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About to be hammered? // Economy must diversify to avoid disaster, leaders say

Most of the people living in Hernando County today weren't around when1980 dawned and brought with it a decade of dizzying growth.

Subdivisions sprang up on every sand hill, and strip centers sprouted wherever two roads crossed, or so it seemed. Each passing year was marked by the arrival of more residents, their pockets full of money to be pumped into the Hernando economy.

But this is 1990.

"We're seeing some slowdown signals in the economy of Hernando County just like the rest of the country," said James Kimbrough, president and chief executive officer of SunBank and Trust Co. "Certainly 1990 is not now, and it doesn't look like it is going to be, one of the better years. As we look back over the last 10, 15, 20 years, it looks like it might be one of the softer years for business," said Kimbrough, who recently was elected vice chairman of the Florida Chamber of Commerce.

"It will be a belt-tightening year," he said. "It's going to be an extremely challenging year for people in business."

One challenge will be dealing with a slower growth rate. Fewer people moved to Hernando in 1989 than in any year since 1983, according to state estimates. The county still is growing, to be sure, but not as quickly as it has for more than a decade.

That can cause problems for an economy like Hernando's that gathers much of its fuel from the construction industry.

The single-family home construction industry is in a two-year slump. Unemployment is up.

Housing starts in the county have dropped nearly 30 percent from their peak in 1986-87.

And commercial construction also is slumping, with the number of commercial projects dropping about 30 percent from last year.

Underlying this picture is the uncertainty surrounding the county's comprehensive plan. Officials at the state Department of Community Affairs (DCA) say the plan promotes urban sprawl.

The Hernando plan, DCA officials say, would lead to a county where clogged highways are lined with strip centers and subdivisions are built on isolated cattle pastures.

State and county officials still are discussing changes to the plan to cut down on the amount of land available for residential and commercial development. And Hernando bankers, developers and others nervously are awaiting the outcome.

But while the state is criticizing the county for not adequately planning for growth, county residents are blasting the state for failing to widen State Road 50.

The unwillingness of the state to widen that heavily traveled road could lead to a moratorium on development along its length, said H. M. Shirley, president of Barnett Bank of Hernando.

And if that causes the county's economy to stagnate, the effects could ripple all the way down to homeowners in Spring Hill and all over the county, he said.

"They may not be able to sell their home for what they paid for it years ago," Shirley said.

These factors - the slower growth rate, the uncertainty brought about by the comprehensive plan - underscore the necessity for Hernando County to expand its economic base beyond its traditional reliance on the construction industry, business leaders say.

"It becomes an illusion after a while," said Hal Robinson, executive director of the West Hernando Chamber of Commerce.

Shortcomings in the economy "were covered up by the massive growth in development and the construction industry."

But that "massive growth" is now slumping. And the county's unemployment rate rose to 6.7 percent in 1989, nearly a percentage point higher than the previous year.

"I think the county and the chambers of commerce have failed miserably in providing alternate forms of income," Shirley said.

A diversified economy would help insulate the county during the normal up-and-down cycles in the building industry, experts say. The county also needs to provide more opportunities to keep Hernando County residents in Hernando County, they say.

"Obviously you need the other industry and jobs," said Al Fluman, the county's economic development director. "And not just jobs, but career-type jobs."

Without a larger industrial base, homeowners will continue to bear the brunt of the county's tax burden, developer George Fray said in an interview late last year.

"We need to promote this county, because in the future, if we don't get business and industry to share the tax burden, it's going to fall down like a house of cards when the residential expansion stops 20, 25 years from now," Fray said.

"All too often, we're too busy putting Band-Aids on a broken leg or fighting fires to realize that we have to plan for 10, 20, 25 years down the road.

"We can't continue to run on crisis mode and not get ourselves into serious trouble."