Defining Economic Development

EDD member Pam Mundo of Mundo and Associates, Inc, has asked that our blog pose two timely questions for this week’s post:

1. What is Economic Development?
2. What incentives (other than money, refunds or abatements) should economic developers provide to encourage new investment in a community?

Jurisdictions across the country have tried a myriad of different economic development strategies in recent decades, with varying degrees of success. Traditional local economic development strategies, including industrial recruitment, have remained important tools for many states and municipalities. Lingwen Zheng, (Master’s of Regional Planning ’09, Cornell University) authored this year’s winning paper for the Economic Development Division’s scholarship award - “Trapped in the Race to the Bottom: Who is Using Business Incentives Now?” In the paper Zheng argued “these development strategies [business incentives] have become so persuasive that local governments find themselves in competition with each other to offer business incentives for self-defense, which essentially catalyzes an unhealthy ‘race to the bottom' in economic development policy. This can lead to a process of destructive inter-local competition, with one result that quality of life concerns of residents are often overlooked.” Zheng’s paper found that while staff time devoted to business incentive strategies at local governments decreased between 1994-2004, that those local governments still heavily dependent on business incentive strategies “perceive more intense inter-local competition and face a declining local economy and lower tax base.” (APA Economic Development Division members can read the full paper and its many fascinating insights in the Spring 2009 issue of the News and Views, on our division website).

It is my personal view economic development practice has a tendency to be captivated by short-term trends, many of which perhaps do not yield long-term benefits for local economies. I studied the outcomes Arizona’s well-known 1990s cluster policy, in Tucson, Arizona, which I found were much more limited and somewhat different than what had been initially anticipated. In this decade Richard Florida’s creative class theory captured the attention of many policy makers, but it is yet to been seen how the application of his ideas to local policy lead to positive economic development outcomes. One program I’ve been impressed with recently is South Carolina’s Centers of Economic Excellence, which leverages private investment with state matching funds (coming from lottery proceeds) to make targeted investments in facilities and positions for Centers of Economic Excellence at three state universities. These investments are in academic disciplines that are highly focused, have a potential direct impact on state economy through the generation of spinoffs or other methods, and in which the state has the potential to develop a comparative advantage.

Of course, all of these theories and strategies (and many others that I’ve failed to mention here) involve the use of government funds, as incentives, matching funds for various investments, or other government investments to catalyze local economic development.

So what is your experience with economic development? What do you think constitutes “real” economic development? Are business incentives true economic development if they are essentially used to poach businesses from one location in the country to another? How have some of the major economic development trends in recent years been applied in your locality? What incentives outside the use of government funds can encourage local economic development? Please feel free to discuss not only the economic development practices that I’ve mentioned, but any relevant ones with which you are familiar.

The Clarendon Hotel Challenge

This is the first in a periodic series of blog posts that asks EDD members and our regular blog readers to give their input on a real-world economic development issue.

This week’s economic development challenge involves a small city in Ohio that purchased a historic hotel, the Clarendon Hotel, in its downtown with the hope of finding a private developer to renovate the property as a hotel and restaurant. The city has not been able to find anyone willing to make the upfront investment, and is now considering redeveloping and operating the property itself, until a private buyer can be found, which they believe will take about three years. The city plans to redevelop and operate the Clarendon Hotel through a Community Improvement Corporation (CIC) and a Limited Liability Corporation (LLC).

• Do you know of any examples where something like this has been done – where a municipality, through vehicles like CICs and LLCs, has developed and operated a business for a number of years?
• Are there any alternative approaches the City could take to redevelop this property that you would recommend?
• What organizations and resources might aid the City in fulfilling their desire to redevelop the Clarendon Hotel?

We particularly look forward to hearing from those of you that have experience redeveloping historic properties in small cities across the country!

Announcing the Eco-Industrial Development Guidebook

The Eco-Industrial Development Guidebook and Case Studies aims to provide an orientation for government officials and managers planning or running industrial parks who are thinking of adapting eco-industrial development strategies to their property and region. It is a guide to the process of EIP development, outlining the elements and resources needed to start a successful modification towards sustainable industrial development. The link provides the full Guidebook and over a dozen case studies from the United States and Canada.

The Guidebook is produced by Peter Lowitt, AICP, of the Devens Enterprise Commission and Andreas Koenig, of Eco-Industry.org with assistance of the Economic Development (ED) and Environment, Natural Resources and Energy (ENRE) Divisions of the American Planning Association. We are pleased to provide this valuable resource and trust this will become an indispensable tool in eco-industrial park development and management.

Access the guidebook (APA or ENRE membership required) at:
http://www.planning.org/divisions/economic/guidebook/

APA & EDA Reauthorization

As Bill Anderson pointed out in his posting on the future of the U.S. Economic Development Administration, APA has been working with Capitol Hill on the agency's pending reauthorization and is interested in your input. In July, President Obama nominated and the U.S. Senate confirmed a new director for EDA. John Fernandez is the new Assistant Secretary of Commerce. He has a background in local government as the former mayor of Bloomington, Indiana. With the appointment process complete, Congress is poised to begin serious consideration of the EDA reauthorization following the August recess. After meetings with House and Senate staff, we expect to see committee action in September or October and a final bill by the end of the year.

APA has been working with a coalition of organization interested in EDA issues on the reauthorization. Partners include the National Association of Development Organizations and the National Association of Regional Councils. The coalition has discussed a number of ideas for EDA reauthorization with congressional staff, including:

• Flexibility in local matching requirements
• Linkage to other Obama Administration sustainability initiatives
• Increased support for planning
• New incentives or "extra credit" for innovative or coordinated planning
• Disaster recovery and mitigation activities
• Local and regional data issues
• Flexibility on data requirements
• Changes to state revolving funds
• Expediting project approvals
• New standards and measurement for 'distressed' communities

The comments on Bill's post have been helpful. I wanted to give everyone a more specific sense of some of the issues under discussion and invite you to give APA your ideas and insights. Feel free to email me directly on this issue (or other policy matters) at jjordan@planning.org but post your comments to keep the discussion going.

We'll be discussing this and other new federal initiatives at the upcoming APA Federal Policy and Program Briefing in Washington October 4 - 6. You can get more information and register online.

Thanks for inviting me to join the discussion!

Jason Jordan

Director of Policy & Government Affairs

American Planning Association

Planners and the Green Economy

Green economic development is center-stage this afternoon on a White House blog post. The post is promoting the coalition organization, Green the Block, which aims "to educate and mobilize low-income, traditionally under-served communities to ensure they have the resources and platforms needed to access the benefits and opportunities of the growing clean-energy economy." It also mentions that "through the American Recovery and Reinvestment Act, we've already invested more than $60 billion toward the green jobs of tomorrow."

An article in the Winter 2009 EDD News and Views, "Economic Development and the Green Economy" by Isabelle Xu and Shana Johnson noted that while the "green economy" has become a buzz word, an explicit definition of the nature and potential of green industries is only now developing. APA's Green Communities Research Center currently offers links to two articles on planning for green jobs, but clearly our knowledge on planning for green jobs is still in its infancy. A February 2009 Planning magazine article, "Blue Collar, Green Collar" argued that planners should think ahead and preserve some industrial space threatened by redevelopment for future green industries. (EDD membership is required to view the News and Views article, APA membership is required to view the Planning magazine article).

Today, the division wants to hear your thoughts on the future of green jobs and industries.

How should economic development planners prepare our communities for the green economy?

Has your community been impacted by American Recovery and Reinvestment Act's funds for green jobs training, home weatherization or other renewable energy projects? Are green jobs in demand in where you live? Would you consider targeting green industries or jobs in your economic development plan?

What New Roles for the Economic Development Agency?

Hello members of APA’s Economic Development Division (EDD), including the new members of the Resort and Tourism Division who just joined EDD as a Section. This is the first of what we hope is a continual line of discussion, debate, and exchange of ideas for our Division. We realize that our quarterly newsletter, News & Views, while informative, is not an interactive medium for communication. Our members have questions, solutions, and want to talk with each other across the country. As members of EDD, presumably we value the importance of City and Regional Planning’s role in economic development, and vice-versa. This new blog provides a vehicle through which we can learn from one another. Thank you to Shana Johnson for setting this up.

So, let’s start a discussion. APA has asked us a timely question for our inaugural blog. The Economic Development Agency (EDA) is approaching their re-appropriation this coming session. National APA is already meeting with EDA and is an active participant in thinking about EDA’s future role. The questions APA and we have for our members is the following:

1. What do you think EDA should do in the future as it relates to economic development and planning?
2. What should APA persuade Congress and the Administration to consider regarding EDA’s function and appropriation? What programs should they continue? What should they modify? What should they introduce and fund?

One thing is clear. Economic development and planning issues around the country have some common themes, but many of the specific problems and opportunities are regional. We look forward to providing APA with our diverse input. Just add your comments and respond to others. We will pass them along to APA.

Finally, APA is already planning for the annual conference next year in New Orleans. Our Division has at least two or three “by-right” sessions, including the new Resort and Tourism section. We will send out a notice soon for session proposals, most likely due later this summer. Please start thinking of good session ideas.

Thank you,

Bill Anderson, FAICP

Chair, EDD

Director, City Planning & Community Investment Department, City of San Diego

Welcome!

Welcome to the American Planning Association's Economic Development Division (EDD) Blog!

The Economic Development Division provides an opportunity for American Planning Association members to join others who share an interest in and responsibility for matters related to economic development.

Our Mission is to advance the practice and state of the art of economic development by:

• Increasing the understanding of economic development as a key element of public policy formulation at all levels of government;

• Promoting economic development as a critical element of neighborhood community, regional, and national planning processes;

• Disseminating materials and information about current economic development practice and theory to members of the division;

• Assisting APA in positively influencing economic development policy; and

• Promoting professional communication among members of the division through a variety of member services, including, but not limited to newsletters, web page, conference sessions, workshops, and other publications.

The division aims to accomplish the following goals by establishing a greater online presence through this blog:

1. Raise the profile of the division
   
2. Provide a forum for peer-based dissemination of best practices/knowledge
   
3. Facilitate member-to-member interaction
   

We hope that this blog will contribute to your economic development planning knowledge, and we look forward to hearing from many blog readers, EDD members and non-members alike, in the coming months. EDD officers and invited guests will post updates to this blog at least once a week, so be sure to check back often!