Economic Development and Redevelopment, Housing

The multiple constituencies/groups interested in economic development

• federal, state, and local governments

• economic development organizations

• workforce development agencies

• chambers of commerce

• private businesses

• anchor institutions

What is the role of local government

clearing and assembling land for business

underwriting risk

providing amenities and infrastructure

promoting economic development

providing/supporting workforce development

changing tax structure

modifying regulations

Economic Agglomeration Theory

firms/people benefit from efficiencies brought by proximity, including:

lower transportation costs

boosts in productivity

higher wages

economic activity concentrates in urban centers

Creative Destruction

incessant product and process innovation is a mechanism by which new production units replace outdated ones, like newer model cars replacing older model cars.

economic concentration and consolidation has continued to increase

Economic Base Theory

divides regional industries into Basic (export sectors) and Non-Basic (local sectors)

assumes that export industries drive regional economic growth

they have a higher multiplier effect on the regional economy

Industry Cluster Theory

geographic concentration of interconnected firms and institutions in a particular field/market (dr. Michael porter)

together, they develop synergies that lead to a competitive advantage and economic specialization

example: silicon valley with technology

Economic Gardening

rather than competing to attract new companies, you can grow your own

focus on high growth companies creating most new jobs

establishing of facilities dedicated to supporting start-ups and small businesses, including accelerators, business incubators (facility that provides infrastructure for start-up businesses), and coworking spaces

Creative Class Theory

global shift from manufacturing to creative industries (like hair dressers)

economic success predicated on a region’s ability to attract innovators

criticized for exacerbating inequality by spurring rising costs in urban areas

richard florida

3T’s framework: technology, talent, tolerance

Innovation Districts

are dense, mixed-use urban area where leading-edge anchor institutions (like universities of hospitals) cluster and connect with start-ups, business incubators, and established companies

proximity nurtures collaboration between different sectors and promotes innovation

Economic Measuring Tools

Economic Structure Analysis

Location Quotient

Shift Share Analysis

Economic Forecasting

Cost Benefit Analysis

Fiscal Impact Analysis

Input/Output Models

Gini Coefficient

Economic Structure Analysis

identify distribution of economic activity by industry in a local/regional economy

several levels of complexity due to digits based on the north american industry classification system

Location Quotient Analysis

ratio of economic activity from local economy against the reference economy/national economy

LQ = 1 means you have same proportional businesses as national avg

LQ > 1 means you have an export capacity for services or goods

LQ < 1 means you have less of proportional industries as national avg

Shift Share Analysis

analyzes growth/decline differences between local and national economies

three components of change

1. national share: growth/decline of nation’s economy

2. industry mix (proportionality shift): influence industry’s national growth rate on regions economy

3. regional share (differential shift): industries expanding more or less rapidly in regions than nation

Economic Forecasting

process of predicting future economic conditions using historical data, statistical models, and key indicators

used to make informed decisions regarding taxation, interest rates, hiring, and investments

hard to approximate complex human behaviors and unforeseen global events, therefore forecasters typically provide a probability range rather than a single absolute number

Cost Benefit Analysis

a form of project analysis in which the future benefits and the future costs of alt projects in economic terms are discounted to present value and ratios computed to compare diff alts

opportunity cost: potential benefits a business or person may miss out on when choosing one alt over another

Fiscal Impact Analysis

also known as cost revenue analysis, used to determine whether developments will generate enough taxes/revenues to pay for public services

average cost method: assumes each new redisent of employee generates municipal operating costs equal to the current per-capita average

marginal cost method: site-specific characteristics, assessing the extend to which the enw development will push existing services over capacity

Input/Output Modeling

estimate economic impact of investments or policies

use industry multipliers

estimates direct, indirect, and induced effects

Retail Market Analysis

way of estimating how much retail activity (bldg space and land zoned for retail) will be required by a community in the future

Gini Coefficient

gauge distribution of income/wealth within population

determines how far distribution deviates from perfect equality

index 0-100, with larger number reflecting more inequality

Equitable Redevelopment

a clearly defined process for determining eligibility of designating areas

assurance that the public/private partnerships adhere to the adopted plans of the jurisdiction.

Community Redevelopment Strategies

create special districts/programs

write a master/strategic plan

provide tax incentives

create/increase tax base

infrastructure and beautification improvements

Enterprise/Empowerment Zones

specific geographic areas that have high levels of unemployment/poverty

offer variety of incentives to attract new businesses and investment, including:

job tax credit

property tax abatements

property tax credits

sales tax refunds

Opportunity Zones

created under the Tax Cuts and Jobs Act of 2017, program designed to allow people to invest in distressed areas using opportunity funds

Enterprise Zone versus Opportunity Zone

Opportunity Zones focus on long-term investment with capital gains tax benefits, while Enterprise Zones provide immediate business incentives like tax credits and property abatements

Tax Increment Financing Districts

used for blighted areas

captures rising property tax revenues - reinvesting “increment“ from property value growth

Neighborhood Improvement District

public-private partnership that contributes to the maintenance, development, and marketing of the commercial district

overseen by a board of directors

Brownfields Program

addresses properties whose redevelopment/reuse is complicated by perceived or contamination

some services include:

phase I/II environmental assessments

associated activities

clean up planning

planning of brownfield sites

Main Street Programs

public-private partnership allowing merchants to be involved and responsible in revitalization efforts

combines historic preservation with economic development

used to revitalize old commercial corridors and downtown areas

Capital Improvement Program

5-6 year schedule of capital improvement projects - is one of local government’s most powerful tools supporting both commercial/industrial and residential growth

civic centers, libraries, museums, fire and police stations, etc.

based on estimated project costs and revenue forecasts

Community Development Financial Institutions (CDFI)

specialized, mission driven financial institutions that provide fair, responsible lending and financial services to economically distressed or under-served communities

certified by the us treasury, they counterbalance historical inequality by funding small businesses, affordable housing, and community facilities

Community Development Corporation

a 501(1)(3) nonprofit organization created to revitalize underserved or low-income neighborhoods

bridge between community members, local government agencies, and private investors

Worker Cooperatives

a cooperative puts worker and community benefits at the core of its purpose

workers own business and participate in its financial success on the basis of their labor contribution

workers have representation on and vote for board of directors