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Home My WebLink About2008 01-29 & 01-31 CITY Of ST. JOSEPH www.cityofstjoseph.com St. Joseph City Council Council/Staff Workshop January 29, 2008 8:30 AM - 2:00 PM Conference Room Judy Weyrens Administrdtor MdYor AI Rdssier A workshop with members of the City Council and City Staff will be held on Tuesday, January 29,2008. The purpose of the workshop isto foster discussion between Council and Staff on various issues of mutual concern. Although a quorum will be present, no official action will be taken. Councilors Steve Frdnk Rick Schultz Renee Symdnietz Ddle Wick 0000000000000000000000000000000000000 St. Joseph City Council Council / Staff Workshop January 31, 2008 5:00 PM Conference Room The purpose of the meeting is to review the proposed Capital Improvement Plan. 2., College Avenue North' PO Box 668 . Sdint Joseph, Minnesotd ,6,74 Phone 12.0.)6).72.01 FdX )2.0.)6).0)42. www.cityofstjoseph.com CITY Of ST. JOSEPH DATE: January 16, 2008 MEMO TO: Economic Development Authority /udy Weyrens Administrdtor FROM: Cynthia Smith-Strack Municipal Development Group RE: 2008 Goals and Transition to Staff CDD MdYor AI Rdssier Background: As announced at the previous meeting, the City has provided funding for a full-time staff level Community Development Director. As you are also probably aware, State Economist Tom Stinson has stated Minnesota in a recession. Councilors Steve Frdnk Rick Schultz Renee Symdnietz Ddle Wick In an effort to provide background for the candidate selection process and ideas to help St. Joseph approach an economic downturn, I've assembled some information for your consideration. Economic development is the process by which local communities organize and engage in tasks to stimulate or maintain business activity and/or employment as a means of improving the economic well-being and quality of life for the geographic area. Economic development does not occur within a vacuum but rather functions as part of the community environment. To those ends, economic development is a long-term investment of time, people, limited resources and skills. The nature of economics is cyclical so economic development and change will occur whether or not they are planned for or desired. However, proper economic development planning and administration can help communities anticipate change and guide development. As you know there are only three things that can happen to a local economy: · Economic expansion · Economic stagnation · Economic contraction As illustrated in the EDA's annual report to the City Council, St. Joseph's economy has been expanding. Much of that expansion can be attributed to new construction and new residents locating in the community. With new building significantly slowing, a renewed focus on the basics of economic development may be necessary. Generally speaking most economic development professionals are advised to operate within specific target areas: organizational development, product (including infrastructure) development, business development, workforce development and market development. Attached to this memo please find an overview these target areas. A review of the St. Joseph EDA in view of common economic development target areas is summarized below: 2.') College Avenue North. PO Box 66s . Sdint joseph, Minnesotd ')6)74 Phone j2.0.j6j.72.01 FdX j2.0.j6j.oj42. Jd, Orqanizational Development The City of 8t. Joseph has an economic development organizational structure in place. The structure is involved and within the past year the EDA has placed renewed emphasis on making it more inclusive (mailings to business owners). The EDA's 2008 goals include the hosting of listening/working sessions with business owners regarding opportunities provided by or available through the EDA The EDA has updated information and work plans included in the Comprehensive Plan and has partnered in a market analysis including retail absorption rates. Infrastructure Development If the support system needed to deliver and produce goods and services is not in place, economic development is unlikely to occur. Infrastructure not only includes basic facilities and services (i.e. wastewater, drinking water, roadways, stormwater, schools, gas, electric, telephony, etc.) as related to economic development it also includes providing for available sites (e.g. business park development), gateway programs, downtown revitalization programs and speculative building projects. Since the St. Joseph EDA has since its inception been active in the development of a business park, the establishment of gateway districts and the pursuit of a downtown revitalization project I've attached information regarding such efforts. I've also attached information on speculative development sponsored by an economic development organization although the EDA has not considered such activity in the past. As you transition to new leadership, the attached information should be helpful. Business Development Business development efforts revolve around three general programs: business recruitment, entrepreneurial development and retention/expansion. The 8t. Joseph EDA has an active business recruitment program including: information on the local business climate, active lead follow-up, inventories of available properties, business basics and start up information, business incentive programs, available & current demographic information (i.e. population make-up), general market data (housing, employment, business mix, market potential, etc.), and information on current and planned projects including market absorption rates and estimates of current square feet per use. Efforts to encourage entrepreneurial development is currently a strategy the St. Cloud Economic Development Authority is actively pursuing. The Partnership and other organizations are working to create an environment conducive to the development of a strong bioscience - biotechnology hub. At this time the EDA has not actively pursued specific entrepreneurial development projects. This is a potential opportunity the EDA may wish to explore with the Donald McNeeley Entrepreneurial Center (C8B) or the Anderson Center (8C8U). The 8t. Joseph EDA implemented a Business Retention and Expansion Program in 2006 - 2007. The BRE program involved personal interviews with several local business owners. The program goal was to identify time-sensitive issues (e.g. businesses wishing to expand or businesses contemplating leaving the community), to further rapport with the business community, and to identify local business needs. Follow up from the BRE survey is ongoing. The BRE survey will likely be repeated approximately every three years. Other business development ideas the St. Joseph EDA could follow up on include tourism related activities. Workforce Development Workforce development activities in Minnesota are generally coordinated by workforce development centers located in each of the State's economic development regions. The workforce development centers have historically pursued bottom-up (i.e. working with educational institutions to provide relevant education for employment opportunities expected in ;2};; the future) and top-down (i.e. working with businesses to educate their workforce and/or working with businesses to identify types of worker skills needed) strategies in an effort to link available educational opportunities with business needs. Market Development As illustrated in the attachments to this memo, there are two ways a community can bring new dollars in: attract new individuals and/or attract new organizations (e.g. businesses, organizations, government). Our EDA work plans have historically focused primarily on attracting new organizations, however, the EDA has continued to support attracting new individuals to the community as well. The EDA may wish to undertake a new effort to attract targeted types of individuals to the community. Additional information and strategies regarding this potential effort is attached for your information. Action: Review and comment. 2./} Five General Components of Economic Development Practice Organizational Development To start the process, a community or region needs to have an economic development organization which is in place, involved and inclusive. Communi- ties lay the groundwork for economic development activities by undertaking a process to determine a common future vision. By conducting an analysis of current economic conditions and completing a strategic planning process, a community can determine goals and objectives that will address local needs while working to achieve its vision. During this process, a community must also eval- uate and identify the most effective organizational structure and potential resources available for carrying out its economic development activities. Infrastructure Development Infrastructure, proVided by both government and private business, is the support system needed for producing and delivering goods and services. Traditionally, infrastructure has included all forms of utilities (e.g. water, sewer, gas, electric, tele- phone), transportation services (e.g. roads, park- ing, airports, ports, rail), schools, hospitals and other public services sometimes referred to as "social infrastructure." Communications infrastruc- ture is becoming increasingly important as busi- nesses and residents rely on advanced data, voice and video transmissions. In addition, communities need to consider infrastructure investments in business and industrial parks and to develop an inventory of sites and buildings, including brownfields, suitable for development. Communi- ties must identify both current and future needs and work with both public and private sector providers to ensure the provision of adequate infrastructure. Business Development Business development is the cornerstone of a community's economic development program. Typically, a community's business development program includes a mix of three primary strategies: retention and expansion of existing businesses, entrepreneurial development, and business attrac- tion. Within these strategies, a community may seek to target certain types of businesses after conducting an evaluation of the current economic base. Business cluster strategies, working with companies based on various inter-relationships, has become a standard practice in recent years. A com- munity may also focus its efforts on the development or redevelopment of its downtown and/or neighbor- hood business districts. Increasingly communities are also directing efforts toward the development of capital resources to support local businesses including revolving loan funds, angel networks and venture capital opportunities. Workforce Development Communities need a quality workforce development program in place to stay competitive, to keep existing businesses strong, to keep young people in the community, and to raise residents' standard of living. Workforce development strategies include developing approaches to enhance the skills of workers so that all residents can become contributing members of the local economy. These strategies involve partnerships with educational institutions, employers, unions and state and local workforce development agencies and organizations. It is helpful to begin looking at this component by completing an analysis of the local labor market. Such an analysis will help to identify significant workforce issues that need to be consid- ered. Community Cash Flow Development Communities looking to bring new dollars into a community to ensure a balance of economic activity (or "community cash flow") can look at two sources of new dollars: those brought in by individuals, and those brought in by entities [organizations, businesses, government]. There are two types of new individual dollars that come into a community: earned income (wage and salary income) and transfer income (non- wage income or generated wealth). New dollars brought into a community by entities or institutions cover a wide range of sources, including tourism, expanding markets, pursuing outside investments, government contracts or grants, and developing support sectors. 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Q) .~ ~ ~= -g-~~ (U(UU)...c: cJ) :::::J cu _ 8~TIE :i ~ ~ 2 ~oc~o ~~E~4)~ :s:eg-gE ~~~g~ ^rl~-g~ Ul "tl Q) c: ~ 0 m g~~ Q) .0 a. l- co .. c: := en E~~ .2-g~ Q) m m .~ ~1i Q) ~~~~ ~~a.~ .\. ~.~ g KEY QUESTIONS ABOUT INFRASTRUCTURE The economic development organization will need to coordinate with local government officials and private utility representatives to assure that upgraded services are planned for commercial and industrial areas and that the improvement schedule matches the time line of the economic development strategy. So before any state-of-the-art infrastructure is agreed upon, the economic development organization must encourage a cautious approach by advocating the right amount and type of infrastructure, as well as reasonable costs for operating a business. Keep the following in mind as you deal with experts: 1. Will the benefits of having this improved infrastructure be worth the costs to the community? 2. Would having this particular infrastructure in place before there are customers to use it make our community sufficiently more attractive to new businesses? 3. What are the risks in waiting to build this infrastructure? What are the risks in moving forward now? 4. Will the increased taxes or user charges for this upgraded infrastructure hurt existing businesses? If so, how much? 5. Are there other ways to solve the problem other than developing new infrastructure? 6. How else can we pay for this infrastructure other than what has been proposed? 7. Is the infrastructure at this site going to be balanced? For example, if there is no way to get water to the site, is there any point in installing electric lines? 8. Can our community take advantage of existing infrastructure in nearby communities? 9. Would sharing facilities with other communities reduce the costs of this infrastructure? 10. What could we gain by having this infrastructure plan verified by someone outside of our community? Infrastructure PRODUCT DEVELOPMENT 11. How else could we beneficially spend our money for economic development than having this infrastructure? 12. Have we asked managers in the kinds of businesses we desire to tell us what their infrastructure requirements are? 13. How might the infrastructure being proposed for this site be extended efficiently to serve other sites? 14. Is this particular infrastructure consistent with our economic development strategy? 15. As long as we are digging a trench for one kind of infrastructure (cables, water mains), can any other kind of infrastructure be placed in the trench at the same time? 16. What is the budget for all of the operating and maintenance costs that this new infrastructure will generate? 17. Do any pending regulatory changes make our infrastructure plans potentially more risky or more costly? 18. Can we support any regulatory or legislative changes to help our community get the infrastructure we need sooner? 19. What technology alternatives have been considered in this infrastructure proposal? 20. What are the rates for this kind of utility service in communities with whom we compete or compare? 30 }g CAUSES OF CONCERN Despite all the good intentions that improved infrastructure may bring to a community, there is potential for disaster if the development is not thought out carefully. The following situations could cause businesses to fail or leave: L Poor location L Short life span L Inadequate capacity L Excessive regulatory requirements L Inconsistent reliability L Community risks in failure modes (e.g., contamination, economic disruption) L Environmental impacts (noise, smell, etc.) L Durability and maintenance requirements L Inability to upgrade or expand L Costly government-imposed fees and taxes L Inability to recover capital costs L Inability to recover operating costs Just the Basics An engineer is hired to study the conditions and capacity of existing municipal water, wastewater, storm water system and the streets and roads servicing the area (or site) or any new systems required. The economic development organization calls upon privately owned utilities to conduct a similar analysis, or completes their own study, if the owners do not. A report is made summarizing the adequacy of these systems to serve commercial and industrial use or reuse of the area (or site). Recommendations are offered indicating what infrastructure can retained for use and what improvements should be installed to service the area (nr c:.it~\ > The local government owners (or private utility providers) make a decision to complete engineering, secure construction permits and finance construction. The first phase of infrastructure installation is undertaken, hopefully servicing the economic development needs of the area (or site). Infrastmcture PRODUCT DEVELOPMENT 31 11 What are Gateways? The gateways of a community are usually the roads and highways leading from the edge of a town or neighborhood into a central business district. They are also the routes leading from other portals of entry, such as by air, rail, or sea. Gateway programs are designed to enhance the entrance ways to give the viewer a positive image of the community and encourage appropriate types of development. The programs may include image-building physical improvement activities as well as land use controls. These two major components are intended for both short- and long-term projects. Why is a Gateway Program Important? Builds Positive Image It shows a community's healthy face to visitors and residents. It makes a statement on how the community feels about itself. Enhances Transportation It protects major transportation corridors from lower standards of development. Promotes Community Pride It provides an opportunity for communitywide projects. Enhances Community Design Theme It promotes a concept to make the community unique and able to distinguish itself to visitors and prospects. On w~~ WIIP~N CI1Y ~~!? Gatrknof &1en~ Gateway Prq~rams PRODUCT DEVELOPMENT 31 30 Suburban industrial parks with newer buildings and more convenient transportation access had also encouraged many manufacturing and industrial businesses to relocate out of downtown. Andrea told Ed about the successful Main Street Program where she had lived before. "The planners got the entire community involved, and they took a long-range, comprehensive approach. Within a few years, the downtown became a thriving center for that area." She also told him about other communities and their strategies for putting fresh energy into their downtowns. As Ed walked back to his office, he no longer saw empty downtown storefronts. Instead he imagined the core area being brought back to life by preservation-minded investors and shoppers looking for something other than strip malls and warehouse discount chains. He saw buildings put back into productive use. He wondered if city officials could be convinced that downtown was worth reinvesting in. Ed knew something needed to be done soon to turn the spiral around, before the heart and soul of his community would be gone forever. What is Downtown Revitalization? Downtown revitalization is enhancing the social, political, physical, and economic value of the traditional central business district of a community. The goal is to expand and improve the livability and sustainability of the entire community by attracting employment, shopping, recreation, and social activities. The most recognizable and basic downtown revitalization activities include: . Organizing a body of people who have a special interest in the district. . Preparing a design plan for land use and physical appearance improvements for both privately and publicly owned property. . Devising a strategy to restructure the downtown retail, commercial, and light industrial economy, including strategic business recruitment programs. . Sponsoring special events to increase visitor and customer traffic in the downtown, as well as celebrations in the district. Successful downtown revitalization requires a carefully organized plan, long-term financial commitments, and cooperation from property owners, business owners, local government officials, and residents of the community. A comprehensive revitalization program-due to the high levels of time, money, and individual involvement required-are not for the faint of heart. However, from a community investment standpoint, it offers a greater chance for quick success than many other forms of economic development undertaken in a small community. Downtown Revitalization PRODUCT DEVELOPMENT 46 3/ Why is Downtown Revitalization Important? Improves Image Downtown is often what gives visitors their first impressions of a community. Makes Use of Existing Buildings Develops a Sense of Community Provides Variety of Retail Options Prevents Blight and Abandonment Assists communities in managing growth through reuse of property. Provides central location for community-wide projects. The more stores there are in an area, the more people will gather and shop. Reduces health and safety costs and concerns; discourages vagrancy and vandalism. Perpetuates Community Character and History Visible signs of the past can be retained and stories can be passed on to the next generation. Encourages New and Businesses want to be where people are and money is Complementary Businesses being spent, so it strengthens an existing business cluster. Expands the Tax Base Generates local revenues to pay for community services. Increases Employment Opportunities Regains Status as Central Shopping District Plugs Leakage of Dollars Replaces jobs lost through natural attrition and encourages entrepreneurs. Pulls in shoppers from a radius beyond the city limits. Citizens will no longer need to shop at retail businesses outside of the community. An empty downtown commercial building costs the local economy $40 in lost economic activity for eveI)' dollar in rent lost to the property owner. Downtown Revitali,ation PRODUCT DEVELOPMENT c 47 j;{ DOWNTOWN REVITALIZATION PLAN Activity Description Champion Budget Start Date End Date Concept The concept of central business district improvements and their importance is sold to the community. Measurement: The community is talking about the importance of revitalizing the central business district. Organizational Form an organizational committee to Development establish a main street/central business district improvement program. Measurement: The organizational committee is meeting regularly. Downtown Inventory downtown area for number Assessment of buildings, usage, size, amenities, services, traffic routes, infrastructure, problems, and potential usage. Measurement: Inventory list and map of downtown area are now available. Research Identify unique character of any Historic building or area and any historic events Features that took place at the site(s). Measurement: Historic landmarks are documented. Plan The committee develops its plans Development through internal assessment, reviewing other projects, and professional assistance, if necessary. Measurement: Plan is drafted and completed. Committees Organize key committees for promotion, design, and economic restructuring. Measurement: Committees established and functioning. Funding Secure funds for specific projects identified in the plan. Measurement: The money is in the bank. Implementation Undertake projects selected as a result of this planning effort. Measurement: The plan is implemented. Downtown Revitali,ation PRODUCT DEVELOPMENT 51 33 BUSINESS PARK DEVELOPMENT PLAN Activity Description Champion Budget Start Date End Date Concept A broad discussion of the business park needs to occur. Measurement: The community is talking about the importance ofthe park. Feasibility Do we have sufficient market demand to Market warrant a business park? Analysis Measurement: A figure has been developed that quantifies how fast land will be developed in the new park. Feasibility Does our preferred site have the capacity to Engineering support development? Analysis Measurement: Engineering analysis has been completed. Feasibility Are the essential community elements in Planning place to support this project? Analysis Measurement: Planning analysis has been completed. Feasibility Can we arrange funding to develop the Financial business park? Analysis Measurement: Financial analysis has been completed. Feasibility How are we going to sell this new park to the Implementation marketplace? Plan Measurement: Implementation plan was completed. Contract Formal discussions with various partners and Negotiation consultants who will make this park a reality. Measurement: All hired help is at the table and discussing the development plan. Formal Formalize partnerships in writing. Commitments Measurement: Completed contracts are in place. Park Actual construction of the park. Development Measurement: Dirt is being moved. Completion Dedication ceremony by mayor and key and Opening officials. Measurement: Local media has announced the new park. Marketing and Ongoing park management throughout the Property sales and construction process. Management Measurement: The marketing program is underway. Business Parks 61 PRODUCT DEVELOPMENT 3q Just the Basics The eight key steps to real estate development, when applied to the business park, look like this: ,. , 1: Inception: Preliminary concept development [b,' 2: Refinement: canw~ .3: Feasibility: Is this , , , , take the concept and L-..y' idea feasible? ' . . .' firm it up? , '.' . 2J 4: Contract Negotiation: ,,5: For~al jL, Legal parameters with Commitments: r key partners are defined ,n '.. Contracts get signed' . . P ..J\. 7: Completion and 6: Construction ~ formal opening 8: Marketing, lot sales and property management 2J Business Park Development a Glance What can you expect to accomplish? Acreage dedicated to business expansion Rallying point for economic development program Who will do the work? Project champions as identified in the work plan Contract personnel who join the project How will you pay for these activities? Economic development program funds Dedicated funds from non- general funding sources Business Parks PRODUCT DEVELOPMENT 3(; Focal point for new growth in the community Positive press and resulting community attitudes Governmental inspectors approving the work Economic development personnel For-profit industrial development group or real estate investment trust (REIT) General fund dollars from local unit of government 62 The planning group, Ed believed, needed to understand that this strategy would complement their vision of business expansion and job creation. But they would be taking a major risk. Being ready too soon could result in an empty building for a long time. Being ready too late may mean losing a prospective client to another community that had a building ready for occupancy. The group would need to carefully weigh the pros and cons. What is Speculative Building Development? Speculative building development is a defined program to acquire land, prepare plans for development of the site, install site infrastructure, and construct a commercial or industrial building for the purpose of offering it to a prospective business. An economic development organization constructs a building with the goal of recouping all invested funds at some point in the future. The speculative building development program is intended to provide sites and buildings for a new or expanding business when the private sector does not fulfill this need. A speculative building can be a fully constructed, ready-to-utilize building, or a shell building where contractors are hired to finish electrical and mechanical systems and pour the floor to meet the needs of the incoming business. In many cases, a shell building is more competitive due to its higher flexibility and lower construction costs. Development costs for a "spec building" typically range between $2.50 and $5.00 per square foot. Why is Speculative Building Development Important? Creates a Market Speculative building development may be the only way to entice a business to locate in your community. Development Suited to Target Industry Can Be Done in Phases A community can design a speculative building to attract ' specific types of companies or manufacturers. A shell building may be more marketable than a completed structure, and it allows the community to complete the project in defined steps. Can Be a Continuing Program Potential for Long- term Income Speculative Bui!din~s PRODUCT DEVELOPMENT Upon sale of an initial building, proceeds can be used for a second project, thus establishing a revolving building program. In lieu of a sale, many businesses may want a long-term lease, which will provide ongoing income to the owner or organization. Many ports prefer this method. 65 3h CHARACTERISTICS OF SPECULATIVE BUILDINGS HIGHLY CONTROVERSIAL Gaining community support is more difficult than other programs because of costs, uncertainty of whether the building will sell, and the pretense of doing private sector development. LONG TERM From start to finish, a speculative building may require up to a year for planning, securing funding, and construction. EXPENSIVE Land purchase, site development, and building construction could easily require $200,000 to $1,000,000 before the building can be offered for occupancy. VERY HIGH RISK Actively marketing a speculative building is no assurance it will be occupied in a short time period. REQUIRES CREATIVE FINANCING Economic development organizations rarely have large amounts of cash or collateral to construct a building and therefore must find funding sources. 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Is the market strong enough to consider constructing a spec building? . Is there a need for more space? . What are the vacancy rates for existing buildings? . What is the market activity level? . What are the absorption rates? . What construction is currently under way? . Where is a good location to build? . Is the cost of this project in line with other buildings already on the market? (SOURCE: Office and Industrial Properties, June 1998.) SPEC BUILDING DEVELOPMENT PLAN Activity Description Champion Budget Start Date End Date Concept Favorable public opinion is sought for the spec building. Measurement: The community is talking about the importance ofthe building and its value in stimulating new investment. Location Wise selection of a location for the building and Size and determination ofthe appropriate size. Measurement: Building committee consensus about the location of the building has been achieved. Engineering The needs of and ideas about the building and Design reduced to architectural drawings and specifications. Measurement: Blueprints are available for review. Funding Capital necessary to complete the project. Measurement: Funding secured. Construction Actual building of the building. Measurement: A building exists. Completion Dedication ceremony by mayor and key and Opening officials. Measurement: Local media has announced the new building. Marketing Ongoing marketing of the property for and Sale ultimate sale or lease. Measurement: New company sets up in town. Speculative Buildin.W PRODUCT DEVELOPMENT 67 3g The planning group also knew that change in the business community was inevitable. Businesses started and either succeeded or failed. It was just part of the natural cycle of the economy. Even the best economic development efforts and a booming economy could not overcome bad management, poor customer service, or retirement and closing. The board was ready for an active effort directed toward bringing new business to the community to help offset the losses that would naturally occur. Ed prepared a plan for presentation to his board. It would be one of the most competitive, difficult, and expensive efforts his community could undertake. What is Business Attraction? Business attraction focuses on identifying companies from outside the area and enticing them to expand or relocate into a community. The goal is simple and straightforward: to secure new jobs and investment. It is glamorous work, frequently commanding the most recognition of economic development efforts in local media. The normal cycle for any business is start-up, growth, stabilization, contraction, and closure. Business attraction activities help insure that new businesses replace the ones that close. A business attraction strategy should supplement other economic development activities and not be a community's sole focus. In fact, competition for firms is so fierce, and success so infrequent, that most authors recommend having at least three other, more viable, economic development strategies in place before tackling business attraction. Why is Business Attraction Important? Creates Jobs Increases the overall health of the community. Enhances Tax Base Allows communities to support and improve local services without increasing taxes. Offsets Attrition Business closing is a normal part of economic cycle, so new businesses are needed to replace them. Shapes Community's Future Businesses become part of a community's long-term strategic plan. Boosts Reputation Encourages Likely Spin-offs Communities become known for the businesses they attract. Other related or competitive enterprises often follow. Business Attraction BUSINESS DEVELOPMENT 102 31 She knew that starting a business was a dream of many people, but reading books about it and doing it were two different things. How would she market her services? And where would she get the money to upgrade her computer so she could increase her chances of locating books for people? What type of business entity would it be? What would her husband think of her leaving a secure job? All these questions were on her mind as she began researching information for her presentation to the economic development planning group. What are Start-ups and Emerging Enterprises? America's greatest claim to fame in the hugely competitive global economy is that we lead the world in entrepreneurship and emerging enterprises. People in rural and urban areas can build major businesses from nothing but an idea. We produce more start-up enterprises in a month than European countries do in a year. While Fortune 500 companies have declined in job creation, entrepreneurs and emerging enterprises are creating jobs by the millions. Start-up and emerging enterprise development stimulates the creative urge--or entrepreneurial spirit- of individuals who choose to be their own boss and have a product or idea they want to develop and market. Such individuals often need assistance in searching for more innovative ways to utilize available resources to create wealth. A start-up and emerging enterprise strategy helps people develop their managerial and technical skills. These entrepreneurs organize, operate, and assume the risk for business ventures either as a start-up (beginning) operation or as an emerging (two- to three-year-old) business. Economic development organizations that focus on start-up and emerging enterprises help communities promote new business, rather than focus on outside risky business attraction efforts. This strategy requires high visibility in order to gain political and financial support. Nurturing entrepreneurial businesses from start-up through the various growth stages and into maturity requires a full-time effort and long-term commitment. CQUNct1.hWJ, WHAl ~,:. HeY, you'Re THe ()Jf -me HecK IS " 'i WHO sNDVi. NfS)et> THI81HING'? INCUBATOO5fOR OOR - .', 51T\Rf.UP W51Nf.&fS! Start-ups and Eme1J!,if\~ Enterprises BUSINESS DEVELOPMENT 113 LfO Why are Start-ups and Emerging Enterprises Importanrl Source for Rural Jobs Few other options are available for communities with no major industry or business attraction possibilities. Creates Jobs One small business will create, on average, 10 to 20 new jobs in a community. Diversifies Local Economic Base Reliance on a few industries could endanger a community's welfare during downturns in the economy. Multiple small businesses may keep it afloat. Supports Local People Home-grown firms typically remain in the community. Enhances Local Tax Revenues Successful entrepreneurs will provide additional income to the community. Provide Role Models Portrays positive image to youth, especially in rural communities. CHARACTERISTICS OF ENTREPRENEURIAL DEVELOPMENT PROGRAMS INNOVATIVE Must design a program that meets the needs of the specific enterprises in the community. CUT THROUGH RED TAPE Start-ups and emerging businesses do not want to deal with bureaucracies that restrict them from getting their product to market. MODERATE COSTS Expenses of training and technical assistance can be shared with other organizations. LONG-TERM Assistance should continue from pre-start-up through growth and into maturity. Start-ups and EmeTJ',i1(~ Enterprises BUSINESS DEVELOPMENT FLEXIBLE No two businesses are exactly alike, so the strategy must work for a variety of ventures. LIMITED TIME Start-ups and emerging businesses work with borrowed money so need assistance in a timely manner. GROWTH FOCUSED Will be key to expansion projects in the future. RISKY There is a high failure ratio, because start- ups are long on ideas but short on management skills and financing. 114 Lf( What is Tourism? Tourism is a conglomeration of many different businesses-hotels, restaurants, gas stations, shops, museums, campgrounds, airlines, theme parks, rental car agencies, resorts. Each complement the other and are often interdependent on each other for success and survival. In some ways, tourism is an intangible industry; it is not as easy to quantify or track as manufacturing. Yet travel and tourism is considered to be the second largest industry (behind health services) in terms of employment, accounting for more than 7 million jobs in 1997-a payroll of $127.8 billion. Travel and tourism in the United States generate an estimated $500 billion in expenditures every year. Ten years ago, many cities, towns, regions, and states did not view tourism as an industry. Today, these areas are developing and promoting the industry and view it as an important part of their economy. TYPES OF TOURISM H Outdoor Recreation H Sightseeing H Entertainment I Spectator Sports H Community Events and Festivals H Business Conventions and Conferences H Visits by Friends and Relatives H Historic and Cultural Activities H Hunting, Fishing, Wildlife Watching H Retreats and Weekend Workshops H Personal Business H Shopping H Passing through Communities Why is Tourism Important? Tourism can bring substantial benefits to a community and its residents. It is one of the few industries that brings new money into a community-that is, money from outside your boundaries. Tourist spending creates a chain reaction flowing through your local economy. Diversifies the Economy Helps communities be less reliant on one or two industries (e.g., lumber, fishing). All Businesses Benefit Visitors patronize hotels, resorts, campgrounds, and restaurants- as well as gas stations, grocery stores, pet shops, hardware stores, drugstores, gift shops, churches, etc. Brings New Money When a visitor spends money in your community, most of it stays and recirculates among local residents. Today's tourist may also be tomorrow's investor. New Tax Dollars All levels of government benefit from taxes paid by visitors. Tounsm BUSINESS DEVELOPMENT 124 L/;( Creates Jobs Tourism is a stable, year-round industry in many communities and is a main source of employment in other areas during certain seasons (e.g., ski resorts, national parks). Boosts Appearance Communities often become more visually appealing in order to attract visitors. Assists in Business Attraction Industries prefer to locate in communities with tourist amenities. Youth Opportunities Part-time or seasonal jobs match employment needs of youth and second-wage earners. Helps Support Community Facilities Outside dollars are used to support amenities used by residents. AREAS OF CONCERN Your community has little control over whether visitors will come or not. But you can and should influence to what degree you develop tourism. Consider how the community may be impacted by the following issues: Conflicts between residents and tourists - Visitors are often not familiar with the lay of the land in your area and may not respect the rights of private property owners. Careful design and community planning for visitor services and access can greatly help minimize aggravations. Internal community conflicts - An industry-versus-the-rest-of- the-community attitude may develop, especially during the infancy stages of tourism development, and fester into antagonism or hostility. Environmental pressures - More people may cause pollution, depletion, or deterioration of your area's natural resources. Transient, low-wage workers - Many travel-oriented jobs are seasonal and entry level. Some rural areas with a small population base may need to find nonlocal employees to service the guests. Public services - Roads, sewer, and safety (law enforcement, rescue teams, medical emergency assistance) may need to be upgraded or enhanced. Tourism 125 BUSINESS DEVELOPMENT L/3 Later that evening, as Lenny drove through the streets of Field, it occurred to him that he now knew more about that stranger's business than he did about most of the businesses in his own town. Did the owners of those businesses feel like no one cared about their needs or the jobs their company provided? Lenny decided to bring this up at the next economic development planning group meeting. He realized there was a lot of untapped potential and several opportunities already waiting for them in Field-all they had to do was find out and pay attention to what businesses and community members needed. What is Business Retention and Expansion? Business retention and expansion, or "BRE," as it is often called, is considered by many communities to be the cornerstone of their economic development plan. And it should be. Existing businesses provide jobs for local residents and tax revenue for the community. BRE strategy focuses on satisfying the needs of the businesses already in the community, encouraging them to stay (retains them) or grow (expand). The most effective economic development dollars are those spent working with existing businesses, since most of the economic growth in a community is a result of established enterprises. In its simplest terms, business retention and expansion programs encourage local businesses because it shows that the community cares about them. One business location expert states he would not recommend a firm move to any community that did not have a business retention program. A BRE strategy also builds relationships between existing employers by gathering information that will reduce business costs, improve competitiveness, increase markets, and enhance infrastructure. This information becomes the foundation of a series of programs targeted directly at the needs of the business and economic base of the community. Why is BRE Important? Job Growth Expansion of a company in the same community has a more significant potential for creating jobs. Business Stability Companies maintain existing relationships with local suppliers and resources. Moving is Costly The economics of moving a company affects the company, the employees, and local community. Stabilizes Local Tax Base Existing companies and their employees generate revenues that pay for existing services. Business Retention and Expansion BUSINESS DEVELOPMENT 90 t-/Lf Helps "At-Risk" Companies No amount of community roots can offset poor market access or excessive costs of doing business. But removing local obstacles will increase business life span. Provides Options Technical assistance with bankruptcy or business succession will maintain job opportunities. Powerful Recruitment Tool Owners and employees of successful existing businesses are a community's best ambassadors. CHARACTERISTICS OF BRE PROGRAMS PROVIDE TECHNICAL ASSISTANCE Services may include management consulting, assisting with expansion siting, increasing competitiveness, acting as intermediary for workforce training, or working with local government to solve problems. FLEXIBLE A custom-tailored program bridges a gap between the community's resources and the needs of the business community. COST-EFFECTIVE Maintaining existing businesses is significantly less expensive per job and new investment do/!ar than other economic development efforts. COLLABORATIVE Requires the cooperation of business and local governments. ASSISTS LONG-TERM STRATEGY Data co/!ected will help community focus on long-term needs of businesses. Business Retention and Expansion BUSINESS DEVELOPMENT INEXPENSIVE TO START A sma/! core of volunteers, organized into an effective team of community advocates, can start a BRE program. EASIEST TO SERVE It is much easier to contact a company currently in your community through formal or informal means than a business or industry from outside the area. RESULTS-ORIENTED Information is co/!ected for the purpose of taking positive action. POLITICALLY CORRECT Emphasis is placed on meeting the needs of local businesses, not on wooing outsiders. 91 '15 What is Workforce Development? Workforce development is a statewide system of education and training that prepares people for high-skill jobs and assures employers of a skilled flexible workforce in the future. This comprehensive program is designed to improve the productivity level of the workers and allow companies to grow in the future. While the program may be articulated under a single organization (often the economic development office), it is actually implemented by a number of organizations throughout the community. A workforce development effort can only succeed when it has the resources-qualified workers-to fill the jobs that new employers will have. It does little good to create jobs for which there are no people who can do them. Workforce development includes: Education reform-adjusting the local education system to produce graduates who have skills necessary for the next century. Skill development for displaced workers-making sure that people who have lost their jobs never have it happen again due to their job skills. On-the-job training-to help workers to gain new skills and handle the increasing use of technology in the workplace. Welfare-to-work programs-to help people become economically self-sufficient by removing barriers, building skills, and meeting the individual's basic needs. NM,~, l WANT YOO 10 VJRrte ~ HAIKU USIN(i 1l-\e Wti<I) I/MVNSltINU!" 135 WORKFORCE DEVELOPMENT Ljfo Because of the large number of individuals and organizations, the need for system- wide coordination and accountability in workforce development programs is substantial. While few agencies absolutely have to work together, the primary role of the economic development organization is to act as an intermediary and create a community-wide vision, so that everyone is recognized for their contributions and is provided an environment where they benefit from participation. Why is Workforce Development Important? Increases Productivity The rate of worker productivity-the amount of work produced per unit time-has been steadily declining in the United States. Workforce development intends to reverse that trend. Enhances Ability to Compete A skilled workforce helps companies expand and remain competitive. Fewer Entry-Level Positions An expected decline in the number of young workers may lead to labor skill shortages in all professions. Low-Skill Jobs are Disappearing They will be replaced by jobs requiring a higher level of technical skill, especially with computers. The Workforce is Aging Without effective training, older workers could become entrenched in old ways, unwilling or unable to learn the new. Opportunities for Women and Minorities People historically denied higher-paying jobs will require more education and training. Women now make up nearly 50 percent of the workforce, and 65 percent of the entrants into the labor market will be women and minorities. Aids in Retention of Workers A trained workforce will lead to steady jobs, which will encourage their families to stay in the community. Increases Standard of Living Better job skills will lead to increased wages and upward mobility. Reduces Illiteracy Skill-building will enhance the self-esteem of the workforce, which will increase productivity. Reduces Gap Between the Haves and Have-Nots Skill shortages contribute to economic disparities between people in many communities. Workforce development helps balance the scale. WORKFORCE DEVELOPMENT 136 1../7 he had moved his business to their town. This could lead to some very interesting recruitment possibilities... . What would it take to get more people like Bart to move to the community? Ed didn't know if Bart would be willing to talk about his business to the group or not, but he might at least share some information about why What is New Resident Attraction? New resident attraction, sometimes called migrant attraction, targets specific individuals or groups with disposable income to support commercial activity in the community. Making an area attractive to people interested in relocating to an area involves developing the amenities they find desirable and possibly providing some incentives to encourage their move. People who move from one area to another are often looking for pleasant, comfortable places compatible with their lifestyles. They typically have steady incomes and are not vulnerable to normal down cycles in the national economy. Their income is often used for discretionary spending, which usually occurs locally and leads to economic development and job creation for the community. Why is New Resident Attraction Important? Increases Retail Sales Migrants either bring money with them or earn a great deal and tend to spend it locally. Creates a Multiplier Effect Dollars spent on goods and services are re-circulated several times through the local economy. Increases the Number Jobs follow people with money the same way that industrial of Local Jobs payrolls generate jobs. Helps Retain Jobs Most targeted groups, such as retirees or loan eagles, do not compete with other residents for local jobs. Improves Local Tax Base Increases Local Capital Pool Larger Pool of Volunteers New Resident Attraction Spending by new residents increases tax revenues from retail sales and property tax payments. Money in local banks provides additional loan capital to residents. New residents may want to be involved in the community and bring fresh ideas and new experiences. 72 1\iARKET DEVELOPMENT 4-q What are Partnerships? Partnering is the process of joining with other key groups within your community or in surrounding communities to make things happen. This will allow a community to expand its market of products and services to existing and relocating businesses. Economic development is a team activity, especially when you're trying to do it in small, rural communities where the resources to accomplish community goals are much more sparse than in urban settings. Rural communities can only succeed if they learn to associate and cooperate with their neighbors, even their competitors. Working with others allows you to achieve a certain critical mass unattainable on your own. For example, one community may have a rail line, the other an airport. One has rolling hills for residential development; another has a talented work force just laid off due to a plant closing. Partnering creates a vital community that businesses inside and out will see as more attractive than a single defined area. The resulting links with nearby towns and cities spawn a thriving region that promotes each of the participating community's special amenities and features. Any weaknesses of one town will be overshadowed by the strengths of its neighbors. Why are Partnerships Important? Creates Political Influence Elected officials and interest groups that work together show a willingness to solve problems. It also creates stronger power base for legislative action. Creates Support Networks The possibility of duplication and costly competition is reduced, and resources are shared. Encourages Cost Sharing or Circuit Riding Develops Collaboration and Teamwork Communities can take advantage of group discount rates, in-kind support, and cluster marketing. People will have regional pride in what they accomplished with the help of others in their area. Helps Build Capacity Expands components that attract and retain businesses. Leverages Scarce Resources Partnerships MARKET DEVELOPMENT Money pooled for development goes farther than individual efforts. 82 Ll1 Enhances Credibility of Program Activities Get Done The more people involved, the more plausible it looks to outsiders. Work is spread out to numerous people rather than just a few who are already overworked. Critical Mass is Achieved More goals are attainable when more people are involved. Increases Efficiencies of Service Delivery Eliminates duplication of efforts and reduces costly or unnecessary competition. AREAS OF CONCERN Despite the obvious benefits that come with community cooperation and partnerships, they are often difficult to achieve. Conflicts may develop and cause a well-intentioned regional economic development program to fail. Things that hamper collaboration include: L Differences in base rates. L Fear of lost identity. L Fear of red ink. L Strong egos and innuendoes. L Inability to compare information. L Seeing economic development as a zero-sum game. L Failure to see similarities. L Limited vision of what they can accomplish. L Little interaction among community leaders. L Communication problems. L Inability to agree on community vision. L Larger community not believing in equality. RECIPE FOR DISASTER Occasionally, board members of community economic development organizations think they are the only game in town and that no one else's input, resources, or assistance is needed. This often results in a totalitarian way of doing business by the board and a "them- versus-us" attitude by others in the community. Partnerships MARKET DEVELOPMENT 83 50 o .pure eo"'Wlrru'1l..1 USe I u _ J M ixeJ lASe ~d. (. I ~niD -t 1'o1ll_~'.-1 r- Page 1 of 1 I 1--400 .., DAlESTE. C h '~. L:97 ~ ~---1 I :z I 123 301 J ~ r03 109 I J ,I. LCEOAR s'r E ,a----.,________ LI rYl i;<eJ CPW\il'IrrdcJ -I- 1-.3 ~~if- res0\ef\~iQ) ~f,:~E}?~: ..~.., ~~__ ir~~':S:..:4 ~ 0'" a I .,:.:;'- .. ~ NoVl. ho mestectJ. t^€SidenLo./ - I Lt~,+- (f'eIllW 00&+1~) CJ~'-1 - i- 'A'J..;<' X. t.-,~___~, ~oMesteqd re>idcniia.} LOu:J~e.... lXWpial) x,z~~i,. ttp: pO al.sehinc.com/output/StJoe_SEH 1319633721 08.jpg , '''. fY1 iXe-J o()..\ne(" ~1c1. + (bmM. P ubI {c/ vY1 U.t71 cl p~l ~o" ~/fk'SteJ re.siJ. ~~nds 1/16/2008