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Thread: Non-traditional ways of economic development

  1. #1
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    Non-traditional ways of economic development

    I am trying to find examples of cities that are using new methods of economic development besides the traditional, FAR incentives, Tax Incentives or just general rezonings. Does anyone know of any examples or methods that can be used

  2. #2
    OH....IO Hink's avatar
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    Providing demographic data or marketing data can be an incentive. Being able to help a company justify your community without them having to run the numbers can save thousands of dollars for a prospective business.
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    Cyburbian wahday's avatar
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    Not sure exactly what kind of economic development you are trying to get going. Some more details about what you are hoping to accomplish might get you more responses.

    When I was in planning school, I took a real estate development class that made me think the same thing Hink mentioned. We had to do extensive site analyses for theoretical projects and part of the process was market research and a construction pro forma, including cash flow analysis for during and after construction. This was a real eye-opener for me to get a better understanding of what real estate development really entails (and now that is what I am doing, though for affordable housing)

    In the end, I thought that if a city really wants to be proactive about attracting certain types of businesses to certain parts of town, it may be worth their effort to do a preliminary market analysis and pro forma to show that such a project is indeed profitable. That is much more likely to get the atttention of key developers/businesses. A developer will still do these things anyway (or at least they should) but showing a site as viable for the identified development gets them interested and in the door. It also helps the city decide what types of developments are realistic for different locations. Its easy for us to envision a coffee house here, a bookstore there and an office park around the corner. But its a lot more complicated to attract such businesses to a place that really isn't suited for them.

    Somehow this discussion also fits into a previous one about the often testy relationship between developers and city planners. I think both parties could use to know more about what the others' work actually entails.
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    Cyburbian Brocktoon's avatar
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    What is the goal in seeking non tradiotnal economic development strategies? If you are talking inducements then there is infrastructure improvements, there is job training grants, synthetic leases, sale leasebacks, straight cash to an end use, sales tax rebates etc. The deal, its structure and its gap will determine how a development incentive will occur. I have worked in three different states and what was normal in Michigan is illegal in Arizona. Besides the detail of the deal, the goals you are trying to achieve the legal space inwhich you can work is also part of way economic development occurs.
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    Cyburbian Hawkeye66's avatar
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    I would be interested to see what sorts of incentives or other breaks cities use for small businesses. I don't mean retail. I mean perhaps a small industrial shop with 20-40 employees.

  6. #6
    Cyburbian Brocktoon's avatar
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    Quote Originally posted by Hawkeye66 View post
    I would be interested to see what sorts of incentives or other breaks cities use for small businesses. I don't mean retail. I mean perhaps a small industrial shop with 20-40 employees.
    It would depend on three items: state law, wages of the 20-40 people and on their capX. If the project was in Michigan and its a new build in a city owned industrial park I would start with reduced cost land, personal property tax abatements for new equipment and possibly a real property tax abatement depending on the communities I was competing with. If its a retention play then I would probably look for incumbent and new workforce training assistance and potentially a personal property tax abatement.

    In my current state I would not do much other than pontentially rebate a portion of the construction sales tax (for a new build legal but highly unlikely), possibly abate so plan review fees and help them with a workforce grant from the state.If the investment was over $5m and the wages were over $34K and they were subject to state corporate income tax then I would assist them in applying for the a tax credit.
    "If you don't like change, you're going to like irrelevance even less" General Eric Shinseki

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    Cyburbian btrage's avatar
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    We've been approached about using a 63-20 Corporation to help finance a hotel development.

    http://www.nossaman.com/the-use-6320...cture-facility

    It is essentially a municipal sponsored nonprofit that is set up to go out in the municipal bond market for financing. The financing is based on future hotel revenue. The municipality would then own the development after the bonds are paid off. It could keep it or sell to a private developer at that point.

    Does anyone have any direct experience with 63-20 or have any insight into positives or potential drawbacks.
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    Cyburbian Raf's avatar
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    It's more traditional in a sense but we kept our building permits alive through a dormant permit program. Basically this gave developers the ability to pay lower fees for permits that were ready to be issued or were issued and abandoned. We simply required a $175 fee and an update of plans if projects weren't pulled by 2011. It has really helped with our housing recovery.

    We have also done fee deferment for a new hotel project. This will save the developer 600K to use towards financing and construction and is due in 5 years.
    Men do dumb $hit... it is what they do to correct the problem that counts.

  9. #9
    Super Moderator luckless pedestrian's avatar
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    I like the idea of deferment of payment on building permit fees for large projects

    for rural communities that can't offer much beyond our TIF and good advice, what else is there?

    We use CDBG funds for facade projects and we do have a micro loan program

  10. #10
    Cyburbian ursus's avatar
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    I like the idea of the deferred fees for large projects too. Simple, yet probably effective.

    I've been reading the information from btrage's link and I think it sounds like it could be really useful. I wish I had something more to offer but I'm going to be lurking on this thread trying to pick up ideas. All we do are "facelift" loans for businesses in certain corridors and kick in help with demo costs all the time. We have no big, impressive or truly creative incentive programs running.
    "...I would never try to tick Hink off. He kinda intimidates me. He's quite butch, you know." - Maister

  11. #11
    Cyburbian Raf's avatar
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    Quote Originally posted by ursus View post
    I like the idea of the deferred fees for large projects too. Simple, yet probably effective.
    This was a huge Coup by our outgoing assistant CM. Brought in a large high end national hotel operator whom will build a hotel with a large conference center. That alone was the biggie in the deal simply to get more people into town for things such as weddings, etc since there is a lack of large conference space. The TOT tax more than makes up for the deferment in fees. We amended the CUP for this project in less than 4 weeks. We truly fast tracked this sucker.

    Deferring rather than waving is a great tool, especially with income generating uses.
    Men do dumb $hit... it is what they do to correct the problem that counts.

  12. #12
    Cyburbian ursus's avatar
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    Quote Originally posted by Raf View post
    This was a huge Coup by our outgoing assistant CM. Brought in a large high end national hotel operator whom will build a hotel with a large conference center. That alone was the biggie in the deal simply to get more people into town for things such as weddings, etc since there is a lack of large conference space. The TOT tax more than makes up for the deferment in fees. We amended the CUP for this project in less than 4 weeks. We truly fast tracked this sucker.

    Deferring rather than waving is a great tool, especially with income generating uses.
    I'm a huge copycat so you can beat me up later at recess. We're trying to close the deal on a hotel coming to our little burb and I ran right over to talk to the CM about this as an idea. Yes, I have no shame. Thanks!
    "...I would never try to tick Hink off. He kinda intimidates me. He's quite butch, you know." - Maister

  13. #13
    Cyburbian Raf's avatar
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    Quote Originally posted by ursus View post
    I'm a huge copycat so you can beat me up later at recess. We're trying to close the deal on a hotel coming to our little burb and I ran right over to talk to the CM about this as an idea. Yes, I have no shame. Thanks!
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  14. #14
    Cyburbian Cardinal's avatar
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    Based on this discussion I am interpreting your question to refer to real estate development, but the field of economic development is very diverse and might also include business development, entrepreneurship, work force, etc. As others have suggested, packaging a deal is a good approach. Develop a concept, prove the market, and show that it is profitable. Then go out to recruit developers. Too many cities simply say "we have this piece of land and want proposals on it". They get none, or ones that they would be better off not having. On commercial projects you always have the option to be the tenant, or one of the tenants. What offices you might consider puttin in depends on the neighborhood and the development project, but perhaps a branch of the library, a police substation, or economic development office.

    Don't forget that your other actions impact the development you want. Too many communities will say "We want to preserve the vitality of our downtown and existing commercial areas", and then show a square mile of land near the highway as future commercial in their comprehensive plan. (Yes, this is a real example from a community of 15,000.)
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