COASTAL TOWNS SEEK FORMULA FOR SUCCESS.

Byline: Winston Ross The Register-Guard

In 1922, a fire tore through Front Street in Marshfield, destroying much of the city's downtown business district, where tourists and locals alike frequented shops along the edge of Coos Bay.

Rather than rebuild in the same spot, town leaders moved City Hall to Central Avenue and created a new downtown along the coast's main thoroughfare: present-day Highway 101. Industrial buildings sprouted where the city center once was. By the time Marshfield was renamed Coos Bay in 1944, views of the water were shrouded by the gritty aesthetic of the industries that drove the town: timber and fishing.

The bay's biggest tourist attraction had all but disappeared from view.

Eighty years later, Coos Bay still suffers from its grimy industrial image. But a group of private and public interests is hoping to ignite an entirely different kind of fire to change all that - and rebuild "Oregon's Bay Area" into a haven for tourists and retirees. The plans include mixed-use developments, boardwalks, a pavilion and a museum along the North Bend and Coos Bay waterfronts.

It is the latest and most tangible sign of an Oregon Coast in transition, looking for new economic engines to create jobs, pump money into the local communities and help them not only to survive, but thrive.

As the historic industries of timber and fishing dwindled, coastal communities watched people flee to bigger cities and bigger salaries. The folks who were left behind, in many cases, suffered: In 2000, more than 28,000 people, or 14 percent of coastal residents, lived below the federal poverty line, with incomes of less than $8,500 a year. Median household incomes average 15 percent below the rest of the state.

In the 1980s and '90s, coastal communities shifted their focus to tourism and retirees as a way to shore up their sagging economies. While some applaud that movement as a source of jobs and income for local businesses, others worry. They say too much emphasis on these areas creates an economy that can't provide the long-term economic growth needed to sustain a shrinking middle class.

This concern comes from two camps pushing very different agendas: one that argues that the answer to the coast's economic woes lies in a return to its historic industries, opening up more fishing and logging, and one that claims that the future lies in a new industry: high-technology.

Going `backward for six months'

Laurie Van Zante is squarely in tourism's corner. When she and her husband, Dirk, opened the Tu Tu Tun Lodge in Gold Beach 25 years ago, it was a fishermen's retreat, designed to lure anglers who came to ply the Rogue River in skiffs or the Pacific Ocean in charter boats.

The couple soon grew weary of the seasonal nature of that focus - and fishing's inherent boom-and-bust cycles - and developed the lodge into a year-round luxury resort, one that has repeatedly been named among the "World's Top 25 Small Hotels" by Conde Nast Traveler.

Unlike many employers in the hotel industry, which pay minimum wage or not much more, the lodge offers its employees a wage they can live on, Laurie Van Zante said, although she declined to give specifics. The Van Zantes are able to do this, she said, because they've invested in upscale facilities and put a premium on top-quality service, allowing them to add a 12 percent gratuity to regular room rates.

Van Zante, who sits on the state's tourism commission, concedes that her success is atypical. Many of the coast's hotels and restaurants are aging and in need of work, she said, so they can't charge as much for a room and would have a hard time adding a hefty gratuity to bills. As a result, their employees can't earn enough to support a family. And during the winter, when tourist traffic can vanish, service-sector employees may lose their jobs altogether.

But Van Zante still thinks tourism could be the answer for many people along the coast, if they're willing to be creative and to adapt.

"A lot of people are making all their money in 90 days," she said. `I ask a lot of innkeepers, `Why don't you close?' because a lot of us go backward for six months.'

Soggy winters do make earning a reliable income in tourism challenging along the Oregon Coast. But the industry continues to grow - thanks in part to help from the state Legislature.

In January 2004, Oregon legislators enacted a 1 percent room tax, much of which was funneled into the commission's efforts to promote the state.

The commission's budget shot up from $3.2 million a year to $10 million. And the state - which had been near the bottom of the pack nationally in promoting tourism - rose to a comfortable position midway up the list.

"That is starting to help us," said Kari Westlund, president and chief executive officer of the Convention and Visitors Association of Lane County and a member of the state's tourism commission.

Direct travel spending on the central coast rose from $300 million in 1991 to $571 million in 2003, according to an analysis prepared for the tourism commission, with similar increases on the north and south coasts. In western Lane County alone, tourists spent $105.1 million in 2004, up from $98 million the year before, and room taxes jumped a record 10 percent.

Tourists and retirees

Both tourism and retirement are booming in Florence. The 9-year-old events center, brand-new casino and continuing explosion in all-terrain vehicle use on the Oregon Dunes are combining to bring visitors here. And there's more to come. The Port of Siuslaw hopes to find a developer to construct a mixed-use complex on a section of waterfront at the east edge of Old Town.

Along with the increase in tourism has come an increase in retirees. When Florence topped the annual list of David Savageau's "Retirement Places Rated," a national survey of good places to settle down, the phone at the Florence Area Chamber of Commerce "rang off the line," Marketing Director David Capen said. Last year, $150 million in real estate was sold in Florence and surrounding areas, he said.

Tourism's success extends the length of the coast. North of Florence, officials in Newport, Tillamook and Astoria are scrambling to build event centers. To the south, the Confederated Tribes of the Coos, Lower Umpqua and Siuslaw Indians are considering building a hotel and resort. And the Bandon Dunes golf resort has gained a reputation as a world-class destination, prompting state Sen. Joanne Verger to push for $10 million in state funding for a $23 million passenger terminal at North Bend's airport.

"Half the Alaska and Horizon planes are full of golfers," Verger said. "And there are as many Lear jets parking there on a busy day."

Then there are Coos Bay's grand plans. The Coos Historical and Maritime Museum hopes to raise $6.5 million to build a museum on the north end of Front Street.

The Coquille Tribe also recently paid Weyerhaeuser more than $6 million for 60 acres that had been home to an abandoned mill and weed-riddled parking lot for years. The tribe plans to build a recreational vehicle park for visitors to The Mill Casino and is now developing plans for a mixed-retail development with options for theaters, shops, a bowling alley and maybe even some housing.

The city of Coos Bay, meanwhile, has developed a master plan for the rest of Front Street that would encourage leisure activities, including shops, theaters and restaurants. North Bend officials have found money for improvements to waterfront streets, sidewalks, striping, lighting and planters, plus a boat ramp and small pavilion.

Looking to logging and fishing

Not everyone thinks boosting tourism is the answer to the coast's woes.

"Very few people are able to make a family-wage-earning job in Florence," says Kay King, who owns R&R Logging. "You talk to people, they'll say yeah, they've had a good week this week, but they're so heavily reliant on summer tourism. We used to have the best of both. We had wonderful economies on the coast and good schools, but all of Oregon struggles without a good natural resources industry base."

King says the solution is to unlock timber land and fishing grounds so that their resources can be extracted in a sustainable way.

Some economists disagree, however, saying that the good old days of logging and fishing weren't all that good.

"Yes, it allowed some high-income, entry-level work for people who decided they didn't have to go to school and get educated," said Hans Radtke, an economist who often studies coastal conditions for the nonprofit Oregon Coastal Zone Management Agency, which advocates for local governments. "But they also stayed at that level, or got hurt."

Ed Whitelaw, president of Eugene-based ECONorthwest, an economic and finance consulting firm, agreed. The feast-or-famine nature of timber and fishing means that the overall standard of living actually tends to improve when their share of the economy is reduced.

`A lot of timber workers referred to it as the `rocking chair' industry, because timber workers spent a lot of time on their porches in rocking chairs during the bust time,' Whitelaw said. "There was no investment in their human capital or skills. They were captive employees of this industry."

It's not just loggers who worry about the future of an economy based on tourism and retirees, though.

From 1980 to '90, the average real wage for coastal counties plummeted by 9 percent, according to research conducted for the Oregon Coastal Zone Management Agency. In the following decade, the coast's population grew by 8.9 percent. At the same time, the median age swelled to 45.8 years - nearly a decade older than the rest of the state.

By 1991, transfer payments - which include Social Security checks, pensions and (401)k income - made up 24 percent of total personal income in coastal counties, according to the study, with timber a distant third at 12 percent, tourism at 7 percent and fishing at 5 percent. An updated version of the study is due this fall, but the sponsoring organization's executive director, Onno Husing, expects transfers and "other earnings" - which includes home-based businesses - to continue to grow.

The numbers show young people leaving the coast, Husing said, while retirees, many of them on fixed incomes, move in.

One effect: Poverty rates vary widely on the coast, from as low as 4 percent to as high as 28 percent, an indication of the uneven impact of tourism and retirement, Husing said.

"There's a veneer of prosperity covering the Oregon Coast if you stay west of Highway 101," Husing wrote in a March draft letter to coastal legislators. "Yes, the real estate market is hot and some nice trophy homes and condos are being built along the coast. ... But I think you'll agree you can't build an economy around trophy homes and condos."

Wealthy retirees can also have a detrimental impact on low-income residents who are already having a hard time finding housing they can afford.

"When you get into a community like Bandon, where property values have skyrocketed, it's extremely difficult for the average wage-earner to afford to live in the community," City Manager Matt Winkel said. "That has a lot of spinoffs for schools: Tourists themselves don't create growth for your student body, and retired people tend not to have children, either."

High hopes for high-tech

Radtke and Whitelaw scoff at critics of the growth in tourism and retirement industries, saying they produce ripple effects that spread out into the rest of the local economy. But they also concede that these industries aren't a magic bullet for the coast.

Husing doesn't dismiss the importance of tourism, retirement or natural resources for the coastal economy, but argues that they aren't enough. He advocates expanding the region's high-tech offerings.

Husing's organization landed a $100,000 federal grant last year to beef up high-speed Internet access in areas of the coast that are now without it or have unreliable access. He hopes this will encourage traffic-jammed city business people either to relocate their small companies here or at least open a branch office.

"To me, the split-screen advertising is somebody sitting in a two-hour traffic jam and then that same yuppie walking on the beach in his khakis with his PDA, thinking up the next great thing," Husing said. "When he needs to go visit his clients, he flies out."

In Bandon, city officials have applied for more than $5 million in state loans to build a fiber-optic network that would be accessible by every building in town, and in April, Florence-based Internet service provider OregonFast.net switched on free wireless access for all of Old Town.

The idea is to attract more people like Florence's Joshua Greene, a photographer who moved here from Los Angeles 10 years ago and opened the Archives of Milton Greene, which restores old photos into digital prints.

Greene fell in love with the coast on a visit to photograph a Florence seafood restaurant, but he needed a high-speed Internet connection to send and receive photos. So he went to OregonFast and got his own antenna. Greene said he has no regrets about moving here. He has grossed more than $900,000 in some years, he said.

It will take more than better technology to transform the coast into a high-tech mecca, however, Husing said. That will require intensive marketing efforts, mixed-use developments attractive to professionals, investment in local community colleges that can churn out skilled workers, and better rural air service. But he sees it as do-able.

"I don't want to see the Oregon Coast rely exclusively on tourism and retirement," Husing said. "If this effort is successful, it's going to pull people that are the cream of the crop from these other places where costs of doing business are horrendous. I don't live in New York anymore for a reason. It's a pain."

Winston Ross can be reached at [phone] or [e-mail].

CAPTION(S):

Golfers unload their bags at the North Bend Municipal Airport. The nearby Bandon Dunes golf resort has gained a reputation as a world-class destination. A view from the roof of the Tioga building in Coos Bay, looking north at Highway 101, unveils a somewhat gritty image that city officials would like to change to one that is more vibrant and welcoming.