Missoula Business - April 19, 2020

INSIDE: Real estate analysis • Tourism industry looks long-term • Businesses step up to help • Economic indicators

Spring 2020 • Vol. 1 Issue 2

Local businesses adapt, hurt, thrive in pandemic era Data Driven Commercial Real Estate Solutions for Owners, Tenants & Investors For more information on how we can help you, visit

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MISSOULA BUSINESS • SPRING 2020

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Missoula rallies to confront pandemic As western Montana businesses put together their 2020 budgets, many no doubt developed contingency plans to provide a buffer in case sales were weaker than projected.

I truly doubt any business included a contingency for the local economy virtually shutting down.

Jim Strauss

Economic downturns come and go, but the suddenness and the magnitude of this economic cessation is unprecedented in Montana, and the pain is acute in Missoula.

Shortly after it was announced that the spending power of many University of Montana students would be gone for the spring semester, local bars and restaurants faced temporary closure.

Events, from graduations to weddings to concerts, were canceled. Local tech companies saw customers pull orders they had booked, real estate agents saw pending sales unravel and car lots saw

Index:

traffic vaporize. Landlords suddenly had tenants without paychecks, and banks held mortgages and loans for customers with no paychecks or cash flow.

Against the dark backdrop of this calamitous economic jolt, the response of area business owners and leaders shines: While struggling with an uncertain future for the enterprises they have built, local business owners have shown inspiring compassion for their workers.

Some have found ways to continue paying workers when the cash flow isn’t there. We’ve seen employee relief funds created and businesses marketing their workers to other businesses for temporary jobs to keep them employed through this shutdown.

Banks and credit unions immediately reached out to stressed clients to help, offering loan deferments and other assistance. Rent relief and deferrals also have come from local landlords, looking to help residential and commercial tenants.

Businesses, while finding ways to help their employees and customers, also have reached deep to address community needs with four-, five-, six- and even seven-figure contributions. These aren’t pledges for tomorrow but immediate dollars donated today to help Montanans get through this crisis.

Economic indicators Up close: Local beef demand surges Giving back: Banks, distillers, others step up Tech check: Department of Labor ramps up In the works: Tourism will ‘wait and see’ How Missoula grows MEP: Task force formed BBER: Grim forecast, glimmers of hope RBC Wealth Management: How to thrive Berkshire Hathaway: Clues to local real estate MT Association of Realtors: Accommodating clients Chamber: Finding solutions

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MISSOULA BUSINESS • SPRING 2020

6 8 12 14 16 18 25 26 27 28 29 30

Equally impressive is how our nonprofits have quickly pivoted to address new community challenges. They have freed up and quickly raised funds to deliver food, rent assistance and health care services to western Montanans in need. They have done this while facing their own staffing and funding challenges.

Here at the Missoulian and Ravalli Republic we face the paradoxical challenge of having readership soar while ad revenue plummets as many of our clients are temporarily closed or have significantly reduced operations. We have removed our paywalls to allow all readers access to our COVID-19 coverage, which clearly there is a need for as our online readership is soaring. In March alone we had more than 950,000 unique visitors and almost 7 million page views. We will easily surpass those robust totals in April.

We, too, are reining in expenses through two weeks of furloughs for employees in the second quarter. We are working with our employees to space those furloughs throughout the quarter to ensure we have the staffing required to deliver the COVID-19 content our readers need and deserve. It’s been gratifying to see many readers reach out to subscribe, supporting local journalism.

The Missoulian and Ravalli Republic

also have reached out to help area small businesses with greatly lowered rates and, in some cases, free ads that have been supported through sponsorships by the Missoulian and other local businesses. Last week we launched “Buy Local,” a free digital directory of area businesses offering gift cards. Even if your business is temporarily closed, you can go to www.cognitoforms.com/ Wehaa/BuyLocalGiftCardDirectory and register your business, for free. We will be promoting the directory through print, online, social media and eblasts, asking area residents to support local businesses during this time. Thank you to Mountain Line and Pruyn Veterinary Hospital who already have stepped up as sponsors for the gift card directory.

When we get through this and look back on 2020, the memories will be painful. However, I hope we temper that pain with the countless examples of resolve shown by the western Montana employers and the commitment they demonstrated to their employees, clients and community.

Stay well.

Jim Strauss is publisher of Missoula Business, the Missoulian and the Ravalli Republic.

On the cover: PHOTO BY BEN ALLAN SMITH, MISSOULIAN

Oxbow Cattle Company, located in Miller Creek, has seen an increase in individual sales of their grass-fed beef. The company lost some revenue with local restaurants reducing output, though the "Farm 2 Market" store and direct sales are providing a cushion, according to coowner Bart Morris.

Publisher Editor Advertising director Business editor

Jim Strauss Gwen Florio Rob Petersen David Erickson

For questions about news or pitches, contact David Erickson, david.erickson@missoulian.com, 406-523-5253.

For advertising information, contact Rob Petersen, Robert.petersen@missoulian.com, 406-523-5216.

NO PART OF THE PUBLICATION MAY BE REPRINTED OR REPRODUCED WITHOUT PERMISSION. ©2020 LEE ENTERPRISES, ALL RIGHTS RESERVED. PRINTED IN MISSOULA, MT, USA.

Please call the Republic Services at 406.543.3157 for more information.

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MISSOULA BUSINESS • SPRING 2020

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Economic indicators

Percent change in initial unemployment insurance claims filed from Missoula County with the Montana Department of Labor and Industry in March 2020 compared to March 2019.

982.4%

Percent change in initial unemployment insurance claims filed from Gallatin County with the Montana Department of Labor and Industry in March 2020 compared to March 2019.

4,415

Increase in number of initial unemployment insurance claims filed from Missoula County with the Montana Department of Labor and Industry in March 2020 compared

to March 2019.

32,858

Number of Montanans who filed a continued unemployment insurance claim between March 21-28, 2020.

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24,067

Number of Montanans who filed an initial unemployment insurance claim between March 21-28, 2020.

9,883

Number of unemployment claims filed in Montana in March 2020 from the accommodations and food service industry.

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*All information comes from the Montana Department of Labor and Industry.

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MISSOULA BUSINESS • SPRING 2020

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BEN ALLAN SMITH, Missoulian

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MISSOULA BUSINESS • SPRING 2020

Up close

Local resource

Missoula-area beef producers see big spike in demand

DAVID ERICKSON david.erickson@missoulian.com

whole life, definitely noticed a surge in demand.

heart, but our little store and direct sales are doing really good.”

eighths. We have 13 people coming to pick up today.”

pparently there’s nothing like a locally raised steak to get Missoulians through a long home isolation and boost the economy.

“When the COVID-19 hit, our hamburger sales went boom, through the roof,” he said.

Morris and his wife Wendy, who has a day job as a local health care worker, run the operation with a ton of help from their only employee, Caroline Caldwell.

Oxbow Cattle set up a farm-tomarket store about two years ago, and it’s based on an honor system. People can go in whenever they want and leave cash, checks or pay by Venmo. Morris said he attributes the rise in business to a variety of factors.

A

Missoula-area cattle ranching operations have seen a big uptick in sales during the coronavirus pandemic as consumers stock up on meat in order to avoid going to the grocery store.

Carly Lewis is an ex-vegetarian-turned rancher in Frenchtown. She and her family, husband Jim and son Clay, run Triple L Livestock. She said business has been great the last few weeks.

“We’ve definitely seen new interest from people in buying local meat,” she said. “I would say in the last month we sold like 800 pounds of ground burger. I think folks are looking for local sources a little bit more, and realizing that food security is something they’ve taken for granted in the past. “ She’s noticed on social media that more people are showing interest in their own gardens.

“People are realizing, gosh, we’re depending on big systems and if they crash it’s going to cause major problems,” she said. “If there’s any bright spot in this tragedy it’s people getting a new awareness of how important it is to be tapped into the local food system.”

Jim Lewis, who’s managed cattle his

He said that at $5 a pound, his grassfed, grain-finished beef is a good deal

They raise the cattle using progressive

“If there’s any bright spot in this tragedy it’s people getting a new awareness of how important it is to be tapped into the local food system.”

- Carly Lewis, Triple L Livestock

because it has a great taste and isn’t too fatty. He says people might appreciate the fact that they don’t have to drain all kinds of fat off Triple L hamburger when they cook it, thereby saving money.

intensive grazing techniques and sell the grass-finished beef in all kinds of cuts, from ribeye steaks to brisket and burger.

Sales have also been climbing for Oxbow Cattle Co., located in the Miller Creek area south of Missoula.

The also sell whole and half beef portions, the largest of which can be in excess of 500 pounds, as long as customers have the freezer capacity to store it.

“For us, business is really good,” said co-owner/manager Bart Morris. “We lost a lot of restaurants, which breaks our

“We sold two today,” Morris said on April 2. “We have another two that we’re splitting into halves, quarters and

“I think a little bit of everything from a food security standpoint locally, to keeping the money local,” he said. “It’s been really amazing. It’s awesome to see. It makes us feel good. People want to support local ag and they want some of the best beef in the country.”

Caldwell, who has studied and worked on agricultural operations from Finland to Australia to the Falkland Islands, said Oxbow cattle get treated better than they would on an industrial feedlot.

They are free to graze on an open pasture, although Caldwell and Morris often move their fences to make sure the pasture has time to regenerate in areas that have been intensively grazed.

“I think the special thing for us, too, is our beef is raised here,” Caldwell said.

“I think people really find value in this is a Missoula beef, you know. You can buy grass-fed, grass-finished, but you’ll still have to pick it up in a Walmart parking lot.”

MISSOULA BUSINESS • SPRING 2020

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BEN ALLAN SMITH, Missoulian

Nick Silverman, left, looks to purchase meat from Oxbow Cattle Co. at their farm-to-market store.

In 2017, Wendy and Bart worked with Five Valleys Land Trust to put 168 acres of important agricultural soil, scenic grassland and riparian wildlife habitat into a conservation easement.

“We have Bitterroot River estuaries, high native grasses in the hilltops and deep wooded areas,” Caldwell explained.

“It’s really varied. I think that’s why the beef tastes so good, too. Because you can have grass-finished beef on monoculture.

You know, you can put them on an alfalfa pivot and the taste is so singular, whereas for us they eat native grasses and forbs and kinda everything. It’s super complex.”

It all comes down to a simple motto.

“We believe you are what you eat,” 10

MISSOULA BUSINESS • SPRING 2020

she said. “And so if what you eat is just eating grain or alfalfa then it just tastes like that, you know.”

Morris said they’re seeing a lot of growth in housing around the ranch, and he hopes to be the local meat supplier for his neighbors.

“We’re hoping to be here for a long time,” he said. “We got a lot of different things going on, a lot of communitybased things.”

For people looking for vegetables, the Western Montana Growers Cooperative and farms like Missoula Grain and Vegetable Co. are taking online orders and getting food to customers with minimum or no contact.

Carly Lewis, at Triple L Ranch in Frenchtown, said customers bought almost everything they had on stock after the statewide stay-at-home order came down.

“We have a licensed retail site at Nourishing Cultures in Missoula (2825 Stockyard Road, Suite C2),” she said.

“We can do curbside pickup. People are buying bulk meat.”

“We’ve got less than 50 pounds right now,” she said on April 3. “But we’ve got two more cows headed down to butcher. We raise natural beef, so that’s no hormones, (no) antibiotics, and they’re pasture-raised. We do finish them off with a touch of barley to change the flavor profile right at the end.”

Through her Triple L Livestock Instagram page, Lewis also tries to show the community what life is like on a small-scale cattle ranch in Montana’s varied seasons.

She said they sell bulk butcher steers in the whole, half or quarter, and they can also get customers steaks or roasts along with the burger.

Morris and Caldwell, at Oxbow Cattle Co., are just happy that they’re feeding the community and getting supported in return.

“We’re trying to do our best and that’s all we can do as humans,” Bart Morris said.

MISSOULA BUSINESS • SPRING 2020

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Giving back

BEN ALLAN SMITH, Missoulian

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Banks, real estate agents, distillers step up to help DAVID ERICKSON david.erickson@missoulian.com From banks to real estate companies to local distilleries and breweries, Missoula businesses and nonprofits are taking action during the coronavirus pandemic to support healthcare workers and needy people in the community.

Ryan Montgomery, who owns Montgomery Distillery in downtown Missoula with his wife Jenny, has been able to keep more than a half-dozen workers on the payroll by pivoting to making hand sanitizer for local healthcare workers and first responders. He teamed up with Big Sky Brewing Co. in Missoula and is now pumping out 50 gallons a week of the stuff.

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MISSOULA BUSINESS • SPRING 2020

“They donated their extra keg beer to us, and we’re distilling that into alcohol,” Montgomery explained. They then mix the alcohol with other ingredients and bottle it. He jokes that it’s the “most expensive hand sanitizer in history” because very little alcohol comes from the beer, and his artisan setup isn’t specifically designed for the purpose. They’re barely covering costs, but he said he’s happy to be doing something to help.

Montgomery has been inundated with calls from hospitals, clinics and other organizations all over Montana and the region, and he said he’s simply unable to fill all requests. But he and his team have delivered to local hospitals, police, firefighters and the Montana Highway

Patrol. Rattlesnake Creek Distillery in Missoula also has been making hand sanitizer, as have many distilleries in Montana.

“We’re able to do it, so we decided we wanted to help until all the big manufacturers can ramp up production,” Montgomery said.

He noted that they’re currently on a very long waitlist for sanitizer, so he’s not able to take any new requests at this time, and the sanitizer is solely for healthcare workers and others on the front lines.

They’re not the only business that’s pivoted during this time.

Engel & Völkers Western Frontier, a real estate brokerage based in Missoula

with shops throughout western Montana, kicked into gear on a different initiative as soon as local businesses and restaurants were restricted due to the onset of the COVID-19 pandemic.

Their “Feeding the Frontlines” program began sending meals each day to local hospitals, including St. Patrick’s Hospital, Community Medical Center, Kalispell Regional Medical Center, St. Joseph’s in Polson and Marcus Daly Memorial Hospital in Hamilton.

Brokerage owner Dawn Maddux kicked things off with a donation, then more than 60 real estate advisers and staff stepped in to extend the program. In the first week of April, they started a GoFundMe account so community

friends and neighbors could help keep their program going and quickly raised over $1,000. They’ve also purchased $3,000 worth of meals from local restaurants.

“As a fellow small business owner and spouse of a medical professional, I understand not only the stress of keeping your doors open and employees working during this time, but also the daily stresses facing our medical teams,” Maddux said. “We know how important it is to support our local small businesses right now, and these meals are just one small way we can say thank you to our medical heroes working so hard to keep us healthy.”

Stockman Bank, a statewide financial institution with offices in Missoula, has offered to defer loan payments that are due and will restructure debt for borrowers as necessary. The bank

is also working with commercial and agricultural customers on a case-by-case basis.

“Over the past few weeks, we have all become part of an unprecedented world health crisis,” said Stockman CEO Bill Coffee. “As schools, universities and local businesses temporarily close, community and sporting events cancel and people stay home to self quarantine, care for loved ones or even themselves should they become ill, we recognize the stress and anxiety this causes for Montanans, who still have bills to pay. As Montana’s community bank, we are making accommodations to help reduce this stress and protect customers’ credit.”

Coffee said they’re offering 24-hour telephone banking.

“During our nearly 70-year history, through ups and downs — market

swings, wars, natural disasters — we have weathered many storms together,” Coffee said. “Montanans are strong, resilient and we take very good care of each other. We will weather this storm too.”

The Headwaters Foundation, a local healthcare nonprofit, has pledged nearly half a million dollars in 2020 to help fund organizations on the frontlines of the COVID-19 crisis.

“As the COVID-19 crisis rapidly became more widespread, staff talked extensively with our grantees to understand their changing needs,” said Headwaters CEO Brenda Solorzano.

“We brought this information to our board, and they made the courageous decision to allocate more resources to organizations in western Montana as these organizations work tirelessly to address the issues, gaps and needs left in the wake of COVID-19. This funding is

meant to respond to what our grantees told us were the most urgent needs they see in our communities.”

The new $450,000 allocation approved by the Headwaters board of trustees will bolster the $4.3 million the foundation already budgeted for 2020 grant making.

Solorzano said the additional funding is earmarked to address food insecurity and emergency childcare. Headwaters will also realign American Indian strategic initiative funding to meet the immediate needs of American Indian communities in western Montana as a result of the current pandemic.

“We want this money to help people now,” Solorzano said. “Food banks, childcare centers, and small nonprofits are suffering, and we hope this extra boost will help in this time of crisis.”

COVID-19 pandemic inspires generous Montanans When the COVID-19 pandemic hit Montana, many of our friends and neighbors stepped up to help those in need.

transport media is clear substance that’s used in a testing kit to transport the swab from a patient to a lab.

as well come here and hang out and all sew together,” store manager Meghan Murtagh earlier told the Missoulian.

Their spirit of generosity prompted business owners and a University of Montana researcher to pivot to making hand sanitizer, Starbucks employees and others to sew masks, and a company based in Bozeman to design face shields for emergency responders.

“The viral transport media was a bottleneck in the process of getting tested,” explained Jeff Pease, the chief business development officer at Rocky Mountain Biologicals. “I don’t know the reason why it’s not more available, but Grant Kier and Nicole Finke at Community Medical Center informed us there’s a shortage. Others in the state are getting close to running out. They asked if we could make it.”

Dr. Neil Fishman, the chief medical officer of the Hospital of the University of Pennsylvania, told the New York Times that even homemade masks could help protect people infected with the virus from spreading it. Masks shouldn’t replace hand-washing and social distancing, but the story notes they should be considered part of the arsenal of protection.

As the pandemic clobbers people and businesses, here’s a reminder of just some of the other generous community members lending their time and knowhow to ease the way for people on the frontlines and those affected in the economic fallout.

Rocky Mountain Biologicals rapidly switched gears in order to produce a muchneeded component for COVID-19 testing capabilities in Montana and the world if needed. Formed in 2004 and located in Missoula’s development park near the airport, the company usually makes cell culture media like serum and other products for the pharmaceutical, cancer treatment and veterinary vaccine industries.

Grant Kier, the CEO of the Missoula Economic Partnership, knew there was an acute shortage of viral transport media for COVID-19 testing. Essentially, viral

As it turned out, the company had most of the necessary components on hand. In just one day, it produced enough media, 18 liters, for 6,000 tests.

The material was going to Community Medical Center and 14 other hospitals and clinics across the region, including a tiny clinic in eastern Montana.

A group of Missoula Starbucks employees could have taken paid time off at home, but instead, they gathered at the coffee shop to sew masks to help the community. They brought in their own sewing machines, and they made 30 masks in just one day.

“All of us that were not at work were just at home, so we were just like, might

Many people have figured out ways to make hand sanitzer even though their usual day jobs have little or nothing to do with that product.

At UM, professor Rich Bridges learned firefighters needed hand sanitizer, and he turned his lab into a production facility, using a power drill with an attachment to mix two simple ingredients.

“It’s fun to be able to do something,” he said, wearing a white lab coat and pouring carefully measured proportions of glycerol and isopropyl alcohol into a big bucket. He’d already made and distributed 25 gallons of hand sanitizer, and when the Missoulian met with him a couple of weeks ago, he was expecting 2,000 empty bottles in the

mail. Bridges, in the Skaggs School of Pharmacy’s Department of Biomedical and Pharmaceutical Sciences, planned to fill them and distribute them to local firefighters and the Missoula CityCounty Health Department.

UM alum and former employee Sam Belanger was helping on the same front. In an effort to “flatten the curve,” his CBD manufacturing company Green Ridge Biosolutions was working to produce thousands of bottles of hand sanitizer for the local community and beyond.

“As a country, we need to help flatten this curve,” said Belanger, COO of the Ronan-based company, in an earlier interview with the Missoulian. The company produces muscle rubs, hemp extract oils and bath products that contain CBD, or cannabidiol, the nonpsychoactive ingredient in marijuana.

The idea for the sanitizer came about when he realized he couldn’t buy any hand sanitizer on his bi-weekly trip to Costco in Kalispell. So Green Ridge Biosolutions started making the product with ingredients it already had on hand and then selling it an affordable price and providing it for free to local stores and agencies in need.

Missoulian Staff MISSOULA BUSINESS • SPRING 2020

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Tech check

Department of Labor ramps up WR KDQGOH ´XQSUHFHGHQWHG¾ WUDIÀF Keila Szpaller keila.szpaller@missoulian.com The weekend of March 21 and 22, the COVID-19 pandemic hit the Treasure State with force, and a rush of Montanans newly out of work started filing unemployment claims. To do so, they landed on montanaworks.gov.

George Parisot, chief information officer with the Montana Department 14

MISSOULA BUSINESS • SPRING 2020

of Labor and Industry, described the crush of activity from Montanans on the website as “certainly an unprecedented number of folks.�

More than 14,000 people applied for unemployment benefits that week in March, up 1,700% from the previous week and 1,917% more than the same week last year, according to the Associated Press. Initially, many ran

into snags, slowdowns and unsuccessful attempts to sign up for benefits.

For technology crews with both the Department of Labor and the State Information Technology Services Division, the weekend required “all hands on deck.� It meant scaling up the system to handle the increase in volume while transitioning staff to remote work at the same time.

For those state employees on the job, the tasks at hand were directly connected to the well-being of Montana workers and their families relying on checks.

Parisot said roughly 45 people work in the Technology Services Division in the Department of Labor, and 20 of them worked directly on the project to ramp up montanaworks.gov. “It is a big responsibility,� said Parisot,

BEN ALLAN SMITH, Missoulian

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who has worked for the state of Montana for roughly 22 years. “I couldn’t tell you when the feeling this is really huge happened, but I think all of our staff realized that this is really important to the people of Montana to get these benefits out there as quickly as possible.”

Tim Bottenfield, chief information officer and division administrator for the State Information Technology Services Division, said the state was prepared to increase its capabilities in part because of the foresight of the Montana Legislature years ago, along with the vision of his predecessors and colleagues, such as chief technology officer Matt Van Syckle.

Lawmakers funded two data centers that came online roughly a decade ago, one in Helena and one in Miles City, he said, and state IT professionals kept them up to date so they could best support state agencies.

“Those data centers, even today 10 years later, are very state-of-the-art,” Bottenfield said.

Parisot, of Great Falls, said his experience as a veteran of the Army National Guard helped him approach the colossal project of bolstering Montanaworks.gov. “You just work to solve one problem at a time and plan for the next problem coming down the road, and you work as a team.”

He said the team included people within his technology division along with leadership of the Department of Labor, Department of Administration and the Governor’s Office.

That weekend in March, the web designers, software developers, tech architects, and other crew worked to figure out where capacity was at and how to quickly increase it to support “what we saw was a large influx of claims.”

“So we had to do a lot of analysis and understand what the impact is and what the volume is and really come up with a plan to ensure that things were stable,” Parisot said. “And we did have some issues that weekend just with the numbers of claimants.”

Out of the gate, they took steps to make changes to the system and rebuilt a portion of the website to ensure its stability, Parisot said. They identified specific features that were compromising the system and stripped the application

down to “really bare bones to make sure it would keep up with the large volume we were seeing.”

“In some cases, agencies did need to procure devices for employees to use at home.”

together,” Bottenfield said, and a solution would emerge. “It was really cool to see that.”

That weekend, many of the staff worked 24 or 36 hours straight to keep the application up and running and continually improve it, Parisot said.

“We’re working even now to support and expand the capabilities of that system.”

At this point, Bottenfield said employees seem to be getting comfortable working from home. “At least for now, we have gotten to the point that this is our new normal, and we’re realizing that we can work this way and still provide great service and support to the citizens of Montana.”

But work remains to smooth out the website. In particular, Parisot and Bottenfield both said the phones have been overloaded, and state employees are trying to tweak the website so as many callers as possible can get their questions answered online.

Since that first weekend, the agency quadrupled the capacity of its web and application servers, he said. They’re working to not only support the load but to ensure there’s redundancy in the system.

“That’s critical when you build your infrastructure like that,” Parisot said.

Bottenfield said the data centers were able to support the increased need of both the Department of Labor and the Montana Department of Public Health and Human Services, the state agencies that required the most augmented capacity in responding to the pandemic.

The work to modify Montanaworks. gov to accommodate the onslaught of new users took place under the constraints of social distancing, so the war room was a virtual one. “We are obviously maintaining social distance … and trying to figure out how to balance conference calls with being at home with home internet and having kids and dogs and cats on the call with you too,” Parisot said.

From March 23 through April 1, the Department of Labor announced it had deposited 35,000 unemployment payments to Montanans; the following week, the agency deposited 24,000 checks. The department estimated it had processed a total of $7.8 million in just one week.

Bottenfield said he’s on conference calls with CIOs from other states, and many haven’t been able to act as quickly.

He said it’s helpful to be a state with fewer employees who need to adjust, but also ones who are willing to work together.

“If we ran into a stumbling block with this piece of technology, there were so many great brains working on it

They also want the application process to be less arduous, especially for people who have never filed a claim before.

“It’s not an easy process, and there needs to be some help there,” Bottenfield said.

And the support has real impacts on people’s lives, Parisot said.

“It’s a little emotional, too, if you think about all the folks who are affected you’re here to support,” Parisot said. “ …

When we bring in contractors and other folks, we explain to them the criticality.

We all understand. It’s our neighbors, it’s our friends and family that might be affected.

“It’s important.”

Bottenfield’s team helped people from all state departments transition to working out of the office. He said he was pleased at the agility of the division and its ability to be quickly responsive.

“We were pretty well prepared to support a quick transition to a remote workforce,” Bottenfield said. “We had several options for agencies to choose from in getting their staff connected to the tools that they would need to work from home.

“I’ll emphasize here that we are fairly nimble and agile and have the ability to scale our service up or down rather quickly, so that was a big advantage for us. I think the biggest challenge for agencies was to determine which connectivity services were the best for their employees and making sure that they had the proper equipment to send them home with.

MISSOULA BUSINESS • SPRING 2020

15

In the works

KURT WILSON, Missoulian

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Tourism industry adopts wait and see DAVID ERICKSON david.erickson@missoulian.com

businesses compared to other places in the country.

The Montana economy is largely dependent on tourism, and that industry has been temporarily ruined by the coronavirus shutdowns. But local officials are hoping to keep people’s minds on the Treasure State when they think about trips many months from now. There also seems to be signs that there have been fewer longterm cancellations for Montana tourism

“As you can imagine, this pandemic has been absolutely devastating to the tourism industry across the world,� explained Barb Neilan, the executive director of Destination Missoula, the local tourismpromoter. “As a destination marketing organization, it has required us to step back, because our mission has always been to bring people in for economic growth. So

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we’ve had to re-evaluate.�

Neilan was on Talk Back, a radio show hosted by Newstalk KGVO in Missoula recently to discuss the state of the tourism industry. She was joined by Jim McGowan, the CEO of Windfall, an ad agency that works with Destination Missoula. Their message was that things are dire right now, but there’s hope for the long-term future.

Nearly 94% of Montana’s travel-related businesses said they’ve been impacted by

the virus, according to a survey conducted March 11-27 by the Institute for Tourism and Recreation Research at the University of Montana. The survey found that roughly 83% of businesses saw cancellations in the last two weeks of March and first part of April. The hardest hit industries were accommodations and outfitters and guides. “We changed our focus,� Neilan continued. “We’re telling people not to come to Missoula right now. Everyone

needs to stay home and stay safe and follow the directions of the state and nation. But at the same time, we know some people have got time on our hands so we’ve pulled back all marketing except for digital and social, and we’re asking them to dream and plan and share memories.”

She wants people to “not so much cancel plans” but to postpone them for the time being.

“We’re still going to be there when this is all over, but we want them to be healthy and safe for now,” she said.

In 2018, nearly 12.4 million nonresident visitors came to Montana and spent about $3.58 billion in the state.

In Missoula County, the Institute for Tourism and Recreation Research estimated that nonresident spending supported about $221 million in economic activity, including 3,580 jobs and $70 million in worker compensation that year.

“As an organization, our purpose is to attract visitors to western Montana, but in the current state our messaging

There is a silver lining, she noted.

has obviously changed,” said Racene Friede, president and CEO of Glacier Country Tourism. “Our purpose now is to remind travelers that now is not the right time to come to Montana, give them a little future travel inspiration, and welcome them back when the time is right.”

“The beautiful thing about tourism is it’s one of those industries that can pivot quickly,” she said. “When we do see people traveling again, this industry is going to come back faster than other industries, and that’s going to help with the economic stability here.”

She noted that about one-third of all tourists in Montana come to western Montana.

McGowan told the radio show that from a marketing perspective, it’s about playing the “long game.”

Neilan and McGowan know how important it will be to get the tourism industry back up and running if and when the U.S. beats back the coronavirus. So for now, they’re focused on getting people to think about Montana for their trips when the COVID-19 pandemic is in the rearview mirror.

“Our marketing and strategy is including trips that happen sometimes a year from now,” he said. “We have to focus on the long game and our engagement with potential tourists now who are ordering travel guides.”

“We need to focus on being inspiring and having uplifting messaging, providing people with beautiful imagery to keep them hopeful and keep them dreaming,” Neilan said. “There is going to be an end to this. I know it doesn’t seem like it right now.”

He said engaging potential travelers results in a higher likelihood that they’ll end up traveling here.

“We have so many great amenities here like the outdoor amphitheater and the mountains,” he said. “We need to make sure that when the smoke clears, we deliver.”

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Norma Nickerson, the director of the Institute for Tourism and Recreation Research, said the survey results show that most businesses are not considering closing their doors permanently.

“It’s a wait-and-see game for many,” Nickerson said in a release about the survey.

Even sectors that aren’t usually considered related to tourism and travel, like the company retreat industry, are getting hit.

Jeremy Sage, the associate director of the Institute, noted that Montana cancellations aren’t as bad as other places in the U.S. For example, about 37% of booked trips to Montana that were scheduled in the spring and summer have been canceled, and another 36% are actively being considered to be canceled.

“As high as these values are, they do paint a better picture than the rest of the U.S.,” Sage said. “To all other domestic locations, 54% of booked trips are getting canceled by this group, and another 32% are considering cancellation.”

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How Missoula grows

Kurt Wilson/ Missoulian

Sitting in a hanging seat, a window washer works near a corner of the Stockman’s Bank Building in downtown Missoula .

Community leaders share their vision David Erickson david.erickson@missoulian.com Editors note: These responses were submitted before the coronavirus pandemic.

Missoula has seen more than $1 billion worth of public and private projects developed since 2013, an unprecedented expansion that’s causing growing pains for many as the city struggles with a severe lack of affordable housing, rising property tax bills and a workforce shortage. The building boom has been good to some but not as good for others, so city leaders will be on the hook to make sure Missoula 18

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grows in a way that benefits everyone on the socioeconomic ladder.

The Missoulian asked several elected officials and other community leaders the following questions to gauge their vision for the future: 1. What are the three most important things Missoula needs to do today to plan for growth so that all residents benefit?

2. What do you want Missoula to look like in 20 years?

Here are the answers: Amy Shattuck, principal, Lewis

and Clark Elementary School: 1. Three important considerations for future growth need to revolve around community involvement and input, neighborhoods & schools, and preserving while improving what is best about our community of Missoula.

The reason our community continues to grow is directly related to these three important components: Making sure we have the right people at the table to help develop this plan is essential. Input from a comprehensive group that includes

representation from a variety of stakeholders, including the education community, is needed.

Neighborhood redevelopment and future development need to continue to have strong schools as their community center point.

We have excellent educational institutions in Missoula and surrounding areas. Schools need to continue to provide a comprehensive education that prepares ALL of our students for a bright future in our community and abroad.

Preserving what makes Missoula so special is always a lens we need

Amy Shattuck principal Lewis and Clark Elementary School

to look through. We are lucky to have the open space and recreational opportunities at our fingertips in Missoula.

Preserving and improving this way of life is essential as we move forward.

2. I want Missoula to be a place where opportunities are endless. Where we support our community members from sunset to sundown.

Where we continue to have strong, safe and vibrant neighborhoods that have schools as their community hub. Where ALL our kids receive an excellent education that takes them where they want to go and beyond. And where we are still able to enjoy the open spaces that surround our amazing and beautiful community of Missoula.

Aaron Brock, Missoula Food Bank executive director: 1. We need to make plans that take into account the pressures that Missoulians are feeling today. The hardship for working-class families in accessing housing they can afford will continue to be a community challenge — one that I think we can meet with ingenuity.

Designing our city and our policies to be anti-racist and LGBTQ2S+ allied should be a priority — Missoula is good at talking about inclusivity and I think we can be deliberate in making policies that work to close equity gaps. Today, one in five people in the city of Missoula experiences food insecurity sometime throughout their year. We envision a future

where that number is smaller, and to get there, we have to address inequities.

We must also address wages. Folks coming through our doors are holding down two and three jobs and still not making it. It’s hard to envision smart growth without addressing the wage issues that many people are struggling with today.

2. Borrowing from our organizational vision statement: Missoula Food Bank & Community Center envisions a community that embraces food justice, where everyone is food secure and everyone can afford their basic needs.

Aaron Brock, Missoula Food Bank executive director

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MISSOULA BUSINESS • SPRING 2020

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SBA help available for businesses TOM LUTEY for Missoula Business BILLINGS — After calming panicked borrowers for the past two weeks of a statewide business shutdown, Montana banks were eager to hear the U.S. Small Business Administration lay out details about the $2.2 trillion coronavirus rescue package.

Lenders had fielded calls from owners of restaurants, hotels and bars. They’d heard from the nonprofits forced to cancel fundraising events. Anybody with a canceled concert or a film festival on hold was in dire straits. Main Street Montana is looking for a lifeline.

MIKE CLARK, Lee Newspapers

If there was a Montana lender who skipped a recent conference call with SBA, Western Security Bank Division President Mike Seppala didn’t know who it was.

“When I got on the call, there were 330 people. That’s almost every banker in the whole state,” Seppala said, who oversees six Glacier Western Security offices in Billings.

Lee Montana Newspapers visited with Seppala, as well as Stockman Bank Market President Wayne Nelson and SBA’s Montana director Brent Donnelly, about what borrowers needed to the know about federal financial aid programs rolling out counter the economic challenges of the pandemic.

The three also offered advice on how distressed borrowers should respond to Montana’s suspension of foreclosures and collections on overdue loans.

Are banks open for walk-in business right now?

“Everybody is working, we just have restricted access to our lobbies,” Seppala said. “If you call for an appointment, we’ll make an appointment, either over the phone or even in person. We’re going to ask you if you’re healthy, but that’s where we’re at right now. We’ve got everybody coming to work that’s not sick.

We can do a lot of it over the internet, too. That’s not a problem” Nelson said much of the communication between borrowers and 20

MISSOULA BUSINESS • SPRING 2020

Maddy Ostwalt washes two crowlers before serving a customer at Thirsty Street Brewing Company in Billings on Thursday, March 19, 2020. Thirsty Street is serving to-go bottles and crowlers while restaurants and bars are closed in Yellowstone County due to the spread of coronavirus.

Stockman Bank and can be done online.

A phone call will get things started.

Most big banks have information to the COVID-19 pandemic on their websites. For more information on their procedures and availability, visit your bank’s website.

Banks will be the front counter for the dealing with businesses and other borrowers looking the tap into federal programs. What information do people need to be gathering up now to present to lenders?

“We’ve got a checklist, a short little punch list that we can provide to people,” Nelson said. “You don’t have to bring a whole lot. The SBA and the Treasury Department are trying to make this very streamlined, for obvious reasons. The driver of this

on the Payroll Protection Program is your average monthly payroll cost.

What people can do right now is gather 2019 payroll costs. And you can include in that, health insurance, 401(k) contributions, PTO, payroll taxes that were paid. And that’s going to come up to a gross number. It’s that simple. Give me the source documents.

It could be QuickBooks, some other spreadsheets that you provide to the bank, where you certify those are your payroll costs.”

Seppala added that because tax filing deadlines have been extended four months from April 15 to July 15, business that have 2018 information available but nothing yet for 2019 should bring in the 2018 the information.

The Paycheck Protection Program is a

newly created, $349 billion program intended to help businesses retain employees, rather than send them to the unemployment line, according to SBA. Banks will be the single point of contact for everything from applying for PPP to receiving funds to meet payroll.

Businesses can receive federal loans to cover up to eight weeks of payroll and related overhead. The funds are supposed be available the same day a business is approved for the loan. And, the loans will be forgiven as long as the money is used to keep employees on payroll and for other expenses such as rent, mortgage interest and utility bills.

Keeping workers on payroll is the key to not having to repay the loan. No more than 25% of the forgiven loan amount can be for non-payroll costs.

Important for businesses that have already laid off workers, the Paycheck Protection Program is available retroactively to Feb. 15. Workers can be rehired through June 30.

Who qualifies for the Payroll Protection Program? Is just for forprofit businesses?

All businesses, including nonprofit groups, veterans’ organizations, tribal concerns, sole proprietorships and self-employed people all qualify, as do independent contractors. Businesses with 500 or fewer workers qualify, with some exceptions for certain industries that have specific limits set by SBA. The maximum loan is $10 million.

What’s available now for the nonpayroll expenses? What’s out there for a business that’s seen its market disappear because of travel restrictions or forced closures, like someone in the tourism industry?

The Economic Injury Disaster Loan is available now, Seppala said. It works better for non-payroll expenses. “The Economic Injury Disaster Loan is a loan that small businesses can apply for. If you are successful applying for that loan, you

will be sent a check for $10,000 within three days from the SBA,” Seppala said.

“It will get people $10,000 pretty quickly if they qualify for that loan.”

The interest rate for the EIDL loan is 3.75%.

“The EIDL is for working capital specifically and in the application is the SBA definition of working capital.

Payroll is part of the worked capital definition. However, if you put payroll into your EIDL loan application and you take that loan, you can’t do the same thing with the Paycheck Protection Plan.

You can’t double dip,” Seppala said.

The Payroll Protection Program is going to offer considerably more payroll help than the EIDL. Repayment is deferred one year on Economic Injury Disaster Loans related to the pandemic. Previous EIDL loans are also deferred for a year.

Is there more than $10,000 in assistance available through EIDL? This is the kind of loan a business might get after its economy was wiped out for several months by a natural disaster, right?

Yes. Nelson said he’s working with a grocer on the border of Yellowstone National Park who has seen its extremely seasonal opportunity to turn a profit evaporate as the park is now closed.

SBA offers up to $2 million in assistance per small business through EIDL. The money can be used for paying accounts payable or fixed debts, as well as payroll. The loan is supposed to cover bills that can’t be paid because of the pandemic’s impact.

While the interest rate for for-profit businesses is 3.75%, nonprofits receive an interest rate of 2.75%. Borrowers have up to 30 years to pay the loans back.

There have also been steps taken to help borrowers with payments due on existing loans, right? The SBA is going to make loan payments for borrowers on existing Small Business Administration loans for up to six months, right? Gov. Steve Bullock announced that foreclosures and evictions were suspended and that late fees couldn’t be charged. The governor’s order was expected to last though at least April 24. How important is it the people who are able to make payments

on mortgages and other loans still contact lenders to explain why payments aren’t coming?

“With the SBA program (for existing loans) there is some forgiveness,” Nelson said. “That’s a little bit different; that’s almost like grant money. But the deferments we’re talking about, loans with your mortgage company, your business loans with the bank, your obligation is not forgiven. It’s just deferred. If you communicate with your landlord, or your bank or your vendors, that two-way dialogue, that gets you lots of places. That means a lot in the business world to have open, good communications so that you can work jointly to solve the financial problem in front of you.”

Editor's note: At publication, the SBA was no longer accepting applications for the Paycheck Protection Program and the Economic Injury Disaster Loan funds.

Congress may extend funding for those programs.

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www.TrailWest.bank MISSOULA BUSINESS • SPRING 2020

21

Economy unlikely to recover as rapidly as it collapsed

ANNIE PENTILLA, Lee Newspapers

Construction was underway on the Copper Ridge Apartments complex, a new affordable housing complex last fall.

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MISSOULA BUSINESS • SPRING 2020

JOSH BOAK The Associated Press BALTIMORE (AP) — President Donald Trump has been telling voters that the U.S. economy will leap back to life “like a rocket,” stronger than ever after its bout with the coronavirus.

But there is a reason economics is called the “dismal science.” There are emerging signs that any recovery will fail to match the speed and severity of the economic collapse that occurred in just a few weeks. The 2020 presidential and Senate elections likely will take place as the world’s largest economy is still attempting to climb back from the deadly outbreak.

“Anyone who assumes we’re going to get a sharp snapback in activity isn’t thinking about how consumers are going to feel. They’re going to be very cautious,” said Nariman Behravesh, chief economist at IHS Markit.

“Households and businesses have seen their finances deteriorate. People are buying groceries on their credit cards.”

To understand the consequences of a sudden negative shock on the economy, Behravesh studied how many people returned to flying after the Sept. 11, 2001, terrorist attacks.

Pollock said. “This is a man who championed his economic abilities — and to me there is nothing to suggest that voters will forgive him, since he’s been front and center on the virus response since Day One.” If his view holds, that plays to the advantage of likely Democratic nominee Joe Biden. But Biden will have to give voters a fuller idea of how he would boost the economy, Pollock said.

Trump has repeatedly sought to portray the situation as the U.S. economy being sideswiped by the “hidden enemy” of COVID-19, which he and his advisers initially downplayed in February and March and later suggested was impossible to foresee. His message to voters is that

recovery came from the Harvard University economist Larry Summers, who served as a top economic adviser to President Barack Obama during the Great Recession, He suggested on Twitter that the U.S. economy would behave much as a beach town on Cape Cod, which closes in the winter and reopens around Memorial Day for a burst of summer activity.

Adding to the challenge is that political leaders cannot simply command an economic recovery to occur. The timing depends on the shared actions of millions of consumers and employers, said Paul Winfree, a former Trump White House official who is now director of economic policy at the conservative Heritage Foundation.

A strong economic rebound likely depends on people and companies being able to preserve their money, so that it can be spent and invested once the gloom begins to subside.

“It took two and a half years for airline passenger traffic to go back to previous levels,” he said.

No longer able to campaign on a half-century low unemployment rate, Trump has begun to tell voters that he can quickly rebuild the economy. He said measures like the $2.2 trillion rescue package — with more money likely on the way — can send employment and economic growth to new highs.

Jefrey Pollock, a Democratic pollster, said voters will judge in November whether the Republican president has delivered an economic revival, and they will be taking a similar measure of incumbent members of Congress.

“The fact that we’re as partisan as ever doesn’t mean we’re destined to forgive a president who fails on the economy,”

Not only have 16.8 million Americans — roughly 1 in 10 workers — lost their jobs in the past three weeks. Workers have seen their hours slashed, have seen sales commissions disappear and have accepted salary cuts, such that incomes have declined for half of U.S. working households, according to a survey from The Associated Press-NORC Center for Public Affairs Research.

Children can no longer attend school, reducing the productivity of their parents. And on a regional basis, many state economies may take time to claw back what has been lost. Florida will need to bring back roughly 130 million tourists annually. The decisions of Texas employers will likely depend on crude oil climbing back above $30 to a point at which drilling and pumping is profitable.

Stanford University economist Nicholas Bloom is an expert on uncertainty and believes the economy will end this year 10% smaller than it was at the start of 2020, a loss of nearly $2 trillion even with the $2.2 trillion rescue package.

The long-term outlook also has deteriorated, he added, in ways that could hurt the recovery.

his leadership will make the economy even stronger.

“Our Economy will BOOM, perhaps like never before!!!” Trump declared Wednesday on Twitter.

Treasury Secretary Steve Mnuchin, who has been leading the stimulus efforts, has said there will be “a very big bounce back,” though he noted that the gains could be uneven.

“Certain parts of the economy you’re going to see come back immediately,” Mnuchin said on the Fox Business Network. “Certain things are going to take a little bit longer.”

One of the arguments for a quick

“I don’t think we’re going to get out of this because of political leadership,” Winfree said in an email. “This isn’t WWII. Rather, things won’t turn around until a significant majority of people decide that we’ve done enough (privately and publicly) and have to move along.

Hopefully, that coincides with the success of public health efforts.”

A strong economic rebound likely depends on people and companies being able to preserve their money, so that it can be spent and invested once the gloom begins to subside. The challenge now is that incomes are eroding, and that could limit the recovery.

“Working from home is creating a collapse in investment,” Bloom said. “All firms I have spoken to have canceled training, new product introductions and R&D projects, while at U.S. universities and laboratories unless you are working on COVID-19 you have stopped work.

So innovation — the main driver of long-run U.S. growth — has stopped.”

Bloom has personally responded to the decline in an ominous way. He said he pulled his retirement funds and college savings from the stock market and placed them in interest-bearing accounts to wait out the storm.

MISSOULA BUSINESS • SPRING 2020

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Economic Recovery Task Force formed Many of us experienced profound upheaval when the onset of COVID-19 suddenly upended our lives, our businesses and our economy. The month since has been disorienting and uncertain. In truth, the breadth, depth, and duration of the impacts of this disruption remain unclear and may remain so for weeks or even months. We will inevitably face challenges ahead that we have not yet even realized. However, our local community is quickly rising to this challenge, providing encouraging signs of resilience and reasons for optimism.

Through the Missoula County GRANT KIER Economic Recovery Missoula Task Force, efforts Economic are underway across Partnership public, private and non-governmental sectors at national, state and local levels. All members of the Task Force are working collaboratively to understand and respond to the impacts that Missoula County residents are experiencing during the COVID-19 pandemic. The pace, scale and sense of collaboration among these efforts to provide relief has been unprecedented, if admittedly imperfect. The Task Force is working to ensure every available resource is accessible to members of our community, to identify gaps in resources, and to fill those gaps with supplemental support.

is not without challenges. Businesses that don’t have an existing relationship with a bank or that lack legal and accounting teams are still facing difficulty navigating relief programs. In response to this challenge, the University of Montana, in partnership with the Task Force, has established the Business Emergency Assistance Relief (BEAR) Program. BEAR Powered by UM offers a simple online form that business owners can submit to get help navigating these programs and identifying the COVID-19 relief resources that will best meet their needs.

Unsurprisingly, a number of Missoula County businesses have quickly adapted their products and services to changing demands, meeting community needs while keeping people employed. Bonner’s Coaster Cycles has retooled their entire operation to manufacture face shields for healthcare providers, Montgomery Distillery is manufacturing hand sanitizer for first responders, many local restaurants and retailers have implemented take-out/delivery models, and the Missoula City-County Health Department has contracted with local tech startup PatientOne to provide a software platform for remote monitoring of patients diagnosed or suspected to have been exposed to COVID-19 by healthcare providers.

The passage of the CARES Act by Congress in recent weeks created new federal relief programs for business entities and individuals impacted by the COVID-19 pandemic. The implementation of these programs has largely relied on our banks and credit unions to serve as front line resources for small businesses. Montana’s financial institutions lead banks across the region in delivering relief through new federal programs such as the Economic Impact Disaster Loan Program and the Paycheck Protection Program. Estimates at the end of the first week of implementation suggest that over 1,500 Missoula area businesses have been approved for approximately $200M in loans, much of which qualifies for loan forgiveness based on initial program criteria.

In the weeks ahead our leaders will be forced to make tough choices with no clearly right outcomes, and every member of our community will be called on to demonstrate new levels of leadership and compassion. We don’t know when we will be able to transition toward opening businesses and an active economy, but we know that transition is inevitable. Making that transition safely and successfully will require every bit and more of the cooperation, communication, and innovation that we are seeing from our community today. To contribute to a safe and smooth economic recovery, please stay informed and share accurate information that can be found at http:missoulapartnership.com or through any member of the Missoula County Economic Recovery Task Force.

While these resources promise economic relief for businesses, access to these programs

Grant Kier is the President and CEO of the Missoula Economic Partnership.

MISSOULA BUSINESS • SPRING 2020

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Grim economic forecasts show glimmers of hope In the decade after the turn of the century, the United States economy experienced a severe financial crisis, which was the result of speculating in financial and commodity markets. The crisis caused GDP to fall about 8 percent that year and led to a recession. Just over 10 years later, a global pandemic hit the world economy. Initially, countries censored information regarding the disease, but facts about a rapidly spreading illness can only be contained for so long. Eventually policies such as social distancing, masks, and isolation helped end the pandemic.

Of course, I’m discussing the Financial Panic of 1907 and the 1918 Spanish influenza pandemic that ultimately led to millions dying. The parallels are eerie.

total is over 1.5 million. In Montana, there are 415 confirmed cases, with Gallatin County accounting for roughly one fourth of the total. Numbers are likely to rise as testing becomes more frequent, reliable and results revised.

In response to the C19 pandemic, countries and states have taken pages from the Spanish flu playbook to help slow the speed of transmission and effectively buy time for a vaccine and obtain more information about the nature of this virus.

And information, or lack thereof, is at the crux of this crisis. During the 2007 financial crisis, a “once in a lifetime event” I thought until ROBERT a month ago, uncertainty was SONORA also at the heart off the issue. A is the Associate multitude of complex equations, Director and obscure financial instruments, and algorithmic trading created a Director many-headed Medusa that few, if of Health any, people truly understood. But Research at no one died from an obscure and the Bureau of fickle financial instrument — at Business and least not directly.

In the aftermath of the Panic of 1907, the U.S. established the Federal Reserve System (the Fed), which was later charged with the explicit goal of to help foster a stable economy. The Economic The C19 pandemic changed Panic of 1907 would have Research at the the game, and we’re playing with also been in the recesses of ever shifting rules.

University of JM Keynes mind when he Montana. wrote the influential text Fundamentally, the ongoing The General Theory of health vs. economy debate is Employment, Interest and centered on the extent of the Money, which was the birth trade-off we are willing to make of macroeconomics and economic stimulus. with imperfect information. In economics we discuss this in terms of the expected costs The flu pandemic helped change and benefits that occur over the short and countries’ health care systems. Because you long run. A multitude of economic research cannot blame someone for getting sick, the has shown that one of the primary engines concept that any given individual’s health of long run economic prosperity is the being the outcome the environment began to germinate into the idea of “public health.” accumulation of human capital — which is loosely defined as “ideas/education and This was the catalyst for the adoption of health.” Not machines, not technology. But, public health systems and state run health concentrating on preserving health, which insurance, the first in Russia. While many is the current tactic, is a cost to short run European countries followed suit, the U.S. economic vitality. went with an employer based plan.

Fast forward to today. In the U.S., the first COVID-19 (C19) case was confirmed on January 19 in Seattle. Now, six weeks later, as of this writing, there are 432,000 confirmed cases in the U.S., growing an average of 18 percent per day, and the global 26

MISSOULA BUSINESS • SPRING 2020

Gov. Steve Bullock initiated closure of dine-in establishments such as restaurants and bars on March 20. Earlier this week the governor extended the stay-at-home orders implemented on March 27 until April 24.

The economic cost of this in the short run

is steep, and we are already seeing it in the data.

The canary in the coalmine was financial markets. Drops in stock market indices were the most obvious, but other markers waved a red flag. Between February 19 and March 9, the benchmark 10-year U.S. bond yield fell 100 basis points to 0.54%. Over roughly the same period the ViX, the so-called “fear,” index increased from 14 to 75 — the normal range is 10-15. It reached a maximum of 83 the following week.

To put things in perspective, the highest the ViX index got during the financial crisis was 81 and the lowest yield on the 10 year bond was 2.9%.

Another indicator of global financial nervousness is the dollar exchange rate. It appreciated almost 9 percent during the first three weeks of March as global capital sought a safe haven. Developing countries have suffered $83 billion in capital outflows.

In early March, I estimated the probability of a third quarter recession to be just under 90%. Those were halcyon days.

As you might expect, the probability now is almost 100 percent.

In the past three weeks 16.8 million workers have applied for unemployment insurance in the U.S. In Montana that number is 63,929 which represents about 14% of Montana employees covered by unemployment insurance.

Numbers for sector employment at the state level have not come out yet, but the national level the most recent data shows that of the 700,000 who lost their jobs at the end of the March, about 66 percent are from the leisure and hospitality sector. This is a concern for the Montana economy as a relatively large percentage of jobs here are in the leisure and hospitality sector, almost 14%. If we add another largely effected sector, retail sales, the total rises to 25% of state employment.

This translates into economic growth numbers I never thought I’d see in my lifetime. The broadest measure of economic output is gross domestic product, or GDP. GDP shrank 23 percent during the Great Depression. The Conference Board and

the Congressional Budget Office are calling for an decline of almost 30 percent in the second quarter of this year.

On a positive note, the grim forecasts only last one quarter. By the fourth quarter, the Conference Board is projecting 18.5 percent positive growth, for an annual growth forecast of negative 6 percent.

Ultimately, short term costs are the long term’s gain. By preserving an economy’s most precious asset, human capital, long term growth will thrive. Recent research by economists from the Massachusetts Institute of Technology and the Fed demonstrate that cities in the U.S. that used, among others, social distancing strategies were more successful after the Spanish flu pandemic than those that did not. Philadelphia was the exemplar of what not to do, whereas other cities, such as Portland, Oregon, which had stay-at-home directives for 120 days or more, recovered relatively quickly.

There are some key differences between 1918 and 2020. First, the American economy is fundamentally different than one hundred years ago. Then, almost no jobs could be done at home. Secondly, the idea that Federal government expenditures could be used to counteract the declines in other spending, either directly or through household income support, did not exist.

And third, health care is no longer in its infancy. Hospitals were less of a place of healing than a final resting place. Now, the opposite is true, and more people have access to care.

Today, we have tools to combat this short run downturn. The Federal government passed a $2.2 trillion rescue package, and Montana sold $33 million in AA+ infrastructure bonds, at a rate of 1.56%, largely for state infrastructure projects.

The Fed, which was an untested institution in 1918, has learned from mistakes made during the Great Depression and 2007 financial crisis, is flooding the economy with up to $2.2 trillion to prevent a liquidity crisis. The Fed has earmarked $300 billion to be used for loans to small businesses to help keep them afloat.

How to thrive in uncertain times The statistician and risk analyst Nassim Taleb said “history doesn’t crawl; it leaps.” The last few months sure feel like a leap.

from your checking account, so you don’t risk overspending in your checking account and borrowing from your own emergency savings.

I am not going to show any graphs or charts today. As the global economy has slowed, and as the stock market has declined, and our favorite small businesses have closed for the greater good, it can be scary to look at retirement account statements and to think about the financial future.

Do a spending audit. Do you know what your monthly spending has been?

If not, pull out the former month’s bank statements and credit card statements, and go through all the spending items and categories. What in your current spending is discretionary that you might cut back on?

And lastly, different questions get you different answers. In times of volatility humans naturally rush to drastic conclusions and to ask less-than-helpful questions (i.e., how much worse is this going to get?).

Pivot here, and ask yourself questions that can help you thrive during this time of uncertainty: How can I use this to gain long-term advantage? How does this change my next year? How confident do you feel that you can positively impact your financial future? How clear are you about your financial plan and priorities?

What is most important to you? Use this time to write down how you are feeling, and how you’d like to feel about your finances in the future.

In the last two centuries of American business, down markets have been followed by up markets. If you can be patient and use this as a time period to focus on what financial health and

freedom look like for you, you can turn this challenging period into a productive, positive financial event in your life.

Prime yourself to seize opportunities that will emerge from the turbulence and maximize your financial wellness as the dark clouds disperse.

Kimberly Shappee is First Vice President and a Financial Advisor with RBC Wealth management in Missoula.

Investment and insurance products offered through RBC Wealth Management are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, or guaranteed by, a bank or any bank affiliate, and are subject to investment risks, including possible loss of the principal amount invested. .

RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC

BEN ALLAN SMITH, Missoulian

Look at refinancing any Our brains are designed debt you have. The Federal towards preservation, and in Reserve’s recent rate cut may these moments of pain and mean that you could obtain anxiety, our natural fight a better interest rate on your or flight instinct kicks in. loans. First you need to know Emotional financial decision KIMBERLY R. your current interest rates and making has historically led SHAPPEE terms. Next look at what you humans to do the opposite of Financial Advisor might be able to obtain if you what would have been best for were to refinance, add the cost their finances. Knowing this: RBC Wealth to refinance, and decide if the I urge you to pause. Avoid Management benefit is worth the instinct of trying to catch the cost. That’s a falling knife. Take a breath. your “breakReclaim your body and your mind from even”: how many months all the news and fear, and let’s focus on of the lower payments it what you can control. takes to cover the cost of First up: Revisit your personal rule on refinancing. emergency savings. If you are feeling at Is now a good time to all uncomfortable with your emergency pursue additional education cash on hand situation, consider setting to help improve your aside time to do the math and setting resume or general skills? a rule for yourself or your family and With so many educational using this as both a lesson and a goal options online and many for working towards that number in people on self-quarantine, the future. Doing the math means now could be a perfect looking at your monthly expenses, and time to take advantage of deciding a prudent number of months #CoronaUniversity. of backup that you need for yourself or your family, and then multiplying Have you been wanting your monthly spending number, say to start a side hustle? Now $3,000, by the number of months you may be a wonderful time have decided to have as backup, for to write out the business example, 9 months, and $27,000 would plan and get started. Many be your target emergency savings account of the best business models balance. Emergency savings should be were built during the last kept in cash (versus invested in anything recession, out of a period that could possibly change in value, i.e. when there were problems a stock or even a bond). It’s also best that needed solving and practice for this account to be separate people had a bit more

time to tinker and execute on those opportunities.

MISSOULA BUSINESS • SPRING 2020

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Western Montana real estate market still rolling Entering 2020, real estate in Western Montana had experienced several years of growth with one notable problem: low inventory. This is no surprise to even casual followers of real estate markets.

The first quarter showed no signs of change, in fact sales were up significantly in both the Missoula urban area and Missoula County by both volume and unit count.

MIKE NUGENT Berkshire Hathaway HomeServices Montana Properties

I started this column with that information because as we try and answer the question of how will the Covid-19 pandemic impact real estate, it is important to understand that looking at numbers alone may not tell the whole story, but also may offer some of the biggest clues to our short-term market.

Real estate and related fields were deemed essential in Governor Bullock’s directive; however, this does not mean business has continued as usual. In-person showings have slowed significantly, open houses are nonexistent, and the number of new listings are well below a normal spring pace. Some buyers and sellers don’t have the option of waiting. Circumstances such as job transfers already in place, moving to be closer to family, and many other factors have led some sellers to continue with their plans for listing their property for sale.

Like nearly every other business, real estate is adapting and trying to encourage safe and responsible citizenship while keeping agents and staff employed. Real estate agents have risen to the challenge of social distancing while serving their clients in a stressful 28

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time. At Berkshire Hathaway we have encouraged our agents to utilize video conferencing, virtual home showings, virtual open houses, 3D tours when available, live video on Facebook and Instagram, and we have provided regular training to support these efforts.

While no one can be certain where real is estate headed in the immediate term and the rest of 2020 it is important to note that real estate activity in Western Montana has not stopped. Sales are closing every day, buyers and sellers are still reaching buy-sell agreements, and listings are still entering the market. At the same time, deals have fallen out of contract for reasons related to Covid-19 such as layoffs and uncertainty. April will almost certainly be down in units sold year over year, as will May, though it appears not by as much as we may have feared a month ago.

number of transactions that went under contract in the first quarter - which was up across the board in activity. With each new week, we gain more data to study this period that began in the last few weeks of March. Will we see a further reduction in new under contracts and new listings? Time will tell.

What we do know is our market has the characteristics that leave it poised for a strong recovery when we get to the other side of this pandemic.

In fact, nationwide, some economists are suggesting that it will be real estate and housing that pull the economy out of whatever recession we are facing.

According to Corelogic, an industry statistical tracking service, steep price dips during a recession are more the exception than the rule. Of the five most recent recessions dating back to 1980, only two saw price drops. The first was a modest 1.9% price decrease during the 1991 recession accompanying the first Gulf War, and the second a large 19.7% price decrease during the Great Recession in 2008, which of course was directly related to housing. Because that is the most recent event in the public’s collective memory, it is easy to use recency bias to draw comparisons to our current markets, but that would not be accurate.

Locally and nationwide in 2008, there were no inventory shortages and though it is hard for many to believe, there was actually more new single family construction in the marketplace at that time than there is right now. Conversely, because there is less inventory today, there is more room in the market to absorb two potential impacts of our current situation: lowering buyer demand, and, worst-case scenario, an uptick in eventual foreclosure inventory.

For the month of March, the city of Missoula UHFRUGHG ÀYH IHZHU VDOHV in 2020 compared to 2019, 102 versus 107.

As an example, for the month of March, the city of Missoula recorded five fewer sales in 2020 compared to 2019, 102 versus 107. At the time of this writing, roughly a third of the way through April, closed sales for the month are about six percent off last year’s pace. New listings and under contract listings are down six and seven percent respectively. These are good numbers in comparison to what is occurring in other economic sectors across the nation, however they should be interpreted with the caution that it is still too early to draw any conclusions. We may still be working through a larger than normal

We all hope that does not happen, but it is something we must consider when looking into the future.

Around mid-March, right before we started to see nationwide economic impacts, Missoula had less than a month’s worth of inventory in many key price points, and only one and a half months of inventory market wide.

A healthy market should have three to nine months of inventory, based on an absorption rate that factors in active listings and listings sold in the last month to determine how many months it would take to absorb current inventory levels. What this means is there is a lot of room for our area markets to absorb turbulence and a few months of decent drops in sold units before we see a major shift in price.

Anecdotally, buyer traffic is still strong in comparison to listing inventory. Web traffic on most real estate sites is increasing, as more people are home with time on their hands. The Missoula Organization of Realtors puts out an annual housing report, usually in March of each year. They have delayed that, likely into early May. This will give MOR a better understanding of how the market is reacting, so they can provide up-to-date information. I would encourage people to be on the lookout for that report and to reach out to their trusted Realtor to discuss the market as it relates to their situation.

Missoula and Western Montana have always been an attractive place to live, and we don’t expect that to change. The most important thing we can all do right now is focus on staying healthy and taking steps to limit the spread, so we can get to the other side of this pandemic, and look ahead to when we can come together stronger than before to start building this place we love back up.

Mike Nugent is the Vice President and Managing Broker of Berkshire Hathaway HomeServices Montana Properties.

Real estate

Local Realtors adapt to new, challenging environment

DIANE BECK 2020 President Montana Association of Realtors

REALTORS® or individual office policies as to how we carry out our clients’ business. We use remote technology when we can and are finding that many sellers/ owners want to hold showings and are doing their part by opening doors, drawers, etc. for easy access. We observe social distancing guidelines and carry disinfecting wipes, rubber gloves and disposable shoe covers at showings in an attempt to keep everyone as safe as possible and to limit the spread of the virus.

Every day someone asks me how the real estate market is faring through the COVID-19 pandemic and so far it appears to be moving along, but not at a normal spring market pace.

Families still need housing and there are people that have accepted new employment who need to relocate. We are doing our best to accommodate our clients in this strange new environment.

Our industry is following CDC guidelines, directives issued by Gov. Steve Bullock, and information provided by the National Association of

Our inventory was low when all of this began and there’s still pent up demand from buyers

Realty Can Hit Hard.

Good Realtors® Protect You.

with multiple offers for homes under $400,000 in the Missoula market. We are seeing a few homes listed each week but not at the normal pace we would typically see this time of year.

Many sellers are waiting to see how the market will react when the “Stay at Home” directive is lifted. With interest rates remaining low we believe that the real estate market will be brisk once restrictions are lifted.

We hear reports from all around the state on a weekly basis, and everything above seems to apply in most markets across Montana with a few

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Diane Beck of Missoula is the 2020 President of the Montana Association of Realtors

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exceptions. Montana fared pretty well after the 9/11 incident and again after the “mortgage meltdown” in 2007 -2010.

We expect that we will see a quicker recovery from this than the last recession as interest rates are still very low and people want and need to move for various reasons. Time will tell and our industry will be here to accommodate those that want to relocate.

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&KDPEHU RI &RPPHUFH &(2 :RUNLQJ WR ÀQG VROXWLRQV It’s strange to think that just a few weeks ago, we were complaining about congested traffic and no seating available in our favorite restaurants. We were running to meetings, picking up kids from school, dropping them off at sports or daycare. We were deep into the hustle and bustle with the freedom to go anywhere we chose.

Over the past several KIM weeks, the LATRIELLE Chamber has Missoula Area been focused Chamber of on the needs of Commerce businesses in our community.

Chief Executive First, at the 2IÀFHU request of Senators Daines and Tester, we launched a survey to gauge the needs of Missoula businesses during the epidemic. We relayed the responses we received to the senators so they could better advocate for Missoula businesses while working on relief bills.

Through the survey, we learned about the significant impact COVID-19 and the related stay-at-home orders have had on area businesses. This information was valuable to our congressional delegation as they worked through the CARES Act, providing potential relief for small businesses in our community.

We’ll be reaching back out to our members soon to get information about the long-term needs of Missoula businesses as well as gathering information on the impacts the CARES Act is having on their financial stability.

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MISSOULA BUSINESS • SPRING 2020

BEN ALLAN SMITH, Missoulian

We live in a different world now. As the nation continues to try to flatten the curve on the Coronavirus Pandemic, the Missoula Area Chamber of Commerce is hard at work – from home — advocating for the needs for business and doing our best to support local businesses as they navigate these challenging times.

5REHUW 3HUDLQR SLFNV XS D GHOLYHU\ RI SL]]D DQG ZLQH IURP %ULGJH 3L]]D UHFHQWO\ %ULGJH LV RIIHULQJ contact-free delivery by placing the items ordered on a milk crate and allowing the customer to pick up their items from a safe distance.

We have also created a page on our website to help businesses share changes in their operations. If you’ve changed the way your business is conducting business, please let us know so we can help you share that information with the public if you haven’t already. We’ve highlighted a number of businesses on the site with an emphasis on restaurants within the community who are offering takeout and delivery services. The page currently offers information about a number of industry sectors outside of food and beverage.

The Chamber hopes you are all supporting our local restaurants and businesses by continuing to purchase food, gift certificates and ordering things online from local retailers. Many of those local businesses support local causes like sports teams, community events and all of our nonprofits. Missoula businesses need your support now to get through this period of decreased traffic within

their shops. Show them how much our community rallies to support each other by continuing to give them your business.

Along with several other Missoula organizations, the Chamber participates in a weekly roundtable discussion hosted

by Missoula Economic Partnership.

These virtual meetings are a collaborative effort to share resources and find solutions to help Missoula businesses weather this storm and find solutions to the problems they face. All of the roundtable participants are committed to doing everything possible to help local businesses keep their doors open and their staff employed.

One of the biggest strengths of the Missoula Area Chamber of Commerce is our ability to connect people.

Participating in roundtable collaborative efforts and serving as a community resource for local businesses is where we excel. We’re advocating on behalf of

business on the local, state and national level to find solutions to challenges driven by the coronavirus. While our regular networking events are on hold for now, we continue to connect people virtually and help them find the experts they need to address questions they have.

These are tough times. Social distancing can be a strain on all of us. We encourage you to continue following the guidance of the local health department and help the community flatten the curve on this pandemic. The sooner we can get the virus contained, the sooner we can all return to work and get our economy back on track. In the meantime, remember to support our local businesses and know that the Chamber is hard at work advocating for and supporting the Missoula community.

Thanks for reading, order some takeout tonight and keep supporting our local businesses!

Coverage You Can Depend On Our Mission is to improve the health, well being, and peace of mind of those we serve.

Your Benefits At Work™ MISSOULA BUSINESS • SPRING 2020

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Montanans are strong and resilient.

During our nearly 70-year history, we have weathered many storms together.

We will get through this one too.

Stay home. Stay safe. Take care of yourselves and your loved ones.

WE ARE IN THIS TOGETHER Montana’s Brand of Banking Member FDIC | Equal Housing Lender

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