Friday, May 28, 2010

3 Questions With Peter Lowitt: Advice for Job Seekers

It's graduation season, and many urban planning students have recently completed their graduate work and are looking for jobs. Recently I got the opportunity to ask some advice from the APA's former EDD chair, Peter Lowitt about advice for those looking for their first economic development position. Here Peter Lowitt shares insight into how the field fares in times of economic hardship and strategies for job hunters.

Alison: Do you find that economic development planning is any more or less recession proof than other areas of planning?

Peter: Economic developers tend to be hired in periods of recession because communities seem interested in attracting jobs-but the position is very political. Economic developers can be seen as the scapegoats if a particular project goes wrong. There’s a saying for economic developers that ‘if it moves shoot it, and if it falls, claim a victory.’

Alison: What should students be looking for if they want to find a job in their area?

Peter: Look at regional planning agencies. Communities are always going to be preparing plans. Look into Chambers of Commerce. A good idea is to look into the International Economic Development Council, which has regional components. For instance, the Northeastern Economic Developers Association, or the Maryland Economic Developers Association.

Alison: What is one thing that you wish all people entering the field knew on day one of their new job?

Peter: Any background that you have in business will help. That is the language that many people you will be working with are used to, and so being able to speak their language is very important.

Peter Lowitt is a Director at Devens Enterprise Commission in the Greater Boston Area, and is the Chair of Green Roofs for Healthy Cities.

Monday, May 17, 2010

Economic Properity Elements - Resource List

Late last year, the blog reviewed Economic Prosperity Elements, and how they differ from typical economic elements of general or comprehensive plans, and invited EDD members to submit links to their Economic Prosperity Elements to EDD. This post provides a listing of Economic Prosperity Elements that were submitted, with some context provided by William Anderson, FAICP, EDD Immediate Past Chair and Director, City Planning & Community Investment Department at the City of San Diego.

Many cities and counties are adding Economic Prosperity or similar elements to their General Plans. These elements help strengthen the link between a jurisdiction’s comprehensive plan and economic development. While most factors that influence economic development are beyond a local area’s control – macro-economic trends, international competition, interest rates, financial markets, etc. – local jurisdictions do have control of factors that can make them more or less competitive in the region, nation, or world. Some of these local factors are traditionally addressed in General Plans, such as land use capacity for industries and targeted sectors, infrastructure efficiency and cost, quality-of-life, housing affordability for the workforce, and environmental quality. Other local factors are not as directly related to land use policies, such as workforce training, education, and access to capital, factors which may be the purview of other organizations and agencies, but are also critical. An Economic Prosperity Element, especially one tied to a regional economic development strategy, can bridge and coordinate these factors and take the General Plan beyond the role of just land use policy. It can also serve as the element that connects a region’s economic development strategy focused on the needs of export-oriented base sectors, to the opportunities for community-level economic development.

This blog provides examples of Economic Prosperity or Economic Development elements from general plans around the country, from small towns to large cities. We hope you can find something useful for your own needs.

EDD is interested in expanding the list provided below, please feel free to submit a link to any Economic Prosperity or Economic Development element that you know of in the comments section of this post.

Thank you,
William Anderson, FAICP
Director, City Planning & Community Investment Department
City of San Diego

Economic Development/Economic Prosperity Elements/Plans Submitted to-date

City of Entiat, WA Comprehensive Plan, Economic Element

Monroe County, Michigan Comprehensive Economic Development Strategy

City of San Diego, CA Economic Prosperity Element

Arlington, VA Economic Development Strategic Plan

Monday, May 10, 2010

Upcoming Course: Cultural Community Development

Former EDD Chair Rhonda Phillips is teaching a Rutgers PDI course, Cultural Community Development, beginning late this month that offers 14 AICP credits! The class will be working with Bisbee, AZ as our project for the studio, have some neat speakers from LISC and other organizations. Find out more on the Rutgers PDI website:

Wednesday, May 5, 2010

Determining the Fiscal Need for Public Intervention in Redevelopment

This week's post is authored by the Bob Lewis, AICP, CEcD, Principal at Development Strategies and the new Economic Development Division Chair. The premise of this post is drawn from a panel session on Spatial Economics at the 2009 national conference of the American Planning Association. Panelists were Steven Shwiff, who heads the Department of Accounting, Economics and Finance at Texas A&M University; Robin McCaffrey, who is a principal with Mesa Design Group in Dallas; and Carissa Cox, an associate with Mesa Design Group. Interpretations of the panel’s presentation in this essay are entirely the author’s, however.

Communities are often barraged with requests for “development incentives” when proposed projects just do not seem to earn a sufficient rate of return. How do public officials figure out which projects deserve incentives?

Any site can be placed on a continuum that indicates the relative balance between the value of the land (i.e., ignoring improvements on the land) and the value of the improvements (i.e., ignoring the land). Almost all property taxing jurisdictions distinguish between the two—land is valued separately from what’s on the land. It’s possible to use the ratio of land-to-improvements value in evaluating incentive requests.

Ideally, the relationship between land value and improvements value will be balanced in a fully thriving community. As the economy is manipulated by the invisible hand toward equilibrium, so says the theory, all real estate values will achieve an appropriate balance. This doesn’t mean that land value is equal to building value, but that there is an appropriate balance that is effectively expressed in the “rents” that the property generates—sufficient income to pay all operating and maintenance expenses, debt service, and a competitive rate of return to the owners.

We all know, however, that a perfect balance for all properties all the time never happens.

To one side of the equilibrium continuum, therefore, would be sites where the ratio of improvement value to land value is too high. To the other side would be sites where the ratio of improvement value to land value is too low.

Properties that have perfect balance do not need public intervention because the economy is operating as it should. Likewise, properties on the “stimulative” side of the continuum do not need public intervention because the underlying value of the land is a strong enough incentive for property owners to develop or redevelop in order to “capture” that value through higher economic rents. That is, if the land value is so strong, then high paying tenants will want to occupy the location, so the property owner needs no economic incentives to, say, build a bigger or better building and attract such tenants.

Where intervention might be necessary is on the “blight” side of the continuum. This is where the value of the improvements is high, but the location value is relatively low. For example, there might be a very expensive building on the site, but the site is too poorly located to attract tenants willing to pay rents that reflect the value of the building. So the building remains underutilized, probably with poor maintenance, and can become a blight in the community.

All cities have experienced varying degrees of these conditions. The corner of “Main and Main” in a vibrant downtown, for example, represents a site either in balance or in a stimulative condition. But a formerly successful shopping center on a major arterial road might no longer be well located because major retailing has moved to the interstate highway interchange. Demographic and household income shifts also change the location value of shopping centers.

‘Blighted” might be too strong a word in some cases, but there are properties that are clearly blighted while others we tend to call “marginal” because they show early signs of imbalance favoring the value of the improvements. For whatever reasons, the value of the land is diminishing relative to the operating costs and value of the building. In such cases, there is technically no economic incentive for the property owner to improve the property to a higher value. Stronger rents cannot be achieved at that location. Thus, the building is effectively allowed to deteriorate to a value more in balance with the value of the land—and rents will inevitably decline.

Ridding that blight requires improving the value of the land and/or reducing operating costs. A city government might work harder to reduce crime, increase the quality of the utilities, or re-pave the street to increase the site’s location value. Indeed, these are useful intervention techniques for properties just beginning to go out of balance on the blight side of the continuum.

More drastic measures, however, are required for more advanced stages of blight. Thus, cities often offer to buy the land and turn it over to a developer at no cost, thus reducing the new property owner’s exposure to the rate-of-return imbalance. Or substantial public infrastructure investments might be made to increase the location value. Tax increment financing is often an appropriate tool in this case because higher values, triggered by the “new” infrastructure, should generate “new” taxes, some of which can be siphoned off to pay for the needed improvements. Tax abatements, tax credits, direct payments, etc., may also reduce the property owner’s exposure to the improvement/land imbalance and/or to increase the location value of the site.

What defines “balance,” however? In most communities, a simple indicator could be the aggregate value of all land divided by the aggregate value of all improvements (or vice versa). This is, in effect, the average for the entire community. Individual property ratios that significantly deviate from this ratio can be identified as opportunities for higher value development (stimulative) or opportunities for public intervention (blighted). Multi-year measures of this aggregate balance can be utilized to minimize statistical variations year-to-year.

Perhaps even better is to determine the equilibrium ratio using a much larger geographic area, say a county-wide or metropolitan-wide measure. A central city might have its own balance, but that ratio might not be the same as, say, the adjacent suburban county. Thus, a metro average might be a more appropriate “goal” though it could mean that a disproportionately high number of central city properties fall into the blighted end of the continuum while the suburban properties are more weighted in the other direction.

In any event, this equilibrium concept can be an effective indicator of properties needing public incentives and those that shouldn’t need such incentives. Public officials need to marshal resources as carefully as the private sector, so the use of such statistics can guide better decision-making.