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Spokane, Washington  Est. May 19, 1883
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Hagadone Gives Cda Realtors A Wake-Up Call Resort Owner Offers Grim Economic Forecast For Coming Year

Eric Torbenson Staff writer

If Duane Hagadone’s crystal ball reads true, Kootenai County residents had better fasten their seat belts.

Hagadone, developer of a North Idaho tourism and media empire, showered gloom over Coeur d’Alene Realtors on Wednesday in his annual economic forecast.

The workhorse of Kootenai County’s economy, the construction business, will drop by as much as one fifth in the coming year compared with last year, Hagadone said.

Homes and new office space worth $158 million were built in the county last year. Hagadone’s research suggests this year’s total will be closer to $118 million or even less.

Construction accounts for about 7,000 jobs directly, meaning that more than 1,000 jobs might be lost if the market drops, he said.

“I’m a cheerleader, and I don’t like to talk this way,” Hagadone told several hundred real estate professionals at the resort he built. “I hope we can steer this into a soft landing instead of the hard landing that we had back in the ‘80s.”

Awash in negative publicity about lead-choked waterways and bomb-throwing anti-government terrorists, the area has a bottom line that has begun to suffer, Hagadone said.

“If we don’t do something about it, they’re going to stop coming,” Hagadone said of tourists, businesses and outsiders wanting their own piece of Idaho. “We have to get off this negative slide.”

Hagadone called on civic and business leaders to sit down together in a sort of “image summit” to brainstorm ideas on how to stop the negative ink.

For Hagadone - the region’s most ardent booster - to admit that the big news events are dampening the economy enough to call a summit is somewhat remarkable, said Allen Plahn, former board of Realtors president and last year’s Realtor of the year.

“I thought it was a real wake-up call for us,” Plahn said. “I think he’s probably the only one who can really get people to think about this.”

Equally intriguing in Hagadone’s address was his call for North Idahoans to shop at home. With the 700,000-square foot Spokane Valley Mall to open later this year, Kootenai County’s fragile retail economy stands to lose.

“Every dollar that goes across the state line means less sales taxes for us,” Hagadone said. “I challenge all of you to make your dollars stay home. Buy as much as you can here.”

Despite the coming Valley mall’s affect, retailing may be one of few bright spots next year with the opening of the Fred Meyer store on U.S. Highway 95. The 157,000-square-foot giant will not only build retail sales, but also employ 240 people.

Aside from construction, the region’s other economic contributors - timber, agriculture and mining - face average years, said Hagadone, who polls dozens of business leaders each January to compile his forecast.

In the eyes of Panhandle Labor Market Analyst Kathryn Tacke, Hagadone’s economic assessment may not be the most likely course the economy could take, but it certainly is a strong possibility, she said.

Hagadone’s primary business, tourism, has seen better years. Visitor center numbers from around the area are off by as much as 20 percent, made more disturbing by how fast tourism has grown around the rest of the country, he said. Hagadone remains cautiously optimistic that this year might see tourism increase.

As for the real estate market, the outlook appears dimmer. Record numbers of homes on the market, record vacancy rates in apartment buildings and an unusual abundance of empty office space suggest that Hagadone’s warnings years ago of over-building were prophetic.

Hagadone’s 1996 forecast seems somewhat prescient; his prediction of a second-half slowdown in construction hit true. In the last quarter of the year, county building permits dropped 28 percent, and the total dollar volume of construction dropped 30 percent.

Real estate firm owner Ron Hagen said bad weather probably contributed to the late-year downturn. “But I think that if you preach a recession, you’ll get a recession,” he said at the luncheon.

As worrisome for Hagadone has been the difficulty in luring good jobs to the county. Bob Potter of Jobs Plus Inc., the county’s recruiting arm, has spent the week in Southern California wooing businesses to make a move for Idaho’s quality of life.

“They’re renting space in Los Angeles at 50 percent of what our costs are,” Hagadone said. “That’s not an advantage for Bob.”

Hagadone suggested that Potter focus more efforts on getting businesses from the fast-growing Seattle area to move. Potter has made trips to Seattle in the past, but his mission has focused on California.

Businesses locally appear to be more optimistic about 1997. Hagadone, as part of his forecast, surveyed 100 businesses randomly in the area and found that 60 percent believe the upcoming year would be better than 1996. Only 7 percent believed things would get worse, he said.

“There isn’t a businessman worth a salt here who hasn’t made record profits and more money than they’ve ever seen in the past three years,” Hagadone said. “But we’ve all got to participate to get this turned around.”

Changing how the nation’s media perceives North Idaho ought to be priority one, Hagadone said. Former Idaho Sen. Steve Symms sent Hagadone an article from the Washington Post about the quality of Lake Coeur d’Alene with the headline “Idaho’s Crown Jewel set in Deadly Metals.”

Other media such as the Wall Street Journal are also planning stories detailing mining’s effect on Lake Coeur d’Alene, he said.

“And if it turns out those bombers are linked to the bombing at the Olympics, this area will get more publicity than we can possibly imagine,” he said. “Our biggest problem by far is our image.”

, DataTimes MEMO: Cut in the Spokane edition.

Two sidebars appeared with the story: 1. DIRE PREDICTIONS Duane Hagadone’s predictions and advice for different parts of the economy in 1997:

Problems Dropping - Construction could decline 20 percent or more in the coming year. Flat performance - agriculture, timber, mining. Modest improvement - retailing, tourism.

Solutions Address image problem immediately. A summit should discuss ways to turn back the tide of negative stories about the region. Shop at home. Idahoans must keep dollars in the state; the soon-to-be-opened Spokane Valley Mall poses a substantial threat to Kootenai County retailers. Target Puget Sound region instead of Southern California for recruiting businesses.

2. OMINOUS SIGNALS Some of the economic factors that lead to Duane Hagadone’s dour forecast for Kootenai County’s 1997 economy: Total construction spending dropped 11 percent in 1996, to $158 million from $177 million in 1995. A record number of homes on the market, 1,890, which is 246 more than last year at this time. Coming off a record 1994, the dollar amount of real estate that changed hands in 1996 dropped 14 percent. Record high apartment vacancy rate in the county - 15 percent. Record amounts of vacant office space. Nearly 15 percent fewer Realtors in the market. Number of requests for relocation information packets from the Coeur d’Alene Chamber of Commerce has dropped to from 6,600 in 1992 to just over 2,000 last year.

Cut in the Spokane edition.

Two sidebars appeared with the story: 1. DIRE PREDICTIONS Duane Hagadone’s predictions and advice for different parts of the economy in 1997:

Problems Dropping - Construction could decline 20 percent or more in the coming year. Flat performance - agriculture, timber, mining. Modest improvement - retailing, tourism.

Solutions Address image problem immediately. A summit should discuss ways to turn back the tide of negative stories about the region. Shop at home. Idahoans must keep dollars in the state; the soon-to-be-opened Spokane Valley Mall poses a substantial threat to Kootenai County retailers. Target Puget Sound region instead of Southern California for recruiting businesses.

2. OMINOUS SIGNALS Some of the economic factors that lead to Duane Hagadone’s dour forecast for Kootenai County’s 1997 economy: Total construction spending dropped 11 percent in 1996, to $158 million from $177 million in 1995. A record number of homes on the market, 1,890, which is 246 more than last year at this time. Coming off a record 1994, the dollar amount of real estate that changed hands in 1996 dropped 14 percent. Record high apartment vacancy rate in the county - 15 percent. Record amounts of vacant office space. Nearly 15 percent fewer Realtors in the market. Number of requests for relocation information packets from the Coeur d’Alene Chamber of Commerce has dropped to from 6,600 in 1992 to just over 2,000 last year.

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