The Bluegrass and Beyond

When a poor person gets a government handout, it’s called welfare. When a rich corporation gets one, it’s called an economic development incentive.

With local, state and federal government budgets tighter than ever, social programs are getting a hard look. But what about corporate welfare?

The New York Times started a good conversation last week with a three-part investigative series called the United States of Subsidies. Reporter Louise Story spent 10 months analyzing corporate tax breaks, gifts and other incentives in all 50 states, which she figured add up to at least $80 billion in annual taxpayer subsidies to business.

Business subsidies have mushroomed since the 1980s, when automakers started pitting states against one another to host new assembly plants. The strategy worked so well that other industries demanded freebies, too.

A big reason corporate welfare has flourished is that politicians love being able to announce lots of new jobs coming to their area. (They often are out of office when those jobs never materialize or leave for another state offering better incentives.)

From a national perspective, it is a zero-sum game. State and local incentives do little or nothing to grow the national economy; they just determine where in the nation the growth will occur.

But it’s more insidious than that. Incentives redirect billions of tax dollars to corporate bottom lines instead of to improving education, health, safety, infrastructure and making other public investments that will create genuine, long-term economic development.

The Times website (Nytimes.com) has state-by-state breakdowns of incentives and a searchable database of recipients. It shows that the nation’s biggest business incentive Santa is high-growth, low-wage, high-poverty Texas, at $19 billion a year. West Virginia and Oklahoma give up incentives equal to one-third of their budgets.

The Times calculates Kentucky’s annual incentives at $1.41 billion — about 15 percent of the state budget, or $324 per Kentuckian. Those include $264 million in personal income tax credits; $108 million in sales tax refunds, exemptions and discounts; and $69.2 million in corporate income tax reductions, credits or rebates.

The Times reports that most Kentucky incentives, $569 million worth, go to mining, oil and gas industries — no surprise there, given their political clout. That is followed by $341 million for agriculture and $180 million to manufacturers.

As is true nationally, some of the biggest Kentucky incentive recipients in recent years were automakers: $307 million for Ford; $83.8 million for Toyota and $10 million for General Motors. Given their high wages and large supplier networks, those might be good investments.

But the big head-scratcher in the Times’ database was $94.1 million in incentives to Tyson Foods from 1995-2009 for a low-wage chicken-processing plant in Henderson County. Is that the kind of economic development Kentucky taxpayers should be subsidizing?

While the Times’ report is impressive in its national scope, there has long been debate about the value of incentives. The Herald-Leader published an investigative series in 2005 that questioned the value of many Kentucky tax breaks and other giveaways. The report resulted in some improved accountability, but did little to stem the flow of tax money into corporate pockets.

A state-commissioned study issued this summer came up with incentive figures smaller than the Times reported, but still pretty staggering: $1.29 billion between 2001 and 2010. The report said 577 companies took incentives to locate 55,173 jobs in Kentucky at a cost to taxpayers of $23,385 per job.

The incentive system favors large corporations over small businesses — often the employers who are already in a community and aren’t looking to leave. Officials have responded by coming up with some incentives for them, too, which just further drains government coffers.

How do we stop this racket, where cities and states compete to steal jobs from one another? It would be great if Congress could pass a law, but it probably can’t. Still, with about 20 percent of state and local government budgets coming from federal dollars, somebody needs to be looking out for the national interest.

Taxpayers should demand reform of these corporate welfare systems, just as they did social welfare systems in the 1990s. But it won’t be easy. Corporations employ more lobbyists and make more campaign donations than poor people do.

Mayors Greg Fischer, left, of Louisville and Jim Gray of Lexington announce the project in Louisville last Thursday. Photo by Mark Cornelison

LOUISVILLE — The Bluegrass Economic Advancement Movement was announced Thursday with all the fanfare that two cities’ business leaders could muster.

A furry University of Louisville cardinal mascot escorted Lexington Mayor Jim Gray to the stage of a Galt House ballroom as a furry University of Kentucky wildcat did the same for Louisville Mayor Greg Fischer. More than 1,000 people from both cities applauded, and a marching band played the Superman movie fanfare, symbolizing the goal of creating a super-region for advanced manufacturing.

The hype might have been goofy, but the ideas behind the effort and the process for achieving it could be an economic game- changer, not only for Louisville and Lexington, but for the entire state.

Brookings, the public- policy think tank, chose Lexington-Louisville as one of seven regions where it will work with business, government and educational leaders to develop a plan for regional economic development. The idea is to focus on business sectors that already are strong and have potential to become major players in international trade.

Brookings thinks regions, rather than individual cities, are the economic powerhouses of the future, especially as the world becomes more urbanized. More than half the world’s population now lives in urban areas, up from 30 percent in 1950 and 2 percent in 1800. By 2030, it could be 60 percent.

Kentucky mirrors the trend. More than 55 percent of Kentuckians live in urban areas, which account for 72 percent of the gross state product of $50.5 billion a year. More than 2 million of Kentucky’s 4.3 million people live in the 27 counties that make up the Louisville- Lexington region, which includes Elizabethtown. Metro Louisville accounts for 31 percent of gross state product; metro Lexington, 14.2 percent.

Fischer got the ball rolling with Brookings. A review of 11 previous economic studies quickly identified advanced manufacturing as an area for focus. Manufacturing employs 65,000 people, or 11 percent of the work force, in metro Louisville, and 30,000, or 8 percent of the work force, in metro Lexington.

The biggest manufacturing niche is the auto industry, with the Toyota assembly plant in Georgetown, two Ford assembly plants in Louisville and suppliers across the state.

Manufacturing jobs were key to creating the American middle class a century ago, and it is no coincidence that the middle class has declined as manufacturing has moved overseas. But some of that high-end manufacturing is moving back to the United States, and Kentucky has the potential to attract it, Fischer said.

“This is a can-do region with enormous assets,” said Amy Liu of Brookings. “We think there’s a real opportunity to succeed here.”

So what could make this different from so many well-intentioned but marginally successful economic development efforts in Kentucky? Several things.

Brookings brings a level of expertise to which Kentucky has rarely had access. The institution is donating its services, valued at about $750,000. Kentuckians are providing about $250,000 in support services and expertise, which will be paid for with private donations.

Fischer and Gray — two new mayors with similar entrepreneurial backgrounds and political outlooks — are powering the initiative. Sports entrepreneur Jim Host will chair the effort. Host is one of Kentucky’s most capable leaders — a drill sergeant with a strong record of getting things done in both cities. His most recent accomplishment: building the KFC Yum Center in downtown Louisville.

Host will lead a 15- to 20-member committee the mayors will appoint soon. And if the mayors are smart, two of those appointments will be the presidents of UK and U of L, which will be vital to this effort’s success.

The committee will develop a specific business plan to be announced by the end of 2012. The key to execution will be forming partnerships among government, industry and education groups. The public may offer suggestions at Facebook.com/bluegrassmovement.

Beyond the goal, though, this cooperative effort could be a big deal for Kentucky. That is because Louisville and Lexington — cities only 70 miles apart but long separated by cultural differences and sports rivalries — will be working more closely than ever before.

The effort also will focus statewide attention on the economic importance of the Louisville and Lexington metro areas. After all, 40 cents of every tax dollar generated in Louisville goes to the rest of the state, as does 23 cents of every Lexington tax dollar, Host noted. When the cities succeed, the whole state benefits.

“The leverage potential this has, we don’t even know,” Gray said. For example, he noted, Jefferson County school board members invited Fayette County school board members to the announcement luncheon. What might a closer working relationship there lead to?

“Greg and I naturally see alliances as a big deal,” he added. “And in this case, one-plus-one could add up to three, four or five. That’s what all of this really represents.”

Among the impressive facilities that Commerce Lexington members saw in downtown Greenville, S.C., during their visit in June was Fluor Field at West End.

The 5,700-seat baseball stadium was built in 2006 for the Boston Red Sox’s Class A affiliate, The Greenville Drive. Modeled after Boston’s Fenway Park, the charming ballpark helps give downtown Greenville a vibrant, urban feel.

It left some Kentuckians wondering: Did downtown Lexington miss an opportunity when the Lexington Legends’ stadium was built on North Broadway near New Circle Road?

“It would have been a great boon to downtown,” said Legends founder Alan Stein. “But we couldn’t get any cooperation from the city council or the state.”

Stein is a top executive with the company that owns and manages several minor-league teams, including the Legends. Long before all of that, though, he spent 15 years trying to bring minor-league baseball to Lexington. He commissioned plans for a stadium in the Cox Street lot beside Rupp Arena. He looked at property at Pine Street and South Broadway.

“There was never any question in my mind that it was supposed to be an urban ballpark,” he said. “Our whole concept was, ‘While we’re doing this, let’s help downtown Lexington.’ ”

Building a ballpark for the Class AA team that Stein wanted to start would have required government help — city-owned land or government-issued construction bonds that could be repaid with stadium revenues or hospitality taxes. The Urban County Council and many other people in Lexington were against that.

Many professional sports facilities are built with public help, but some economists argue that they are not good investments. Minor-league baseball stadiums have a better track record, though, because they are less expensive than other facilities and have more frequent games that are played in the afternoon, as well as the evening. That means more economic impact for surrounding businesses.

“When it became a private deal, there was no downtown land available,” Stein said. “Either everything was owned by the government or was just way too expensive.” He also downsized his ambitions to Class A to cut costs.

Stein identified 17 sites around Central Kentucky — including free land offered in Woodford, Scott and Jessamine counties — but chose the 30-acre North Broadway site, 2 miles north of Main Street, because he wanted to be as close to downtown as possible.

The Legends began play in 2001 in a $25 million, privately financed stadium, now called Whitaker Bank Ballpark. Stein said that because pre-sales of tickets were so strong, the stadium was enlarged during construction from 4,000 to 6,000 seats, which means it could handle a Class AA team in the future. “The site we found turned out to be ideal and has worked beautifully,” he said.

But never say never.

Stein is among 50 people now serving on Lexington’s Arena, Arts and Entertainment District Task Force, appointed by Mayor Jim Gray to consider options for redeveloping 46 downtown acres of city-owned land that includes Rupp Arena, Lexington Center and a sea of parking around them.

“Now the question is — and I get asked this in every speech I make — would you rather have been downtown, or did it work out where it is?” Stein said. “It depends on which hat I’m wearing.

“We have made literally tens of millions of dollars on this project that we wouldn’t have made had it been a public-private partnership,” Stein said. “But as someone who really cares about the development of Lexington, I think it was a huge missed opportunity. It would have made a big difference in the economic history of the past 15 years in downtown.”

Would the Legends ever consider moving downtown? After all, the Whitaker Bank Ballpark property is much more valuable now, after a decade of booming growth on Lexington’s north side and more to come with the new Bluegrass Community and Technical College campus.

“If somebody were interested in buying that from us and then participating in building a new stadium downtown, we would look at that,” Stein said. “Those are a lot of ifs. But I’m always open to a deal.”

For those of you keeping up with all of the magazine rankings for best and worst cities for this and that, Kiplinger, the respected personal finance magazine, has published a new list.

Kiplinger lists Lexington as No. 6 in among best cities to live in terms of value. Kiplinger said it worked with Kevin Stolarick, research director at the Martin Prosperity Institute, to analyze metro areas according to economic environment, cost of living and quality of life. Kiplinger said it then sent a staff reporter to each city to help determine the final rankings among the top 10.

Here are the rankings. For more information, visit Kiplinger’s web site.

1. Omaha

2. Charlotte

3. Nashville

4. Colorado Springs

5. Knoxville

6. Lexington

7. Little Rock

8. Wichita

9. Cedar Rapids

10. Cincinnati

(Tip: Mark Turner of Commerce Lexington)

How can Lexington be both the nation’s most sedentary city and the fourth-best city for business and careers? Those seemingly contradictory rankings came out recently in Men’s Health and Forbes magazines.

The laziness award from Men’s Health — that peerless monthly guide to flatter abs and better sex — gave people a good laugh at Lexington’s expense. I didn’t hear the news for several days; I was with a large group of Central Kentucky friends in Virginia, where we were bicycling 300 miles up and down mountains.

When I returned home, I also discovered that Forbes had ranked Lexington No. 4 in its annual Best Places for Business list, up from 9th last year. (Louisville ranked No. 14.)

I don’t put much stock in magazine rankings, which are designed mostly to draw attention to magazines. But people love lists, no matter how suspect they seem. The good rankings give us something to brag about; the bad ones, something to fuss about — or think about.

The slap from Men’s Health was another reminder that Kentuckians need to adopt healthier lifestyles. One more reminder came last week, when two public health groups reported that nearly one-third of all Kentuckians are obese, making this the nation’s sixth-fattest state.

Maybe the drumbeat will persuade more Kentuckians to give up smoking, cut back on fatty foods and sugary drinks, and get more exercise. Lexington lags many cities when it comes to bicycle lanes, trails and a pedestrian-friendly environment that allows physical activity to be part of everyday life. But recent improvements show that when facilities are built, Lexingtonians will use them.

Forbes said it arrived at its list by weighing a series of metrics, including job and income growth, cost, quality of life and educational attainment. Lexington ranked higher than all of the cities that Commerce Lexington members have visited in recent years to gather improvement ideas: Greenville, S.C., was No. 60; Pittsburgh, No. 69; Madison, Wis., No. 63; Austin, Texas, No. 7; Boulder, Colo., No. 44; and Oklahoma City, Okla., No. 28.

Most Commerce Lexington trips have focused on downtown development and quality-of-life improvements — important factors in long-term economic vitality. All of the cities visited have offered good ideas for Lexington. But as last month’s trip to Greenville showed, Lexington has more going for it than we often assume.

Some Lexington businessmen — impressed by Greenville’s success in recruiting industry — were quick to tout South Carolina’s low-tax, low-regulation, anti-union environment. But economic statistics show a more complicated picture.

Before Forbes ranked Lexington a whopping 56 places above Greenville, I was looking through the “regional economic scorecard” that Clemson University economists compile for Greenville’s leaders.

Greenville considers Lexington one of its “peer” cities, and our metropolitan area outperformed theirs in almost every measure on the scorecard: work-force education, cost of living, knowledge workers, innovative activity and capacity, entrepreneurial environment, employment diversity and high-wage employment opportunities.

Even more telling, Lexington leads Greenville in per-capita income, perhaps the best measure of economic health. (Still, both places trail the national average, and the gaps have widened in recent years. That is neither a healthy sign nor an argument for “business-friendly” low wages.)

Economists in both South Carolina and Kentucky say one of the main keys to long-term economic prosperity is education. Still, many business and political leaders find it easier to fuss about taxes, regulation and unions than to make significant, long-term investments in education.

What lessons should we draw from economic comparisons? In a nutshell, Lexington should more aggressively build on its strengths and focus on initiatives that will promote long-term, broad-based economic prosperity.

And what about all of those magazine lists? Be neither discouraged nor deluded; just consider them tools. Brag about the Forbes ranking — it might bring in some business — and use the Men’s Health ranking to rally support for mending our unhealthy ways.

Lexington is neither as good nor as bad as others say we are. But if we are smart, we will use both the praise and criticism to get better.

Greenville Mayor Knox White, left, leads a group from Commerce Lexington across Falls Bridge, a suspension pedestrian bridge that replaced a highway bridge over a waterfall that has become a city park. Photo by Tom Eblen

One of the most valuable things about Commerce Lexington’s annual “leadership visit” is that it brings together nearly 200 people who spend three days looking at Lexington’s strengths and weaknesses through the lens of another city.

Last week’s trip to Greenville, S.C., was my fourth, and I found it the most useful. Perhaps that was because Greenville’s relative size, assets and challenges are more similar to Lexington’s than are those in Pittsburgh, Madison or Austin.

In many respects, Lexington is better than all of those cities. It was easy to sense some of Greenville’s shortcomings, despite city leaders’ positive spin. But the point of the trip was to learn from what they do better than we do.

The primary lesson was that beautiful, high-quality urban development can improve both quality of life and economic vitality. Since the 1970s, Greenville has transformed an ugly, car-choked downtown into a garden spot where people want to live, work and play. Economic prosperity has followed.

Greenville is more politically and socially conservative than Lexington, and much of what city leaders did was controversial. But they did it, and it worked.

The city transformed a Main Street the size of Lexington’s from a sun-baked, four-lane highway into a pleasant two-lane, two-way gathering place. It is shaded by big trees and filled with shops, restaurants, sidewalk dining and plenty of parking in diagonal street spaces and artfully disguised garages. A neglected riverfront and waterfall became a gorgeous public park surrounded by new development.

Downtown is now beautiful, inviting, unique to Greenville — and twice as big as it was. Old buildings have been restored and adapted to new uses. Contemporary mixed-use developments have been built and are successful. There are a variety of performance halls, sports venues and museums. The renaissance is growing in all directions, and nearby towns are emulating it.

What can Lexington learn from Greenville? Here were my takeaways:

■ Articulate a simple vision that almost everyone can embrace. That is different from launching a task force or commissioning a detailed study that will gather dust on a shelf. Simply agree on a vision such as this: Lexington’s urban and suburban spaces should be worthy of the beautifully unique countryside that surrounds them.

■ Leaders must lead. As the Lexingtonians saw in Greenville, that means taking risks, working together and figuring out creative ways to accomplish goals. It means entrepreneurial partnerships among government, business and nonprofits. It also means inclusive, transparent planning and long-term strategies.

■ Demand excellence. Greenville raised the bar for downtown development with design guidelines and an architectural review process. Developers know they must meet high standards — and that city officials will work with them to overcome obstacles to mutual success.

Remember when the developer who wanted to build a one-story, suburban-style CVS drugstore on Lexington’s Main Street said the retailer wouldn’t do better? Well, a two-story, urban-style CVS is under construction on Greenville’s Main Street. When finished, it will look like it has always been there.

I asked Mayor Knox White to explain Greenville’s redevelopment vision in a nutshell. “Downtown is all about the walking experience,” he said. “The architectural guidelines, the landscaping, everything. It’s a religion with us.”

■ Build on success. Greenville’s revitalization was an intentional, long-term process. Partnerships were formed to create world-class anchor projects and beautiful public spaces that would attract private investment around them. Civic leaders were not afraid to dream big and take risks.

Greenville leaders said they always have a “next big thing” on the horizon. Lexington achieved much during the three years before last fall’s Alltech FEI World Equestrian Games. We need a “next big thing” on which to focus.

This is a time of great opportunity for Lexington. Over the next couple of decades, Lexington will redevelop three huge tracts of urban land: the 46 acres around the Civic Center and Rupp Arena; the adjacent Distillery District; and the area surrounding the new Bluegrass Community and Technical College campus at the old Eastern State Hospital site.

Greenville shows what can be done, and the visitors from Lexington left talking like converts at a tent revival. But as we all know, even the most sincere believers can backslide when distracted.

Will Lexington stop being satisfied with good enough and try for great? Can those who went to Greenville help articulate a clear vision for Lexington and mobilize the community behind it? Will our leaders lead?

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This is the week each year when Commerce Lexington takes several dozen business and civic leaders to another city for three days of networking and brainstorming about how to improve Lexington.

Nearly 200 people are leaving on chartered jets Wednesday morning for Greenville, the largest city in the Upstate region of South Carolina. Although a much smaller city than Lexington, Greenville is the center of a metro area with 172,000 more people.

The annual “leadership visit” went to Greenville in 1995, but Commerce Lexington thought the city was worth a second look. Greenville has continued to prosper, thanks to smart economic development, good urban planning and successful public-private partnerships.

The city that once called itself “textile capital of the world” is now home to a mix of companies, many from Europe, including BMW and Michelin. A big part of Greenville’s strategy was revitalizing its urban core and improving the quality of life.

“They focused on what makes the city unique and special,” said Lexington Mayor Jim Gray, whose family-owned construction company helped build BMW’s facilities there. “It’s become a city that reaches out globally, not a big city but a city with a modern, cosmopolitan sense.”

Greenville’s downtown revitalization was sparked in the 1970s by a mayor who immigrated from Austria. He thought a beautiful, pedestrian-friendly European approach was a good antidote to the car-centric, asphalt-everywhere path that had contributed to urban decay.

That meant downsizing some streets, adding trees, restoring old buildings and removing a highway bridge over a neglected gulch of the Reedy River. The river was cleaned, the gulch transformed into a park and the four-lane bridge replaced by a unique pedestrian bridge.

“They have reclaimed that whole space, and it has had an amazing effect on the downtown,” said Jeanne Gang, the renowned Chicago architect whom Dudley Webb recently hired to redesign the stalled CentrePointe project in downtown Lexington. “They have an amazing set of beautiful urban elements that they’ve done over time.”

Gang’s firm, Studio Gang Architects, is completing designs for two signature projects in Greenville: Reedy Square and the Blue Wall Center.

Reedy Square will be the “town square” that Greenville hasn’t had, plus a showcase for regional attractions and culture. “It’s both a place for the locals to go hang out and a place that turns visitors on to what all there is to do in the Upstate,” Gang said.

Blue Wall Center, a 175-acre area at the foot of the Blue Ridge Mountains, will have a visitors center, gardens and trails for people to get a taste of the local mountains. “We’ve been calling it speed-dating with nature,” Gang said. “It’s both a landscape and a building that work together to be this kind of visitor destination.”

Lexington can learn some things from Greenville, but how much of that learning will be converted into action? That is a frequent criticism of these trips — at least by people who don’t go on them.

Commerce Lexington President Bob Quick said there has been action. For example, Lexington’s Thursday Night Live and Minority Business Development programs began with ideas from the 1995 Greenville trip. “Sometimes it takes years for things to come together,” he said.

Last year, Commerce Lexington went to Pittsburgh with Greater Louisville Inc. The most popular idea from Pittsburgh — replicating Bill Strickland’s Manchester Bidwell program for inspiring and teaching job skills to young people — has been stalled by the weak economy, Quick said.

But many of Manchester Bidwell’s concepts will be used in the Fayette County Public Schools’ new agri-science vocational program, which begins this fall on Leestown Road. “Some of the things that we’re going to be doing are very similar to what Strickland is doing,” outgoing Superintendent Stu Silberman said.

Quick said the biggest benefit from last year’s trip has been stronger relationships among leaders in Lexington and Louisville, which has led to more cooperation on common issues and economic development initiatives.

Networking is always the biggest benefit of these trips. Sometimes it takes getting away from work and the patterns of everyday life to build new relationships that will help turn good ideas into successful action.

Follow the trip on Twitter

I will be posting updates from the trip on Twitter. Follow me here.

It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness.

That is how Charles Dickens might have started a report about Lexington’s potential for economic development, just as he began his classic novel A Tale of Two Cities.

That is how I might have started such a report, too, if I were the consultant being paid $150,000 by the city and Commerce Lexington. If you are going to recycle language, you might as well borrow from the best.

Last year, after then-Vice Mayor Jim Gray and others complained that the city’s strategic plan for economic development had not been updated in years, Commerce Lexington and the city hired AngelouEconomics of Austin, Texas, to conduct a local market study and develop a plan.

Commerce Lexington scheduled a public unveiling of Angelou’s final report for March 18, but that has been postponed. Instead, now-Mayor Gray has summoned the head of the consulting firm, Angelos Angelou, to meet with him Monday morning. Angelou has some explaining to do.

That is because Ben Self, a Lexington technology entrepreneur, read a final draft of AngelouEconomics’ report and discovered that large passages had been cut-and-pasted from previous reports done for other cities. He detailed examples in a post Thursday morning on the blog of ProgressLex, a new grass-roots civic group.

Since the report appears to be half recycled, Self wrote, AngelouEconomics should refund half its $150,000 cost. Angelou Economics staffers initially defended the report, but by Thursday night, Angelou had fallen on his sword.

Angelou apologized for the lapse, which he said was the result of a staffer’s personal problems. But, he said, “There is no excuse or rationalization of what has happened.” Angelou asked for two or three weeks to rewrite the report personally to make sure it addresses Lexington’s specific conditions and needs.

Angelou must now scramble to try to restore his firm’s credibility. But there is a bigger lesson here for Lexington.

This should be a wake-up call about the way Lexington deals with economic development, just as the CentrePointe fiasco was a wake-up call about the way Lexington handles downtown development.

The business world is awash in consultants. Some provide valuable services. But others are little more than a crutch for leaders who are afraid to lead and are willing to pay so-called experts big money to say what everyone already knows. Too often, hiring a consultant is a way of creating the illusion of action while avoiding real work and responsibility.

I am no economic development expert, so I will leave it to others to assess AngelouEconomics’ final work and decide whether taxpayers are owed a refund. But the “recycled” draft report didn’t tell me much about Lexington and its challenges and opportunities that I didn’t already know.

I didn’t find the report’s recommendations any better than those of two economic development transition teams Gray commissioned after he was elected mayor. Those were researched and written by local business people; they cost taxpayers nothing.

The point here is that consultants can sometimes provide good information, analysis, perspective and advice. But they are no substitute for leadership. If Lexington’s leaders trust consultants from Texas more than their own judgment, we are in trouble.

The previous mayor, Jim Newberry, basically outsourced the city’s economic development function to Commerce Lexington, which gets about a half-million dollars a year in public money to do the work. It may have been a smart move then, because Newberry, a lawyer, didn’t have an economic development background.

But it makes less sense now. Gray has worked on economic development for decades, both in civic roles and as an executive with his family’s construction company, which specializes in building industrial plants. Commerce Lexington can play a valuable supporting role, but the mayor and the Urban County Council should lead.

These are, indeed, the best and worst of times for Lexington. Business conditions have been tough lately, but it is obvious that Central Kentucky has enormous potential to succeed in the 21st-century economy.

Lexington must harness its own brainpower to develop smart economic development strategies, and then make them happen. We need more wisdom and less foolishness.

Wait for others to do it, and it won’t get done. That old saying might not have the same ring to it as “United we stand, divided we fall,” but it could just as easily be Kentucky’s motto.

Increasingly, technology- enabled entrepreneurs are taking a different path. Rather than waiting for big companies, government or established organizations to figure out how to build a 21st-century economy in Kentucky, they’re trying to do it themselves.

They received some encouragement last week from one of the nation’s popular entrepreneurship gurus, Saul Kaplan of the Business Innovation Factory in Providence, R.I.

During a whirlwind 28-hour trip, Kaplan met with city and business leaders in Lexington and Louisville. He talked to entrepreneurs and business students in both cities, and to some who drove in from as far away as Cleveland, Columbus, Pittsburgh and West Virginia.

Kaplan created the non-profit Business Innovation Factory in 2005 as a laboratory for entrepreneurs working on “areas of high social impact,” such as health care, education and energy. Before that, he was a strategy consultant in the health care industry and executive director of the Rhode Island Economic Development Corp.

Kaplan’s trip to Kentucky was organized by Eric Patrick Marr of The Lexenomics Group, a non-profit economic development organization. Kaplan donated his time, and Randall Stevens of the Lexington business incubator Base 163 paid for his travel.

“The visit was fantastic,” Kaplan told me as he was leaving to fly home Tuesday. “I was pleasantly surprised by the momentum here. There’s definitely the makings of a very entrepreneur-oriented economy.”

Kaplan’s message was that innovation and entrepreneurship must be central to any economic development strategy. And like any consultant, he loves buzzwords. His favorites are: connect, inspire and transform.

“You need to get innovators from across all the silos in your community to communicate and collaborate more effectively,” he said. The next step is inspiring creative people with stories of successful entrepreneurs. Finally, he said, dramatic transformation is required to create a robust, sustainable economy and address many of society’s biggest challenges.

“Incremental change isn’t going to create the economic future that this community wants and needs,” he said. “How can you turn your community into a real-world lab oratory, a place that celebrates experimentation, where people are willing and able to try new things, to try new ideas … to determine what works and what doesn’t work?”

Elder care in Kentucky is one area ripe for innovative problem solving and entrepreneurship, Kaplan noted. The state has an aging population and a growing health care infrastructure. Plus, Louisville is home to the nation’s largest elder-care companies.

“We know that the majority of the elder population want to age in place in their own homes with dignity, but the system wasn’t designed that way,” he said. “How can we create a new set of solutions and new approaches to do that? Those solutions could create new jobs and businesses.”

Kaplan said he sees several assets Kentucky can build on. First, the Lexington-Louisville-Northern Kentucky region is big enough to have a critical mass of important assets, but it isn’t too big.

Second, he said, “It has incredible quality of place. I could see it the minute I left the airport. And quality of place is the best asset any community can have. Everything should be viewed through the lens of how do we enhance and protect that quality of place, and at the same time figure out how to unleash entrepreneurial innovation.”

Finally, Kaplan said, the recent elections of Lexington and Louisville mayors with innovative business backgrounds offers a unique opportunity for economic transformation.

“Having spent time with both mayors, I think they get it,” he said. “I think they want to catalyze the kind of entrepreneurial economy and community we’ve talked about here over the past couple of days. If I were living here, I would be optimistic.”

Kaplan said top-down economic development planning — the “bring in the big outside company” incentive strategy that Kentucky has failed at more often than it has succeeded — isn’t the way of the future.

“Bring the entrepreneur and the innovator to the center of the economic development conversation,” he said. “And tie that conversation to solving real social challenges within the community.”

One of the smartest things Jim Gray did after being elected mayor was create diverse transition teams of local citizens to study and make recommendations on key issues facing Lexington.

The team reports, which started coming out late last week, offer the new mayor a great source of free advice. They also could help generate buy-in for initiatives Gray chooses to pursue.

The first reports I wanted to read dealt with economic development and job creation. Those are two of the biggest issues facing Lexington, and they were central themes of Gray’s campaign.

Gray appointed two groups to study economic development. Both were diverse, ranging from economic development professionals and corporate executives to small-business owners and interested citizens.

“I deliberately tried to create an environment where different points of view would be expressed,” Gray said.

After a healthy amount of debate and dissension, the two groups produced very different reports. But there were many common themes. Both said Lexington needs:

■ Better coordination among local economic development groups, and better measurement of results.

■ More effective marketing of Central Kentucky as a place for entrepreneurs.

■ Closer relationships between Lexington and surrounding communities, Louisville and Northern Kentucky, as well as between the city and University of Kentucky.

■ Streamlined bureaucracy to make it easier for businesses to get permits, approvals and information.

The strongest common theme, though, was a call for Gray to focus much of his personal time and attention on economic development.

“The mayor should initiate and drive Lexington’s economic development strategy and execution,” one report said, adding that he should be the “face” of Lexington to the world.

That makes sense. As an executive of family-owned Gray Construction Co., Gray spent more than 30 years working with companies on site selection and business development.

“That’s my DNA — selling and marketing,” Gray said Friday, adding he had spent much of that day meeting with executives from a company, which he declined to name, that is considering moving to Lexington.

One economic development transition team was led by Kim Menke, a Toyota executive and former Commerce Lexington chairman. Its report recommended many traditional strategies, such as a professional marketing campaign and economic incentives.

It suggested the mayor create a small but diverse business advisory board, as well as roundtables of chief executives from small and large local companies to give him advice. Gray said he was already planning such a CEO roundtable and will have an announcement soon.

The other team was led by Alan Hawse, vice president of information technology for California-based Cypress Semiconductor. Its report suggested many less conventional — and less costly — approaches, such as targeted recruitment of successful Kentucky natives and UK graduates elsewhere who might want to move back to Lexington to work, create or expand companies.

That group’s report emphasized the growth potential of several development-related initiatives Gray already supports. Those include full implementation of the Downtown Master Plan, funding infrastructure for the Lexington Distillery District and creation of a “land bank” to encourage redevelopment of blighted urban property.

(It is worth noting, though, that while some members of that team wanted to give the city condemnation power as part of land bank legislation, the mayor is against that. “There are creative paths that don’t require eminent domain,” Gray said.)

That team put especially strong emphasis on Gray using his personal skills to promote economic development: setting vision and strategy, building relationships, cheerleading local entrepreneurs and selling Lexington elsewhere.

“A lot of the things that need to be done are leadership things that Jim could be really good at,” Hawse said.

As mayor, that is perhaps Gray’s biggest opportunity — and challenge.

The reports

Click here to download report from Team 1 (Hawse)

Click here to download report from Team 2 (Menke)

VERSAILLES — Woodford County, like a lot of places, is struggling to adapt to a changing economy. How can people there create a more prosperous future while protecting their community’s beauty and quality of life?

Those were the big questions posed one morning earlier this month when community activist Deborah Knittel and the Woodford Coalition, a citizens group, invited more than 100 local leaders to meet in a church’s fellowship hall.

The facilitator was Doug Henton, a California-based consultant who has helped more than 40 communities across the country deal successfully with these issues over the past three decades. Henton is also a native of Woodford County, where his family has lived for two centuries

Doug Henton

The points Henton made, the questions he raised and the research and further discussions he suggested could help other Kentucky communities that are struggling with these issues. In other words, every community.

To an outsider, Woodford County would seem an unlikely place for anxiety. It ranks first among Kentucky counties in per-capita income, is strategically located between Lexington and Frankfort and has some of the Bluegrass’ most beautiful countryside.

But income statistics may be skewed by wealthy landowners. The Thoroughbred industry is in a slump. Tobacco farming is all but gone, and many of the factories that once gave Woodford County workers a middle-class lifestyle have closed. Conflict over growth, development and land-use planning has created deep divisions.

Henton, CEO of Collaborative Economics of San Mateo, Calif., didn’t come home with all of the answers. What he offered were tips for analyzing a community’s strengths, weaknesses and opportunities, with the goal of creating a shared vision for growth.

Long-term economic development isn’t about cheap labor and tax breaks, Henton said. It is about regional collaboration, productivity and continuous innovation. It is about having infrastructure, a skilled workforce and sufficient economic and social capital.

“It’s not just about having assets, but creating networks of people who can make the best use of those assets,” he said. “It’s not just the ingredients, it’s the recipe.”

It also is about quality of life, a hard-to-define combination of environment, resources and social conditions such as inclusiveness. “Economic development today is about where people want to live,” he said. “You can’t have a strong economy without a good community.”

Henton advised Woodford County leaders to assess weaknesses they need to fix and unique strengths — “economic clusters” — they can build on and market to bring money in from elsewhere.

He talked about his work with Sonoma County, Calif., in the early 1980s, which leveraged its wine industry for more tourism and used its beauty and quality of life to attract professionals who could live wherever they chose.

The Woodford County folks quickly got the point: horses, bourbon, scenic beauty, good quality of life. Other assets to build on: good roads, attractive downtowns in Versailles and Midway and educational assets such as Midway College. They even started reeling off names of people who do business all over the world but choose to live in Woodford County.

The discussion also identified things the county lacks: public transportation, motels, a movie theater, enough affordable housing for low-wage workers.

Then talk turned to deeper concerns: fragmented local governments that don’t cooperate enough, a lack of support for entrepreneurs, friction over land-use planning and old debates over private property rights vs. public good.

The people, seated at round tables, were asked to talk among themselves to identify Woodford County’s strengths and weaknesses. As each table reported, you could hear the buzz: what some thought of as strengths, others saw as weaknesses.

As one table’s representative discussed social issues, Larry Blackford, who was there representing a local African-American group, rolled his eyes and leaned over to me. “They’re in denial,” he said.

Nothing was resolved, but I had the sense that this sort of frank and open discussion doesn’t happen very often.

“We need to listen to each other,” said Dan Rosenberg, a Thoroughbred industry consultant. “It’s not a situation of you’re right and you’re wrong. We all have different perspectives.”

Henton urged the group to keep meeting, identify champions to take on specific issues and visualize what they hope to achieve. “It’s about people and relationships,” he said. “The critical point in all of this is trying to define goals for a shared future.”

It was a good first step. But without diverse leadership and buy-in, Knittel fears, the effort could fizzle. “I think good things will come out of this,” she said. “Any conversation is better than the one we haven’t had.”

For any Kentucky community wanting a brighter future, that’s good advice.

Much of the competition at the Alltech FEI World Equestrian Games won’t be among the equine and human athletes on the field.

In the stands, in the hospitality tents, across the grounds and even throughout the state, Kentucky business executives and economic development officials will be busy trying to figure out how to make the Games pay dividends for years.

“This will be huge,” Commerce Lexington president Robert Quick said. After all, for two weeks, an international spotlight will be trained on some of Central Kentucky’s most positive aspects during its most beautiful time of year.

“The rolling, green hills and smiling faces will be our biggest advertisement,” he said.

Commerce Lexington, which is part of the Bluegrass Business Development Partnership that also includes Lexington’s city government and the University of Kentucky, has invited some business prospects and site-selection consultants to the Games, but Quick said he doesn’t know yet how many will attend.

The group is partnering with chambers of commerce in Louisville and Northern Kentucky on business- recruiting efforts, and with the Lexington Convention & Visitors Bureau to reach out to national, international and niche media.

At the Kentucky Horse Park, Commerce Lexington’s most visible role will be staffing 58 shifts at the information desk in the VIP hospitality tent. “We’re not going to do a hard sell,” Quick said. “But we want to be the go-to information source to guide them.”

Kentucky’s Cabinet for Economic Development will play host to about 50 guests, said Mandy Lambert, director of marketing and communications. Plans are similar to what the cabinet does each year when it brings prospects to attend the Kentucky Derby in Louisville.

“They’ll be attending the Games, as well as enjoying other outside activities during their stay,” Lambert said. “Our goal is to showcase the state’s business and quality of life advantages and encourage future economic development opportunities for Kentucky.”

Individual companies will be using the Games to entertain clients, reward partners and build business. And none will work harder at it than Alltech, the Games’ title sponsor.

Alltech is investing more than $30 million to make the Games a success and leverage them for its own business development, president Pearse Lyons has said. In fact, in recent months, the line between the Games organization and Alltech has seemed increasingly blurred.

Alltech is using the Games to launch two animal feed products, a malt whiskey, a brand of Haitian coffee and an after-dinner drink, spokesman Billy Frey said. The company’s Bourbon Barrel Ale is the official beer of the Games, and its Alltech Angus beef will be served frequently and promoted heavily.

The company also is sponsoring the Alltech Fortnight Festival, two weeks of concerts and other entertainment during the Games that gives it a way to reach out to a wider audience and forge stronger ties with more than 60 Central Kentucky restaurants and bars.

Alltech has used the Games as a marketing engine to build relationships with 67 customer companies. And, in an effort to boost ticket sales and attendance, Lyons created the Commonwealth Club, which provides ticket and hospitality packages that other companies can use to entertain guests. So far, 115 companies have joined the club.

Lexmark International plans to host customers from Canada and Europe at the Games, said Denis Giuliani, vice president of U.S. marketing and supply sales for the company’s laser printer division.

“WEG could be a once-in-a-lifetime opportunity, just like the Ryder Cup,” Giuliani said, referring to the golf tournament at Louisville’s Valhalla course in 2008, where Lexmark was a sponsor. “They’re great customer-hosting events.”

While some deals might get done amid all the vaulting, jumping and reining, the real payoff, at least for Lexington and Kentucky, will be long-term. “We learned from Aachen (the German city that was host to the 2006 World Equestrian Games) that a lot of what happened with the Games happened later,” Quick said.

“It will be all about image and impression that people have as they go around the region and how they might see economic connections, business connections,” Quick said. “I think we’re going to have the benefits of this for decades to come. People will be talking about this.”

The best way to get to know someone is to travel together. That was the idea behind the joint trip to Pittsburgh in May by 200 members of Commerce Lexington and 100 members of Greater Louisville Inc.

Kentucky’s two big cities have always been separated by much more than 75 miles of asphalt. But these days, cities, states and regions that want to succeed economically can no longer afford to let cultural differences, petty jealousies and college basketball rivalries keep them from working together.

The trip went well. But the big question was this: Would there be any follow-up?

Commerce Lexington’s trips are sometimes criticized as junkets because the travelers come home, go on summer vacation and never get around to following up on most of the city-improvement ideas they gathered.

Lexington and Louisville officials said they are determined that that won’t happen this time. Last Thursday, summer vacation ended, and it was time to get to work. A Commerce Lexington/GLI steering committee met all day and, that evening, announced follow-up plans to the trip’s participants at a reception in Louisville’s 21C Museum Hotel. The attendees included both cities’ mayors.

The two chambers of commerce announced plans to form a joint task force to follow up on seven top priorities and to hire a full-time staff person to drive the process. Most of those priorities were identified and ranked by the 300 travelers during a session in Pittsburgh.

Top priorities include exploring the feasibility of light passenger rail between Lexington and Louisville, and creating Bidwell Training Centers in both cities. Bidwell is a remarkably successful job-training center for poor people in Pittsburgh. Founder Bill Strickland’s presentation about it during the trip had almost everyone in the room teary-eyed and cheering.

Strickland is now working with other cities to replicate Bidwell’s success. Talks began this summer about seeing whether the concept could mesh with a Fayette County Public Schools project to develop an agribusiness vocational training center on Leestown Road.

Other top priorities include the cities working together to promote Kentucky’s horse industry, and to pursue legislation that would allow the cities to have a local-option sales tax. The cities say they need the extra money to provide the infrastructure necessary for business to flourish.

Presidents Bob Quick of Commerce Lexington and Joe Reagan of GLI said afterward that such taxing authority probably would have to be done in the context of overall state tax reform, which is long overdue. “Some of these things will take some time to build the right coalitions,” Reagan said.

The two chambers and city governments already work well together, but closer ties are needed between them and Northern Kentucky, Quick and Reagan said. The so-called Golden Triangle has been Kentucky’s growth engine for a couple of decades, and it will become even more important in the future.

But, Reagan said, “The last thing we want to do is pit urban against rural. We have to look at the big picture.”

Jerry Abramson, who is retiring after 21 years as Louisville’s mayor to be Gov. Steve Beshear’s running mate next year, said the cities’ most important challenge will be convincing the rest of the state that investment in the Golden Triangle benefits the entire state. That’s because much of the tax revenue and economic development created by Lexington, Louisville and Northern Kentucky flows throughout Kentucky.

“As we develop our strategies, we must take into account how it’s going to positively affect the other citizens of the state,” Abramson said. “How does it play in Paducah? What’s in it for Hazard?”

About 10 days after a massive earthquake struck Haiti on Jan. 12, Pearse Lyons decided to go take a look. He flew to the Dominican Republic, then took a helicopter into Haiti. “You don’t need to be there long to see the tragedy,” he said.

Like so many others, the founder and president of Alltech wanted to help. But he knew it would do little good in the long run to throw more aid money into one of the world’s poorest, most-beleaguered countries.

What Haiti needed, Lyons thought, was sustainable economic development, jobs for its people and hope for its children. And because he is a businessman, Lyons thought that helping Haiti could also be good for his company, which mostly sells natural animal nutrition supplements in 120 countries.

Pearse Lyons

After four months of work and a lot of help from friends, Lyons and Everett McCorvey, director of the University of Kentucky’s Opera Theatre program, sat down Friday to discuss their plans for Ouanaminthe, a city of 100,000 people near the border with the Dominican Republic in northeast Haiti.

Lyons’ company is buying 10 acres of land and plans to construct a new building for a local school with about 350 students. A new medical clinic and an Alltech factory that will initially employ 20 or 30 Haitians also will be built.

McCorvey and his graduate students plan to create Haitian Harmony, a music training program for the school’s children. Haiti has a strong music culture, and Alltech employees found when they visited the school that each classroom wanted to welcome them with a song.

McCorvey and his students plan to have a choir of 35 or so Haitian children organized in time to bring them to Lexington to perform at the opening ceremonies of the Alltech FEI World Equestrian Games on Sept. 25.

He hopes the choir will eventually become like the African Children’s Choir, a touring ensemble that can draw global attention to Haiti’s needs — and potential. “These kids could get to do something for themselves and their country,” he said.

Lyons, who has made two more trips to Haiti since January, will be going back later this month with McCorvey to work on the project. UK Opera students Eric Brown, the first winner of the Alltech Vocal Competition in 2006, and Manuel Castillo also will go to begin the Haitian Harmony program. They will be joined later by other UK voice students.

Alltech has a long history of setting up businesses in distant lands. This venture makes sense, Lyons said, because although Alltech has no facilities in the Dominican Republic, it sells about $2 million worth of products there each year. Most of those products are made in the United States or Brazil, but there is no reason they couldn’t be made in Haiti instead.

“When could you find a situation where your first order is for $2 million?” Lyons said. “That’s the sustainability part of it. And I think that $2 million will quickly become $4 million, where otherwise it might have become just $2.2 million without this focus.”

Everett McCorvey

Alltech chose Ouanaminthe for its efforts on the advice of local business contacts and Catholic missionaries. Because the city is in a part of the country less damaged by the quake, it is more ready for economic development.

The Alltech plant will begin by hiring Haitians to mix animal nutrition supplements from concentrates. “It’s a pretty manual process,” said Dan Haney, Alltech’s director of manufacturing. The company already has the equipment it needs, sitting in a warehouse in Springfield.

Lyons envisions other Alltech business opportunities that could employ Haitians. For example, the company buys several hundred pounds of coffee to produce its new Bluegrass Sundown bourbon-and-coffee drink. “Why couldn’t that coffee be grown in Haiti?” he said.

“There is a branding opportunity here, and it is a branding opportunity with a cause,” Lyons said. “It doesn’t get any better than that.”

Alltech’s initial business and philanthropic investment in Haiti will be about $500,000, which includes $100,000 donated by Alltech employees and matched by the company. Other money is coming from Alltech suppliers and customers. Lyons also is getting help from a fellow Irishman, Denis O’Brien, who owns Haiti’s main telecom company, Digicel.

Lyons and McCorvey see the potential for creating close ties between Lexington and Haiti — economic, cultural and human. “This project could be life-changing for them,” McCorvey said, “and maybe for all of us.”

Click on each thumbnail to see complete photo:

Apologists for mountaintop removal and other destructive forms of surface mining often rationalize it by saying that digging coal by any means is essential to Eastern Kentucky’s economy, even as the number of mining jobs steadily declines.

A new Web site hopes to foster more public discussion about creating a sustainable, healthy and environmentally friendly economy for Central Appalachia.

The Web site, www.appalachiantransition.net, was created by the Berea-based Mountain Association for Community Economic Development and the social-justice group Kentuckians for the Commonwealth.

“We believe the old extraction-based mono-economy has produced poor results and offers a very limited future,” said Jason Bailey, MACED’s research and policy director. Besides, coal reserves are dwindling.

“We know that transitioning to a new economy in Central Appalachia will not be easy or quick,” Bailey said. “But we believe with a clear vision and a steady approach, together we can move to a new economy that sustains the people and the land.”

April is technology month in Lexington. Local promoters plan to spotlight the high-tech people and companies already here in the hope of attracting more.

Digital technology has given smart people more flexibility about where they live and work. That’s an opportunity for Lexington, a beautiful city with a great quality of life.

The big question is, how can Lexington make the most of that opportunity?

One way to succeed is to identify success and figure out how to replicate it. So I went to see Alan Hawse, vice president of information technology at Cypress Semiconductor, one of the world’s leading designers and manufacturers of the silicon chips at the heart of almost every electronic device.

Cypress is based in San Jose, Calif. Hawse works in Lexington, along with about 40 other Cypress employees who do high-level research and development. The Lexington design center is one of five Cypress has in the United States. Four others are in India, Ireland and Belgium.

Why is this little piece of the Silicon Valley now at Main Street and Mill in Lexington? Because of Hawse.

Hawse, 41, was born and raised in Lexington, attended public schools and studied electrical engineering at the University of Kentucky and Georgia Tech. He joined Cypress in 1991 and worked in the Silicon Valley for five years.

But when it came time to start a family, Hawse and his wife, Jill, who is from Georgetown, wanted to live here. Cypress didn’t want to see a talented employee move on, so it moved with him.

Things have worked out well for both Hawse and his employer. “Cypress loves Lexington because we’ve been able to hire a lot of super-intelligent people who like to live here and do good work,” he said.

Like Hawse, many of the Cypress employees in Lexington are native Kentuckians or UK graduates. “Every time there’s a story written about me,” he said, “I get calls from mothers with kids in the Silicon Valley.”

Hawse, a former Herald-Leader contributing columnist, said the first thing he would do to build Lexington’s high-tech economy would be to compile a list of Kentucky natives and UK grads who are technology industry standouts elsewhere. Call them. Fly out to see them. Ask them whether they have any interest in coming back. If so, ask them what it would take to get them here.

“Lexington has many, many of the good things about big cities and almost none of the drawbacks,” Hawse said. Natural beauty. Good schools. Universities. Little crime. No traffic. Lots of cultural amenities. “I would work at selling those things; play to your strengths and away from your weaknesses,” he said.

“I would promote an intellectual framework that would allow high-tech people everywhere to visualize themselves being here,” Hawse said. “Sometimes, all you have to do is give people a map. Maps have lots of roads on them. They don’t tell you where to go, but they show you where you can go.”

But that’s only a start. Lexington must become known as a place where technology people and companies can grow and succeed. That means more tolerance and diversity, fewer good old boy networks.

Most important of all, Hawse said, it means education. Kentucky must create educational excellence, from preschool to graduate school. Rigorous math and science education must begin in elementary school, and the “gem” students must be nurtured.

Creating educational excellence also means better coordination and pooling of Kentucky’s limited resources. Less overhead. Less bureaucracy. “Here’s a radical idea,” Hawse said. “What if we merged UK and (the University of Louisville)? What about that?”

The problem with traditional economic development strategies, Hawse thinks, is that they are political exercises built around trying to hit home runs — landing the big plant, attracting the big company.

But long-term success, he thinks, comes from steady, continuous improvement. Improving education. Connecting smart people and companies. Creating an entrepreneurial climate that encourages business development and personal success.

“It’s all about the brains and the skills they acquire,” Hawse said. “It’s all about developing the brains, keeping them here and bringing them back here. And bringing new ones here. The brains make it possible.”

Want to explore the latest ideas for making cities successful? Plan to attend the Creative Cities Summit in Lexington, April 7-9.

Want to discuss how those ideas could be applied to Lexington? Mark April 17 on your calendar.

That’s when a companion session called Now What, Lexington? will be held at the Carnegie Center for Literacy and Learning.

Unlike the Creative Cities Summit, there are no big-name speakers and no admission charge. Everyone is welcome to attend — or to lead a session, if they wish, on any topic that interests others enough to participate.

Now What, Lexington? isn’t a conference; it’s an “un-conference,” said Ben Self, a Lexington technology entrepreneur who is helping to organize the event. To sign up, go to www.nowwhatlexington.org.

“Our goal is to take the excitement, ideas and momentum from the Creative Cities Summit and spark some action from it,” Self said.

There is no agenda for Now What, Lexington?, just five or six rooms available for breakout discussions during seven 45-minute blocks between 9 a.m. and 5:30 p.m. The only request of session leaders is that the groups discuss action steps, not just ideas.

For example, Self wants to lead a discussion on what citizens and neighborhoods could do to self-organize and take up some of the slack of cuts — and possible future cuts — in city government services.

Now What, Lexington? is being organized by a new group called ProgressLex, which hopes to advocate for a variety of urban Lexington issues the way The Fayette Alliance does for land-use issues, said the group’s chairman, Dan Rowland, a University of Kentucky history professor.

Rowland said Lexington has many organizations that do good work, and ProgressLex hopes to bring them together to be more effective. He envisions a bipartisan online community of as many as 30,000 people focusing on issues ranging from good urban design and historic preservation to ­social justice and government transparency.

He said Now What, Lexington? seemed like the perfect launch event for ProgressLex, because it is focused on putting new ideas into action to improve Lexington’s quality of life.

Phil Holoubek, a downtown developer who is one of the main organizers of the Creative Cities Summit, said Now What, Lexington? is a perfect companion event. That’s because the summit is aimed toward ideas for cities generally — and attracting attention to Lexington as a place where good ideas are discussed. Now What, Lexington? could help get some of those ideas put into action.

“We really need both types of events to move ­Lexington forward,” ­Holoubek said.

This two-step approach — gathering ideas, then discussing an action plan for Lexington — offers a good model for Commerce Lexington’s annual Leadership Visit.

Each May, more than 200 local business and civic leaders spend three days together in another city, networking and gathering ideas to bring home to Lexington. This year’s trip, to Pittsburgh, promises to be one of the most useful of these visits, because it is being taken with Greater Louisville Inc.

Kentucky’s two largest cities need a closer working relationship, and this is a good step in that direction.

Although past ­Commerce Lexington trips have eventually led to some action in Lexington, a frequent criticism is that more could be done. In a letter to the editor recently, former Urban County Council member Dick DeCamp suggested that Commerce Lexington’s trips be scaled back to every two or three years, with time in between devoted to meetings focused on applying ideas already gathered.

That’s a sensible approach. At the least, Commerce Lexington could take a cue from the Creative Cities Summit and Now What, Lexington? and schedule public follow-up sessions after the Pittsburgh trip. Those sessions would be good places to discuss how ideas generated in Pittsburgh — and relationships made with Louisvillians — could be put to good use.

Speaking of ideas: One of America’s most successful mayors — Joseph P. Riley Jr. of Charleston, S.C. — speaks Wednesday at 6 p.m. in the Downtown Public Library. Riley, Charleston’s mayor since 1975, has been a key player in growing the city’s economy while preserving its historic buildings and decreasing crime. The free program is sponsored by The Fayette Alliance and UK’s Gaines Center for the Humanities.

Improving Kentucky’s economy will require more capital. Finding that capital, both human and financial, is likely to involve more small steps than big leaps.

Two groups are taking steps worth noting. They are the Young Professionals of Eastern Kentucky and the Lexington Venture Club.

The Young Professionals of Eastern Kentucky is a new organization that hopes to help talented young people stay in — or return to — Eastern Kentucky’s mountains. It is having its kickoff event Monday night in Hazard.

“We really want to combat the brain drain,” said Bradley Parke, 24, of Knott County, the group’s vice president. “There are a lot of people who leave and want to come back, but there’s just not the opportunities for them.”

The free event, which begins with a 6:30 p.m. reception at First Federal Center on the campus of Hazard Community and Technical College, will include speeches by U.S. Rep. Hal Rogers and former Gov. Paul Patton.

Kevin Smith, 26, a Laurel County native who lives in Inez, was inspired to start Young Professionals of Kentucky after reading Visioning Kentucky’s Future, a 2008 report by the Kentucky Long-Term Policy Research Center.

“There was a need for young professionals to come together,” he said, not only to create new economic opportunities for themselves and their communities, but to be more aware of opportunities already in the region.

“Many of us have a passion for this region,” he said. “We want to live and work here.”

Smith, Parke and others formed a steering committee and then a board of young professionals from across Kentucky’s 32 Appalachian counties. They applied for non-profit status and organized small get-togethers in London, Hazard, Prestonsburg, Somerset, Whitesburg and Pikeville.

“We’re pretty spread out, so we’re trying to reach every part of the region so everyone feels like they’re included,” said Parke, adding that online networking tools will be key. The organization has created a Web site (www.ypek.org) and a Facebook group with nearly 1,200 members.

In addition to networking, Smith and Parke said the group plans to form working groups to study and undertake projects around six themes: economic development; energy and environment; education; health care; technology; and civic engagement. That work will get started at the group’s next regional meeting, tentatively scheduled for early April.

They said the organization’s board includes Republicans and Democrats, and they’re being careful to avoid political associations that could limit their effectiveness in the region.

“We’re trying to say, no matter what your background or ideology is, we’re here to make a difference,” Smith said.

Meanwhile, the Lexington Venture Club gathered last week to discuss the state of venture capital funding in Kentucky.

The club reported that entrepreneurial companies in Central Kentucky attracted $47.5 million in venture funding last year for a two-year total of $116 million — not a bad showing considering the overall economic climate.

The 88 companies surveyed by the club said they hired 386 people last year, up from 230 in 2008 and 162 in 2007. The average salary for full-time jobs at those companies was $69,800, up from $61,000 two years ago.

Venture funding comes from a variety of non-traditional sources outside bank lending, such as venture capital funds, private investors and entrepreneurs and their friends and families.

It is a vital source of capital for young companies in fields such as technology and bio-sciences. Innovation is often a risky investment, but it can pay off big, both for investors in those companies and for their communities.

The gathering at Lansdowne’s Signature Club attracted nearly 200 people, prompting UK President Lee Todd to remark that Lexington’s venture capital and entrepreneur community “could not have filled a closet 10 or 15 years ago.”

The keynote speaker was David Jones Jr., chairman and managing director of Chrysalis Ventures in Louisville, the region’s oldest and largest venture capital firm with about $400 million under management. He also is non-executive chairman of Humana Inc., which his father helped found.

Jones said Kentucky is behind many neighboring states in creating the kind of innovative companies that can attract venture funding. A key to improvement, he said, will be for Kentucky to emphasize and invest more in education at all levels.

Lexington’s political and business leaders often talk about the importance of the “creative class” in building a vibrant 21st-century economy.

It makes sense that an economy based on innovation and technology needs young, creative, well-educated innovators.

On the Sunday after Christmas, I spent the afternoon listening to members of the creative class — a dozen or so of the smartest young people Kentucky has produced in recent years.

We sat in a circle of chairs inside the Miller House, a little-known landmark of modernist architecture that a small group of fans rescued from vandals, restored and is struggling to preserve.

Most of the people there were in their late 20s or early 30s. Some were former Gaines Fellows at the University of Kentucky. Others were Lexington natives, spouses and significant others with educations from Harvard, Princeton and the Massachusetts Institute of Technology.

They were architects, educators and entrepreneurs in the arts and technology. Some were back in Lexington after a few years in larger cities. Others were home visiting family, on break from successful careers in New York and Boston. I could sense, though, that they hoped to return to Lexington. Someday. If only.

The question that brought them together was this: How can Lexington do a better job of keeping its brightest young people and attracting more? Rather than suffering from brain drain, how could this city become a brain magnet?

Several of them had begun the discussion Labor Day weekend at a retreat organized by former Gaines Center director Dan Rowland and Vice Mayor Jim Gray. After I left, the talk continued at a reception at Gray’s home.

Among the laments: Lexington doesn’t have enough economic opportunities, especially in technology. UK and other universities aren’t integrated enough into civic life. Too few people are risk-takers. Lexington leaders look elsewhere for innovation but often don’t recognize it under their noses. The local arts community is vibrant — and growing more so — but lacks the acceptance and philanthropy found elsewhere.

Their expectations weren’t unrealistic. They didn’t want to change Lexington so much as to expand its horizons. Things are moving in the right direction, they said, just more slowly than in many of the cities Lexington competes with economically.

What they loved about Lexington was its beauty, people and authentic culture. It’s a place big enough to have world-class amenities yet small enough that an individual can make a difference.

They loved Lexington’s quality of life, livable neighborhoods and the potential of its human-scale downtown. They wondered why there wasn’t more connectivity with Louisville and Cincinnati, which are so close yet seem so far away.

They saw great potential for reviving parts of town that have seen better days, such as the Distillery District and old Northside neighborhoods. They wondered why Lexington doesn’t do more to capitalize on local treasures, such as McConnell Springs, the Kentucky Horse Park and the Miller House.

None of these young professionals seemed to be horse people. Yet they were excited about next fall’s Alltech FEI World Equestrian Games, and they were surprised more people in Lexington seem not to be.

These young people understood that an international event like the Games can have a transformative effect on a city. But when they started talking about how people should take advantage of it, there was an interesting dichotomy.

Several of those living here said they were confused about how they could harness the Games to develop or promote their slice of Lexington. Who is in charge? What is the process?

It doesn’t really matter, the people living in Boston and New York replied. Organize your own events, activities and celebrations around the Games. While it’s nice to be part of the official program, it’s hardly necessary. Seize the day and put your stamp on it. Just do it.

It’s good to read books and listen to consultants. But if Lexington really wants to tap the creative class, we must recognize and listen more to its members. Many of them are right under our noses. And many more would like to come home, if given the right opportunity.