing the first conversion of a composite and nearly all-electric aircraft to incorporate a high-end cabin and thus requiring virtually the entire focus of the Kestrel team for the past two years, is the 11th widebody conversion that Vella’s team has managed from purchase through entry into service. The company has also done 10 narrowbody VVIP cabin conversions.

But as communications vice president Martin points out: “Sadly it is a sector that rarely allows us to publicize our work -- until this 787 project.”

Visibility was not a problem for Vella when he was turning around airlines, particularly the nearly 15 years he spent helping turn Qatar Airways from a struggling, five-plane regional airline into one of the handful of the world’s Five Star airlines.

When Akbar Al Baker, Qatar’s group chief executive, was tapped by the Qatar government in  1997 to take over the failing airline, he contracted with Vella, who functioned for the next 15 years as basically the airline’s COO, doing the long-term planning, fleet management, overseeing brand development as well as mergers and acquisitions.

By early this decade, Qatar Airways was operating 150 planes with another 200 on order, producing billions of dollars in sales for Boeing, but also for Airbus since the fleet, Vella estimates, is about half from each manufacturer.

Vella, 62, is a native of Gibraltar, the British Overseas Territory at the southern end of the Iberian Peninsula, and he explains that, despite being a citizen of the United Kingdom, Spanish is his first language.

His upbringing in Gibraltar and his fluency in Spanish, along with a healthy dose of self confidence, allowed him to build his reputation in the airline-turnaround business early.

He recalls that he was still in college when he took time off to visit with an official the prime minister back in Gibraltar and convinced him to grant Vella a Masters scholarship in return for assisting the City architect in redesigning the airport terminal.

After graduation, he approached executives of British Caledonia and pitched that the fact he was bilingual would allow him to launch the airline’s Latin America routes.

He recalled with a chuckle that the pitch allowed him to land a job at a time when there were no jobs to be had and while he worked for peanuts, he was able to see the world.

By his early 30s he had become general manager of British Caledonia’s fleet management division, but at that point left to start his aviation consulting firm and early on helped Richard Branson acquire his first 747.

Vella has turned around eight airlines, including Qatar and the Spanish airline Air Nostrum, a Iberia affiliate, which is now the largest regional carrier in Europe, and started several airplane leasing companies, including one for Rupert Murdoch.

I asked Vella to give me a sense of what he thinks the future holds for the industry and he offered a couple of predictions. One, Asia is a fertile field for new airlines to come into existence. And he suggests that in this county we’ll see consolidation bring the industry down to four large airlines. He declined to name those he thinks will compose the final field of four.

 

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Huntsman World /Senior Games turns 30 this October

Jon Huntsman Sr.’s vision of creating an event that would attract hundreds of seniors to Southern Utah annually to engage in competition with each other in what he named the World Senior Games has become, over three decades, likely the most successful event of its kind in …well…the world.

Fulfillment of the prominent Utah businessman-philanthropist’s conviction that seniors could be lured to a remote but appealing corner of the West to demonstrate that their competitiveness remained strong despite advancing years will be played out again this fall for the 30th time.

Thus the City of St. George, along with officials and volunteers of the event itself, prepare to entertain almost 11,000 seniors during the first two weeks of October with athletes from every state and many nations. In fact, as Michelle Graves, Director of Sponsor Relations for the Games, emailed me: “Our goal this year is to host 10,950 athletes, which is the number of days in 30 years,” a goal only 400 ahead of the participant total for last year. “We also hope to host 30 nations, one for each year.”

I am registered again this October to be among the competitor in the 100 meters, against other “old guys” of my age (competition in all events is on the basis of five-year increments, as in 50-54 on up). But in addition to track and field, others of the thousands on hand will be participating in events ranging from archery, badminton and basketball to cycling, tennis, swimming and softballr.

The appellation “World” that Huntsman’s marketing acumen attached to the games’ name has, without doubt, been a key attraction for seniors willing to travel to a spot that you don’t get to easily so they can have the satisfaction of competing with the best of peers of their age.

I don’t know whether the intent of Huntsman and his wife, Karen, in their commitment to these games was because of the goodwill it has obviously fostered or economic development for the picturesque region known as “Color Country,” or “Red Rock Country.”

But the fact is both have occurred. The population of St. George was about 25,000 when the games were first held and has now grown to more than three times that at just over 80,000.

As long-time readers of the Harp are likely aware, participating in these games has held an appeal for me since I first learned of them in 2002, wanted to be a part of something called “World” games,  and came to run in the 100 meters and 200 meter events a year later, to my surprise finishing sixth in the 100.

It’s what attracted me back in 2011 after colon cancer surgery, needing to prove something to myself, and was amazed to finish third in the 100 meters in the 70-74 group. And again last year, when I finished second in 75-79 100-meter runners.

These games are a success story that Huntsman himself, now 79, probably couldn’t have envisioned. And except for those aware of Huntsman’s life of giving and caring, people might well be surprised that a multibillionaire who was in the process of building the world’s largest chemical company of its kind and developing a noted cancer hospital in Salt Lake City would have the time or interest to worry about it.

This Harp is, in fact, as much about a regard I have for Huntsman, whom I have never met, as the regard I have held for more than a dozen years for the annual gathering of senior athletes he has been committed to fostering and supporting, making it possible for me and others to test ourselves in peer competition.

A person like Huntsman is particularly important at a time when anger and hostility seem to have become what too many people bring to interactions with each other, rather than goodwill and regard.

Huntsman, a leader in his Mormon church, is a two-time cancer survivor who founded an institute with the goal of curing the disease and dispenses his substantial wealth to an array of causes, in addition to having taken the Giving Pledge, the promise taken by the world’s richest people to give away more than half of their wealth.

Huntsman’s philanthropic giving now exceeds $1.2 billion but he suggests he has a long way to go since his stated intent is to give all his wealth away.

Huntsman is wont to sum up his view of the non-giving wealthy thusly: "The people I particularly dislike are those who say 'I'm going to leave it in my will.' What they're really saying is 'If I could live forever, I wouldn't give any of it away.'

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Naturopath Laurie Mischley's focus on intranasal treatment of Parkinson's

Laurie Mischley is a naturopathic physician at Bastyr University whose years-long research seeking to change the course of Parkinson’s Disease has quietly attracted both national and internatonal interest.

And now the results of two recent research projects relating to her focus on the relationship of glutathione(GSH) to the disease and her intranasal approach to treatment are likely to mean interest in her work will extend beyond academia and foundations into mainstream awareness.

The most recent was publication this week of her research findings from a project funded with a grant from Michael J. fox Foundation that, in essence, glutathione provides a “marker” for Parkinson’s Disease.

The study results showed that the lower the blood glutathione the worse the Parkinson’s, meaning, meaning that testing for low blood GSM might be a signal for the presence of Parkinson’s Disease.

“In essence, we can say now that the absence of glutathione leaves the brain on fire and it will be consumed unless the GSH is restored,” she said. “Wouldn’t it be nice to have a marker, not unlike cholesterol level and heart disease, that we could modulate rather than simply watching the disease progress?”

The other recent development was a team project, with Mischley as lead investigator working with scientists from Washington State University, that determined, through use of magnetic resonance spectroscopy (MRS), that glutathione had reached the brain and how to measure it.

Glutathione, called by some “the mother of all antioxidants” and “the master detoxifier,” prevents damage to important cellular components. The body makes its own but its depletion is known to relate to an array of neuro/pshyche diseases like Parkinson’s and Alzheimer’s

“People have been suggesting for more than three decades that glutathione deficiency plays a role in diseases of the brain and central nervous system that finding a way to augment it might be a good idea,” Mischley said. “What we just demonstrated is that squirting it up your nose works to raise brain levels of GSH.”

Explaining the study, Mischley said it showed a boost of almost 250 percent in the  glutathione in the brain after 45-to-60 minutes.

”Our results showed that all groups improved over the three months of use, including placebo, enough to warrant further study of glutathione for both symptom management and disease modification,” Mischley said.

Left for a follow-up study, which she said “ideally will be off the ground by the end of the year,” is determining issues like whether the glutathione level continue to rise? How long before it peaks? What happens following multiple doses?

Mischley returned at the end of June from the 20th International Congress of Parkinson’s Disease & Movement Disorders in Berlin where her research into the intranasal delivery of glutathione for Parkinson’s patients was given high visibility.

The challenge Mischley talks about candidly is frustration about making the glutathione therapy, intranasal injections of it on a regular basis, available to PD patients, “the formula and delivery need to be improved and partnerships with industry forged.”

“If we had a company to accelerate the research, I sincerely believe we could have the first disease-modifying therapy for PD available in 3-5 years, if cards are played correctly,” Mischley said.

“I came into this years ago to cure Parkinson’s,” she said. “I ndver thought of starting a pharma company, “But the fact is the way I need to proceed if I am to serve my patients and prospective patients is to start one.”

Mischley, 42, was in pre-med studies at Penn State University in the mid-‘90s, assuming that medical school lay ahead when she decided to switch her major to nutrition.

“I was told nutrition is not a science,” she said. “That was my reality check in what I was up against. It was like I was more interested in being a detective trying to solve a mystery and conventional medicine knowing what it is and hiding it.”

Her focus on nutritional medicine and now on Parkinson’s Disease is in line with her philosophy that “if people don’t wonder, they can’t learn. You have to be able to incite curiosity.”

In seeking out a place to study nutritional medicine, she says she found Bastyr had d the only nutritional medicine program, so she came to the campus of what has become the Harvard of naturopathic medicine and got her degree as a naturopathic doctor, and subsequently a PhD and masters of public health at University of Washington.

In 2010 she was awarded a five-year, $500,000 grant from the National Institutes of Health, one of three researchers in the country to receive what was described as a career-transition award, explaining “they thought it was a good idea to train individuals with a clinical doctorate in complementary/ alternative medicine to do research.”

Her research with glutathione and intranasal delivery is helping spur the growing focus on intranasal delivery of drugs destined to address neurological disorders from Alzheimer’s and Parkinson’s to chronic pain and migraine. 

In fact, that increasing medical interest in intranasal delivery for drugs focused on disorders of the brain and central nervous system is attracting key angel-investor interest to a rapidly growing Seattle company that makes intranasal devices.

Impel NeuroPharma, which Mischley describes as being “at the top of the food chain” for manufacture of intranasal devices, has already raised millions and scould be key to creating a new biotech category, maybe called drug delivery technology,  for which this area could be at the forefront.

Thus Impel and its co-founder and CEO, Michael Hite, will be the focus of next week’s Flynn’s Harp.

 

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Reflections: Brexit, out-of-touch High Court ruling, talk of 28th Amendment

It was well over a year ago that my brother, a retired Spokane small-business owner, began telling me, in support of the Donald Trump phenomenon, “Mike, you don’t understand, the silent majority is roaring.” My response was always, “I hear the roar, but it’s a minority made up of those unsettled by the murky mix of terrorism and immigration policies and angered by their lack of influence, or even contact, with the establishment.”

Then came last week’s Brexit vote, where the English version of folks I described turned out to be the majority, leaving establishment leaders of both major parties in this country to ponder whether what’s at stake is a desire to throw out the system rather than merely overturn particular politicians or policies. And what that means come November.

Or for the future. Thus perhaps an appropriate time to ponder questions as Independence Day approaches

Now a week following the blow to the U.K. comes a decision by the U.S. Supreme Court almost certain to fuel anger at the established order, the court making it harder to prosecute public officials for corruption by basically saying it’s ok for “the system” to include paying elected officials to influence their decisions.

At issue was the case of former Virginia governor Bob McDonnell, who was convicted by a lower court of using his office to help a businessman who had provided McDonnell and his wife with luxury products, loans and vacations worth more than $175,000 when Mr. McDonnell was governor.

Chief Justice John G. Roberts Jr., writing for the court, narrowed the definition of what sort of conduct can serve as the basis of a corruption prosecution. He wrote that “routine political courtesies like arranging meetings or urging underlings to consider a matter generally, even when the people seeking those favors give the public officials gifts or money,” do not represent corruption.

The alternative to the new limits, Roberts wrote, would be to criminalize routine political behavior. “Conscientious public officials arrange meetings for constituents, contact other officials on their behalf and include them in events all the time,” he wrote. All the time! Isn’t that the problem?

By now readers of this column have likely concluded that the usual focus on people, companies and issues that relate the Northwest is being upstaged to Harp about some personal thoughts on an issue that impacts us in this region, but that transcends us.

Fodder for thought following Brexit, for those who care to think, is offered by The Los Angeles Times‘ Vincent Bevins: “Since the 1980s the elites in rich countries have overplayed their hand, taking all the gains for themselves and just covering their ears when anyone else talks, and now they are watching in horror as voters revolt.”

It has to be hoped that the revolt is aimed at reconstructing rather than destructing the Democratic process. But that may not be certain.

A quote from author and MSNBC commentator Chris Hayes is getting attention on social media in the wake of the Brexit vote.

“The mechanism that western citizens are expected to use to express and rectify dissatisfaction – elections – has largely ceased to serve any correction function. When Democracy is preserved only in form, structured to change little to nothing about power distribution, people naturally seek alternatives for the redress of their grievances, particularly when they suffer.”

Coincident with the post-Brexit analysis have come a couple of group emails in which I was included, both suggesting that the idea of change by the ballot isn’t being totally abandoned. Both related to a focus on the 28th amendment to the U.S. constitution and both widely popular but not yet widely promoted.

The first relates to ongoing discussion about an amendment to overturn Citizens United, the U.S. Supreme Court decision that held political expenditures by corporations could not be limited.

Polls show the efforts for a 28th Amendment to overturn Citizens United is supported by more than 75 percent of Republicans, Democrats, and Independents and sixteen states have enacted 28th Amendment resolutions.

The other idea gathering support as a proposed 28th amendment: "Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives; and, Congress shall make no law that applies to the Senators and/or Representatives that does not apply equally to the citizens of the United States."

It strikes me that this idea could generate some positive action from voters by, between now and the November General Election, insisting every member of Congress on the ballot, as well as every state legislator, commit to voting in favor of the constitutional change next year. Or bite the bullet as voters and vote for the opponent, regardless of ideological compatability.

There are examples of the manner in which a fed-up public can bring a positive focus to their anger and bring about beneficial change within the system.

 

One such example was actually the result of an idea of someone from inside “the system,” then-Washington congressman Brian Baird, who during the last three of his six terms as the representative from the state’s third district sought to gather support in Congress for what he called the “Stock Act.”

 

Baird sought to prevent members of Congress from doing stock transactions in areas they regulate, in essence, prohibiting their investing in a manner that those in the real world call Insider Trading.

 

I wrote about it in a November, 2011, column after a program on CBS’ “60 Minutes” brought national attention to Baird’s idea with a program titled “Honest graft.”

 

For ordinary citizens, reaction to Baird's proposal would be a laughable "well, of course." But in a place whose mantra is "the rules we make for you don't apply to us," seeking to force action by the lawmakers on one small, self-imposed ethical constraint could become a rallying point for a fed-up public.

 

The thrust of the CBS segment was that lawmakers often made stock purchases and trades in the very fields they regulate. While ordinary citizens could be jailed for engaging in the kind of investment shenanigans that those in Congress involve themselves in, there's wasn’t even an ethical concern among lawmakers.

 

Reporter Steve Croft questioned then-House Speaker John Boehner and former Speaker Nancy Pelosi at their respective news conferences. And the ineptitude with which both Boehner and Pelosi tried to answer Croft's questions about whether their investment practices were at least conflicts of interest, the thought that had to occur was "Who elects these people?" The answer, unfortunately, is people like us elect them. And both have continued to be elected. Shame on us. And so maybe a revolt wouldn’t be that bad.

 

As a result of the outcry following the program and You Tube pieces on the congressional leaders’ confused responses, the Stock Act was passed overwhelmingly in the spring of 2012 with what observers described as “vulnerable congressmen” at the forefront of supporters. So now Members of Congress and employees of Congress are prohibited from using private information derived from their official positions for personal benefit, and for other purposes.

 

Baird had already retired by then, having decided not to seek a seventh term, thus exemplifying one of the concerns about the future of the Democracy as currently operating: The Nancy Pelosis remain in office and the Brian Bairds decide to leave.

 

 



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Oregon ballot measure would dramatically boost business taxes

Just as the races for state and national offices in the November General Election may demonstrate that anger can trump reason, voters in Oregon will be faced with deciding a ballot measure that will test whether anger at big business over things like soaring executive compensation exceeds logic.

At issue is IP28 (Initiative Petition), which targets Oregon's biggest corporations — roughly 1,000 by the state's estimates, or about 4 percent of businesses. Those with $25 million in Oregon sales would pay a minimum $30,000 tax, plus 2.5 percent on anything above that threshold.

In essence, it would be a tax on gross receipts, like Washington’s business & occupation tax, generating an estimated $6 billion in new revenue. Except in Oregon it would be in addition to the tax on personal and corporate income and would boost corporate tax collections more than five-fold.

As my friend Don Brunell put it in his latest column, which alerted me to the fact the measure had been cleared for the November ballot by collecting the required 130,000 signatures, “Washington’s next economic development plan may be written by Oregon voters next November.”

His point was that “Oregon voters need to remember that Washington and California have heavy concentrations of large businesses and stand to benefit from passage of IP28 and that while all parts of Washington would gain, the corridor between Vancouver and Longview could be the biggest winner.”

Brunell, retired president of Association of Washington Business, in his more than a quarter century at the helm of the state’s largest business association saw all the off-the-wall ideas for taxing business. But it’s as a longtime observer that he shakes his head at this proposal, noting the tax scheme “would transform Oregon from one of the nation’s lowest business-tax-burden states to one of the nation’s highest.”

Organizations that purchase products and services from those major businesses would undoubtedly see their costs increase and thus would need to increase their price for items resold to Oregon consumers. In response to this, businesses purchasing goods in Oregon may opt to leave the state or relocate some or all of their facilities to avoid the increased cost of doing business in that state.

IP28 is sponsored by Better Oregon, a labor union coalition led by the Oregon Education Association, and targets “big business”.  Proponents claim it would tap a tiny portion of Oregon businesses while bringing a huge revenue boost to cash-strapped public education, health care and senior services.

The non-partisan Legislative Revenue Office, in evaluating similar proposals to IP28, has forecast job losses should a gross receipt tax pass.

Former Washington Gov. Mike Lowry, who despite being perhaps Washington’s most liberal governor carried an understanding of the importance of nurturing big businesses as the creators of better-paying jobs, offered his classic belly laugh when I called him for his thoughts on the initiative.

“We always looked to Oregon for progressive ideas but this would represent the total opposite,” Lowry said. “The gross-receipts tax is about the worst tax there is.”

Amusingly, Lowry understood how to use the tax as a whip. In his first year in office he sought to have the Democrat-controlled legislature extend Washington’s sales tax to service businesses like law and accounting firms, which used their lobbying clout to beat back the effort.

But they paid a price by having the lawmakers impose the highest b&o tax rate on services, a payback in the form of a 2.5 percent rate, which though now reduced to 1.5 percent remains the state’s highest rate, reserved for service businesses and professional gambling.

Most gross receipts tax rates around the country are relatively low when compared with the Oregon proposal’s 2.5 percent rate. In Washington, it ranges from 0.138 percent to the aforementioned 1.5 percent. Thus if the measure were to pass, the tax burden of operating in Oregon would increase dramatically when compared with other states.

Proponents argue that “IP28 would modestly raise the effective tax rate of large corporations and use the added revenue to fund Oregon's crippled public school system, provide services to seniors, and extend health care coverage to 18,000-plus children.”

Problem is if it comes to be marketed to voters as “the big-business tax,” the result could be that anger overrides common sense for voters, among whom would be many that would face loss of their jobs if the analysis of business reaction proves true.

The ballot proposal comes as raising taxes on wealthy individuals and large corporations is at the forefront of a national debate — especially among Democratic progressives, including much of Oregon's electorate— about how to close the gap of economic disparities between rich and poor in the post-Great Recession era.

And if there is a doubt that anger at big business underlies the measure, and leaves concern about the logic voters will bring when they mark their ballots, supporters point to the current difference between growth in corporate profits vs. growth in family income in Oregon. They say it’s time big business takes on its fair share of the tax burden to help pay for education and social services.

Business people in Southwest Washington are not only looking to gain business if the measure is approved, they are having some amusement thinking about it.

When I talked with longtime Vancouver businessman Michael Worthy about it, he chuckled and offered that the two-state effort to agree on financing a new I-5 bridge across the Columbia could be solved by letting firms that would want to move operations out of Oregon might want to pay for improved transportation they’d need.

And when I asked Brunell why he thinks intelligent voters would go for a tax that would likely impact them, and perhaps their jobs, he replied: “I suspect, knowing Oregon a little better by living down here in Vancouver, there is a reason for the bumper sticker: ‘Keep Portland Weird.’” 

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Seattle investor friends focus on 'The Holy Grail of Energy' train project

The six-year-long commitment by two successful Seattle-area businessmen to sustain the alternative-energy breakthrough technology that one of them describes as "the holy grail of energy" is close to paying off. The story of their commitment to develop the technology owned by their company named Advanced Rail Energy Storage LLC (ARES) is as intriguing as that of the business itself.

ARES' launch project is a rock-laden train of special electric cars that would run up and down a long hill in the Nevada desert near Pahrump, 60 miles west of Las Vegas, to demonstrate on-demand delivery of electricity. The $55 million, 50 megawatt project is gathering interest from utilities across the county as it moves into final funding phase, fulfilling the vision of investor friends Art Harrigan, a respected attorney, and Spike Anderson, successful businessman who describes himself as a serial investor.

The two have partnered since 2010 to provide the majority of the funding for planning and preparation for ARES and its ARES Nevada project's launch, which is planned for spring of 2017 with completion expected by spring or early summer of 2018.

Now they are in the final fund-raising push for the last $15 million of equity and $15 million of debt necessary to cap the $25 million already committed and begin construction on a six-mile long track with 7.5 percent grade on 43 leased acres of BLM land

ARES Nevada will be the prototype for future projects elsewhere in the country. The Nevada project is smaller (able to fully discharge for a period of 15 minutes at 50 megawatts) than future projects are likely to be, though William Peitzke, the company's director of technology development, notes it will be "the largest energy regulation management project ever in the West."

As word of the planned Nevada project has spread, a number of utilities have reached out to the leaders of ARES, who invited about 30 representatives of utilities and the Electric Power Research Institute (EPRI) to a March 1 demonstration of a functioning scale model.

The gathering at the quarter-scale, proof-of-concept project in Tehachapi, in the mountains east of Bakersfield, CA. prompted EPRI representatives to announce to the assembled utilities people that they would develop an EPRI demonstration project and seek funding from member companies.

Since then, the ARES project has attracted media attention from the likes of Forbes and Fortune and, in recent days, from a newspaper in Finland.

Part of the interest generated in ARES, which is a company headquartered in Santa Barbara with its initial project incorporated as ARES Nevada, is due partly to the quality of the management team Anderson and Harrigan have attracted. The CEO is James Kelly, who for almost four decades was a key executive at Southern California Edison, and the executive vice president is Steve Sullivan, who worked with Kelly at Southern Cal Edison and guided many of his projects there.

But given that the two principal funders of ARES have not sought to put themselves in the limelight on this project, despite the fact they were largely responsible for generating the $15 million necessary to reach this point and attract this management team, ARES has not gotten the extended visibility it might need for the closing rush to funding.

But that will likely change as media, both nationally and locally in Washington State, begin to focus on the principal investors because their past successes in business amount, in the minds of many potential investors, to an imprimatur of likely success of their projects.

I've written recently about Harrigan, who is chairman of the ARES board, relating to his legal involvement setting the stage for Seattle's two major league sports teams to be saved and brought under local ownership. But he was also closely involved with Craig McCaw's Eagle River, formed after the sale of McCaw Cellular to AT&T. And he provided the legal guidance that gave birth to Nextel Partners, one of the nation/s largest cellular companies in the late 1990s, was involved in setting up Nextel's IPO and served on its board.

Anderson, whose career in sales and marketing included building one of the most successful reps firms on the West Coast then co-owning and eventually merging his firm, by then Anderson-Daymon, and building Costco's largest supplier of goods and services. Recently he founded, is funding and acting aa CEO for Clean Global Energy, a Bakersfield-based firm developing a process its website describes as "redefining oil separation in a better, cleaner way."

Part of the emerging visibility for Harrigan and Anderson was a letter Anderson recently sent to prospective investors explaining the project in detail and soliciting investors for the final $15 million of equity needed to get ARES Nevada project underway.

Anderson explained, in the extensive narrative on the project to the audience of more-than-qualified investors, that he would take the investing lead in the project with $10 million of the amount needed to complete it.

"We believe we can raise $15 million in debt, and will offer the remaining balance on the exact terms of my personal investment," Anderson explained, adding that "we believe that we can achieve close to a 25 per cent return on equity with ARES Nevada over the next few years "

"By running a train up and down a hill, ARES can help utilities add and subtract power from their grid on demand," Anderson explained in his letter. "A 19th century solution for a 21st century problem, assisted by that abundant natural resource called gravity."

And inevitably, the image of a train loaded with boulders running up a hill has spurred the metaphor of Sisyphus, the king from Greek mythology who was punished by the gods by being forced to roll an immense boulder up a hill, only to watch it roll back down, repeating this action for eternity.

Of course the Sisyphus image is flawed because the boulder being forced back downhill highlighted Sisyphus's forever failure whereas the trains loaded with boulders imbedded in sand rolling down the hill will exemplify the success of the ARES project.

Anderson explained that Shuttle trains, referred to as modules that are each made up of two electric locomotives and multiple weighted cars, will go up or down the track to either take electricity off the grid on the ascent or supply electricity to the grid by descending.

An example of the fact the Nevada project is on the small side of possible ARES projects, Harrigan and Anderson note that ARES can scale up to 3,000 megawatt, which would be a project as big as some hydroelectric projects. And Anderson noted that "the scope of the Nevada permit also allows for construction of a much larger system for an energy storage facility as well, essentially expanding the 50 MW system to add a 300 MW storage."

Said Anderson is his letter to prospective investors: The real problem we are addressing is providing an answer to the question of how do we generate more power since we can't build more dams, states are not permitting for fossil-fuel power generation and nuclear is enormously expensive."

Kelly suggests that a large part of the likely ARES appeal to investors and potential utility customers is that "ARES can be deployed at around half the cost of other available storage technologies and produces no emissions, burns no fuel, requires no water, does not use environmentally troubling materials. And it sits lightly on the land."

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