Forum on the Future 2018

Sponsored by 2 Forum on the Future 2018 INTRODUCTION daho is clearly a state in fl ux, a state that was kind of a hidden gem, but has now been discovered by the wider world. The question is what will Idaho Ibecome in the next fi ve, 10, 20 years as it grows and evolves. One city that is often discussed as a potential vision of Boise’s future is Denver, which experienced a similar trajectory of dramatic in-migration and urbanization, adding 100,000 residents in just seven years. Like Boise, Denver often lands near the top of national lists for quality of life, but not everyone is a fan. In late November, the Kansas City Star published an editorial with the headline: “Stop the Denverifi cation of Kansas City.” The headline goes on to say that a rapidly gentrifying Kansas City neighborhood “doesn’t need to be hipster friendly.” “We only have to look to the many cities that have already become islands for the advantaged to see where this is going,” the editorial states. The Star’s editorial board insists that the Denverifi cation already underway must stop “otherwise we will have more and more mountain-view prices, Rockies not included.” For better or worse, Denverifi cation is sweeping across Boise and Idaho in general - and we have the scenic views to back it up. This process is impacting everything from the price of real estate to the makeup of the workforce. So, how should the Gem State respond to ensure it grows into the best version of itself? On Dec. 4 the IBR gathered a panel of experts to give their best predictions for 2019 and be-yond.

Moderator

Kim Burgess, Editor of Idaho Business Review Kim has worked as a reporter and editor at newspapers in Utah, Arizona and New Mexico. Recently, she covered K-12 education at the Albuquerque Journal. As city editor for the Herald Journal in Logan, Utah, Kim led a team that won the Society of Professional Journalists’ Sunshine Award, which recognizes contributions to open government. BOISE’S EXPERTS LOOKING IN LUXURY LIVING. FORWARD: Each December, the Top: 2565 S Mill Point Lane $2,500,000 IBR gathers a variety Left: 711 W Wyndemere Drive $1,125,000 Middle: 2280 S Bluestem Lane $3,500,000 of local leaders from Right: 1415 N Promontory Road $1,090,000 various industries to speak about the upcoming year. VIEW OUR LISTINGS AT WWW.LYSIBISHOP.COM

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2018 Forum on the Future 3 PANELISTS LYSI PENNY BISHOP DENNIS Lysi Bishop is the market Penny Dennis is the leader in Treasure Valley business development residential real estate manager at Layton (existing home) sales, and Construction in the founder and CEO of Boise. She received Lysi Bishop Real Estate her architect’s license (LBRE). Bishop currently in 1999, and has been oversees $172 million in in the construction annual residential real industry for 22 years, 13 estate sales out of her of those in the Treasure downtown Boise o ce. Valley. Bishop grew up in Penny is active in the Ketchum, Idaho; a er community, serving on attending the University the CREW Idaho Board, of Washington, she moved the Advisory Council to a dormant downtown for the University of Boise in the early 1990s Idaho College of Art and and began a residential Architecture and as a real estate career as member of Eagle United a single agent. Her Methodist Church. systematic, detailed approach to analyzing market trends, along with In her spare time she enjoys playing golf, skiing, reading and her concierge service, helped her grow a strong client base. spending time with her family: husband, Doug, and children Twenty- ve years later, LBRE o ers a full-service team of residential Jameson, 18 and Libby, 14. real estate specialists who have retained her hallmark personal touch. A liated with Keller Williams Realty Boise, LBRE maintains a national and international reputation, ranking eighth in the United States for Keller Williams Realty 2018 YTD production.

DR. BOB JIM HOUGHTON SHIPMAN

Dr. Bob Houghton is a is the President and COO professor of informatics and of Colliers International in has specialized in the hard- Boise. He previously served ware aspect of informatics. as managing director of His research focuses upon ree Ships and executive informatics security with VP & partner at Phillips human-computer integra- Edison & Company in Salt tion. Lake City, Utah. His background in infor- His career began as an matics security provides a attorney serving clients large knowledge base for in the real estate industry. sharing experiences with HI- He is a current member PAA, FERPA, and PCI data of the board of directors security standards. Professor of Big Brothers Big Sisters Houghton joined the Idaho Southwest Idaho. State University College of Shipman holds a bachelor’s Business in Spring of 2014 degree in History and where he teaches courses on Public Policy from Duke so ware and systems archi- University, a Juris Doctorate tecture, analytics, and net- Degree from the University working and virtualization. of Denver, Strum School of Dr. Houghton currently Law and a master’s degree serves as the interim associate dean of the College of Business and is in Business Administration the former systems administrator for the College. from University of Denver, Daniels College of Business.

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2018 Forum on the Future 5 DR. BOB HOUGHTON: I see 2019 as a position of change. We’ve What changes do you see in your own recently gone through a dramatic change with our old president retiring business in 2019? and our new president coming on board and revitalizing all aspects of the state university. There’s a feeling of hope and change. Hope and change is kind of the motto of 2019 going forward. There is a tremendous re-ener- LYSI BISHOP: I think our office growth will stay at the status quo. gization of the faculty and the students and a new sense of pride in ISU In our business, we’re expecting a slowdown in our overall real es- and that leads to better opportunities for students and the faculty to go tate market. Boise residential real estate, as all of us know, has grown into the community and have wonderful experiences with them. exponentially over the last few years. So, the slowdown we’re look- We’re seeing now a rallying effect in our community, especially in Pocatello, ing at is probably specifically related to price growth. especially around ISU. In Pocatello, as opposed to Boise, ISU is really the Looking at the background of where we have been, in 2018, we saw market driver in our area. It’s the largest employer. It’s the largest economic year-to-date in our existing home sale market at almost 15 percent engine. It has all these resources that are tied to it, that in the last fi ve years growth. So the reason for that growth is the shortage of inventory. If have been kind of hamstrung with different types of bureaucracy. So Kevin you’ve been looking for a home or reading about real estate, you’re has come in and just blown open the doors, saying nothing is a sacred cow, hearing this about shortage about inventory, we don’t have enough everything is available for change. That has kind of crept over our market. homes for the demand that’s here. Demand has pushed up our values So this year, our football team went out and actually had a winning in our market creating this new issue for us going into 2019. That issue season for the fi rst time in what feels like a decade. These are the kind is affordability. So we’re seeing some affordability come into our area of things that really make a university truly its own community. So 2019 and probably get intensifi ed in 2019 due to the expected interest rate going forward is this opportunity for growth in our programs, growth in increases. We might go up another one percent through 2019. our program offerings and growth in our community. So, bottom line, in our industry, we’re still expecting growth. We’re expecting that our values will increase, but perhaps at a JIM SHIPMAN: First when we look at 2019, we have to refl ect on 2018. very different rate than we experienced this year. Probably nobody In the commercial real estate industry, we’re trying to track the economy. knows how much they will go up next year, but we’re hearing some You need to continually right size the business for what’s happening of the economists saying maybe 4 percent, maybe 8 percent, which around you. This year we experienced tremendous growth. We doubled is a pretty marked difference from the 15 percent increase in the our number of offi ces, adding a new offi ce in Pocatello in May and a average sale price of existing homes. fourth offi ce in Twin Falls in September. We’ve also increased our sales The reason we think we’re still going to go up, we’re not going to agents, our work group, brokerage group, by about 25 percent this year. see anything that’s a major dip or dive, from where prices are now, is When I look forward to 2019, the fi rst thing we need to do, we kind we still have that problem with inventory, that’s still pretty low and of swallowed the pig this year with all the growth this year. We need to that’s not going to change any time soon. Inventory is still pushing digest it and build in and now start to fi ll in some of those opportunities, us up. People still want to come to Boise. Maybe people want to leave whether it be in Eastern Idaho where we see a tremendous opportunity Denver now and come here for all the great things that we have to of- in the Magic Valley, building out those offi ces. Adding staffi ng there and fer. We expect that growth to continue. The headwind of affordability taking advantage of those markets. from values going up as much as they have, and the interest rate in- Lysi mentioned residential real estate; and commercial does follow creases, is going to bring that change, that slowdown in our business. residential to a certain extent. Obviously homes are built, retail needs to be built that follows it. So we’re hoping that there’s not a big slowdown. I don’t foresee much of a slowdown in 2019. I think, with respect to the PENNY DENNIS: In the commercial construction industry, we Fed, interest rates are getting closer to neutral but we’re not there yet. follow the residential construction industry. So we really don’t want We’ll probably have a hike here shortly, but that’s normal. Interest rates you to slow down that much. But we’re expecting another great year have been so low for so long. That will affect the residential side, but in 2019. We see growth, especially in the industrial market. also commercial side. But I think they’ll be looking to achieve neutral or There was a lot of shortage in industrial properties that has been a softer landing in 2020. But we’re very excited for the coming year for starting to be rectified this last year. But we see a lot of industrial Collier’s and the state. construction still moving forward that will follow office construction, health care construction is huge in Boise and the region. So that won’t change in the next several years. I don’t foresee much of a slowdown in We see St. Luke’s downtown is expanding at a rapid rate, so we’re “ 2019. I think, with respect to the Fed, excited about that. We see a very bright future for Idaho in the next interest rates are getting closer to neutral several years. Concerns of ours are infrastructure, services to each new parcel of building, water, wastewater, gas. Making sure that all but we’re not there yet. those services are there to serve the new buildings before they can ” — Jim Shipman really logistically get constructed. Yes, the future is very bright.

6 Forum on the Future 2018 Some things nowadays feel like 2007 a little bit “ – the explosive growth, the huge price increases in materials, the labor shortages we see in our industry. Sometimes growth without proper planning. Those things make me nervous. — Penny” Dennis

means we have to work twice as hard in order to just maintain similar populations of our course offerings. The thing that worries me is how are we going to educate a smaller populace to do more. Because it’s not just doing more with less, like in times of recession or times of economic hardship. We’re going to have to do more with less in terms of actual human capital, and that’s something that every business is going to have to face. We’re going to have to face it in the next ﬁ ve years. You get to face What keeps you up at night? What it in 10 or 15, and that is something that is very interesting how to ﬁ gure is the biggest problem you foresee in out how to solve that problem. 2019? JIM SHIPMAN: I actually sleep pretty well. I think there’s things that we all can worry about and things we can control and things we can’t control. One of the words that’s being thrown around is recession – the LYSI BISHOP: Probably house affordability. Boise has just changed so next recession, the next downturn. I just choose not to spend my nights much with our landscape, with our popularity, with our inmigration. Af- worrying about. Obviously we are at a very sensitive time with geopo- fordability has changed pretty substantially. I don’t really have any answers litical issues and there’s things that can change very rapidly, change our as an individual residential real estate agent. I do worry about our growth. economy and have a negative impact – but those are out of our control. It has obviously put pressure on affordability, and while we want this growth and the exciting changes, it will be a little harder to buy into a new As far as things that I am most focused or concerned about, it’s more residence close to downtown, close to the core. So, if people are thinking on the local level. We use the term growth, it’s part of managing that of relocating back to where they grew up, maybe they grew up in the North growth. Making sure that growth is reasoned and happens in a way that End and they want to come back, that’s getting harder and harder. Idaho is able to hold onto its roots and values, and yet enjoy the expansion that will happen with growth. It’s coming, it’s not changing, folks know where Idaho is now. PENNY DENNIS: A lot keeps me up at night. Sometimes these worries are founded, sometimes not. A lot of times it’s – things have been good for so We had a conference in this room just two months ago, our big annual long, it’s got to get bad. Or the Great Recession was so awful in construc- outlook conference. One of the things we talked about is looking at all tion. Our industry took a huge hit. So I’m afraid of going back there. the different publications, whether it is the fastest growing city, or the happiest state, or the fastest wage growth state. Idaho is getting a lot of Some things nowadays feel like 2007 a little bit – the explosive growth, attention, and I guess the thing that I would say keeps me up at night the huge price increases in materials, the labor shortages we see in our that would worry me is that we’re not – the folks in this room, the busi- industry. Sometimes growth without proper planning. Those things ness leaders, the community leaders, that we’re not focused on how to make me nervous. I just can’t stay that pessimistic that long. Things are manage that growth and do it in a responsible way, to welcome it. We’re like 2007 in the growth part of what happened a decade ago. But I think not going to – not to get too political here – we can’t build a wall around we’re smarter than we were then. We’ve learned our lessons, the lending it to keep everybody out. So how do we embrace that and continue to is not crazy like it was in those days. Money is a little bit smarter, there make this such a great place and continue to bring the positive attention are other sources that people are getting behind – private equity, capital that we’ve got. investors, in addition to traditional lending. So that part doesn’t feel like it did a decade ago. But sometimes you just get worried, just to worry. I try not to. But the labor, material shortages are real in our industry. Then you get this tariff talk that no one can really quantify, but a lot of people are using it to increase prices. What is the tariff? Where are the tariffs coming from? Who’s really charging you the tariffs? Where does this go? Then sometimes it (the worry) just goes away. We’re still pretty optimistic, and I try to focus on that so I get a good night’s sleep.

DR. BOB HOUGHTON: The number one thing that keeps me up at night is every single student emailing me during fi nals week asking when the fi nal is. The thing that actually keeps me up as far as the future of ISU is looking at the change in demographics. We are facing a very interesting time in America. If you look nationwide, there are fewer students graduating high school over the next fi ve years. Not because they’re not completing their course work, or because they’re failing, or our schools are failing. There are literally fewer students, there are fewer children that were born 18 years ago that are coming into the college age going forward. Why that’s a big deal going forward, especially in our market compared to the other markets, is that the next fi ve years you can see this decrease in overall population, which means that in seven years as they get through college, as they get through high school, when they go into the workforce there’s fewer potential employees which means that there’s fewer potential people buying homes, fewer potential people buying cars, fewer potential people exploring the benefi ts of the economy. We get to see that fi rst. So as we are going forward, we are seeing fewer students out there. There’s literally less population there to come to university, which

2018 Forum on the Future 7 In pretty much every metro area, a large proportion of the population can’t afford to buy. They’re pushed further and further out from the downtown core and have to endure long commutes. Do you think this is inevitable for Boise?

LYSI BISHOP: For better or worse, it’s what we’ve seen in growing communities, and we hope that our community leaders are putting emphasis into smart growth. Geographically speaking, when you talk about the core, we have some obvious geographic barriers that are likely to keep our core expensive. We have foothills, we have a river through the city. So these barriers create these close-in communities that are very popular in the city. We’ve seen (prices) in those areas at the core go up. They are the areas that are fi rst to go up and the last to go down. The average sale price is considerably higher than the outlying area. I an- ticipate that trend to continue, and with Boise’s projected population growth, I think we will see a lot of growth leaving our core and heading out west. When you fl y in you can certainly see how much land we have here. But we do expect to have growth and have our affordability a bit more diffi cult just based on population growth.

How do you see technology affecting your business in 2019?

LYSI BISHOP: Technology in real estate is expected to change quite a bit. We’ve seen, obviously, some dramatic changes in technology over the years, but right now we are expecting to see in 2019 two big competitors to growing technology. One is Wall Street investors are interested in getting into real estate, being part of the trend action. So we have seen a lot of companies backed by Wall Street trying to ﬁ gure out new and different ways to sell residential real estate, whether that is online transactions or just different models. So, we’re probably going to start seeing some changes in 2019, test those systems and our market, see some of those investor driven models be tested in Boise, and we’ll wait to see what their success is like. But we’re expecting to see a change and along those same lines, knowing that technology has changed so much, knowing that we have big data, artiﬁ cial intelligence, and that it has become such a big part of our business community - whether it is those disruptors coming in from Wall Street or our own broker- ages as we know them today. The second part of that is Keller Williams International, which nationwide, is the largest residential real estate brokerage in the country. They have the most agents, they do the most units, they do the highest volume. They hold the lion’s share of this big data and with AI and with all the technology growth coming in, they have been in a race to create a more streamlined transaction, basically an agency for real estate that technology would help with. I think they’ve hired like 300 engineers in the last two years, and they’re really looking to change the way the transaction is done – make it better for the consumers. We’re looking to see those changes come out and launched with their agents in 2019. So with technology in 2019, we’ll start to see real estate done a little bit differently.

PENNY DENNIS: Construction technology is really interesting because our industry is equal parts tradition and innovation. We’ve got things that we do just because that’s the way our granddad did it when he built a building. Is that the right way? No one really knows, it’s just what historically has been done. Then with technological innovations, both on the management side and in products and building systems, integrating that into our model is interesting. It’s always, literally, is there a better way to build a mousetrap? Let’s try. Sometimes it’s no. We’re going to do exactly what we’ve done for the last 100 years. But we use software that dovetails with what architects and engineers do so that we can make that a little more seamless and we can spend less time in the offi ce, more time out in the fi eld dealing with issues as they arise. Then there’s always the product technology pushing everything forward. Then there’s affordability. It used to be that a low-fl ow toilet or a LED light was much more expensive to buy. Now it’s the same cost as any other regular fi xture. So that pushes the envelope, pushes the industry, lowers the operating cost, puts construction costs in line. But then there’s always that bleeding edge. Is there a better way to water- proof a building? Is there a better way to build an energy effi cient window? That will always push the market forward. Each product is different and each owner is different, but we try to balance that between construction costs, affordability of the product and operating costs.

8 Forum on the Future 2018 DR. BOB HOUGHTON: We experienced this school. Pocatello is not Boise. We have a pop- you can immediately enhance your education- about 10 or 15 years ago with the dawn of the ulation of around 60,000 people all clumped al aspect. World Wide Web. We saw a whole bunch of together in one little valley. We have to serve I recently was teaching a lecture and I re- online educational opportunities. For better or everyone from Aberdeen to Salmon to Inca member this video I’d seen and I pulled it up worse, those online educational opportunities and down south in Lava. So how do you get and we watched a good 10-minute expert talk. are with us to this day. For the most part, we education to someone in Rupert, Idaho? Do It was a computer history class. So we were found that technology does not replace quality you make them drive 84 to Pocatello? It’s watching a 1950s IBM. It was interesting for education. If you look at about two years ago, what, two and a half hours, in weather, espe- the class and it was relevant. It wasn’t possible there was a major scandal within Veteran cially in wintertime. How do we educate this a few years ago. It wasn’t even possible even Affairs and the GI Bill, as far as online insti- diverse populace that’s spread everywhere? two years ago, the ability to pull in outside tutions that were for-profi t that came out to The good news is that’s where technolo- information into the classroom and have it be try to bilk servicemen out of their GI bill and gy can come into play. The recent advances immediately relevant to the discussion. That they were charging hundreds of thousands of in web conferencing have just dramatically has dramatically changed not just the students’ dollars in tuition. They were never graduating opened lots of opportunities for students to outcomes, but their expectations. They want and there was a massive investigation. These participate in quality online education taught to have, not just the sage on the stage preach to were purely online educational schools. These by faculty vested at our traditional research them. They want to have other people coming have gone away for the most part. There were universities. So we will be able to use this into the classroom via these new communica- lots of bankruptcies, lots of consolidations. technology. Instead of saying that we will have tions mediums to discuss these prospects. But when it comes to technology, the ones that class from 6 p.m. to 8 p.m. on Monday night are left, the ones that have successfully started One of the faculty in our college of education – you don’t have to come to Pocatello, you went out and interviewed a local expert, a local to embrace as it were technology in education, don’t have to come to Idaho Falls. You can be are your more traditional institutions. principal on how to manage a school. They just in your pajamas, with your dogs or your kids set up a camera and recorded the whole thing At Idaho State University, we have before the or at your work, and you can participate in a and then they brought that in and showed it to state board right now a masters of arts in Spanish Zoom session. So your professors are there, all their students. Well, that wasn’t possible. You’d proposal. The entire proposal is our fi rst, not just your classmates are there and you can ask each have to bring in the principal, you’d have to co- fully online program, but fully online cost struc- other questions. It’s not just this one-to-many ordinate all this time. No, it was on the expert’s ture program. The tuition that they’re going to presentation style, if you’ve ever taken the time. Because of the fl exibility of technology, we charge there is only to pay for the actual cost for traditional distance learning class. It’s dra- can bring in experts anytime we need, to have the technology and the faculty involved. There’s matically different. We’re able to use video in a third opinion, a fourth opinion, to bring in no overhead – you pay your one rate, you can our classrooms that otherwise have not been the debate to enhance the student’s knowledge. take up to 12 credits, and you’re good. there. It used to be that you’d have to rely on Technology is just absolutely revolutionizing So, we’re seeing technology as a way to the textbook maker to provide all the extra and democratizing education to all peoples bring education out to the masses as it were. multimedia parts to your textbook. But now, and it’s just a fantastic time to be in education As far as Idaho State University, we’re a rural with just a quick Google search to anything, because of these technological changes.

Pocatello | Meridian | Idaho Falls | Twin Falls | Anchorage, AK

2018 Forum on the Future 9 I think at the same time, we are at a very “ fortunate place with the way Idaho is growing and the wage growth. I think USA Today said Idaho is the number one state for wage growth. ” — Jim Shipman

Jim, what are you seeing in terms of the challenges of ﬁ lling open positions?

JIM SHIPMEN: It’s always a challenge to fi ll positions. I think that is one of the biggest challenges for Idaho with all the growth. Whether it be Idaho State or Boise State, they are doing a great job. I think we are starting to see students stay. For a long time that wasn’t the case. Kids were getting an education here and moving out of state. I’m seeing more and more families who have relocated to Idaho because they have a kid at State, so I think it’s a great place to be. I think retention is the responsibility of employers and educators, creating an environment where these young professionals want to stay. I think that’s critical. I think the construction industry is a great example. There’s such a demand on construction right now. I think the biggest challenge right now is labor, and the shortage of labor. You ride around communities where new homes are being built and you see trades out there in the middle of the night. The drywallers may be in because they have a job during the day and another at night. There’s a real pinch on the industry because of the smaller workforce. Some of that has to do with demographics, how many kids were born 10-20 years ago versus the post-WWII time. I think at the same time, we are at a very fortunate place with the way Idaho is growing and the wage growth. I think USA Today said Idaho is the number one state for wage growth. That means our wages were probably pretty low and we’ve got to continue to grow, that to will JIM SHIPMAN: From the commercial real estate side, there’s really two attract people here. things I’d look at as far as how technology will impact us. Not neces- From our standpoint, we’ve had a number of new hires this year. sarily similar to the residential side, I think we’re all familiar with all the We’re excited to work with the schools. We’re working with Idaho State apps we can look up on our phone where we’ve got all the information. now and Boise State on an internship program. I think we’ll continue to Commercial real estate is a bit different to that as far as technology is encourage the kids to stick around. concerned. There’s a number of different platforms that are offered to us now. Idaho is a non-disclosure state, which means that we don’t have public data on every real estate transaction like you would in a number of states. You can’t go down to the county clerk’s offi ce and pull out a deed and fi nd out exactly what was paid for a specifi c property. Having that information, those comps and the data on each property is really integral and what gives us our competitive advantage. We really focused on our research group. We’ve got a terrifi c team within our marketing and research department that are here, and we’re so appreciative of what they do in gathering all that data. What’s critical for us on these fronts is determining which of these platforms add to our business. Not all of them do. So we are really sorting through the different opportunities with the proper people, whether it’s with the residential like Zillow or some of these other platforms. You’re seeing efforts to create something similar to that on the commercial side. The second part, sitting next to Bob and hearing all these things about how technology is taking over education. That is terrifi c to expand and to broaden the reach. What speaks to employers is when these kids come out of school and they want everything instantly and we’ve got to fi nd ways to integrate the technology in our workplace and whether it be remote – everybody that I interview says, “Can I work from home?” You know, real estate is a relationship business and it’s a handshake and a phone call and a face-to-face meeting. It’s shouldn’t be all email and text. For us, the other side of that channel is how to we provide enough technology, enough of the advances to excite and attract the young educated workforce that places like ISU are putting out. They’re all used to this intense technology platform where they went to class and never left their dorm room for four years. That’s a continuing challenge and I don’t think that’s unique to our industry. For all of us, that’s something we have to look at, how do we integrate those platforms and those different mediums to engage our workforce.

10 Forum on the Future 2018 Bob, I’m sure you’re working to keep Lysi, your company has done a lot on the good talent here in the state. company culture. Can you tell us more about what you have done in that area? DR. BOB HOUGHTON: That’s the number one thing that our students face. They want to stay. They want to fi nd a local job. Unfortunately, that’s not always the case. Idaho is a rural state, there’s 1.3 million people. The LYSI BISHOP: For us, being a small business and being here, we’ve had a problem is, becoming a highly educated populace requires a highly edu- really tough time with the labor market with unemployment being so low. It’s cated market for them to be employed in. That’s not necessarily the case. become diffi cult to fi nd that labor. Real estate has seen substantial growth If you come to ISU and get a Ph.D. in English, that’s fantastic …. and the last few years, so we’ve felt this shortage. Interestingly, what we’ve chosen what are you going to do? Where are you going to go with that? Unfortu- to do to be in this new economy where labor is so tight, where there is such nately, in Pocatello, Idaho, we don’t have a Chaucer research institution. a shortage and we want to retain people, we’ve focused on culture. Our old culture used to be just a hard-driving working culture. When we talked about Let’s say you get a master’s degree in engineering in Pocatello, Idaho. having pingpong tables and bean bags, it was defi nitely not that, it was all hard How many structural engineers do we need with a populace of 60,000 work. people? Or Idaho Falls? Rupert, Idaho? How do we retain this highly qualifi ed, highly educated workforce we’re trying to create in Idaho with- Over the last few years, culture has been our most important change, and I out the population to go behind it? We need, not just a retention policy for think it has helped with our retention. That meant, even as a small business, our students. We need a retention policy for Idaho. hiring someone to help us defi ne our culture. After that defi nition, a leader to help us implement that culture and keep that going. That’s been our best Yes, we’re a fast-growing state. We need to grow even faster to have defense, our best way to cope with the tight labor market because we want to those services be introduced. Idaho is in a very unique place right now. retain that great talent when we fi nd them. Because they are out there. I think We’re transitioning from this typical rural economy to a more serviced, all of us in this room feel how hard it is to fi nd that talent, but we do fi nd it. urban economy, and that transition is probably the number one challenge that our governmental and our community leaders are going to have to face in the next 10 years. How are we going to transition from small inde- PENNY DENNIS: We spend a lot of time, and I think employers have changed pendent little communities spread across a vast area to a more concentrat- a lot over the last few years, understanding the cost of losing employees. Not ed or service based economy? only, bummer you went to work for somebody else, it’s – this just cost our The good news is that we have a workforce, we have a generation that company X amount of dollars in training and resources and we can’t afford want to do this, that want to be in Idaho. So, how can we as the business that. So we have to recognize that employees have choice, and we have to community facilitate that? The number one thing we need to do is we make it a great place to work. It is a shift. The time we spend at work didn’t need to open more businesses. The great recession has unfortunately tak- change. en that entrepreneurial spirit out of the populace as a whole. We are now Before, it was we spent 8 or 10 hours at work. Now we’re still working 10 hours, more risk averse than we used to be. We need to be able to experiment but it’s more fun, more interactive. You can take a quick break and play pingpong. with our economy, our job potentials and experiment with what is going You can go for a walk to the store and grab a granola bar and come back. to be the future of Idaho. We can’t just build up and say …. recruit the Having a great place to work makes a huge difference, not only in employ- next Amazon to Idaho. That’s not going to work here. Number one, Am- ees’ retention, but in employee productivity. If the attitude is, I had to be here azon already exists. You going to try to compete with them? Good luck. for eight hours of work, but good luck getting fi ve out of me, that’s a real prob- You going to be the next Tesla? Good Luck. You can’t take what’s already lem. So we try to combat that from the ground up. So we make it just a great, out there and say, “Poof, we have an economy.” It has to be homegrown. fun place to work. Construction is really fun. What is it about Idaho that makes it Idaho? We can’t be the next Silicon Every day is different. Every time you think you have a problem solved, Valley. We don’t have the weather, and thankfully, we don’t have the fi res. there’s another little one that crops up. So, it is fun. It’s different than moving a So what is it that makes Idaho, Idaho? I don’t know. I’m an academic. pile of paper from the left side of your desk to the right side of your desk. You We need someone to step forward and say, the economy of Idaho is go- can see what you’ve done at the end of the day, or what your team has been ing to be – I’m just making this up – the next ski resort community of the part of. So just reinforcing that to the team makes a huge difference - to have world. So we’re going to invest heavily in Sun Valley, we’re going to pro- fun while you’re working hard. mote ourselves at the Winter Olympics, all that kind of stuff. That could be something that we need to do. We need some kind of rallying point for this state as a whole to come together, and not be southeastern Idaho, the Treasure Valley and the Panhandle. It needs to be the entire state coming together and fi nding, what is Idaho, what is our economy and what is going to be our goal overall.

We need, not just a retention “ policy for our students. We need a retention policy for Idaho. — Dr. Bob Houghton”

2018 Forum on the Future 11 JIM SHIPMAN: We can joke about juice bars or bean bag chairs, or The whole faculty is wondering who is this new president. So our fi rst all those things, but that doesn’t necessarily defi ne culture. Real estate company-wide meeting he gets up there and puts out four points. The has historically been an industry where you show up, you get your head fi rst thing he did was eliminate the cost of making a long distance call on set, you get your phone book and you’re told, go cold call, go get deals. campus. I don’t know about you, but how long ago was it you paid for a That’s really something that we try to stay away from. I think the days long distance call on your cellphone? He was like, this is like ridiculous, of Alec Baldwin and “Glengarry Glen Ross,” that sort of driving sales is we haven’t paid for long distance in 10 years. outdated. Yet at ISU, we were billing each individual faculty per minute for long The thing that we’ve done the most with our group that I’m proud of distance phone calls. How are you going to recruit students if you’re is the collaborative efforts. Being a commercial real estate broker, you are billing 13 cents a minute or whatever? The point was, it was a cost you not only competing with the folks in the offi ce down the street, you’re knew you were incurring, just to call a student or parent or a donor. This competing with the person in the desk next to you. You’re all trying to get is 2018, not 1996. Immediately, there was a standing ovation. It didn’t the same clients. In our offi ce, we had a real strong collaborative approach cost that much to the administration, but that one little change dramati- where the different brokers worked together on deals, shared on deals. cally changed how everyone perceived their jobs. As a result, people were They realized that on doing so, that not only is there an energy in the walking out of that meeting with gigantic smiles. We were all of a sudden offi ce that is feeding off each other, learning what’s going on, but when bonded together because we didn’t have to pay long distance charges. you bring someone in on a deal with you, they’re probably going to part- These are the kinds of things that new leadership can bring. It’s this ner with you on a future deal. Everybody does better. With our expansion cultural change for the better. He understood this one little thing that was to Pocatello and Twin Falls, we’re really trying to emphasize that now that just driving everyone crazy. To that end, he started this new marketing we’ve got folks on the ground in those areas. campaign. It’s roughly a million-dollar contract with a fi rm in Boise to The second part is very simply, appreciation. People want to know that make ISU not just regionally known in southeastern Idaho but to push they are appreciated. Folks want to know they’re doing a good job and be that through the entire state. You’ll probably be seeing billboards with acknowledged for what they are doing. You can mask some of that with smiling, happy faculty faces saying, “Come and be a Bengal.” But it’s bean bag chairs, but that doesn’t really hit at the core values and needs more than that. It’s the establishment of what is ISU. What is it to be a of what each and every one of us is looking for. So from our shop, so to Bengal. The answer is, to lead in health sciences. We are one of only a speak, we are very proud or our core culture. handful of campuses across the nation that’s affi liated with a new medical school. That just doesn’t happen in institutions like ours. We were talking about trades earlier. Idaho is one of fi ve universities in DR. BOB HOUGHTON: Culture at a university is multifaceted, especially the entire nation that you can earn anything from technical certifi cates in in the sense that there are many interests at a university. It is a place of the trades, all the way through DOs through ICOM, or Ph.D.s. in some work, so there is an offi ce culture. What is it like to be a faculty member, a of our science skills. We literally have the entire educational gamut from staff member or in support services? But you also have students come in everything at ISU. None of you knew that until I just said it. Isn’t it a and experience it, and they live there on campus. shame. And it’s not just Idaho State, it’s Lewis and Clark, it’s Boise State, When we’re talking about the culture of ISU, it’s not just your typical it’s U of I. They each have unique and wonderful programs that we can offi ce culture. It’s the entire package. It’s this unique opportunity for contribute to the entire state at large, but they are not known. young adults to fi nd themselves. Idaho itself is a unique and wonderful state and a growing economy, For the last few years, ISU, it’s unfortunate, has lagged behind. If you and we keep saying these things over and over, yet you go to Utah or Cal- look at our housing on campus, and the vacancy rate, it’s very high. ifornia – Idaho? Where’s that? My brother, who lives in California, didn’t That’s a shame because it makes it so that there isn’t that establishment of know Idaho shared a border with Canada. that university culture. It’s not just ISU with our new leader marketing ISU as a regional Well, we have a new leader. Kevin (Satterlee) has come in and said, you university to more of a national university of choice. We need to take that know what, we need to establish ISU from becoming a regional university idea and expand it statewide. We have a new governor coming in, so it’s of convenience, to becoming a national university of choice. We need to again a time for a new leadership, kind of a new branding campaign. We put ISU into a place where, “I’m going to ISU because ISU is a fun place need to go forth and say Idaho is open for business. We want you to come to be. The culture of ISU is what I want. I want to be a Bengal.” How do here and we have a highly educated populace, we have wonderful natural we do that? resources, we have an easy ability to come in and fi nd the jobs, especially Kevin come in and the fi rst thing he does, he calls this big meeting. when it comes to the highly educated jobs.

12 Forum on the Future 2018 You are leaders of successful organizations, so what would you say is your one tip for the managers and business leaders in the audience to create a successful company culture in 2019?

LYSI BISHOP: Culture is such a catchphrase right now, but fi guring out what your culture is, and what makes your company tick, is the step we had to take. We have undergone a lot of changes, but what it really was, was defi ning it. For example, in our organization, we defi ned it as building leaders, starting out with just a core of what we were going to do and going from there. We added on the items that were going to be important to us and made sure we implemented them. The most important thing for any of us as small business leaders is really defi ning it and then setting our whole goal for implementing it and following up with it. It’s been a dramatic change and a very positive one and successful for us.

PENNY DENNIS: I would deﬁ nitely echo that sentiment. Understanding that you can’t be all things to all people and you don’t want to be all things. The construction community in Boise is small. All of our competitors we usually have great relationships with, and our subcontractors. Understand- ing now that there’s enough construction work to go around. I can’t handle everything, so where do we focus and where do we really shine? Under- standing what that is, and deﬁ ning it, and then wishing your competitors well on everything else really works well for us.

JIM SHIPMAN: If there’s one tip, I would say, listen to your group, listen to your employees. It’s very easy to tell people what they are going to be happy with, or dictate things that you think would be good. But how about asking what’s needed, where they see the culture? I think that you will glean a lot of information from that, which will create the culture that not only you want as a leader or manager, but also what the group wants.

DR. BOB HOUGHTON: When it comes to culture, the answer I would give is, “Don’t be afraid to fail.” Right now, we’re in the middle of an economic boom. Economic booms are fantastic in the sense that if you do fail, there’s enough money in the supply so you can try again. When you are in the middle of recession – and we’ve talked a little about that, a recession will come. It’s the typical fl ow of the economy across the U.S. I’m not going to say it’s next year, but when recession happens, all of a sudden if you don’t have that established culture, and know what that is, you are going to be more on the tail end of a bust. It’s going to be very diffi cult for you to compete. So when the time is good, as it is right now, now is the time to experiment. Is your culture with the video games and the bean bag chairs, or is it that you’re going to create the best buildings, that you’re going to be the best construction company in this little market? That could be the culture. Don’t mistake culture for just your typical offi ce life, your everyday. Culture isn’t just do you have the latest coffee available at your Starbucks. Culture is also the outcome of your process. It’s the way in which you conduct your business, be honest, be true – those type of things, that is also part of your culture as a business. Make sure that you’re going forward and trying everything you can to either expand or become a niche or attract that shrinking generation. Those are the things you need to do. If you haven’t fi gured it out yet, experiment. There’s nothing wrong with failing. Thomas Edison is credited with saying, “I know 2,000 ways not to make a light bulb.” If we try and try and try, eventually, we will succeed. So, number one, experiment with your culture. Find out what works for you and fi nd out what works for your company and you will position yourself to be that long-term success.

Culture is such a catchphrase right “ now, but ﬁ guring out what your culture is, and what makes your company tick, is the step we had to take. ” — Lysi Bishop

2018 Forum on the Future 13 Looking to 2019, what issues are on your radar in your business, at a local Basically ISU is remaking itself to “ become a new university. I would level in Boise, statewide or at the na- expect you in 2019 to start seeing ISU tional level or anything else you’d like in your daily lives. to say looking forward? ” — Dr. Bob Houghton

LYSI BISHOP: This comes back to where we opened, where we see 2019 and what’s going on. We’re watching really carefully to see what’s going on have introduced Idaho’s fi rst medical college here on the campus. I expect with interest rates and inventory. That’s what’s driving residential real es- us to start seeing that relationship being built and being thought of. We’re tate. We’re also looking at these other markets that are outside us. We have going to start seeing more and more Idaho State leading the states and lead- to look at that hyper-locally. Everything feeds into inventory, whether it is ing in the health professions, coming out and establishing new opportuni- your in-migration, whether it’s jobs. But inventory is what we watch daily. ties for those health collaborations. That’s an exciting place to be. There That’s what’s going to show us where our market is going to go. That’s the are programs and proposals coming forward. In the College of Business, most important thing we watch. we’ve launched a master’s degree in health care administration. We’re the We are starting to watch that outside of Boise, outside of just Idaho only institution in the state that has that, so if you need to learn how to because the residential real estate market is seeing some changes in these manage a hospital or a medical practice, come to the College of Business other markets. Sometimes we think we’re isolated from it, we’re so popular. and we’ll teach you how to do that. We have world experts teaching in those This Denverization and the popularity of Boise and all the articles that we fi elds. read make us think that we are insulated from it. But those outer markets, I I expect in 2019, you’ll start to see these type of things being reached out call them feeder markets, they tend to feed our residential real estate market. of Pocatello, coming into Moscow, coming into Coeur d’Alene, saying come That will defi nitely play into our economy and real estate as a whole. to ISU and experience what it is to be a Bengal.

PENNY DENNIS: Similarly, in the commercial construction world we track JIM SHIPMAN: Issues we’ve been watching on the national level, inter- on several levels. We try to keep an eye transnationally, certainly regionally. est rates, geopolitical issues, tariffs. A lot of these things have an impact Boise, the Treasure Valley as a whole and Idaho, is different than our neigh- on our economy. We’re not looking at the next recession. I just don’t bors. So we try not to depend too much on what Denver is doing, what view it that way. We’ll have cycles. I think we are all very cautious and Salt Lake is doing, because we’re not just diet Denver. We’re different than on edge because we went through the great recession just 10 years ago, Denver. We’re not Salt Lake’s little brother. We’re distinctly different from and so people are afraid of when that’s going to happen again. I think Salt Lake. So we try to look at those trends and then extrapolate what we you need to defi ne what a recession is, and where we are now versus might be able to expect over the next year. where we were then, and there’s a lot of differences. So I don’t think So with all our growth, we are extremely optimistic for 2019. We see a lot we’re looking at it from a standpoint of fear. You have to prepare and of new buildings, when they are constructed, especially in the Downtown adjust and be ready for things to slow down. They don’t necessarily market, that then require renovations of existing building. So we look at have to go in reverse. tenant improvement construction. We look at existing building owners and On a local level, with all the growth we have seen in Idaho and will developers that have lived in the community for generations. We look at continue to see, something I am focused on and what I’d like to see – I who is moving into the community to reside, or who might just be investing don’t know how many folks here are familiar with the term local option in construction in our community. So we track those folks as well. Certainly tax, but it’s something that we don’t have available to us and if you look there’s a lot of information out there and we are extremely optimistic for at Denver and Salt Lake and Utah, and all the growth, a local option Idaho and specifi cally the Treasure Valley for 2019. tax is really important. It allows local municipalities to tax for improve- ments that are specifi cally for them, it doesn’t have to go to a state legislature to approve it. DR. BOB HOUGHTON: I think going forward in 2019, our outlook is bright. We have new leadership, we have new focus, we are coming out with a new There are different economies within the state and different sectors, vision, a new master plan. Basically ISU is remaking itself to become a new and that should be recognized. I think those areas should be allowed to university. I would expect you in 2019 to start seeing ISU in your daily lives. improve and grow. I think a concern going forward is the infrastructure, whether it be light rail or mass transit. Right now in downtown Boise you see our sister institution. They have done a great job of ingraining themselves into the community in Boise. I I would encourage folks to get involved and talk to your local repre- would expect in 2019 you will see the ISU fl ag being waved around the sentative and explore the local option tax to help improve each of the state as part of our branding campaign. communities so that we grow individually together as a state. The other thing is that we have recently entered into a partnership, we This transcript has been edited for length and clarity.

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2018 Forum on the Future 15 2019 AWARDS PROGRAMS

8 1 IDAHO 20 BUSINESS REVIEW 2018

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