primer on economic development
DESCRIPTION
TRANSCRIPT
A Primer on A Primer on Economic Economic DevelopmentDevelopment
Shelby County Economic Development Initiative
Mike Weber, Director
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTBackgroundBackground
Originally the purview of the private sector (Utilities, railroads, banks, and businesses organizations)
Since the late 1970’s it has become a critical function of local government
Often associated with distressed areas
ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENT BackgroundBackground Economic development programs
typically are concerned with:
Retaining existing business and industry Attracting business (manufacturing, service,
and retail types) Nurturing small and start up businesses Downtown revitalization Can include promotion of residential
development as well (small communities)
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENT Program OriginsProgram Origins
Term “economic development” became popular after the creation of the Economic Development Administration – an agency of the U. S. Department of Commerce
Created in the 1950’s during the Eisenhower administration
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTProgram OriginsProgram Origins
Also has roots in the urban renewal programs that evolved from the Federal Housing Acts of 1949 and 1954
At the Federal level, reached a zenith in 1978 with the Urban Development Action Grant program
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENT Program OriginsProgram Origins
Focused heavily on Federal financial assistance to states and cities for:
Infrastructure to build new industrial parks Redevelopment of older industrial and
commercial areas Provided project financing through loans,
grants, and tax-exempt bond financing
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENT Program OriginsProgram Origins
By 1982 there was an “alphabet soup” of Federal economic development assistance programs that cities could draw upon
EDA UDAG IRB EZ CDBG
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENT Program ShiftProgram Shift
The Reagan Administration instigated major shift in public policy, partly attributed to Federal deficit and program abuses
Began a 10-year process of “pulling the plug” on nearly all Federal assistance for economic development
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENT Program ShiftProgram Shift
States and cities told to come up with creative local programs to foster economic development
Reagan coined the phrase “public/private partnerships”
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTThe Shift to StatesThe Shift to States
Federal assistance is extremely limited
Focus shifted to State authorized mechanisms for local jurisdictions to raise funds
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTThe Shift to StatesThe Shift to States
States legislatures have enabled some programs
Most programs enable creative use of local tax revenue to spur economic development
Illinois State assistance in the form of tax credits, loans and major employer attraction
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTThe Shift to States and LocalitiesThe Shift to States and Localities
Focus has shifted to enable cities to use future tax revenue created by a project as an incentive
This is sometimes referred to as:“transactional economic development”
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTIllinoisIllinois Programs TodayPrograms Today
Programs can be grouped by method of assistance Tax Abatement Value Added or “Capture” Tax Assessment Tax Credits Loans
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTTax AbatementTax Abatement
Enterprise Zone
Property Tax Abatement (intergovernmental agreement)
Sales Tax Rebate (local only)
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTValue Added or “Capture”Value Added or “Capture”
Tax Increment Financing (TIF)
Sales Tax Rebate
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTTax AssessmentTax Assessment
Special Service Areas (SSA) Hotel/Motel Tax (tourism) Business District Tax (retail & hotel) Home Rule Sales Tax Non-Home Rule Sales Tax (0.5% max)
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTTax CreditsTax Credits
EDGE Tax Credits (when competing against other states)
Investment Tax Credits (EZ) Historic Tax Credits (Federal) New Market Tax Credits (Federal - low
income communities)
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTLoansLoans
Illinois Finance Authority: Tax exempt and taxable financings Industrial revenue bonds ($1.5 M min.) Agri-Industries loan guarantees Participation loan program Local government bond program
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTIllinois Programs TodayIllinois Programs Today
Local responsibility and initiative County or multi-community Local control and flexibility to build on
opportunities Project based Use public/private partnerships to
leverage public dollars and implement redevelopment
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTGetting StartedGetting Started Determine the County/municipalities
roles in a sustainable economic development program County lead Public/Private Group (Shelby Development
Council) Staff/ED consultant/Both Local Initiatives (community based
development corp.)
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTGetting StartedGetting Started Realistic Assessment of Assets and
Liabilities Quality of life factors (schools, low crime,
recreation) Smaller market
Compile the Facts: Inventory of available sites Job skills – local and adjoining counties Peak season market dynamics
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTGetting StartedGetting Started Know Your Existing Businesses Well
Over 80% of new job opportunities come from expansion of small business enterprises
Be prepared to compete with other cities and states
Networking and Knowledge Resources: Illinois Development Council (IDC) Illinois Tax Increment Association (ITIA) National Association of Industrial and Office
Properties (NAIOP)
Sale Street Looking North - Existing
Sale Street Looking North - Restored
ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTConclusionsConclusions
Economic development doesn’t just happen Local initiatives need to seize the
opportunity or create the opportunity County or region-wide efforts more cost
efficient Public/private collaborative tends to get
better results Get help – staff, consultants or both