NHBR: 30 years and counting
NHBR was first published in 1978. This issue, as we celebrate 30 years of reporting on business news and trends, we’re featuring a special section devoted to a review of the 10 biggest business news stories of the last three decades, as selected by our readers in our online “Big 3-0” anniversary celebration survey. The importance of some of the events and trends is obvious, others not so, but all had a tremendous impact on the development of the Granite State’s economy, In fact, the effects of many of them are still being felt today. An overview of the stories begins on page 30.
10. Verizon Wireless Arena opens
The way Sean Thomas describes it, the irresistible arena idea finally overcame the immovable opposition when the Verizon Wireless Arena opened in downtown Manchester in November 2001.
“I don’t think I’ve ever seen two more determined groups — those who were determined to stop the construction of a civic center at any cost and those who were hell-bent to put one up, regardless of the arguments,” said Thomas, who served as an aide to former five-term Mayor Ray Wieczorek, who worked tirelessly to get the approximately $60 million bond issues approved by the board of mayor and aldermen and to obtain a commitment from the Legislature that a portion of the revenue collected in New Hampshire from the state rooms and meals tax would be dedicated to paying for it.
Opposition to the plan included antipathy to the public funding as well as a concern that the site at the corner of Elm Street and Lake Avenue lacked the parking facilities needed to handle the crowds of 8,000 and 10,000 expected at the new arena.
City leaders assured the public that bond payments would not be charged to the city’s property taxpayers. And patrons of the arena have managed to find places to park in the parking garage attached to the Radisson Hotel Manchester, at parking lots nearby or at curbside parking within a reasonable walking distance of the site.
Now in its eighth year, the arena continues to draw spectators from southern and central New Hampshire into downtown Manchester for Manchester Monarchs hockey and Manchester Wolves arena football games, as well as the circus and ice shows and performances by stars like Elton John, Barry Manilow, Neil Diamond, Willie Nelson and others. It also has been a driving force in bringing nightlife to the state’s largest city. Since its construction, restaurants and other businesses have opened and are thriving across downtown Manchester, creating an economy that would have been a pipe dream a decade ago.
9. New Hampshire remains firm against broad-based tax
The political obituary writers have been forecasting for decades that New Hampshire’s run as one of only two states (the other being Alaska) to have neither a broad-based sales or income tax was about to end. State services have expanded and the costs of even basic services have risen significantly over the years. New Hampshire has had to build new prisons and provide new services for students with disabilities. Health insurance for children has become a state responsibility. What many thought would be the final blow to the political defenses against a broad-based tax came in December 1997, when the New Hampshire Supreme Court ruled in the Claremont II decision that the state must assume the cost of providing at least “adequate” K-12 education in public schools throughout the state.
More than a decade later, there is still no broad-based tax. The Legislature has passed a couple of different versions of a state property tax.
The closest the state has come to instituting an income tax over the last 30 yeas came in 1998, after Gov. Jeanne Shaheen came forward with a plan for school funding that the state Supreme Court advised would be unconstitutional. The same year, the state House passed an income tax that the Senate would almost certainly have passed, but they didn’t because of Shaheen’s threat to veto it.
The lack of broad-based levies has contributed mightily to New Hampshire’s reputation for fiscal frugality. Charles Arlinghaus, president of the Josiah Bartlett Center in Concord, believes the state’s tax structure has made that virtue a necessity.
“New Hampshire is not dramatically more frugal than other states,” said the executive of the free-market think tank. “We just have never taken that step.”
Without the revenue that a broad-based levy would bring, the state’s governors and legislators have had to scrutinize budgets more carefully than they otherwise might, he said.
“We have higher-than-average property taxes,” said Arlinghaus, acknowledging that property taxes in New Hampshire are the fourth highest among the 50 states. “The last two states to adopt an income tax were New Jersey and Connecticut,” he said. “They did that to reduce their property taxes. Yet New Jersey and Connecticut are two of the three states with higher property taxes than ours.” The other is New York, he said.
8. Public Service of New Hampshire bankruptcy
Dennis Delay, former senior economist with Public Service of New Hampshire, had been with the company 14 years when PSNH filed for bankruptcy in 1989. He remembers well the feeling of uncertainty experienced by the employees as well as by the business and retail customers of the state’s largest utility.
“When we heard about it, people weren’t sure if we should report back to work the next Monday or not,” Delay recalled. He also remembers the political, social and, most importantly, the economic upheavals brought onto the utility and the state by the effort to complete construction of the nuclear plant at Seabrook.
“I remember the cost estimates for both reactors was under $1 billion,” Delay said, recalling the early estimates for construction of the planned twin-reactor facility at Seabrook Station. “When the final bill came in for one reactor, it was over $5 billion.”
But as bankruptcy proceeded and Seabrook Station was eventually sold, the company’s day-to-day operations continued. “We quickly realized we could operate in bankruptcy because the company was providing an essential service to the rest of the state,” Delay said. The bankruptcy followed an already uncertain period in which the financially troubled and overextended company was kept afloat by high-interest junk bonds and other borrowing, all predicated on the completion of the nuclear plant and PSNH’s ability to reap a substantial return on an investment that was rapidly growing into the billions of dollars.
Eventually, PSNH was able to emerge from bankruptcy and was purchased by Northeast Utilities. Customers endured several years of substantial rate increases as part of the settlement plan. Today, the company’s electric rates are no longer the highest in the region — in fact, they’re among the lowest — and, without the nuclear plant, PSNH ceased being a target of environmental groups.
7. Pease International Tradeport development
New Hampshire was already in a deep economic recession and on the brink of financial chaos when the Pease Air Force Base was closed and the land turned over to the state for economic development in 1991. The real state market had collapsed and five of
the state’s biggest banks had been shut down by the federal government. The decision by the federal Base Realignment and Closure Commission to close the Strategic Air Command Base at Pease was initially seen as another economic blow to the state and region. It was, to say the least, a challenging time to try to draw businesses to the former Air Force Base.
“Actually that quiet time allowed us an opportunity to convert a single-use facility to a world-class industrial and office park with an international airport,” said David Mullen, acting executive director of the Pease Development Authority.
The slow economy gave the PDA time to develop the infrastructure and do the environmental development needed for the anticipated economic development. “The recession bottomed out in ’93, and that was two or three years to get these things in place,” Mullen said.
After getting off to a slow start, things began to move at what became the New Hampshire International Tradeport at Pease with the arrival of Celltech, a British firm later acquired by Lonza Biologics. Lonza now employs more than 700 workers at Pease and is one of several biotech and other high-tech firms at a tradeport that includes manufacturing firms, office buildings, a hotel, half a dozen restaurants, the Red Hook brewery and a variety of retail and service establishments.
And Pease has become a national model for how communities can reap substantial benefits from military base closures.
Today, Pease International Tradeport has 256 companies occupying 4.4 million square feet and employing roughly 7,000 workers. There is still room for development on about 60 acres, and at full build-out the site will likely have some 10,000 employees, Mullen said.
The overall economic impact on the region from the activity at Pease has been calculated at $500 million annually. The state receives $10 million a year in business profits and rooms and meals taxes and Portsmouth receives about $5 million a year in property taxes as a result of business activity at Pease.
“So everybody’s happy,” said Mullen.
6. Revitalizations of downtowns across New Hampshire
If you think nothing is going on in downtowns around New Hampshire, look again. According to the Downtown Resource Center, a program of the state’s Community Development Finance Authority, DRC assisted downtown revitalization efforts over the past 12 years have resulted in 2,110 projects, nearly $238 million in public and private investment, a net gain of 929 businesses and 2,903 jobs in 19 New Hampshire communities, from Berlin to Wilton. Other communities, both large and small, like Manchester, Nashua and Newmarket have had their own revitalization successes, not reflected in those statistics.
The success of downtown revitalization programs is not exactly a secret, said Sarah DiSano, director of the Downtown Resource Center.
“I think the people who live in or near those downtowns won’t be surprised,” said DiSano. “They’ve seen the impact over the last 10 or 12 years in terms of refurbished building facades, new businesses moving into the heart of downtown and improvements in public areas such as sidewalks, public squares and parks.”
Investments in revitalization have come from local and state government, federal grants and the private sector, as well as grassroots funding from “concerned citizens who pull the money together,” said DiSano. The vibrancy of community centers remains an essential part of the life of towns and cities facing stiff competition from shopping malls and plazas in the outlying regions.
“The downtown or the village center of a community is the heart of the community,” said DiSano. “The health of the downtown or village center reflects the overall health of the community.”
Businesses that start up or move into downtown are more likely to be independent businesses, whose members contribute to and participate in the life of the community, she said.
5. Tyco scandal and its aftermath
No petty thieves, Tyco International Ltd. chief executive Dennis Kozlowski and chief financial officer Mark Swartz took over $170 millions in “loans” from the company without the shareholders’ knowledge. A Securities and Exchange Commission investigation in 2002 also found the pair had made more than $400 million in stock sales without disclosure.
All told, losses from fraudulent practices were estimated at $600 million.
Kozlowski and Swartz both resigned in the summer of 2002. On June 17, 2005, a Manhattan jury found both men guilty of stealing more than $150 million from Tyco, a conglomerate that at the time of the crimes was based in Exeter.
Kozlowski, whose name will long be associated with the $6,000 shower curtain and a $2 million birthday party, obviously had big dreams and large ambitions. But he never imagined the kind of house he would be living in when he was interviewed by Morley Safer of CBS’s “60 Minutes” in March of last year.
“In my wildest imagination, when I would project myself into my late 50s and early 60s, where I would be or what I would be doing. If I make a list of a hundred different places, or a hundred different things, here would never make that list,” Kozlowski told Safer.
He was speaking from his residence at the Mid-State Correctional Facility in the state of New York. As “60 Minutes” noted, “’Guests’ at the facility include murderers, drug dealers and pedophiles and the odd multi-millionaire.”
But one result of the Tyco misfortune was a $5 million settlement with the state Bureau of Securities Regulation by the company’s board of directors on charges related to the scandals. The settlement was used to fund the Initiative for Corporate Responsibility and Investor Protection, whose mission it is to teach executives, shareholders and the public about the need to remain vigilant about ethics in the marketplace.
4. Seabrook reactor controversy
The considerable controversy over construction of the nuclear power plant at Seabrook Station had been raging for some time by 1978. The previous year had seen more than 1,400 demonstrators arrested and charged with criminal trespass at the construction site. It was the third year of protests and acts of civil disobedience at the site.
The planned nuclear plant at Seabrook also played a key role in the 1978 gubernatorial campaign in New Hampshire as Democrat Hugh Gallen, then a little-known former state representative and auto dealer in Littleton, made opposition to Public Service of New Hampshire’s Construction Work in Progress charges to ratepayers the centerpiece of his successful campaign against three-term incumbent and conservative icon Mel Thomson.
One unit of the planned twin-reactor facility eventually came on line, but not before the burden of financing the facility had escalated the cost of construction dramatically, leading PSNH, the state’s largest utility, into bankruptcy and acquisition by Northeast Utilities.
Today, when high oil prices have led to renewed interest in nuclear power, Wall Street remains almost as nervous about nuclear energy as survivors of the Clamshell Alliance are, says Alpert.
“The only way they’re going to be able to jump-start the so-called nuclear renaissance is through massive public subsidies,” said Arnie Alpert, a former leader of the anti-Seabrook Clamshell Alliance.
3. Real Estate boom and bust of late 1980s and early 1990s
It was known as the age of “go-go banking.” There were “low-doc” loans and “no-doc” loans and even “liar loans,” meaning the borrower didn’t have to document income or assets to get a mortgage. All that helped fuel the red-hot real estate market in the 1980s, when values were appreciating so fast that some properties were sold two or three times in a day — all at a handsome profit for each temporary owner.
It wasn’t just the buyers who had such easy access to money. Developers built high-priced homes and condominium projects “on spec,” with a faith that there was a never-ending market for residential units.
Then, suddenly, like Humpty Dumpty, it all came crashing down, retired real estate broker Ron Boufford recalls.
“They were calling in ‘non-performing loans,’ when people were making payments on time, but the value of the property had dropped so that it didn’t meet the standards banks were required to write loans on. The equity dropped so they didn’t have the equity they needed in the property to support the loan,” Boufford said.
In 1992, a presidential election year, New Hampshire newspapers ran page after page of foreclosure notices. Then-President George H.W. Bush visited New Hampshire and declared the economy was in a “free-fall.” As it turned out, Bush may have been describing his own reelection campaign as well.
Today, another George Bush is in the White House, though he is no longer seeking re-election. There are other similarities, however.
“I couldn’t believe what was happening from about 2003 to 2007,” said Boufford, who sold his company in 2004. “You could buy a house for no money down and no income or asset verification. If you said you were making $100,000 a year, ‘OK, you’re making $100,000 a year.’ You say you’ve got $50,000 in the bank, ‘OK, you’ve got $50,000 in the bank.’ It’s the same thing that went on in the ‘80s.”
2. Bank shutdown of 1991
It wasn’t quite the world-changing event that the bombing of Pearl Harbor, the assassination of President Kennedy or the terrorist attacks of 9-11 were. But Oct. 10, 1991, was a day that remains vividly ingrained in the memories of many New Hampshire residents.
“I was in the New Hampshire Bankers Association office taking phone calls,” said Jerry Little, then as now, president of the state bankers organization. Nearly everyone, it seemed, was on the phone or tuned to a radio or TV anxiously awaiting the news of what would happen to both personal savings and the state economy after agents of the Federal Insurance Deposit Corp. descended upon five of the state’s seven largest banking institutions — the “Magnificent 7,” as they had been known — and shut them down.
Dartmouth, Numerica, New Hampshire Savings Bank, BankEast and Amoskeag Bank Shares, the holding company for Amoskeag Bank, Bank Meridian and Nashua Trust, in almost a blink of an eye suddenly were no more. Indian Head and First NH were the only survivors among the “Mag 7.”
When he wasn’t on the phone during that and subsequent long days, Little was spending a lot of time in the office of then-Gov. Judd Gregg.
“The governor had been working very closely with FDIC Chairman William Seidman in what became known as the New Hampshire Plan,” he said. The assets of the failed banks were gathered together in what was called “for lack of a better term, a bad bank” and sold off to other organizations, Little recalled. For the first time, the assets of failed banks were sold to a non-bank, as a new group of investors took over the holdings of Dartmouth and Numerica to create the New Dartmouth Bank. First NH, then owned by the Bank of Ireland, acquired the former Amoskeag Bank. Years later, First NH was acquired by Citizens Bank, which was then acquired by the Royal Bank of Scotland.
“What happened in New Hampshire is analogous to what is going on in D.C. right now,” Little said, taking note of the leadership role Sen. Judd Gregg is playing in attempting to resolve the nation’s financial crisis. “I think Judd may have a feeling of déjà vu.”
1. Expansion and growth of Manchester-Boston Regional Airport
There may have been any number of visionaries among the aviation enthusiasts in southern New Hampshire 30 years ago, but it would have been hard for anyone in 1978 to envision the transformation of the limited passenger service at Grenier Field into the 4 million passenger-a-year operation at the Manchester-Boston Regional Airport.
Travelers have seen a new air terminal, opened January 1, 1994, and two expansions of same, along with vastly expanded parking and runway facilities at the airport widely advertised as “the convenient alternative to (Boston’s) Logan.”
Former Airport Director Kevin Dillon, previous Airport Director Fred Testa and others before them all played a role in turning what Dillon described as a “small-hub facility to a medium-hub facility” among America’s passenger airports. But it was during Dillon’s eight-year tenure (1999-2007) that a roar of protest surrounding airport expansion from residents along the fight path and neighbors turned into a steady hum of satisfaction over northern New England’s dominant airport and one of the state’s most reliable and well-known economic engines.
“I think probably one of the things I’m most proud of is turning around the relationship that the airport had with the local communities,” Dillon said. “There was a challenge, I think, in getting the communities to realize that we wanted to be a good neighbor and tried to be a good neighbor and I’m proud of what we’ve been able to accomplish in terms of that relationship.”