THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, December 11, 1995 TAG: 9512090241
SECTION: BUSINESS WEEKLY PAGE: 04 EDITION: FINAL
TYPE: Editorial
SOURCE: Ted Evanoff
LENGTH: Medium: 86 lines
Step into someplace like Detroit and you can soon identify the origin of all the wealth - it's the factories.
Step into Roads - whether on the Peninsula's Mercury Boulevard or the southside's Virginia Beach Boulevard - and no visible means of support appears for all the shops and stores.
No visible means appears, that is, until you see Norfolk Naval Base and all the gray ships, teeming with men and women in khaki and denim, missile hatch mechanics in pony tails, computer engineers in corduroy jackets, truck drivers in blue jeans. As folks in Norfolk like to say, Tidewater resembles a university town, only the product is defense.
No wonder then, when Washington first talked about retiring ships and bases in serious numbers, a shaken Hampton Roads dreamed up Plan 2007.
It was the early '90s, and Plan 2007 was a blueprint for creating a stable economy less reliant on defense spending. Among the plan's many goals was the modest aim of organizing a regional venture capital fund.
The thinking was venture capital, a fancy word for money, could help bankroll the companies employing all those mechanics, engineers and truck drivers as they pried open new markets.
How the venture fund has taken shape, though, suggests Hampton Roads movers and shakers are blind to what's going on in Washington.
It happened exactly the opposite of how I thought it would,'' Norfolk investor Alan J. Lindauer said.
Of course, the idea was simple. Tidewater lacked venture capital. So the cities and counties of Hampton Roads would pool their money in a venture fund.
Just setting it up could help unite the cities, shed Tidewater's image as the Balkans of Virginia, a place where the towns claw each other for jobs and status.
Lindauer organized the venture as a for-profit fund and expects it to open in early '96 with $10 million in hand under the name Eastern Virginia Small Business Investment Corp.
Working for profit - the fund wants a hefty return on its investments - is a condition the U.S. Small Business Administration requires of venture funds that use federal money.
Half the $10 million in the Tidewater fund would be the SBA's, which figures a profitable fund is less likely to squander federal cash.
As for regional unity, the venture fund resembles Bosnia. The big Peninsula cities, Hampton and Newport News, pitched in cash. So did York County and the Eastern Shore.
But the southside's Chesapeake, Norfolk and Virginia Beach - home to half of Hampton Roads' 1.5 million people - haven't given a dime. Chesapeake leans in favor. Norfolk has thought it over, watched its rivals. And Virginia Beach? The state's largest city said no.
``The city came back and said they couldn't legally do it. They couldn't put money in a for-profit organization,'' Lindauer said. ``We have legal opinions from all the other cities that they can do it. It's being done all over the country . . .
``Our position is we'll go forward with or without Virginia Beach or Norfolk,'' Lindauer said. ``We'll make investments in businesses in those cities, but the cities that invested in the fund will have a seat on our board.''
If the early '90s upset Hampton Roads, with all the Navy downsizing talk, calm prevailed in '95.
Early this year it became clear the base closing commission hardly had raked Tidewater's huge military installations, such as Oceana Naval Air Station in Virginia Beach.
The Navy would scale back worldwide but consolidate many services in Hampton Roads. The ships were the key to Tidewater's good fortune. It may be hard to believe today, but the Navy had almost 6,000 vessels in 1945, 1,030 in 1955, 976 in 1968, and 575 in 1990.
Navy plans now call for a much smaller fleet, roughly 350 vessels, but about 120 ships would be stationed in Tidewater, along with some 130,000 Navy and civilian personnel, almost as many as in the '80s.
While the base closing commission heartened Hampton Roads, no one has guaranteed 120 ships will remain based in the region.
National security analyst James L. George, elsewhere on these pages, suggests a balanced budget could compress the Navy to far fewer than 350 ships.
If that happens, it may be hard to sustain 120 ships in Norfolk. As the number falls, so will the economy. Then Tidewater's leaders might tame their Balkan ways and get serious about economic development. by CNB