New York investment bankers are telling Avista Corp. that a fund-raising to launch business options at its fast-growing subsidiaries would bring in $200 million less if Avista keeps the subsidiaries headquarters here instead of moving them out of town.


Avista Corp. Chairman, President, and CEO Tom Matthews told a City Forum audience here that gloomy news last month.


When Goldman, Sachs came in, their president came driving down Mission to our office, and his first question was, Whats going on in this town? Matthews said. The Goldman, Sachs executive continued, On Mission Street, coming up to your office, theres potholes everywhere, theres trash everywhere, I see all of these old homes that are just sort of ready to fall down.


Matthews continued, Heres a guy fixing to help me raise $2 billion to $4 billion in the marketplace, and hes saying, Whats going on in this town? If we take these subsidiaries public, and you want the headquarters in Spokane, itll be a 10 percent to 15 percent reduction in valuation. Thats my perception after being here for two hours.


Matthews made the remarks in a speech he titled Collaboration Out of Chaos. In his talk, he also said:


Despite the investment bankers concerns about Spokane, Avista will announce around the end of this month some bright new headquarters for its technology companies. Its unclear, however, whether all of the companies central offices would remain here.


Avista, Telect Inc., and Agilent Technologies right today are seeking a total of 500 technology employeesfor which the three companies are having difficulty finding applicants.


Hes put the Spokane areas economic-development organizations on notice that Avista wont contribute money to them next year unless he receives plans of action from them and assurances that theyll work together.


While other major cities in Washington state take specific requests to Olympia and Washington, D.C., Spokane fails to do that.


In much of his speech, Matthews said a need exists for improved civic collaboration here.


From my view, there seems to be plenty of chaos around town, he said. I think we are at or near the crisis point of what happens in this city.


Matthews warned last June that unless significant changes were made here, Avista would be unable to grow its promising technology subsidiaries to their full potential if their headquarters offices remained here. Those subsidiaries include Avista Advantage, which provides Internet-based specialty billing and information services; Avista Communications, which provides dial-tone and data services to commercial accounts; and Avista Labs, which is developing fuel-cell technology.


Avista recently retained both the investment banking firm of Goldman, Sachs & Co., of New York, and the Silicon Valley law firm of Wilson Sonsini Goodrich & Rosati to help it explore what it calls strategic options for its subsidiaries.


Yet, Matthews said, right now, (the investment bankers) are saying, You ought to have your back office in Spokane because youve got a lot of low-wage jobs. But if you want technology, if you want to attract engineers and programmers and software people, you ought to be either in Issaquah, or Phoenix, or Austin. I said, Well, before we make that decision, I want you to spend some time here, and thats what the two investment bankers weve retained are doing. Theyre spending a lot of time learning the quality of life, which is the only thing about Spokane that he has to sell now, Matthews said.


The Wall Streeters are joggers, and theyre running on the Centennial Trail and they ran behind the child racers in Junior Bloomsday, Matthews said. Theyre starting to understand: The thing we have to market here is the quality of life and the good things we can build around it, because right now the perception of our chaos is that were whining and were not collaborating.


Still, Matthews said, hes optimistic about Spokane: Youve got to remember that crisis is not a place you stay stuck in; its a turning point that you move fromone way or the other.


Right now, were at the point where this chaos is going to leave us with ashes, or its going to leave us with the rebirth of a bright city, and its up to us to decide which one we want. Avista wants to be part of the rebirth of a bright city, and so Im pushing back at all of these investment bankers now, saying, No, we think we can have the headquarters in Spokane. And sometime, probably about the end of May, well be making some announcements at open houses about some bright new headquarters weve opened up here for our technology companies that people will see, something that will really knock their eyes out as to what weve done with high-tech here.


Still, while Avista is trying to make sure the community can work together and advance, at the same time Im getting told by (the) investment bankers, Do you really want to do that? And Im told by my board of directors, We hired you to grow Avista, not to grow Spokane, Matthews says.


Another troubling aspect of the business scene here is that Avista and other technology companies are having trouble finding technology workers, Matthews said. While much has been made of the need to create family-wage jobs here, the Spokane-area companies are creating such jobs, but cant find qualified candidates to fill them, Matthews said.


He and other executives here talk about such things in a monthly meeting with Gonzaga University President Robert Spitzer, Matthews said. Between three of us in the room, we have right today 500 open jobs that we cant get qualified candidates for. Some of it may be the education system, some of it may be the perception of the area, some of it may be just the fact that people read the newspaper and see such passionate views and they dont want to come here.


This year, while Avista Vice President JoAnn Matthiesen serves as chairwoman of the Spokane Area Chamber of Commerce, he has asked her to get the chamber and other economic-development agencies here to solidify their long-range plans, decide how theyll work together, and submit those plans to him.


Right now, it appears to me that weve got 10 different organizations in this city and county that are working in a non-collaborative way on economic development in some form or fashionand we at Avista are funding all 10 of these organizations, Matthews said. Starting next year, nobody gets our money until they can show me results and a focused plan of action for all of the people working together.


In another indication of a lack of coordination in economic-development efforts, Spokanes representatives in Washington, D.C., and Olympia say that while Tacoma, Bellingham, and other cities in Washington state come in with a specific plan, Spokane normally comes in with Me, too, Matthews said. Spokanes representatives in the state and national capitals are asking, What do you want to do? Do you really need to create a research-based educational program that can attract the Microsofts of the world or do you just want to grow? Growth is not specific. Tell us what you want to do, and well help you with that, Matthews said.


So thats one of the challenges were having right now is, how do we get past the whining, how do we get past all the mean-spirited accusations, how do we get past all of the paranoia, all of the sparring that goes on every week and every night?


Im not put off by this as much as you might think because I like debate, and oftentimes at our officers meetings, we have discord and debate, but thats healthy when you talk things out. Even last fall, myself personally and at Avista, we supported change in this community. What we didnt support was destruction. Im concerned, sort of, that thats where were going in Spokane.


Periodically in his speech, Matthews talked with hope about developments in education here. He noted that he and leaders like Spokane developer John Stone are working with Community Colleges of Spokane Chancellor and CEO Charles Taylor to see, can we duplicate what Bellevue has done on their Emerging Technology Center.


Matthews suggested that the former U.S. Postal Service terminal annex property, which Gonzaga now owns, could be used for a new high-tech incubator center. He also said, One of the things that people like (Microsoft Corp. Chairman) Bill Gates tell us is, We wont even think about coming to Spokane till, first, you have a Ph.D. program in technology that attracts a lot of research and grants.


Lots of things already are happening in Spokane, including construction of a new concourse at Spokane International Airport, River Park Squares second phase, an addition at NorthTown Mall, WSU-Spokanes Health Sciences Building, Spokane Community Colleges Allied Health Sciences Building, Cheney Cowles Museums expansion, and KHQ-TVs new headquarters building, plus restoration of Lewis & Clark High School and the opening of Gonzaga Universitys new law school building, Matthews said.


So weve got a lot of examples of how we can do things around here collabora-tively if people will listen to understand, not listen to destroy. Listening to understand is the No. 1 skill in a chaotic world. As you look around to people worth thinking about in leading this community, thats got to be a No. 1 skill we look for. Weve had a lot of leaders who are willing to listen, then abrogate their responsibility and refuse to act.


In this falls elections, Matthews said, Im hoping that we get leadership thats willing to do things different, because if you just look at it right now, you cant just keep talking. Were two years behind on the comprehensive plan, were two years behind on the growth-management plan, were two years behind on streets, were two years behind on economic development. Is that going to continue? Because, otherwise, I think its sort of death in our community, particularly when I look at Avista and what we do here.