helps spur reinvestment in distressed commercial … andrea surratt, dave leonetti, and mike bennett...

BY ANDREA SURRATT,DAVE LEONETTI,AND MIKE BENNETT

Helps Spur

Reinvestment

in Distressed

Commercial

and Industrial

Corridors

Operation NoVacancy

This article is based on the case study application the City ofHickory,North Carolina,submitted to the Alliance for Innovationfor its May 2009 Transforming Local Government conference.The Alliance for Innovation is a networking association for citiesand counties that are committed to innovation and transform-ing local government. For more information on the alliance, goto http://www.transformgov.org/.

T he changing nature of industrial and commercialdevelopment has led to disinvestment in certain areasof Hickory,North Carolina. In response, the city recent-

ly undertook a program called Operation NoVacancy, an eco-nomic development initiative that aims to attract reinvest-ment in distressed commercial and industrial corridors.An innovative vacant building inventorytool and grant program, OperationNoVacancy encourages new and existingbusinesses to locate in vacant and under-used buildings within six target redevel-opment zones.

The program got underway in 2007,when the fire and planning departmentsasked a management intern to developan inventory of all the vacant commer-cial and industrial buildings in Hickory(population 41,000). After reviewing amemo and map of the vacant buildings’ locations, the CityCouncil initiated Operation NoVacancy in February 2008.During an open comment session, one council member — astaunch supporter of redevelopment efforts in the central cityarea — focused the discussion on the fact that the city hadmore than one million square feet in vacant space available,cluttering the landscape and providing a reminder ofHickory’s changing economy.The city has experienced a majorshift in its economy, having lost more than 29,000 manufactur-ing jobs between 2000 and 2007. In 2000, manufacturing jobsmade more than 42 percent of jobs in the region; in 2007,only31 percent of jobs were in manufacturing. One alderwomansuggested that staff develop a grant program and provideincentives for major employers to retain employees or expandtheir business and to think creatively to address this problem.

In response to this discussion, city staff formed theRedevelopment Committee, which included representativesfrom the city manager’s office and the planning, fire, commu-

nity, economic development, public services, and CatawbaCounty building services departments.The committee’s majorwork focused on five areas:

■ enhancing the vacant building inventory that was developed in 2007

■ designating a commercial revitalization area

■ creating a vacant building revitalization grant program

■ unifying existing redevelopment programs

■ reaching out to stakeholders

The makeup of the committee enabled divisions, sectors,and jurisdictions to cross typical boundaries and share infor-mation toward a common purpose.As simple as it may sound,the ability to come together in this way was the key to devel-oping an innovative program and achieving a common goal.

VACANT BUILDING INVENTORY

The Fire Department historicallytracked which buildings were vacantwithin the city, for fire prevention pur-poses. The intern assigned to the inven-tory project started out by enhancingthe fire department’s listing, which con-tained only a building’s address andwhether or not it was vacant.The internadded property information such asbuilding square footage, ceiling heights,

zoning information,photos,realtor information,historic desig-nation, etc. (See Exhibits 1, 2, and 3 for screen captures ofinformation available on the Web site.) The intern visited eachproperty to take photos and obtain real estate contact infor-mation. Much of the information on building square footagecame from the county assessment reports,which are availableonline, and information about sprinkler systems was on filewith the Fire Prevention Bureau. This additional informationallows developers, site selectors, preservation groups, andother interested parties to see which buildings might fit theirneeds. Property listings are also available in PDF form.

The inventory is also available as a layer on the city’s geo-graphical information system (GIS) site, which is also avail-able online.This allows users to access a wealth of additionalinformation such as the location of the floodplain, infrastruc-ture locations, topographical information, and aerial photog-raphy. The GIS site has a query function that allows users tosearch for buildings that meet specific criteria.

June 2009 | Government Finance Review 25

The city had more than one

million square feet in vacant

space available, cluttering the

landscape and providing a

reminder of Hickory’s changing

economy.

26 Government Finance Review | June 2009

While it is relatively common for local and regional eco-nomic development corporations (EDCs) to have GIS-basedinventories of available sites, the city’s inventory takes theanalysis one step further. Most EDCs only focus on sites thatare being actively marketed by the development or real estatecommunity. Hickory tracks all vacant structures, allowing staffto enhance the redevelopment component of the initiative.A significant percentage of the vacant buildings in the revi-talization area are not being actively marketed, and many are obsolete commercial and manufacturing facilities locat-ed in areas that the traditional real estate market has leftbehind.Operation NoVacancy is devoted to tracking all prop-erties where redevelopment needs to occur, which is very

uncommon in ordinary governmental operations. OperationNoVacancy represents a proactive approach to solving a cityissue that also assists the private market. This approachaddresses issues affecting not only development, but also the quality of life within the targeted redevelopment zones.

By making it possible for employees from different divisions

to work together,Hickory was able to use existing information

to create an interactive tool and develop a consolidated pro-

gram that encourages redevelopment of commercial proper-

ties. With the exception of GIS support from the Western

Piedmont Council of Governments, all the work was per-

formed in-house.

Exhibit 1:Web Platform to Operation NoVacancy Inventory Tools

COMMERCIAL REVITALIZATION AREA

GIS software allowed staff to plot allvacant structures on a map (see Exhibit4).The Redevelopment Committee identi-fied clusters of vacant buildings,which ledto the designation of six targeted redevel-opment zones. The city adopted a rede-velopment plan for each of the six areas.

The West Hickory/Green Park zone was chosen as a pilotproject for the program. This area contained a high concen-tration of vacant and obsolete manufacturing facilities, sur-rounded by older residential areas that were, for the mostpart, reasonably stable. City officials were concerned, howev-

er, that this area would continue todecline without intervention. The planproposes sidewalk,bus shelter,and curband gutter improvements that havebeen identified as a priority in the city’ssidewalk master plan and in the WestHickory/Westmont Neighborhood Plan— $300,000 was budgeted in the 2008 -2009 fiscal year budget to complete thiswork as the city’s capital contribution to

the West Hickory community,which must live with the impacton the landscape of numerous vacant buildings.

The proximity of these six led to the creation of a unifiedcommercial revitalization area. The committee is working to


Exhibit 2:Vacant Building Inventory Listing

Another important aspect

of Operation NoVacancy is

marketing and improving the

city’s existing redevelopment

programs.


unify all the areas that qualify for the city’s redevelopmentprograms into one map. Doing so will help target programimpacts to the area of greatest need and make eligibilityrequirements easier to understand.

VACANT BUILDING REVITALIZATION GRANT PROGRAM

The Vacant Building RevitalizationGrant is one of the core programs ofOperation NoVacancy. The grant isintended to encourage the reuse of exist-ing buildings within the designated com-mercial revitalization area that city staffhave identified as vacant or under-used.The city earmarked $250,000 in the 2008– 2009 fiscal year for this grant program,

which is designed to help owners of vacant and under-usedproperty make improvements that will result in the occupan-cy and reuse of the buildings.

The program offers matching funds of up to $25,000 for proj-

ects that renovate vacant or under-used buildings in the com-

mercial revitalization area.Funds can be

used for exterior improvements, demoli-

tion of substandard buildings, and interi-

or improvements necessary to protect

the structural integrity of buildings. The

redevelopment committee reviews the

grant applications,and priority is given to

brownfield sites. One grant is currently

underway, and another is awaiting final

approval by the City Council.

Exhibit 3: GIS-Based Vacant Building Inventory

The city has seen increased

interest from potential develop-

ers and potentially expanding

companies in redeveloping

vacant commercial buildings.

EXISTING REDEVELOPMENT PROGRAMS

Another important aspect of Operation NoVacancy is mar-keting and improving the city’s existing redevelopment pro-grams. The city already offered a number of programs thatencouraged redevelopment, including landscape incentivegrants,facade improvement grants,and tax incentives for proj-ects in a commercial revitalization area. One of the goals ofOperation NoVacancy is to unify each of these programsunder one eligibility map.This not only helps target the effectsof the programs, but it also makes it easier for citizens tounderstand the programs for which a particular property iseligible. City staff has developed brochures and other promo-tional materials to use for targeted mailings and distributionto potential stakeholders,as well as improving Web content tohelp promote the city’s redevelopment programs.

As a result of Operation NoVacancy’s success, Hickory’srevised economic development assistance guidelines nowpromote the reuse of vacant industrial buildings. The guide-lines, revised in June 2008, now provide an additional 10 per-cent of funding per year and/or an additional year of proper-ty tax incentives back to the company, which must meet thethreshold of $1.5 million in new investment and a minimumof 20 jobs. As an example, a company that invests $5 millionand adds 20 new jobs would normally receive a 3-year,65 per-cent grant in property taxes owed to the city. If the companyuses a vacant building on the inventory list, the incentivecould be increased to 4 years and 70 percent, upon approvalby the City Council. In this scenario, the incentive generatedby an additional year and an additional 10-percent propertytax grant takes the grant from $48,750 over a 3-year period to


Exhibit 4: Commercial Revitalization Map Plotting Vacant Buildings


$70,000 over a 4-year period — an increase of $21,250 forselecting a vacant building.

The program also works in conjunction with Hickory’sBrownfield and Community Development Block Grant(CDBG) programs. For example, the city’s brownfield grantwill be used to pay for environmental assessments on vacantand under-used buildings, while CDBG funds can be used forsidewalk and other infrastructure investments. CDBG fundsare also used for a first-time homebuyers program and a hous-ing rehab loan program.This helps strengthen many of the res-idential neighborhoods adjacent to the commercial andindustrial corridors where a number of the vacant buildingsare located. Staff has compiled information about these pro-grams and applicable state and federal programs as aresource to citizens, realtors, and developers.

STAKEHOLDER OUTREACH

As an ongoing process, the committee works with stake-holders to improve the process for occupying existing build-ings and solicit feedback on potential programs. Staff hasworked with Catawba County’s building inspection depart-ment to develop a document that explains some of the issuespeople may come across when trying to occupy existing

buildings.The document outlines implications of changes inuse or occupancy classification,which allows citizens to lookmore critically at some of the issues that may arise whenadaptively reusing a vacant building.The committee has alsoconsulted with local real estate professionals to gain per-spective on potential programs.

The committee makes presentations to the City Council andto neighborhood associations to get their feedback on howthe initiative can assist property owners. All of the neighbor-hood associations are concerned with proactive codeenforcement for both residential and commercial property.The police officer in charge of code enforcement was recent-ly added to the committee to ensure that these concerns areaddressed along with other revitalization efforts.

Also,in partnership with a local historic preservation organ-ization, the committee has helped develop resources aboutprograms available for historic properties. This initiative hasjust gotten underway.The group continually works with localprofessionals to gain additional information about sites andget input about potential redevelopment strategies. It is cur-rently working with a number of property owners to redevel-op a few of the historic mill buildings in town.These buildingsare either already listed on the national register of historicplaces or are on the study list.

RESULTS AND GOALS

The city has seen increased interest from potential devel-opers and potentially expanding companies in redevelopingvacant commercial buildings. Three recent projects havecommitted to occupy more than 375,000 square feet of man-ufacturing and office space in vacant buildings. One is a sub-sidiary of a national home furnishings retailer, which recently

Operation NoVacancy

The City of Hickory recently presented its OperationNoVacancy initiative at a May 2009 Alliance for Innovationconference that presented cutting-edge programs from localgovernments across the country.The program earned an outstanding achievement in innovation award from the alliance.

For more information on Operation NoVacancy or the VacantBuilding Inventory, call Dave Leonetti, planner, at 828-323-7422or go to the Planning and Development Department sectionat www.hickorygov.com.

committed to occupy a vacant facilityfor a plant that makes upholstered fur-niture products.

Using in-house resources to con-duct the inventory of vacant buildingshas saved the city more than $15,000during the inventory process for itsbrownfield program. This will allowthe city to perform more environmen-tal site assessments than previouslyanticipated. The city received two$200,000 brownfield assessmentgrants from the U.S. EnvironmentalProtection Agency to assess whetherany environmental contaminationexists on these properties and forredevelopment planning, including creation of a clean upplan for properties. The grant does not pay for remediation,but the city can apply for additional funding when the grantcycle is finished.

The Operation NoVacancy program is still in its beginningstages, and the committee is developing performance meas-ures.These will include:

■ net square footage of vacant buildings reoccupied

■ number of people reached through marketing efforts

■ hits to vacant building inventory and redevelopment Webpages

■ number of vacant buildings toured and summary reportscompleted

CONCLUSIONS

A common barrier to the redevelopment of vacant com-mercial buildings is the lack of information available to poten-tial buyers and local governments to easily access and searchproperties. In Hickory, most commercial realtors do not shareinformation about other realtor’s listings,as they do in the res-idential sector.Before the city’s vacant building inventory wascompleted, staff had to make numerous phone calls to com-mercial realtors to fulfill economic development requests forbusiness owners looking to locate in an existing building.Theinventory has greatly improved staff response time to theserequests. Small business owners can also now search the listthemselves to find buildings that might meet their needs. Inaddition the vacant building inventory tool serves as free

advertising for vacant commercial andindustrial buildings within Hickory.

The inventory has helped staff iden-tify corridors in need of redevelop-ment and enhanced staff’s ability tocreate realistic plans for corridor rede-velopment. Identifying these corridorsled staff to conduct a comprehensivereassessment of existing redevelop-ment programs and develop new pro-grams.In addition,citizens benefit fromimproved quality of life, aesthetics,increased property values, andimproved transportation within theredevelopment of corridors in whichthey live, work, travel, or engage in

recreation. Designating the commercial revitalization areaensures that the city’s redevelopment dollars are targeted tothe areas where need is great and the dollars will have themost impact. ❙

ANDREA SURRATT is assistant city manager for the City of Hickory,North Carolina. In addition to overseeing the Operation NoVacancyproject, she manages and oversees several city departments; devel-ops and directs preparation of city policies; leads implementation ofcity master plans; assists the city manager with strategic planning,including economic development and long-range infrastructureneeds; accomplishes City Council goals and objectives; and serves asthe city's representative in regional and state forums. Surratt has 16years of local government experience. Before coming to Hickory, shewas planning directory for Moore County, North Carolina, andbefore that, she was town manager of Wrightsville Beach. She alsoserved as the director of planning and inspections with WrightsvilleBeach, North Carolina; planning and development manager inWilmington, North Carolina; and as a planner for the City of Nixa,Missouri. Surratt received a master’s degree in city and regional plan-ning from Clemson University and a bachelor of arts in political science from Guildford College. DAVE LEONETTI is a city planner forHickory. He began working for the city in 2007. Bennett has a mas-ter of Public Administration from the University of North CarolinaChapel Hill and a bachelor of arts from St. Joseph’s University. MIKE

BENNETT is the assistant to the city manager. He began working forthe City of Hickory in 2007. Bennett has a master of PublicAdministration from the Brigham Young University and a bachelor ofscience from Utah State University.


A significant percentage of the

vacant buildings in the revitalization

area are not being actively market-

ed, and many are obsolete com-

mercial and manufacturing facilities

located in areas that the traditional

real estate market has left behind.

Operation NoVacancy is devoted

to tracking all properties where

redevelopment needs to occur.

helps spur reinvestment in distressed commercial … andrea surratt, dave leonetti, and mike bennett...

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