Five Ways to Celebrate National Small Business Week

Small businesses are an essential component of a strong local economy. Our nation’s small businesses not only create well-paying jobs, they also deliver vital goods and services, generate local sales tax revenue, and contribute to the unique character and livability of neighborhoods.

SBA_NSBW2015_FINAL_v2It’s National Small Business Week (May 4-8, 2015). How is your city celebrating? Share your plans with @robbins617 with the hashtag #Mayors4SmallBiz. (Photo Credit: Small Business Administration)

Local leaders are in a unique position to help support and develop a strong small business community. From NLC’s Big Ideas for Small Business report, here are five ways your city can support small businesses during National Small Business Week, and all year long.

  1. Establish a Small Business Resource Center. Create a business resource center that serves as a hub of information for entrepreneurs and the local small business community. These centers, like Kansas City’s KCBizcare, are staffed with experts who serve as mentors and liaisons to businesses in need of support or information.
  1. Advocate for Small Businesses via Community-Led Councils or Committees. Form a council or committee consisting of small business owners, entrepreneurs, and other community stakeholders to advise the city council and mayor on small business issues. In Cincinnati, the Small Business Advisory Committee (SBAC) provides feedback on policies and programs that impact business owners.
  1. Celebrate Successful Businesses. Thank small businesses and recognize their contributions to a city’s unique character. Seattle’s Office of Economic Development and the Seattle Metropolitan Chamber of Commerce select several local companies per quarter to recognize as part of the In Good Company The chosen companies are awarded a video profile on the Seattle Channel, a profile on the Office of Economic Development’s daily newsletter, a press release and proclamation from the mayor, and a free one-year membership to the Seattle Metropolitan Chamber of Commerce.
  1. Encourage Local Small Businesses to Bid for City Contracts. Invest in the long-term future of small businesses by including them in the bidding process for city contracts. As part of the Business Empowerment Plan in San Antonio, the city offers a mentoring program for small businesses designed to help owners build skills that will prepare them for the contract application process. In San Diego, the city’s Small Business Development Program offers educational trainings on the city’s procurement process and helps entrepreneurs market their products and services to the city.
  1. Develop a One-Stop-Shop at City Hall. Create a one-stop-shop to centralize and streamline the interface between small businesses and city hall. Red tape and inefficiency are problematic for business owners because they waste time and resources that should be spent building their enterprise. The city of Chicago restructured its approach to serving small business by launching the Small Business Center, including an Express Lane service. These initiatives optimize business owners’ time at Chicago City Hall by providing access to staff from various departments at one time, and by better prioritizing requests based on the specific business needs.

Robbins_small (2)About the author: Emily Robbins is the Senior Associate of Finance and Economic Development at NLC. Follow Emily on Twitter: @robbins617.

The Arts Mean Business

This is a guest post by Jay H. Dick, Senior Director of State and Local Government Affairs at Americans for the Arts.

Meyerson_Symphony_Center_Dallas_1_fullsizeThe Morton H. Meyerson Symphony Center in Dallas, Texas, is a visually spectacular example of the type of anchor for economic development that can be achieved when city governments invest in arts and culture initiatives. (photo: Matt Clarkson)

If your city had a new construction company move to town, this would be good news – more jobs, more economic activity, and more tax revenues to be collected. How about if your city received funding from your state to widen a road? Again, you would probably welcome this news with open arms. Now, think about a new arts organization moving to town. Would you look at this group with the same economic lens that you used to look at the construction or transportation business?

If your answer was no, here’s why you should!

The U.S. Bureau of Economic Analysis (BEA) with the National Endowment for the Arts recently released their second annual report measuring the arts and culture sector’s contributions to U.S. gross domestic product (GDP). This year’s report found that the arts and culture sector represented 4.32 percent of the GDP – a higher percentage than tourism (2.6 percent), transportation (2.7 percent) and construction (3.4 percent) – at $698.7 billion!

(Americans for the Arts)

In other words, the arts and culture sector have a larger impact on your economy (in terms of GDP) than these other industries. The unfortunate problem is that we don’t readily recognize the economic value and impact of the arts. Luckily, more research is being done on this topic by groups such as the BEA and by organizations like mine, Americans for the Arts.

For example, did you know that, according to our Arts and Economic Prosperity IV study, the nonprofit arts are a $135 billion industry that supports over 4 million full-time equivalent jobs? Further, the nonprofit arts contribute $22 billion dollars in tax revenue, of which $6.07 billion is collected at the local level. Given that most local governments (that Americans for the Arts has studied) appropriate less than they receive in tax revenue, the arts are a wonderful investment!

Our Creative Industries: Business & Employment in the Arts reports provide a research-based approach to understanding the scope and economic importance of the arts in America. Nationally, 702,771 businesses are involved in the creation or distribution of the arts, and they directly employ 2.9 million people. This represents 3.9 percent of all U.S. businesses and 1.9 percent of all U.S. employees – demonstrating statistically that the arts are a formidable business presence and are broadly distributed across our communities. Arts businesses and the creative people they employ stimulate innovation, strengthen America’s competitiveness in the global marketplace, and play an important role in building and sustaining economic vibrancy. In addition to our national numbers, there are downloadable maps on our website of every state, federal legislative district, state legislative district, counties and some larger cities.

Cities of all sizes that, even minimally, invest in their local arts organizations can see economic benefits. For example, over 300 cities have created cultural districts to foster the economic viability of their downtown. Cultural districts are a well-recognized, labeled, mixed-use area of a city in which a high concentration of cultural facilities serves as the anchor of attraction and robust economic activity.

The Playhouse Square Center in downtown Cleveland, Ohio. (Getty Images)

According to a study by the Federal Reserve Bank of Cleveland, Ohio, the Cleveland Playhouse Square’s downtown economic impact has been impressive. For every one dollar spent in ticket sales, $2.20 is generated in additional expenditures to the local economy. In a five-year period, 79 new businesses moved downtown, and the cost of downtown office space nearly doubled.

In the late 1990s, Paducah, Ky. had a problem – an area of the city, LowerTown, was run down. Fifty percent of homes were dilapidated; 73 percent of homes were renter-occupied; and there was a 17 percent unemployment rate with 51 percent of people living in poverty. To tackle the problem, city leaders came up with a unique plan: the Artist Relocation Program. City leaders partnered with banks and other businesses and reached out nationally to artists to invite them to move to Paducah. The program would offer them a very low-interest loan if they bought a house, agreed to make improvements, worked as an artist out of their house, and lived there for at least five years.

Dixie Leather Works, located in the LowerTown arts disctrict of Paducah, Ky. (photo: Paducah Visitors Bureau)

Dixie Leather Works, located in the LowerTown Arts District of Paducah, Ky. (photo: Paducah Visitors Bureau)

Ten years later, dilapidated homes have fallen to 3 percent; the renter-occupied rate is down to 15 percent; unemployment is down to 6 percent; and the number of people living in poverty has been reduced to 4 percent. This is all a direct result of the Artist Relocation Program.

These are just a few examples of how the arts and culture can help your city’s economy. The great thing about the arts is they are already in your city. The arts, unlike many industries, are not going to relocate overseas or to a different city. The arts are committed to serving your city’s residents and improving the quality of life. But what they do need are community leaders to recognize them as an industry worthy of both private and public sector support. So, please contact your local arts groups. Get to know them, understand their programming, and how they work to improve your city. And if you have any questions, feel free to contact me directly – I would love to help.

Jay H. DickAbout the Author: Jay H. Dick is the Senior Director of State and Local Government Affairs at Americans for the Arts, an organization which serves, advances and leads diverse networks of organizations and individuals who cultivate, promote, sustain and support the arts in America. Americans for the Arts has partnered with NLC for almost 20 years on a variety of programs.

Closing the Digital Divide in America

This is a guest post by David L. Cohen, Executive Vice President of Comcast Corporation.

Chance the Rapper (left) and Comcast Executive Vice President David L. Cohen present laptops to students from Chicago’s Alcott College Prep at a recent event to announce new Internet Essentials milestones. (Comcast)

According to the U.S. Census Bureau, only 52 percent of low-income households in the United States subscribe to broadband at home. What’s more, for certain low-income groups, broadband adoption still falls more than 20 percentage points behind the general population, according to the National Telecommunications and Information Administration (NTIA).

Today, access to the Internet at home is essential for all family members to keep up in this digital and highly competitive world— so much so that it’s hard to believe there are still so many families without it. Whether doing homework, applying for college, searching and applying for jobs, paying bills, accessing health care or using social media, think for a second about how you would do all these things if you didn’t have the Internet at home? Would you park your car in your nearest McDonald’s parking lot so you could hand your smartphone to your child to use the free Wi-Fi to write a book report? Would you send your daughter across town on a bus at night to a computer lab so she could do her homework? Would you walk a mile to your local library to sign your son up for a 30 minute session on a computer? I’ve traveled all around the country hearing stories from mothers and fathers who had to do all of these things for their kids because they didn’t have Internet service at home. It doesn’t seem fair does it?

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In August 2011, we set out to try to help solve this problem by introducing Internet Essentials, the nation’s largest and most comprehensive broadband adoption program. It provides low-cost broadband service for $9.95 a month; the option to purchase an Internet-ready computer for less than $150; and multiple options to access free digital literacy training in print, online and in person.

That was three and a half years ago. Recently, we were proud to announce that thanks to the support and hard work of thousands of community partners, elected officials and dedicated employees, we have connected more than 450,000 families, or 1.8 million low-income Americans, to the power of the Internet at home. For a frame of reference, 1.8 million is larger than the populations of 96 of America’s 100 largest cities as well as 12 states. That is real and meaningful progress.

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On a local level, the Chicago metro area leads the way in closing the digital divide for the fourth year in a row. More than 50,000 families, or 200,000 low-income Chicagoans – nearly 25 percent of its eligible population – have signed up for Internet Essentials. Second best is the Miami metro area, with more than 41,500 families, or 166,000 low-income residents – 28 percent of its eligible population. The Atlanta metro area is third best with more than 25,000 families, or more than 100,000 low-income citizens – almost 20 percent of its eligible population.

Crossing the digital divide is not just about getting families online, it’s also about teaching them how to use the Internet’s resources to its fullest potential. The clear-cut assessment across all broadband researchers is that the most widely noted reason for non-adoption is not the price of the broadband connection or any cost related to that connection. Instead, it’s a bucket of digital literacy issues, including a perceived lack of relevance of the Internet and a lack of understanding of its value. For instance, nearly half of non-adopters say they simply don’t need the Internet at home or are not interested, according to research by the NTIA.

To break down that barrier to adoption, we’ve invested more than $225 million in cash and in-kind support to help fund digital literacy and readiness initiatives, reaching more than 3.1 million people through our network of national and local nonprofit community partners. Partners like the National League of Cities have also played a crucial role in making more people aware of these training opportunities.

One of my favorite statistics that truly highlights the progress we are making is from research by Dr. John B. Horrigan, former head of research for the FCC’s National Broadband Plan and a preeminent researcher on broadband adoption and utilization. He found that even though Comcast is only one of multiple providers, and does not have broadband systems in two-thirds of the country, the company’s Internet Essentials program has accounted for one-quarter of all of the national broadband adoption growth for low-income families with children from the program’s inception through June 2014.

We look forward to the continued success of the program. We believe the Internet has the power to transform lives, strengthen communities and inspire a new generation of leaders – but we can’t do this alone. We hope you will join us in this fight to close the digital divide. If you’d like to get more involved and become a partner, please sign up at www.internetessentials.com/partner and help spread the word.

david cohen, comcast_150x187About the Author: David L. Cohen is Executive Vice President of Comcast Corporation. David has a broad portfolio of responsibilities, including corporate communications, government and regulatory affairs, public affairs, legal affairs, corporate administration and community investment, and serves as senior counselor to the CEO. He also serves as Chief Diversity Officer for the company.

Retention and Attraction Strategies for a Balanced Retail Sector

This is a recap from Big Ideas for Small Business, NLC’s national peer network helping local governments accelerate effort to support small businesses and encourage entrepreneurship. To learn more, email robbins@nlc.org.

Empress of China SFNeighborhood institutions, such as the Empress of China restaurant in San Francisco, are often forced to close their doors due to escalating rent prices – but city leaders can balance retention and attraction strategies to sustain a healthy and diverse local business community. (Image courtesy reelsf.com)

Small businesses in some San Francisco neighborhoods are “disappearing as fast as an artisanal ice cube in a $14 craft cocktail” because of a development boom that’s turning neighborhood institutions, like the Empress of China and Lombardi Sports, into housing units. In Washington, D.C., local shops like Jak & Co. Hairdressers are closing their doors due to escalating rent prices.

At the same time, though, Cleveland has found it difficult to attract a full-scale grocery store downtown. Fort Worth also recently struggled to attract a retailer to a lower-income and underdeveloped neighborhood of the city.

What’s happening in these scenarios is nothing new. The real estate industry tends to develop where demand and buying power are high enough to create a return on investment. Even though cities don’t have direct control over the private real estate market, there are indeed strategies local governments can implement to create equity across neighborhood retail sectors.

City leaders should find the right balance between retention and attraction strategies to sustain a healthy and diverse local business community across all neighborhoods. Business retention strategies help existing local businesses keep their doors open. Business attraction strategies encourage or promote business growth in areas that wouldn’t otherwise be considered viable options for investment.

Achieving the right balance can undoubtedly be a complicated and ongoing process. Cities from NLC’s Big Ideas for Small Business peer network recently shared some of their local best practices.

Business Retention

 Legislating to preserve legacy businesses.  San Francisco is considering Legacy Business Legislation that would help retain local businesses in their original location by providing incentives to both the business and property owners. The businesses affected by this legislation are mom-and-pop restaurants, bars, and other small retailers operating in the city for at least 30 years. In recent years, these historic retailers have been “swallowed up” by the city’s development boom.

Providing business owners with site relocation assistance. For existing businesses that can no longer afford their leases, the choices are either to close up shop or relocate to a different neighborhood. Retail site selection tools, like the Retail Site Search from the Washington DC Economic Partnership (WDCEP), catalogue all of the available commercial spaces in the city. Every year, the WDCEP works with several business owners to choose a new, more affordable site for their business. The WDCEP tracks data on new business licenses that provides a unique vantage point into areas where businesses are growing and commercial rents are likely to rise.

Business Attraction

Partnering with a public hospital to build a grocery store in a food desert. Grocery stores are one of the more difficult types of retail for cities to attract in underserved areas. A public hospital in Kansas City, Mo., is supporting the construction of a grocery store in a section of the city that is now considered a food desert. The hospital’s vision is to provide access to fresh, affordable produce so that local residents are healthier and need fewer emergency room visits. Once it’s opened, the hospital will take over the management of the grocery store and offer classes on food and nutrition.

Using vacant space for pop-up retail. Temporarily filling vacant commercial corridors with pop-up retail businesses benefits the local economy in two ways. First, it reinvigorates the neighborhood by attracting visitors and customers, and can help reestablish the neighborhood as a “hot spot” for new businesses or development. Additionally, pop-up spaces provide local entrepreneurs the chance to test their products and skills in a low-risk environment. San Antonio’s OPEN initiative provides entrepreneurs with short-term leases in vacant downtown spaces, and aims to “authenticate downtown as a vibrant urban space, ready for long-term investment.” The Pop-Up Project in San Jose also connects retailers to vacant or underutilized downtown space.

A mix of these types of retention and attraction strategies will help ensure that all businesses have the chance to be successful, and that all neighborhoods have affordable goods and services available for residents.

Robbins_small (2)About the author: Emily Robbins is the Senior Associate of Finance and Economic Development at NLC. Follow Emily on Twitter: @robbins617.

National Park Service Launches NPS Urban Agenda

This is a guest post by Jonathan B. Jarvis, Director of the U.S. National Park Service.

Jefferson National Expansion MemorialThe Jefferson National Expansion Memorial in St. Louis, Mo., exemplifies the innovative ways city leaders, businesses and NGOs are investing in new parks, new park designs, and new ways to engage communities in creating healthy and livable cities. (National Park Service)

One hundred years ago, lawmakers were considering a radical idea to preserve some of our nation’s most iconic landscapes “for the benefit and enjoyment of the people.”

Indeed, what the founders of the national park idea had in mind nearly 100 years ago was incredibly innovative – but today, we live in a different time and a different era that requires new ways of thinking and a renewed relationship between parks and the American people. Since 1916, the American public has diversified and evolved; so, too, has our need to diversify National Park Service parks and programs to answer the call of the next century.

As we prepare to celebrate the 100th anniversary of the National Park Service’s establishment in 2016, we have spent a great deal of time thinking about how we can make national parks relevant to a new generation of Americans. One constant in those discussions is the importance of urban parks and National Park Service programs in urban areas.

People are often surprised to hear how urban the National Park Service is. For instance:

  • Forty of the country’s 50 most populated urban areas have national parks located within them;
  • One-third of all NPS sites are located in urban areas;
  • Thirty-six percent of all NPS visitation occurs at our urban sites – Golden Gate being the most visited;
  • NPS historic preservation tax credits have contributed significantly to preserving the character of our cities, generating more than $66 billion in private investment in historic rehabilitations; and
  • Some 30 NPS programs serve urban communities, providing funds and technical assistance for recreational facilities, environmental restoration, historic architecture, historic research, trail building, and youth engagement.

Recognizing this strong base of urban engagement and its potential to connect new audiences to national parks, last week, the National Park Service announced the Urban Agenda for the National Park Service. The Urban Agenda establishes a framework for an unprecedented strategic alignment of parks, programs and partnerships that will better serve communities.

A key component of the Urban Agenda will be realizing the core principles that call for being relevant to all Americans and creating a culture of collaboration. We have identified 10 model cities where we will develop our capacity to act as “One National Park Service” to better serve communities. To assist in activating the Agenda, we have developed a fellowship program that will deploy Urban Fellows in each model city and ultimately serve as a pipeline for growing NPS urban leaders.

The model cities were selected to provide opportunities to address a variety of challenges in spaces where we already have a national park located within the city, places that have national parks nearby, and locations that have no physical national park units, but strong ties to NPS programs. They include:

  1. Boston
  2. New York City
  3. Philadelphia
  4. Richmond, Virginia
  5. Washington
  6. Jacksonville, Florida
  7. St. Louis
  8. Detroit
  9. Tucson, Arizona
  10. Richmond, California

Importantly, the NPS Urban Agenda is supported by the President’s 21st Century Conservation agenda that calls for full funding of the Land and Water Conservation Fund and a $326 million NPS Centennial Fund. If enacted by Congress, this would provide an additional $107 million for federal land acquisition, $47 million for state grants and $25 million for the Urban Parks and Recreation Fund, which assists economically distressed urban communities with the revitalization and improvement of recreation opportunities.

My boss, Secretary of the Interior Sally Jewell, has launched an ambitious youth initiative that will engage the next generation of leaders and stewards through recreation, education, volunteerism, and employment. Specifically, by 2017, the Department will convene coalitions in 50 cities across the country to create more opportunities for young people to play, learn, serve, and work outdoors. The 10 NPS model cities are part of this movement, and over the next year and half, her initiative will result in investments in and support for 50 coalitions in many of our largest and most densely populated cities in the country. The Department of the Interior’s youth initiative goals include engaging 10 million kids in outdoor recreation programs; providing educational opportunities to 10 million of the nation’s K-12 students annually; engaging one million volunteers in support of public lands; and providing 100,000 work and training opportunities to young adults, including returning veterans.

This month, the National Park Service and our partner the National Park Foundation also launched a broad public awareness and engagement campaign called “Find Your Park.” This campaign extends an invitation to the public to understand the current breadth of the National Park Service stands for and rethink where and what all that a park can be.

The National Park Service recognizes that we cannot accomplish our goal of connecting the next generation to the benefits of their parks and public lands without the support and assistance of a whole host of partners. So, I invite you to join us and find ways to engage and share in a public dialogue, to learn from one another, to address the impact of climate change on our cities, to create education and employment pathways for disengaged youth, and maybe even to co-design the next great urban national park. Go out and Find Your Park.

Jonathan_Jarvis_150x183About the Author: Jonathan B. Jarvis began his career with the National Park Service in 1976 as a seasonal interpreter in Washington, D.C. Today, he manages that agency whose mission is to preserve America’s most treasured landscapes and cultural icons. Managing the National Park Service on the eve of its centennial in 2016, Jarvis has focused on several key areas that are critical for the future: enhancing stewardship of the places entrusted to the Service’s care; maximizing the educational potential of parks and programs; engaging new generations and audiences, and ensuring the welfare and fulfillment of National Park Service employees. His blueprint for the agency’s second century, A Call to Action, calls for innovative, ambitious, yet practical ways to fulfill the National Park Service’s promise to America in the 21st century.

Regulatory Reform, Data Analytics and Local Food Systems: This Month in Economic Development

Our monthly roundup of the latest news in economic development filtered through a city-focused lens. Reading something interesting? Share it with @robbins617.

boston_1_fullsizeCities like Boston have recently begun a new chapter in economic development by taking an innovative approach to regulatory compliance, creating a win-win scenario in which the community is protected and businesses are encouraged to contribute to a vibrant, healthy economy. (Getty Images)

Grab your scissors, it’s time to cut red tape for local businesses. Whether it’s the dizzying paper trail, inexplicable permitting or licensing requirements, or an arbitrary approval timeline, the local regulatory process is ripe for reform. NLC profiled the three key strategies for untangling the knots of business regulations, and also highlighted how several cities are using a “more carrot, less stick” approach. Mayor Martin J. Walsh wrote a guest blog post for NLC on how he is making Boston more business friendly, including building an online permitting system. The Ash Center at Harvard’s Kennedy School recently launched a comprehensive, online guide to help cities plan out their own regulatory reform initiatives. (Side note, here’s a great article from The Week on other ways cities can support businesses).

Data analytics is driving more effective economic development… There were a couple great stories this past month about how data analytics is improving local government outcomes, particularly for economic development. For example, Transit Labs is partnering with Detroit to use city data to improve inefficient bus routes. Also Louisville and Raleigh are among a group of cities using public feedback on the restaurant review website Yelp to prioritize health inspections for businesses.

…and collecting city data is more valuable than ever. The data analytics movement is creating new dialogue around what is the most effective data for cities to collect and analyze. To this end, Smart Incentives shared advice on how to measure the actual impact of economic development incentive agreements, not just the costs associated with them. The Kauffman Foundation also released a briefing on the four best indicators to measure a city’s entrepreneurial ecosystem. (NLC also has a performance management guidebook for cities).

Pioneering local food systems. Creating a local food ecosystem is a win-win situation for food providers and community member. The city of Portland, Maine, is emerging as a pioneer in the local food system scene. Mayor Michael Brennan developed the Healthy Sustainable Food Systems Initiative a couple years ago pledging that 50 percent of food at public schools, universities, and hospitals will be from local sources. To help other cities create their own local food ecosystems, the Council of Development Finance Agencies (CDFA) recently held a course on financing local food systems (follow @CDFA_Update to find out when it will be offered again).

Local government is still the leader in public sector job growth. This month’s Local Jobs Report found that, once again, local government is leading public sector job growth. Both federal and state governments lost jobs, but local government gained 3,000 jobs in March. Our analysis also reviews monthly employment trends from 2008 to now, and looks at whether or not cities are hiring back public safety positions that were lost after the recession due to budget cuts.

Religious freedom in Indiana? Talk about voting with your feet. In the wake of Indiana Governor Mike Pence’s passage of a controversial new religious freedom law, the business community is responding by cancelling expansion plans and prohibiting travel to the state. Angie’s List, headquartered in Indianapolis, is delaying a planned $40 million expansion set to create 1,000 local jobs over the next five years until the law’s ramifications are made clear. The list of other organizations that are banning activity in Indiana includes major companies like Apple, Salesforce, and Yelp. Meanwhile, Governor Pence is working to clarify the intent of the law, and its supporters are explaining that similar legislation already exists in 19 states without comparable pushback.

For a laugh. Or maybe for a shudder. The city of Austin wants you to visit its cemeteries. No, really. The city is developing a master plan for its burial grounds to turn the abandoned (and perhaps creepy?) spaces into public places where people choose to visit. The city’s plans include gravestone repairs, public programming, and other revitalization efforts.

What we’re reading. HuffPo column on how McDonald’s is fighting Seattle’s new minimum wage law. San Francisco Fed’s analysis of whether or not place-based policies like enterprise zones create jobs. A thought piece from Jerry Newfarmer on why people, not technology, are the unsung heroes of innovation in cities.

(Read the previous monthly roundups from January and February.)

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About the author: Emily Robbins is the Senior Associate of Finance and Economic Development at NLC. Follow Emily on Twitter: @robbins617.

Can Cities Beat the Fiscal Odds?

Can Cities Beat the Fiscal Odds?Beating the fiscal odds means cities are able to not only balance budgets, but continue to pioneer innovative solutions to the country’s most intractable challenges and lay the foundations for fiscal and economic growth. (Getty Images)

As the economy continues to show hopeful yet nascent signs of recovery, cities remain cautious about their fiscal condition. They continue to face rising costs of services, stark infrastructure needs, employee obligations, and omnipresent state and federal funding cuts and uncertainties. Still, cities have proven remarkably resilient. Despite a couple of high-profile cases, the vast majority of cities are balancing their budgets and making good on their debt.

But this hasn’t come easy or without consequences. The harsh reality is that municipal governments are operating at 90 percent of their pre-recession revenues, with little growth in sight and limited prospects for tapping into growth sectors within their local economies. Balancing local budgets in this environment is an ongoing process of revenue and expenditure choices that affect the types, levels and costs of services provided in a community. These choices often involve tradeoffs, even among investments critical to growth and innovation, such as infrastructure and workforce.

Take the city of Charlotte, for example. The city is currently looking to close a $21.7 million budget gap left by the state repeal of a business license tax and a surprise drop in property tax values. The city is reviewing its options, which include: pay freezes and eliminating positions; transferring some maintenance expenses from the general fund to a tourism fund (thereby decreasing funds for tourism activities); cutting funding to an arts and science program; and increasing development fees.

After all of this, the city will still be $10-15 million in the hole. Increasing property taxes may be politically infeasible, which likely means deeper and more widespread service cuts, higher fees, and less funding for programs and investments. No doubt, though, the city of Charlotte will find a way to close the gap, but at what cost to their future economic and fiscal health?

Even under these circumstances, our cities are leading change, progress and solutions to the most difficult issues of our time. Chattanooga is bridging the digital divide; Louisville and Buffalo are closing the skills gap; Seattle and San Francisco are raising the minimum wage. If we want grassroots innovations that are even more widespread and sustainable and that drive national economic growth, then cities need more than the fiscal cards they’ve been dealt. They need more than creative workarounds – but instead a consistent toolbox of resources to create the conditions that will accelerate their local and regional economies.

Their Hand: City-State Fiscal Structure

Cities, of course, are creatures of their states. The choices local governments can make are constrained by legal limits on their revenue raising authority.

In a new National League of Cities report, we examine the Cities and State Fiscal Structure across the 50 states and determine that a city’s “hand” is unique within each state and is a mix of:

  • Municipal fiscal authority: access to sales, income and property taxes. A mix of revenue sources is needed to provide cities with stability to buffer against economic downturns, and to allow them to capture revenue growth during periods of economic growth. No state uniformly authorizes its municipalities to utilize all three tax sources. Maps for export-03
  • Municipal revenue reliance and capacity: the amount of revenue (taxes and fees) a city generates that can be used to fund services and their share of resident needs. On average, U.S. municipalities derive approximately 71 percent of their general fund revenues from own-source revenues, including 24 percent from property taxes, 13 percent from sales taxes, 3 percent from income taxes and 32 percent from fees and charges.
  • State aid: the amount of state support for a municipality as a proportion of its total revenues. While it could be argued that too much state aid makes municipalities beholden to the state, in general, well-structured state aid can increase the capacity of all cities by equalizing the base support for cities that may lack sufficient resources. State aid has been decreasing despite increases in state mandates and cuts to state services that in turn force cities to pick up the slack (i.e., cuts to higher education or mental health services).
  • Tax and Expenditure Limits (TELs): constraints on local fiscal autonomy through voter imposed or state-imposed taxing or spending limitations, most frequently limits on property tax rates, growth in property value assessments, or caps on the total revenue allowed from these taxes. Forty-one states currently have some form of a TEL.

Incredibly, no state has afforded its cities an expansion of municipal fiscal authority since the start of the recession. Local fiscal health remains below pre-recession levels despite burgeoning broader economic recovery in part because authorization of more local revenue authority and other enhanced capacity measures are so rare.

States are balancing budgets too, and in some cases fulfilling tax reform promises on the backs of local governments.  Cities in Texas, for example, have traditionally traded lower levels of state aid for more local control but are seeing revenue threats as the state pursues caps on the local property tax. Last week, the state Senate Committee on Finance heard a bill, S.B. 182, which would lower the cap from 8 to 4 percent. This reduction would only provide a typical homeowner in McKinney, Texas a savings of $29.65 annually, but the city would have a revenue loss of $1.4 million. Similar threats are being considered in statehouses across the country.

Hold or Fold

Within these constraints, cities are using the tools available to them, and in some instances, implementing creative financing strategies. In the best case scenarios, strategies like social impact bonds, crowdsourcing, participatory budgeting and even ballot measures can help meet specific needs or increase engagement with the community. But they do not offer long-term, broad-based, reliable, general revenue streams.

Fees and charges have become an increasing proportion of local revenue due to a lack of access to other sources and the political difficulty of raising taxes. Fees and charges include development fees, waste disposal fees, court fees and service fees such as libraries and parks. They can be regressive, making it difficult for lower-income residents to access services, or impose charges on development that can negatively impact economic growth.

Beating the fiscal odds means cities are able to not only balance budgets, but continue to pioneer innovative solutions to the country’s most intractable challenges and lay the foundations for fiscal and economic growth. This requires more local tax authority, access to a mix of revenue sources, state aid that enhances the fiscal base of less-wealthy cities, and a revision of existing tax and expenditure limitations to make them less binding, or better yet, nonexistent.

We are gambling with the economic future of our country if we do not offer our cities more flexible fiscal structures that align with new economic realities and the responsibilities that we lay on their doorsteps.

Read the full 2015 Cities and State Fiscal Structure report here.

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About the Author: Christiana K. McFarland is NLC’s Research Director. Follow Christy on Twitter at @ckmcfarland.

How Startups Solve Problems at the Intersection of Urbanization and Climate Change

This is a guest post by Stonly Baptiste.

startups postCould startups be the secret weapon to make cities smarter and combat climate change in the face of ever increasing urbanization? (Getty Images)

When you see the word ‘startups’ in the news, you see headlines like “Meet the Hottest Tech Startups,” “Snapchat Could Become One of the 3 Highest-Valued Startups in the World,” or “Why Startups Want This 28-Year-Old to Really Like Them.” But the most interesting startups may be the ones working on problems that can directly help cities.

The Problem: More People + More Energy Consumption = Climate Change

People are moving to cities at rates never before recorded. The urban population of the world has grown rapidly since 1950, from 746 million to 3.9 billion in 2014. This represents a shift from two out of 10 people to five out of 10 people living in cities. The motivations behind this migration vary, from the search for more employment opportunities and increased earning potential to better health care and improved living standards; social factors like better education opportunities also play a role. Whatever the cause, there is no denying the rapid rate of global urbanization.

So what does this mean in terms of climate change? Energy consumption is the biggest contributing factor to global climate change, and more people means more energy consumption. In fact, 75% of global energy consumption occurs in cities. That consumption is likely to increase as we experience the shift from 54% of the world’s population residing in urban areas in 2014  to 66% by 2050. The environment around us will simply not be able to support this kind of growth and the increased level of energy consumption. Managing climate change seems more and more like a city efficiency challenge.

The Challenge: Redesign Cities

“No challenge – no challenge – poses a greater threat to future generations than climate change.”
– President Barack Obama, State of the Union, Jan 20, 2015

The challenge is to create a fast, widely-adopted, effective and lasting impact on the future sustainability of cities; to redesign cities in response to climate change. Previously, the burden of these issues fell on the government. However, due to the increasing budget constraints of so many of the world’s economies, government can no longer afford to take on all of that responsibility.

The Solution: More Urbantech Startups

Technology has always helped shape urban and suburban environments. “Urbantech” describes the emerging technologies that are being used to solve problems at the intersection of urbanization and climate change, from reducing energy use and greenhouse gas emissions to reducing crime and increasing government efficiency.

Over the last 18 months at Urban.Us, we’ve analyzed hundreds of startups that are working on Urbantech problems. We wanted to understand what problems they are solving as well as their customer focus (consumers, businesses or governments). By creating the Urbantech radar, we were able to visualize companies according to their customers and problems they are trying to solve.

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The visualization reveals some interesting patterns about where founders and investors have chosen to focus – but it also shows where there is open space and opportunity.

The radar also provides strong evidence that the challenge of redesigning cities to positively impact climate change could very well lie in the hands of the consumer, therefore circumventing the government-first approach. By reaching mass consumer adoption, these startups are able to make cities sustainable through channels like the Apple Store, Home Depot and Amazon.

No one can predict what the future of cities will look like – but we can get a glimpse of what’s possible by looking at some of the fastest-growing startups currently reshaping the way people live and work in cities:

  • DASH, a hardware plugin tool that syncs to your mobile phone to turn any car into a smart car, unlocking enhanced performance, cost savings and social driving.
  • OneWheel, a one-wheeled electric skateboard to quickly and easily get you to and from mass transit.
  • Whill, an all-terrain wheelchair that makes hard-to-navigate obstacles like stairs a thing of the past for people with disabilities.
  • Radiator Labs, a radiator cover that converts old cast-iron radiators into precision heating machines with climate control, operational efficiency and safety comparable to any radiator, transforming steam heat into a comfortable and efficient solution.
  • Hammerhead, a handless device that enables cyclists to safely navigate streets.
  • Rachio, a smart sprinkler controller that automatically adjusts your watering schedule based on weather or seasonality to save on water consumption.
  • Zuli, a plug-and-play smart outlet that enables users to control appliances, dim lights, set schedules, and conserve energy from their mobile phones.
  • Lagoon, a smart water sensor that alerts you when there is a leak, tracks usage, and saves money on water bills.

These startups have found a way to impact climate change by leveraging consumers’ need to collect data, save money, and enjoy the user experience. The climate change aspect may not even be a factor for consumer adoption – but through new crowdfunding platforms, distribution channels and government procurement initiatives, these startups could change the future of our cities and the environment.

The Next Step: Local Government as the Coach vs. Quarterback

The way cities work with emerging technologies is entering a new paradigm in which the city is not always the customer but, more often, the regulator and promoter of the best ideas. We are excited to be hosting 100 of the most promising Urbantech startups at this year’s Smart City Startups event – and, thanks to the support and partnership of the National League of Cities, we will introduce local government officials from Tel Aviv, San Francisco, New York, Boston and elsewhere to the innovations these startups offer.

We have all seen the battle between Uber and regulators – and it’s likely that no local government made an attempt to discuss regulating Uber before the battle occurred. We’ve also seen the impact that Rachio is having on water consumption around the country – and in most cities, this shift is still under the radar. Recently, we’ve seen police departments fighting against some of the information shared on Waze.

Our goal is to enhance awareness and increase partnership between local governments and startups working to solve the same problems, so that the best solutions can be promoted and cities can begin to preemptively manage the impact of regulation. Urban.us and NLC are joined by Direct Energy, the Knight Foundation and others aligned with the goal of sharing experiences that cities are having as they work with startups to build new relationships that will forge the future of urbanization and climate change.

stonly_baptiste_headshotAbout the Author: Stonly Baptiste is the Co-Founder of Urban.Us, where he leads investment research, community management and platform development for the fund, which now works with 16 startups around the world solving urban challenges. Additionally, he is co-organizer of Smart City Startups, a multi-day, multi-track event based in Miami that recruits 100 of the the most promising startups from around the world who are working to solve challenges at the intersection of climate change and urbanization. Additional participants include officials focused on innovation and economic development from local governments in Tel Aviv, San Francisco, New York, Boston and more. Investors such as Vast Ventures and Fontinalis Partners, and global companies such as Direct Energy, EDF, and Canary Wharf join to further government efforts to work with startups and promote innovation in cities.

Carrots and Sticks: How Cities Are Taking a New Approach to Regulatory Compliance

This post is a response to the recent Governing article on regulatory compliance.

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There has been some recent buzz about the dangers of local regulatory compliance. Regulating businesses is necessary – you wouldn’t want to eat at an unsanitary restaurant, or take your car to an auto mechanic who wasn’t certified. However, some say that regulating businesses can be counterproductive, costly and raise equity concerns. Holding up examples of cities coming down hard against large swathes of businesses on relatively minor infractions can certainly make that case.

But these instances are the exception, not the rule.

Less Stick, More Carrot

While local governments would be wise to heed the warnings of fallout from “inspector zeal,” the regulatory reality is that most cities aren’t filling their coffers with health inspection fines. Ensuring that businesses operate in a healthy and safe way is clearly an important function of city government, but paying for inspectors can be expensive. And because cities are still facing fiscal challenges, many are approaching compliance with caution, carefully scoping out the financial, social and economic costs and benefits of their compliance approaches.

As a result, the regulatory environment emerging in most cities is guided by a clear articulation of the end game – to ensure safe, healthy communities and prosperous businesses. This means a more informed, sensible carrot-andstick approach: punitive “stick” measures when necessary, paired with a bushel of “carrots” in the form of compliance incentives and supports.

The “stick only” approach characterized by harsh, blanket enforcement is giving way to targeted compliance that leverages innovations in data and analytics, reforms bureaucratic red tape and makes it easier for businesses to comply in the first place.

Driving Innovation: The Impact of Analytics and Legislation 

New York City and others have enlisted the help of online review tools like Yelp to proactively identify health and safety concerns. A new Pew analysis noted that “[New York City’s] Department of Health and Mental Hygiene launched a nine-month pilot study in July 2012 that used data-mining software to screen and analyze about 294,000 Yelp reviews. It searched for keywords such as ‘sick’ or ‘food poisoning’ to find cases of foodborne illness that may not have been officially reported.”

Some cities – such as Boston, which has created a Problem Properties Taskforce – are even starting to use predictive analytics to better understand and pinpoint particular cases where compliance interventions can have the greatest impact.

Despite efforts to target the worst offenders, compliance “crackdowns” can disproportionately affect lower-income and legacy businesses that don’t have the skills or time to navigate government regulations and can’t afford to pay for fees, tax increases or compliance upgrades to their business. For these reasons, San Francisco is currently considering Legacy Business Legislation to help businesses that have been in operation for over 30 years remain in compliance and in their original locationThese businesses would be eligible for certain types of assistance, including priority access to pre-inspections for ADA compliancy, pro bono legal advice on leases, and property tax rebates. The legislation will predominantly support small mom-and-pop restaurants and cafes, and smaller bars and retailers that cater to the LGBT community.

Regulatory Overhauls

Even more common than predictive analytics and legacy business legislation is simply regulatory reform. Take ChicagoBoston, Cleveland, Kansas City, Mo., and Seattle, for example. These cities are making it easier for businesses to comply by reducing the number of permits and licenses, improving approval times, making requirements and timelines more transparent, revisiting outdated and onerous laws, and creating accessible ways for businesses to interface with government and obtain information.

Improving the ease of doing business is not only the most impactful compliance carrot available to local governments, but it is also a top contributor to a business-friendly environment (often surpassing low taxes). By using carrots and sticks in an innovative approach to regulatory compliance, cities are creating a win-win scenario in which the community is protected and businesses are encouraged to contribute to a vibrant, healthy economy.

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About the Author: Christiana K. McFarland is NLC’s Research Director. Follow Christy on Twitter at @ckmcfarland.

Workforce Development, Jobs Report, and Broadband: This Month in Economic Development

Our monthly roundup of the latest news in economic development filtered through a city-focused lens. This month’s roundup features stories from NLC’s Congressional Cities Conference. Reading something interesting? Share it with @robbins617.

"Photo by Jason Dixson Photography. www.jasondixson.com"President Obama announces his new TechHire initiative, which calls for a partnership between cities, higher education and the private sector to expand access to tech jobs in communities across the country, at NLC’s Congressional City Conference in Washington, D.C. last week. (Jason Dixson Photography)

White House announces TechHire initiative to expand skills training for tech jobs. President Obama addressed NLC’s membership at the Congressional Cities Conference and asked for cities to partner with him on TechHire, a new workforce program designed to train low-skilled workers for well-paying information technology jobs like software development, network administration and cybersecurity. The new initiative will include $100 million in competitive grant funding as well as private sector resources and support for 21 communities selected to participate.

Skills gap: myth or reality? Meanwhile, the ongoing debate continues over whether or not a skills gap actually exists in our country’s workforce. Tom Snyder, President of Ivy Tech Community College, wrote a piece for The Huffington Post about leveraging community colleges for skills training on emerging technologies. New York Times columnist Paul Krugman recently challenged the idea of a skills gap, arguing there’s insufficient evidence to prove a skills gap is holding back employment. However at the local level, where job opportunities are returning but going unfilled, mayors are responding by developing workforce programs to meet the specific hiring needs of area businesses (like in Missoula, Mont., and Heath, Ohio).

The latest employment trends in local government. NLC’s latest Local Jobs Report analysis by Christiana McFarland found slight gains in overall public sector employment, with local government responsible for the majority of those new jobs last month. But this positive news is tempered by the fact that the local government workforce is still smaller today than it was at its peak in 2008. Another local government trend highlighted by the Emerging Local Government Leaders (ELGL) network is the lack of growth in the percentage of chief administrative officers that are women. That number still stands at 13 percent – the same today as it was back in 1984. The thought-provoking ELGL “13 Percent” blog series features personal stories from city employees.

Municipal broadband could be coming to a neighborhood near you. In case you missed it, the Federal Communications Commission (FCC) voted to allow the municipal broadband systems in Chattanooga, Tenn., and Wilson, N.C., to expand outside their existing borders. This is encouraging news for other cities that are considering building their own broadband systems, like Seattle. The decision also affirms NLC’s position that municipal broadband systems can play an important role in supporting local growth and opportunity. More info from the FCC can be found here.

Cities are making the sharing economy work. NLC released a new report, Cities, the Sharing Economy, and What’s Next, at the Congressional Cities Conference. The report provides analysis from interviews with city officials about the impact of the sharing economy (and companies like Uber, Lyft, and Airbnb) on innovation and economic development and how cities are managing safety and implementation considerations. NLC’s Brooks Rainwater explained how this new resource will assist city leaders as they understand, encourage, and regulate the sharing economy in their cities.

For a laugh. Not to start a dog-versus-cat war, but how great would it be if every economic development strategy included plans for a cat café? Meanwhile in Boston, a GoFundMe campaign aiming to raise $300 million to fix the struggling local transit system first started out as a joke but is now receiving national media attention. The campaign is unlikely to reach its goal, but if you donate $50, the fund’s creator will scream your name on the orange line for 45 minutes during rush hour.

Idea of the month: Life experience as college credit. Getting a degree later in life is hard, but Pennsylvania’s community colleges are making it easier by now counting life experience as college credit.

What we’re reading. There were a few solid reports this month on workforce, wages, and jobs. Brookings released a report identifying the advanced industries with the greatest prospects for long-term economic growth (Governing provided a solid overview of the key findings). The Boston Consulting Group found that the top three reasons companies bring manufacturing jobs back to the U.S. are better access to skilled workers, lower shipping costs, and shorter supply chains. Finally, the Economic Policy Institute testified before Congress about government actions needed to create jobs and grow wages. The testimony said that local governments should implement targeted employment programs and also invest in broadband, education, transportation and other infrastructure projects.

(Last month’s roundup is here.)

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About the author: Emily Robbins is the Senior Associate, Finance and Economic Development at NLC. Follow Emily on Twitter: @robbins617.