Chesapeake is an economic force but still has growing painsJanuary 30, 2013 2:53 PM
by Elizabeth Cooper
A mixture of celebration and administrative headaches greeted new City Manager James Baker when he moved into his sixth-floor City Hall office just two weeks after Chesapeake marked its 50th birthday. While the city is hitting its stride as an economic and educational powerhouse, it also is navigating a number of pesky issues, including troublesome construction projects, simmering tensions between elected officials and city staff, and school budget shortfalls.
Formed on Jan. 1, 1963, with the merger of the small but bustling city of South Norfolk and bucolic Norfolk County, Chesapeake’s initial purpose was to prevent encroachment on its forebears from neighboring Norfolk and Portsmouth. Since then, the city has grown from 78,000 people to more than 225,000 residents spread out across more than 353 square miles. It’s also collected its share of accolades. Last year, 24/7 Wall St. named Chesapeake America’s sixth Best Run City, while Bloomberg Businessweek.com placed it 21st on its inaugural list of America’s best cities in 2011. Not bad for a city just hitting the half-century mark.
Maintaining that momentum now falls to Baker, who comes to Chesapeake after spending five years as the county manager of York County, S.C., a suburb of Charlotte, N.C. He’s facing myriad challenges amidst the city’s yearlong birthday celebration. Before tackling them, Baker plans to listen to the many voices in city government as well as the community.
“The most important thing I can do is listen to the elected officials, community leaders and the staff,” he says, noting that delays and cost overruns on the city’s new animal shelter along with unusable modular jail units built way over budget have eroded trust between City Council members and city administrators. Restoring trust won’t happen overnight, but listening to both sides is imperative, Baker says. “To be an effective council and staff, you have to sit down and see each other as partners. The public doesn’t differentiate between the roles of elected officials and staff. They look at it as a unified whole.”
Spats at City Hall, however, have not kept Chesapeake from prospering amidst the economic downturn. According to the city’s 2012 Annual Report, more than 800 jobs were created in 2011 as the result of $163 million in business investment from new and existing companies. It was the city’s fourth consecutive year of economic growth, momentum that Economic Development Director Steven Wright hopes will continue as Chesapeake embarks on new road and bridge construction projects, opens new commerce parks and endeavors to draw new businesses to the city. “We’re constantly looking for opportunities and strive to maintain a certain level of diversity, including new, large, domestic, international, women-owned and minority-owned businesses,” he says. “It insulates us against some of the problems others have had in the past few years.”
Home to large employers
With its assortment of available tracts and suburban office parks, Chesapeake is home to 20 percent of the region’s largest employers, including Dollar Tree Stores Inc., QVC Chesapeake Inc., Cox Communications Inc. and General Dynamics Information Technology. The Greenbrier corridor includes Hampton Roads’ largest business district with more than 19 million square feet of commercial space.
Wright points to the quality of labor throughout the region, as well as nearby port facilities and Chesapeake’s strategic placement as the only city bordering every other municipality in South Hampton Roads as factors that set it apart. “When a company is trying to move people or products through South Hampton Roads, more chances than not, they will come through Chesapeake,” he says.
Economic development officials target industries that offer diverse products, from manufacturing to call centers. “Casting a wide net is the ongoing philosophy of the city,” Wright says. “Chesapeake has effectively targeted the right businesses because we have the resources for those businesses in the city.”
Those include the city’s status as one of the safest of its size and a strong pipeline of labor, constantly replenished by people exiting the military and graduating from the region’s colleges and universities as well as people commuting from bordering communities in North Carolina. “We try to go after all businesses that make sense for the city,” Wright says. “We believe all jobs are important, all businesses are important.”
That’s where teamwork can prevail, Baker points out. “Every jurisdiction right now wants to see economic development, but those are things that are accomplished or not accomplished as a team. My job is coordinating things. If I take the position that I can solve all the problems by myself, I won’t make a good manager.”
The city’s largest private employer is Chesapeake Regional Medical Center, which has more than 2,400 employees. Anchored by the 310-bed Chesapeake General Hospital, it includes outpatient diagnostic and surgical centers, a physician group and an assisted-living facility. Chesapeake Regional is also a partner in a Nags Head, N.C., hospital. The medical center is seeking a successor to President and CEO Wynn Dixon, who retired at the end of 2012.
Presence of many foreign firms
Cooperation among economic development officials, City Council and other departments no doubt helped Chesapeake attract a diverse network of businesses, including many from overseas. More than 75 international firms representing nearly 20 countries have offices in Chesapeake, the most in Hampton Roads. Last June, Sumitomo Machinery Corp. of America announced a $13 million expansion that will transform its Chesapeake facility and U.S. headquarters from assembly/distribution to assembly/manufacturing. The move shores up jobs previously thought to have been lost to overseas markets.
“They tried to manufacture their product in China but really weren’t getting the efficiency they wanted,” Wright says. “When they decided to bring those manufacturing jobs back stateside, they chose Chesapeake.”
With nearly half of the region’s international companies calling Chesapeake home, the city serves as a virtual United Nations. In addition to Sumitomo, international firms that have set up shop in Chesapeake include Denmark’s Maersk Distribution Services, Inc., Japan’s Usui International Corp. and Germany’s INIT Innovations in Transportation Inc. A leader in intelligent transportation systems, INIT Innovations grew its five-person office in Chesapeake into the corporation’s North American headquarters.
To attract similar businesses and continue on an upward trajectory, Chesapeake officials realize they must not only maintain but enhance the city’s roadways and bridges. The $140 million, privately built South Norfolk Jordan Bridge opened in October, giving the region its first fully electronic toll facility. The mammoth 5,375-foot-long structure towering above the Elizabeth River replaces a dilapidated bridge which had closed in 2008. Then in November, the city closed on the $150.7 million Chesapeake Transportation System Senior Toll Road Revenue Bonds and $152 million subordinate loan by the Virginia Transportation Infrastructure Bank to help fund the $410 million Dominion Boulevard Improvement Project.
Slated to be finished by January 2017, the project includes 3.8 miles of road improvements and will replace the Steel Bridge with a four-lane, 95-foot fixed span structure. A top priority for city and state officials, the Dominion Boulevard upgrades are expected to improve travel between Hampton Roads and North Carolina.
Growth in southern Chesapeake
Road improvements also present opportunities for growth in southern Chesapeake. “With construction beginning on the new bridge, we think it’s a good time to develop economic opportunities along that corridor and aggressively market it to new businesses and investments,” Wright says, noting that the city also plans to develop new commerce parks in Greenbrier and along the I-664 corridor in Western Branch.
The 120-acre Oakbrooke Business and Technology Center in Greenbrier, owned and operated by the city’s Economic Development Authority, will house the regional FBI headquarters, which will move from Norfolk to its new 131,000-square-foot facility this fall. In Western Branch, Cinemark Theatre opened at Chesapeake Square Mall in late 2011, sparking renewed interest in the facility and surrounding area, which had been losing shoppers to upscale retail developments in neighboring Suffolk. “All indications are the new movie theater has done exactly what we hoped it would — bring in new investment and interest to Western Branch,” Wright says.
South Norfolk residents would like to see more investment take place in their community, which has been unable to capitalize on several redevelopment initiatives. While there’s no shortage of civic pride in the largely blue-collar neighborhood bordering downtown Norfolk, the area has languished in recent years. Some residents believe South Norfolk, which began as an town in 1919 and became an independent city three years later, took a hit that it never recovered from when it merged with Norfolk County to form Chesapeake.
“A lot of people have lived in South Norfolk their entire lives,” says Kevin Amick, the former president of the South Norfolk Civic League and a candidate for City Council last year. “They have seen money that has gone into the expansion of Chesapeake, but little has come back here to keep the infrastructures up.”
South Norfolk residents’ hopes rose when the city announced plans to build BelHarbour Station at SoNo, a mixed-use development of offices, condominiums, apartments and a marina. When the economy went into a downward spiral, however, the project fell into foreclosure without ever breaking ground.
In late 2011, SeaGate Terminals, based in Atlanta, bought the BelHarbour Station parcel and sought council’s permission to rezone the property for heavy industrial use.
Many South Norfolk residents, however, didn’t want the waterfront property to become an industrial complex. Instead, they preferred for it be used for a project that would spur economic development, similar to Portsmouth’s Old Towne. In the end, council voted to rezone the property, allowing SeaGate to operate a shipping and cargo business.
Amick, however, takes the rezoning in stride. “That decision has been made,” he says. “There’s nothing to do but move forward.” He’s optimistic, though, that improvements to the borough’s historic Poindexter Corridor will usher in new businesses, noting that a Dunkin’ Donuts scheduled to open early this year will be South Norfolk’s first major franchise.
Schools face budget crunch
The city’s continued growth depends in part on a first-rate school system, with city leaders pointing to Chesapeake Public Schools’ 100 percent accreditation rate for six years running. “A big part of economic development in Chesapeake comes from our schools,” says Superintendent James Roberts. “People move to the community because of the schools. We’re absolutely focused on the instructional program and hire excellent people who can carry out the program and who want to work in Chesapeake.” With the highest on-time graduation rate and lowest dropout rate in the region, the school system’s focus is likely to remain intact.
The school system, however, is struggling to deal with a $60 million decrease in its operating budget during the past five years, including a $40 million reduction in state funds. In response, Chesapeake schools have eliminated programs, increased class sizes, cut positions and delayed replacing school buses and technical equipment. “It’s primarily a state issue, but it has hit K-12 way too hard,” Roberts contends. “They did some things to us that are not temporary.”
While the school system offered some older employees retirement incentives to stave off layoffs and put off renovating aging facilities and building new ones, the superintendent is still wary about the future. “I hope we’ve hit bottom,” he says. On a bright note, the system added about 170 students to its rolls this year, the first increase in five years.
Financial constraints, however, have not kept Chesapeake schools from achieving recognition. In 2012 the U.S. Department of Education named Norfolk Highlands Primary one of 269 National Blue Ribbon Schools based on academic excellence or progress in student achievement. The international baccalaureate, technology and science and medicine programs at three high schools have been successful despite the additional drain on the system’s coffers.
On the personnel side, Kathryn B. Galford, a sixth-grade English teacher at Greenbrier Middle School, was named the 2013 Virginia Teacher of the Year, placing her in the running for the National Teacher of the Year award. “The most important thing we do is hire people that can get the job done both in the classroom and in the support system,” Roberts says, noting that many of Chesapeake schools’ 6,000 employees spend their entire careers in the school system. Roberts believes that Galford will be a top contender in the National Teacher of the Year competition, with a good chance of bringing home the top prize.
If so, the city may have to add another celebration to Chesapeake’s golden anniversary festivities.
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