Saving Eastern Kentucky.....The End of the Road

Time for the final installment of my series. In previous posts, I've discussed my ideas for re-shaping Eastern Kentucky. In short, they involve embracing our culture, focusing on hospitality industry (food, alcohol, and tourism), and spending our money at home.

It wont be easy. It will take time. There will be growing pains. Its also likely the region will experience a very distinct shift in the population. Some, like me, must leave. Its inevitable based on the shifting economy. People like me need be replaced with artisans, chefs, etc. People like Abigail Tolliver (who co-manages the Letcher County farmers' market); Kim Owsley (a talented Native American artists and musician); and Tim Crager (who operates a unique wood carving business) will thrive in a hospitality based economy.

It won't be easy. Teamwork is a must. There needs to be a regional coalition formed by tiny counties that will give them greater cooperation in pursuing opportunities where they present themselves.

Its the same in the hospitality industry. Although counterintuitive, the type of tourism I outlined in Part 1 works for EKY with a regional, synergistic approach where all counties, provide different yet similar options. This provides a multitude of choices that attract visitors. Tourists will not drive to Eastern Kentucky to visit just one restaurant, or just one attraction. However multiple restaurants, wineries, distilleries in the area become a reason to come spend a weekend (for a good example look at Huber's Orchard/winery just outside of Louisville). Like I mentioned in my last post, this is exactly what cities like Louisville, Chattanooga, and Asheville have used to fuel their resurgence.

If Eastern Kentucky can get through the next 1-3 years using a growing hospitality economy, and buying local; the area can then focus on reversing the population trend.  At the same time, the new hospitality based environment creates a very attractive market for a small/medium sized business to locate.

On December 12, 2013 I had the opportunity to hear Texas Roadhouse CFO Scott Colosi speak. At the end of the impressive discussion, Mr. Colosi took questions. One of the great questions was: why locate a business headquarters in Louisville? Mr. Colosi explained that when examining the options, the company knew it could attract top talent only if the headquarters was in a location that had food, drink, entertainment, and culture. Why? Because these are what makes a desirable place to live; and therefore easier to attract top talent.

This brings us full circle: taking advantage of what the area has and what its residents can do. Food, drink, and tourism will not only keep the area alive - it gives the area a real chance of rebuilding. For decades, outsiders traveled to the mountains to marvel at our way of life: the music, the food, the wine/moonshine, and the craftsmanship brought to life by the hands of its people. They'll come again. Then IF we give them reason; they'll keep coming.

Moving forward doesn't always require becoming more modern. Sometimes it means remembering our history. In the end, the answer was always there; right from the beginning. In order to save ourselves, we just have to be ourselves. Easier said than done.

Saving Eastern Kentucky.....Part 4 "Buy Local"

After looking at some of the government intervention that can help; lets look at what WE can do.

"Buy Local". Its not just a catchy phrase. Its a concept; and it works.

Why does buy local work? One reason it works is because the world is growing smaller; in its own way. In 1990's/2000's there was a socioeconomic-geographical movement called "Californization". Californization was a label given to the incredible amount of urban sprawl that started in California, and moved nationwide. Its where businesses, and consumers, moved from downtowns to the outskirts/suburbs. Big box stores like Walmart, Applebees, etc all exploded in growth. Small, local businesses wilted and died.

Today, the nation is contracting back to downtowns. In fact, in many developers are scrambling to construct urban residential properties. Higher gas prices combined with infuriating drive times play a large role. This movement back towards  is being called "manhattanization" and its clearly taking place all over the country.

What is buy local? The concept is simple: buying local. Stop spending money at "big box" stores, like Walmart and Applebees. Yes, I know Applebees is tricky because its a chain but has several units owned by Perry Countians (who are very successful business people).

Stop driving to Lexington, Huntington, or Johnson City for food, entertainment, and shopping. Remember, we're trying to pull revenue into Eastern Kentucky. This starts by spending money at home. Think of it as a financial circle. An investment in the region.

On the consumer end, its about spending a little more money in return for a MUCH better product. creating and shopping at local farmers markets or organic markets/butchers. Eating at restaurants who use a "farm to table" approach.  Purchasing craft beer from local brewers and moonshine from local distilleries (both these are a little ways out; but not as far as one might think). Buying from local artisans rather than big box stores.

In the end, its about showing entrepreneurs you're willing to spend your money with them; if they will use local vendors.  Many people are hesitant initially, because of the slightly higher costs. However once they experience the far superior quality and see the reinvestment into the community; the concept quickly catches fire.

On the Entrepreneur side, its a little different. Its a leap of faith. If an entrepreneur decides to open a restaurant, his research will show there's a much greater chance of success if they pay a large sum of money and purchase a franchise. In fact, who could blame a business owner for this decision? Especially without research showing the region will "buy local". In fact, I would guess Eastern Kentucky consumers spend very little money with local vendors.

However once opened, and "buy local" starts working FOR your business; make sure your business starts working for "buy local". Don't buy food services from gigantic companies like Sysco. Don't pay exorbitant franchise fees to corporations who's money will never make its way back to Eastern Kentucky. True, it'll cost a little more per unit, but the money will come back to you through the community.

Growth of downtown areas in cities like Louisville, Asheville, Chattanooga, and Cincinnati are all showing incredible growth in restaurant and hospitality; mostly based on buy local. All are cities within about 3 hours away from our region. All have elements of their revitalization that Eastern Kentucky could use to aid in our revitalization. All will be examined in a greater detail later.

Hospitality is just the start. Once buy local becomes a movement, it spreads to other things. Local designers start opening clothing boutiques. Local artists open art galleries. There are tons of talented designers, artists, and musicians in the region. Unfortunately right now, they all ply their trade elsewhere because there simply isn't a market in Eastern Kentucky.

All of this makes Eastern Kentucky a better place to live. An easier place to attract visitors. And ultimately an easier place to attract small/medium size employers. A more attractive place for small/medium sized businesses (which Ill cover later). All necessary for the survival, and resurgence of Eastern Kentucky.

Saving Eastern Kentucky.....Part 3B

I planned to discuss all legislative actions that could help save Eastern Kentucky in one post. Then I quickly realized the wet/dry issue would require so much detail and discussion, that anything else would get lost in the mix.

The innovation and creativity of the Appalachian people will be the catalyst behind revitalizing Eastern Kentucky. Government help isn't a requirement; but could definitely make the process MUCH easier.

To fully realize the roughly outlined tourism plan, Eastern Kentucky must attract new entrepreneurs and a work force skilled in hospitality (jobs dealing with recreation, food, tourism, etc).

How can Eastern Kentucky find new entrepreneurs? The best way is for federal, state, and local governments to give financial incentives to prospective entrepreneurs in return for opening hospitality/tourism based businesses in Eastern Kentucky. In other words, "money talks".

The federal government could provide incentives through the Small Business Administration (SBA). The SBA doesn't make loans themselves. Banks (hopefully local banks. Remember: "buy local") loan the money. The SBA simply guarantees should the business default, the federal government will cover the default; reducing the bank's risk.

As one might imagine, there are some fairly cumbersome guidelines to qualify. These guidelines should be relaxed and the amount of monies available increased for anyone planning to open a hospitality/tourism business in Eastern Kentucky. Banks could loan more, at a reduced risk. This in turn makes it easier for prospective business owners to bet on themselves and Eastern Kentucky.

The state government could relax state income tax on limited liability organizations for businesses operating in Eastern Kentucky. The federal government, along with nearly all states, allow "flow through" limited liability entities to operate without taxation of the entity itself. This is done to avoid double taxation, because the payments from the entity to the owners are taxed too. Kentucky is one of the few states who have an oppressive and ridiculous state income tax on limited liability organizations. This could be forgiven for the first few years for any business opening/operating in Eastern Kentucky.

Finally several creative local tax strategies/incentives that could be in place to encourage the location/relocation of hospitality/tourism business in Eastern Kentucky versus other parts of the state/country. Property tax, local employment tax, etc. could all be forgiven, delayed, or otherwise reduced.

These would make Eastern Kentucky an attractive location for outside and local entrepreneurs to open new hospitality/tourism business.

In addition to talented business owners, the region needs skilled employees. What would talented businesses be without skilled employees? The best way to hone a workforce for the skills needed in hospitality/tourism is through training and education. Training and education could be obtained at local institutions with a track record of results. Several in state institutions offer associates, bachelors, and masters in business. There are recreation degrees. And there are culinary schools in Louisville turning out incredible chefs.

The problem? Education and training costs money. Sometimes a lot of money. The solution? Student loan or subsidized tuition incentives. Federal student loans could be forgiven or offered forbearance in return for being employed in the Eastern Kentucky region. Furthermore the federal and/or state government could subsidize tuition for any prospective student from Eastern Kentucky that commits to the region for a period of time.

These economic incentives make Eastern Kentucky an attractive location for prospective business owners. Furthermore they ensure these same business owners will have a talented and skilled workforce from which to staff their business.

Saving Eastern Kentucky.....Part 3A

The next two installments discuss legislative moves that will help fuel Eastern Kentucky's revival. While a complete revival doesn't necessarily require help from the government. There are definitely several things local/state/federal government could do to aid the revival. 

Up first is a change that must happen socially, then at the polls - the wet/dry issue. Most counties in Kentucky are dry (click the link for a map). To spark growth in tourism, this MUST change.
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If you have religious/moral convictions about the issue, think about this: Being dry doesn't stop drinking. It stops potential revenue, which stops growth/development opportunities, which stops the revitalization of our region. Its a financial decision.

Since the invention of the modern automobile, anyone in a dry county who wants to drink; will. They just go to a nearby county/city taking their potential revenue with them. It doesn't promote underage drinking. There are restrictions that come with the relevant ABC licenses and heavy fines associated with serving underage. The same cant be said for bootleggers. So if you oppose being wet for moral reasons, its really not making an impact.

It doesn't cause an increase in DUI related accidents. That's an argument unsupported by facts. Logic suggests residents in a dry county drive further to get a drink, therefore putting them on the road longer; increasing the chances of an accident. Furthermore drinking and driving are already illegal. So anyone making the conscious decision to break the law, it really has nothing to do with county/city lines.

Let's talk money. Restaurants are extremely hesitant to open in dry counties, and for good reason. Alcohol has a high profit margin. Probably the highest. If given the choice, why would a new restaurant open in a dry county? They wouldn't. Its why cities like Prestonsburg, Pikeville, and Whitesburg all show some growth in the entertainment/restaurant sector; while dry counties/cities are stagnant.

Whitesburg is an excellent case study in favor of the wet vote, because it voted wet only a few years ago. Whitesburg voted "moist" in 2007 and wet in 2012. The direct financial impact is incredible. Speaking with Eleanor Caudill, who is the city ABC administrator, stated that going wet generates approximately $120,000 for the city. Per Kentucky law, these funds can be used ONLY to pay for administration and law enforcement. However this still clears up funds from the general budget to be used for other matters.

The indirect financial impact has been just as incredible. Whitesburg added two very busy restaurants/music venues. They've added an active farmers market, which I will discuss in a later post. These additions increase revenue, build a sense of community, and promote a "buy local" culture; which Ill also discuss later. All in all, it makes Whitesburg a place that people want to visit.

If going wet for a tiny town the size of Whitesburg makes $120,000 direct impact, think of what it could do for a dry county. Or the region as a whole.

One might ask: if nearby counties are wet, why should MY county be wet? Being wet is absolutely crucial for food/drink tourism that will focus on Appalachian moonshine distilleries, wineries, and craft beer. Ill outline all these later in more detail. For now, just know these businesses will work alongside adventure related excursions to create the "pull" that makes people want to visit. The more options, the greater the pull. Noone will drive to Eastern Kentucky to visit a lone restaurant.

If counties won't vote wet, then cities need to. If cities wont, then communities need to incorporate into new cities and vote wet. The importance of this issue truly cant be overstated. Without it, Eastern Kentucky's future looks extremely bleak.

Saving Eastern Kentucky.....Part 1

There was quite a response to the recent New York Times article "What's the Matter With Eastern Kentucky". http://www.nytimes.com/2014/06/29/magazine/whats-the-matter-with-eastern-kentucky.html?_r=0


The article focuses on many problems with Eastern Kentucky and why industrialization wont work. Its all pretty much true. But as the great John Wooden said, "Don't let what you cannot do interfere with what you can do". We know what wont work. Lets focus on what will.
When examining Eastern Kentucky the most important questions are: what does the region have? And what can it do?


First, what does Eastern Kentucky have? Eastern Kentucky has difficult, mountainous terrain. There isn't enough flat land available for industrialization or modernization, as noted by the New York Times. However the Times sees only half the picture.

Difficult, mountainous terrain makes Eastern Kentucky impossible to industrialize/modernize. Yet the same is also the region's greatest assets: incredible environmental scenery and wildlife. At every turn there are scenic mountains, lakes, trails and streams. Incredible hunting/wildlife consisting of elk, deer, turkey, etc. Terrific climate for certain kinds of agriculture that could provide small scale/locally sourced vegetables for local/regional restaurants. A perfect climate for growing industrial hemp.


Second, what can Eastern Kentuckians do? Sadly the days of backbreaking, yet well paying, labor in the coal mines are gone; likely never to return. Trust me, it hurts to say. As an attorney coal put a lot of money in my clients pockets; allowing them to pay my fees. Its loss financially hurts me as much as anyone. But we, as a region, need to plan as if coal is finished. Then if coal returns - it will be a HUGE bonus; not a life source the region NEEDS just to survive. Therefore "tunnel vision for coal" MUST stop if the area is to survive.


What are Appalachian people good at? Most people fail to realize Eastern Kentuckians possess several artisanal skills that currently in incredibly high demand both regionally, nationally, and globally. In fact, many of the artisans themselves are yet to realize their skills are in high demand. Also many in the region are exceptional artists and/or musicians.


There's small scale/locally sourced farming. Right now, the fastest growing movement in the restaurant industry is the "farm to table" concept. Eastern Kentuckians have been eating from farm to table for DECADES! Raising gardens and small/medium livestock are skills basically woven into the DNA of many Appalachian people.


Lets not forget moonshine/corn whiskey distillers, which is on the verge of experiencing the type of explosion enjoyed by Bourbon the last few years.

Eastern Kentucky is doomed in terms of industrialization? So what? The region is ripe for sustained, continual success in tourism and cultural export. Not the goofy go-cart, airbrush T-shirt driven tourism of Pigeon Forge (which admittedly, I love too). Instead upscale, rustic, nature driving tourism could quickly and easily begin to bring tourists into the area to spend their money with local merchants/artisans. What's more, the same merchants/artisans could easily export the "Appalachian culture" regionally, nationally, and globally.


In the coming weeks, I'll be writing in more specifics exactly how the region can create a sustainable economy based on tourism and culture. I invite you to follow my posts, and lets all try to reboot Eastern Kentucky together.