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.

Inequality, Instagram and Incubators: 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.

San-Diego-InstaCould Instagram walk-around tours help cities attract visitors and showcase local landmarks? (Photo Credit: David Maloney)

Shining a new light on income inequality.
The issue of inequity is getting prime-time coverage from the White House, think tanks and mayoral state of the city addresses. A root of the problem, as a  new CityLab analysis suggests, is that the “rising tide raises all boats” approach needs to be swapped out for one that focuses on expanding advancement opportunities for low-wage earners. City leaders are taking note. Portland Mayor Charlie Hales is proposing to raise the minimum wage to $15 for city workers and contractors. San Francisco Mayor Ed Lee announced a “shared prosperity agenda” that includes affordable housing measures and universal after-school and summer programs. Huron, South Dakota is increasing city spending on English classes for new residents as a local workforce development initiative. Cincinnati just created a new city department for economic inclusion.

Forget all your troubles, forget all your cares. Things will be great when you’re developing downtown.
Cities are continuing to invest in revitalizing their downtown districts to attract retailers, visitors and residents. In places like Monroe, La., Derby, Conn., Modesto, Calif. and Osage, Iowa, city officials are making plans to enhance their downtowns with projects including expanding parking access, updating building facades and developing pedestrian walkways. Bismarck, N.D., will soon have a new downtown apartment and retail complex designed to attract young professionals. Last year, NLC’s City Fiscal Conditions study found that 62 percent of cities increased spending on capital projects and infrastructure. That number may continue to grow this year.

Old debate, new players. Are major sporting events a good development strategy?
It’s an age-old question. Is hosting a major sporting event a good economic development strategy? This debate has been playing out in Glendale, Ariz. and Boston, Mass. in recent weeks. Leading up to the Super Bowl, Glendale Mayor Jerry Weiers tried unsuccessfully to get reimbursed the $2.1 million his city spent on security during game week. Meanwhile the city of Boston won the U.S. bid to host the 2024 Summer Olympics, but not everyone is wicked excited about Bostonians handing out the gold medals. A new nonprofit, No Boston Olympics, formed to protest the bid and says it plans to push for a ballot initiative or state legislation that could prevent the Games from coming to Boston. No Boston Olympics argues the city could be left in debt or forced to use taxpayer dollars to support the Games.

Coworking spaces are popping up in new cities.
Affordable, shared workspaces for entrepreneurs (a topic we’ve talked about here also) are launching in new places. DeskHub in Scottsdale, Ariz., recently opened its doors to the community and is the largest coworking space in the Phoenix metro area. Artists, crafters and makers in the nation’s capital can now rent space at the Brewmasters Studio in downtown D.C. to let their creative juices flow in the company of fellow artists. Plans are also officially underway to build an innovation district in Chattanooga.

The Great GASB.
The Government Accounting Standards Board (GASB) proposed a new set of rules requiring state and local governments to disclose details about tax abatements. Over 300 organizations weighed in during the recent comment period, with a decision expected from GASB this summer. While greater transparency and accountability in the use of incentives gets a big thumbs up, concerns abound regarding the administrative burden the rules would impose, and the lack of context in which abatements would be disclosed.  Stay tuned…

Idea of the month: Downtown Instagram walking tours.
Speaking of downtowns, a local photographer in Bluefield, W.V., developed an Instagram walk-around tour of his city, attracting shutterbugs from the area to snap photos of downtown buildings and landmarks. This could be a unique new approach for attracting visitors and showcasing a city’s unique architecture, parks or art.

What we’re reading.
Governing’s new series on gentrification. On a related note, can Starbucks predict where gentrification will happen next? Also, policy ideas from the Kauffman Foundation for how federal, state and local government should support immigrant entrepreneurs.

For a laugh.  
It’s state of the city season. Are you ready? Cupertino’s Mayor Rod Sinks just raised expectations to new heights by jumping out of an airplane with his council colleagues as part of his speech.

Check back here on our blog Friday, Feb. 6, for NLC’s take on what the latest Bureau of Labor Statistics’ numbers mean for local government workforces.

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

Tying Business Incentives to an Economic Development Strategy

This is a guest post written by Ellen Harpel. Post originally appeared on the Smart Incentives blog.

Construction-in-SingaporeEconomic development initiatives like this construction project in Singapore are more successful when investment incentives align with the values articulated by the overall development strategy. (Getty Images)

Incentives are not just about winning a deal or completing a transaction with an investor. Smart incentive use is always connected to a larger economic development strategy.

Economic strategy

Any project for which incentives are offered needs to be evaluated in the context of community economic goals and strategies. Many communities have an economic development strategy, though perhaps of varying quality, and making sure that an incentivized project aligns with the broad statements and values within that strategy is an important first step. Unfortunately, a surprising number of communities either do not have strategies in place or do not align their incentive programs to those strategies. Community discussions on incentive use focus on the deal, not the reason for the deal. My work around the country has revealed that the public, elected officials and even economic development board members do not see how incentives are connected to the broader economic development mission, seeing them entirely as necessary evils to enable business recruitment.

Program goals

Policymakers are increasingly ensuring that individual incentive programs have clear goals, although we have seen that guiding legislation can be frustratingly unclear, making both implementation and evaluation difficult. Clearly defining the purpose of an incentive program helps ensure it will be used as intended. Otherwise, it runs the risk of being offered to all comers regardless of their capacity to connect to community goals. Communities also often have specific objectives related to supporting target industries or developing individual sectors of the economy. Economic developers may be urged to support small businesses or firms meeting certain demographic criteria. Economic development organizations often work with regional or national organizations and may need to align efforts with their broader strategies. Sustainable development may be a priority. These are all additional strategic factors that should be considered when assessing the basic project benefits that an incentives investment might generate. Good economic development organizations know their communities well and should be able to relatively easily assess whether a proposed investment aligns with community values on these factors, singly or in combination.

Ellen Harpel bio photoAbout the Author: Ellen Harpel is President of Business Development Advisors (BDA) and Founder of Smart Incentives. She has over 17 years of experience in the economic development field, working with leaders at the local, state and national levels to increase business investment and job growth in their communities. Contact Ellen at eharpel@businessdevelopmentadvisors.com or ellen@smartincentives.org. You can also follow her on Twitter at @SmartIncentives.

Cities Focus on Talent, Quality of Life to Grow Local Economies

Instead of focusing singularly on business attraction or workforce development, mayors across the country are taking a more holistic lens to economic development.

Denver-Downtown-ActivityPeople wandering around shops and restaurants in downtown Denver. Getty Images.

In his State of the City speech earlier this year, Mayor Greg Fischer from Louisville shared his mantra for economic development: “In today’s world, companies can’t locate just anywhere – their workforce is not interchangeable. They want to locate where they can find a pool of skilled workers – and a place with the quality of life to attract and retain them, no matter where they are from. So the jobs follow the people.”

Our analysis of annual State of the City speeches finds that many mayors across the country are thinking about economic development in a similar way, taking a more holistic lens instead of focusing singularly on business attraction or workforce development.

The quality of life in a city is an important deciding factor in where residents and businesses locate. Making a city a place where people want to live, then, will also make it a place where people will want to work or start a business.

Demographic trends indicate that this shift in approach to economic development is coming at just the right time. The Kauffman Foundation points to data showing there will be more “thirty-somethings” in the U.S. over the next 20 years than ever before. As Kauffman researchers have suggested, this is an exciting opportunity for cities because the “peak age” for entrepreneurship is late thirties to early forties.

No Time Like the Present

Based on this data there is, quite literally, no time like the present to support small business growth and entrepreneurs. Our analysis of State of the City speeches demonstrates that cities are starting to prepare themselves for this new entrepreneurial environment. Larger cities are seemingly leading the way in developing city initiatives to support start-up growth, but smaller cities are a player in this game too.

Small business is the common business-related topic mentioned by all cities, with 37% of mayors discussing it during their addresses. This does not come as a surprise since small businesses are a key economic driver in a lot of cities, regardless of their size.

Overall, 19% of mayors discuss entrepreneurship in their speeches, with the majority (36%) coming from large cities. However, in cities with 100,000 or less in population, 10% of mayors discuss entrepreneurship, which means this topic isn’t completely off the radar among smaller communities.

Two widespread strategies for supporting entrepreneurship, accelerators and incubators, are not mentioned at all in cities under 50,000 in population, but are discussed somewhat frequently by big city mayors (4% and 18% respectively).

Cities Spearhead Economic Growth

Across regions and population sizes, the cities we analyzed are spearheading some interesting initiatives to support economic growth in their communities.

Providing support to business owners is a theme throughout many mayors’ state of the city addresses. Mayor Bill Lambert in Moscow, Idaho, discussed how he helps support the Palouse Knowledge Corridor, a partnership between two area research universities, economic development agencies, the business community and city government that strives to create economic opportunities in the region.

As part of these ongoing efforts, the city will help host an event called, “Be the Entrepreneur Bootcamp” designed to help entrepreneurs develop business plans and connect with mentors and investors.

Mayors are also pledging to cut red tape at city hall and make it easier for local companies to comply with the city’s regulatory requirements. “The spirit of entrepreneurship is alive and well in Seattle, and we need to make sure the city is contributing to – and not inhibiting – that energy and enthusiasm,” said Seattle Mayor Edward Murray. “This year, the Office of Economic Development will launch a new online restaurant resource guide to help new restaurant owners navigate the local and state regulatory process.”

Workforce development approaches were also highlighted in the city’s speeches. Recognizing that “unemployment is unacceptably high in communities of color, particularly among young men,” Jersey City’s Mayor Steven Fulop will be connecting students to construction apprenticeship programs offered in partnership with local unions and developers as part of the city’s overall goal to increase job placement by 33%. Similarly, in Providence, the city is investing in construction apprenticeship programs through Building Futures and YouthBuild Providence.

The Role of Mayors

A mayor’s role in growing a city’s local economy takes on many forms, from creating well-paying jobs to training a skilled workforce to developing an environment that attracts families and business owners alike.

Economic development was the most frequently-cited topic in our analysis of state of the city speeches, with 98% of mayors mentioning it and 67% dedicating a significant portion of their remarks to the topic. NLC will be releasing more information about this and more topics when we publish our State of the Cities report later this month at the Congress of Cities Conference.

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About the author: Emily Robbins is the Senior Associate, Finance and Economic Development at NLC  and the author of a new report on entrepreneurship and small business growth. Follow Emily on Twitter: @robbins617.

Using Data to Improve Accountability in Economic Development Programs

This post was written by Ellen Harpel, founder of Smart Incentives and president of Business Development Advisors LLC (BDA), an economic development and market intelligence consulting firm. Post originally appeared on the Smart Incentives blog.

Data-Blog-t

Data is one of the key elements of the Smart Incentives 4×4 framework that enables communities to make sound investment decisions. Unfortunately, good data on how well incentive programs work is often lacking. This lack of data hinders both economic development professionals in their day-to-day work and policymakers in their leadership and oversight roles.

Last year one report concluded unhappily, “We simply don’t have the information we need to make good decisions about incentives.” The Pew Charitable Trust’s widely-cited 2012 report, Evidence Counts, found that “half the state have not taken basic steps” to provide evidence of whether incentives work well or not, and “no state regularly and rigorously tests whether those investments are working,” though many states have taken valuable steps to begin to understand and evaluate the impact of their incentive programs.

Here we consider 3 data themes: available resources, challenges in data collection, and organizational advice to improve data management.

1. We have better data than ever on existing state incentive programs and past deals thanks to the Council for Community and Economic Research (C2ER) State Business Incentives Database and Subsidy Tracker 2.0 from Good Jobs First. These resources provide a great start for understanding the incentives environment. Further, many states are striving to improve the quality of reporting on their incentive use, providing new insights into existing programs.

2. We know we still need to improve data collection to assess compliance and outcomes associated with incentive deals, but we first must overcome substantial challenges. These include but certainly aren’t limited to:

  • Applying consistent definitions to the various measure of merit, including how we count jobs (all, new, over a baseline, full-time (by number of hours worked?), part-time), wages and investment
  • Accessing data sources to obtain and validate these measures by project
  • Determining project timing for compliance versus evaluation purposes
  • Tallying the exact cost of each incentive, both on a project and a program basis. This is particularly challenging for many tax–based incentives taken as needed over a multi-year period. Further, should costs be calculated by project? by annual budget impact? by program?
  • Deciding who should collect the data and how the data management effort should be staffed and funded

3. Enabling economic development organizations to address these data challenges requires significant effort, including the following critical steps:

  • Assembling a team with analytical skills as well as subject matter expertise. The team should encompass economic development knowledge, experience working with businesses, political awareness, analytical skills and information system expertise. You’ll probably have to look beyond your own agency to pull together the talent you need.
  • Asking the right questions to guide data improvements by defining the current situation, describing an improved state, focusing on the most important issues that need to be addressed, and agreeing on a desired outcome.
  • Collaborating with other agencies to collect data and share analytics expertise. Development finance entities, tax and revenue departments, and workforce or labor departments are all potential allies for data collection, analysis and verification of incentive use and compliance.
  • Setting expectations at senior levels for analysis and accountability in incentive programs. Staff must know that their efforts to track compliance and performance are important to the economic development mission and the organization’s leaders.

Smart Incentives works every day to provide state and local governments the data and analytics they need to identify what works and to enable sound decisions when awarding incentives. Founder Ellen Harpel is also pleased to be part of the Center for Regional Economic Competitiveness team working with the Pew Charitable Trusts on the Business Incentives Initiative, designed to improve data collection, management and reporting within state incentive programs.

HarpelAbout the Author: Ellen Harpel is President of Business Development Advisors (BDA) and Founder of Smart Incentives. She has over 17 years of experience in the economic development field, working with leaders at the local, state and national levels to increase business investment and job growth in their communities. Contact Ellen at eharpel@businessdevelopmentadvisors.com or ellen@smartincentives.org. Follow Ellen on Twitter @SmartIncentives.

Supporting Small Businesses through Economic Development Offices

This is a guest post written by Jason Rittenberg.

Bakery Square in Pittsburgh is a mixed-use redevelopment project of CDFA member Urban Redevelopment Authority.

Bakery Square in Pittsburgh is a mixed-use redevelopment project of CDFA member Urban Redevelopment Authority.

Incubators. Microlending. Accelerators. Crowdfunding. From rural areas to large cities, from the middle of the country to the coasts, today’s economic development entities — and their jargon — are all-in on encouraging small business finance.

Communities are increasing their support with good reason. Small businesses account for more than 99 percent of firms, 49 percent of employment and 42 percent of payroll in the country.[1] Further, small business lending continues to struggle out of the recession. While overall business lending is up nearly 25 percent from 2008, bank loans of less than $1 million remain down 14 percent over the same period.[2]

So communities are focused on helping small businesses, and from a constituent and need perspective, it makes sense for them to do so. But what does it mean to “help” a small business? For that matter, what is a “small” business? The answers to these questions are actually complex.

The U.S. Small Business Administration (SBA) defines a small business as having fewer than 500 employees, covering 99.7 percent of all firms. However, 90 percent of firms have fewer than 20 employees, and 62 percent have fewer than five. The difference in sophistication, goals and needs of a business with no employees is vastly different from a business with 10 employees, which is again exponentially different from a firm with 200 employees. Infusionsoft put together an infographic in 2012 to help illustrate these differences.

Given this variation, communities looking to support small businesses of any stripe need to think strategically about their economic development goals and needs before proceeding. Development finance programs require non-trivial commitments of resources to be effective and should therefore be entered into only as part of a comprehensive regional strategy. At the organization I work for, the Council of Development Finance Agencies (CDFA), we refer to this approach as the “development finance toolbox.”[3]

In the area of small business access to capital, CDFA has seen a wide variety of city and state programs be successful. Technical assistance, seed and venture capital, credit enhancement, and lending programs — as well as incubators, microlending and other trendy solutions — can all contribute to small businesses in different ways. The keys to success are to match the right program to real community needs and to find the right partners to assist in implementation.

Small business needs, foundational finance programs, and innovative support programs are all being covered as part of the Providing Small Businesses with Access to Capital forum being held in Kansas City, MO on October 8-9, 2014. Economic development, small business development, and other city staff are encouraged to participate in the event to learn about the latest and best practices for encouraging this critical sector of the local economy.

Rittenberg_HeadShot_blogAbout the author: Jason Rittenberg is the Director of Research & Advisory Services for CDFA. He oversees numerous projects, including the State Small Business Credit Initiative Coalition, and is the course advisor the CDFA Intro Revolving Loan Fund Course.

 

 

 

[1] U.S. Census Bureau. (2012). Latest Statistics of U.S. Businesses Annual Data. Retrieved 8/19/2014 from: http://www.census.gov/econ/susb/

[2] Simon, P. and Loten, A. (2014, Aug. 17). Small-business lending is slow to recover. Wall Street Journal. Retrieved 8/19/2014 from: http://online.wsj.com/articles/small-business-lending-is-slow-to-recover-1408329562

[3] Rittner, T. (2009). Practitioner’s Guide to Economic Development Finance.

Business Incentive Initiative

This post was written by Ellen Harpel, founder of Smart Incentives and president of Business Development Advisors LLC (BDA), an economic development and market intelligence consulting firm. Post originally appeared on Smart Incentives blog.

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Local businesses in New York City’s West Village. Source: Flickr user wallyg

City leaders have many concerns about the cost and effectiveness of economic development incentives in their communities, as we learned from the session on economic development financing tools during last year’s Congress of Cities. A new initiative working to develop best practices for evaluating incentives at the state level will help local elected officials whose communities use state incentive programs for business attraction. It should also provide some guidance for cities striving to assess their own local incentive programs.

The Pew Charitable Trusts recently announced the launch of the Business Incentives Initiative. This Initiative will help improve data collection, management and reporting within state incentive programs in order to “improve decision-makers’ ability to craft policies that deliver the strongest results at the lowest possible cost.”

Pew and the Center for Regional Economic Competitiveness will engage leaders from seven states (IN, LA, MD, MI, TN, OK, VA) to develop best practices for evaluating economic development incentives by:

  • Identifying effective ways to manage and assess economic development incentive policies and practices.
  • Improving data collection and reporting on incentive investments.
  • Developing national standards and best practices that states can use to successfully gather and report data on economic development incentives.

As project manager Jeff Chapman explained in an interview with Bloomberg BNA:

This initiative builds on Pew’s ongoing project to help state policymakers implement ongoing evaluation of economic development incentives. As states work to measure the effectiveness of these programs, they often find they lack the data needed to determine whether an incentive is producing the expected outcome. Further, there is currently no source that has identified and compiled the best practices on how to overcome this obstacle.

All states were invited to submit proposals to participate, and seven were selected. They have agreed to commit top decision-makers from economic development, revenue, and other relevant state agencies to work intensively with Pew throughout this 18-month program. Each of these seven states has also already begun to address the challenges associated with economic development incentive program management and evaluation. The Pew team will work with the states to develop and implement tailored solutions for each state, while also paving the way for development of best practices and training that will be available to all states.

I am pleased to be part of the Center for Regional Economic Competitiveness team working with Pew on this important effort. Our role will be to leverage our economic development and incentives expertise to provide technical assistance to the states.

Here at Smart Incentives, we have emphasized the importance of data, analysis, transparency and accountability in economic development incentive use. The lack of quality data regarding compliance and effectiveness is a significant problem for the economic development field and policymakers trying to do what’s best for their communities. The Business Incentives Initiative represents a notable step forward in enabling smart incentive use in all states.

HarpelEllen Harpel is President of Business Development Advisors (BDA) and Founder of Smart Incentives. She has over 17 years of experience in the economic development field, working with leaders at the local, state and national levels to increase business investment and job growth in their communities. 

Contact: eharpel@businessdevelopmentadvisors.com or ellen@smartincentives.org. Follow Ellen on Twitter @SmartIncentives.

What It Takes to Cluster

This is a guest post written by Daria Siegel, Director of Launch LM and Andrew Breslau, Downtown Alliance Senior Vice President of Communications and Marketing.

Tech Tuesday’s took place at the South Street Seaport during the summer of 2013.  Hundreds of technologists gathered for conversations related to innovation and technology at this weekly public event series.

At Tech Tuesday’s during the summer of 2013, hundreds of technologists gathered for conversations related to innovation and technology at this weekly public event series.

It seems everybody these days wants a “tech cluster.” Municipalities across the country are repositioning themselves as tech friendly in hopes of capturing some of the promise the industry might hold for their local economy.

Here’s the rub though: a tech cluster can’t happen just anywhere. It needs two primary ingredients. One harkens back to that oldest of business clichés “location, location, location” and the other is a bit more under a municipality’s control: a coordinated strategic marketing campaign.

The beginnings of a meaningful tech cluster are rooted in the strength and breadth of a location’s irreducible assets. Even in the face of the digital economy’s decentralizing potential, agglomeration is essential. One of these desired clusters can’t be faked, plunked down just anywhere or retrofitted neatly in the postindustrial landscape (unless you have access to an extraordinary amount of capital i.e. Las Vegas). A preexisting creative cluster or digitally dependent core industry, robust academic assets, cutting edge telecommunications resources, access to financial resources for start-up and mature businesses alike and multi- modal transportation networks are just some of the characteristics that enable viable tech clusters.

If those assets constitute the hardware needed to animate a tech cluster, the software is marketing. In order to build the right marketing software, a location has to first be ruthlessly honest in its appraisal of what its “hard” assets are. Whatever your store of hard assets is, it will take a partnership amongst a consortium of stakeholders and investments in branding, social media and organizing to make the most of your locality’s strategic and competitive interests.

In Lower Manhattan, we’ve been doing just that.  In September of 2013 we created LaunchLM, an initiative to galvanize and grow the technology and digital communities in Lower Manhattan. Over the past year, the number of tech companies in Lower Manhattan grew by 24 percent, from nearly 500 to 600 companies today.  And that doesn’t even count digitally oriented media and other creative industries. We believe the potential to build on that is vast.

Lower Manhattan has a legacy rooted in innovation. From AT&T building its first headquarters here in 1916 to being the location of the first transatlantic telephone call, Lower Manhattan has always teemed with possibility. We’re blessed with unsurpassed transportation access, a rich pool of knowledge workers, space for businesses to let at a variety of price points, the nation’s most advanced fiber optic network and we possess an already bustling mixed use environment.

By partnering with the real estate industry, LaunchLM provides venues for programming and events targeted toward the creative industries sector, like the holiday party hosted by LaunchLM and Control Group at 4 World Trade Center.

LaunchLM provides venues for programming and events targeted toward the creative industries sector, like the holiday party hosted with Control Group at 4 World Trade Center.

LaunchLM grew out of a committee convened by the Alliance for Downtown New York—New York’s’ larges Business Improvement District. The committee, made up of stakeholders in the tech sector, real estate professionals, industry associations, community leaders, venture capitalists and entrepreneurs, met for a year discussing and debating the kinds of catalysts needed to help Lower Manhattan reach its potential with the industry.

Two bedrock principles of the effort were clear and became the pillars of LaunchLM. The effort had to make those it was seeking to influence the parties who defined our direction and also make them partners in content making.  The effort needed to be by and for the technologists, executives and locational decision makers and influencers that make or break clustering. It also had to be an effort that was committed to for the long haul. Whatever work was undertaken would have to be sustained with constant investment and effort over time. Years, not weeks. To quote the Carpenters “we’ve only just begun.”

Launch likes to think of itself as relentlessly active and patient at the same time.

Whether it’s our restless pursuit of building virtual community through our rich website, Twitter, Instagram and Facebook accounts, the attention we pay to SEO and email list building or the regular public programming we sponsor from Start-up Open houses to talks on the frontier of data science to discussions on the intersection of food and tech, we keep our ear to the ground about the industry’s latest trends and concerns and then invite them to partner with us to produce relevant content. We never forget it’s their industry, we help produce the venue, the crowd, make connections and spread the word.

This is the key to marketing to the Tech sector. If it’s ersatz –you’re done. Be what you advertise.

In addition to making content, Launch is an advocate. Among other things, we educate the real estate community about the particular needs of tech clients–flexible space, bike rooms, etc. You can look to our website as a resource for tech friendly buildings in the district. We also energetically engage with government, educational institutions and the not for profit sector on the industry’s needs and agenda. We strive to be a connecter, problem solver and industry champion.

Our next step will be creating a physical space where programming, networking and pedagogy can have a home. In the months ahead, LaunchLM will become a three dimensional destination where industry associations and startups, out of town executives and companies can come set up and shop, conduct business, sponsor hackathons, do product demos and convene audiences. All that and have a killer cup of coffee at the same time. Never forget that caffeine is the fuel that the Tech industry runs on!

Our results so far? Great press about the district’s assets, a constant drum beat about possibility, promise and achievement, a robust and growing social and communications network, a new sense of community, new connections between the real estate and tech industries and a palpable sense of momentum.

We’re confident that it’s the dynamic interplay between the intrinsic appeal of Lower Manhattan and how and with whom we sell it that will ultimately tell the tale of our “cluster.” We’re also confident that, with the course we’re setting, the oldest neighborhood in New York City is going to play a big role in defining the City’s economic future.

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Andrew Breslau is a Senior Vice President for the Alliance for Downtown New York. A former press secretary in New York City government, a not for profit executive and producer at CNN, he manages the Alliance’s communications, marketing and technology teams.

 

 
Daria_headshotDaria Siegel, an urban planner, serves as Director of LaunchLM, an initiative designed to champion the growing technology sector in Lower Manhattan, created by the Alliance for Downtown New York.

Local Governments Expand Incentive Programs for Technology Companies

This is a guest post by Ellen Harpel, president of Business Development Advisors and Founder of Smart Incentives.

Incentives are taxpayer backed programs used to influence business decisions and spur company investment or job creation in specific locations. Incentive use has expanded tremendously over the past several years, though the exact amount of money devoted to incentives is unknown.

We do know that incentives are no longer reserved for special, targeted projects, but are offered to entities of all types and sizes. They include bonds, grants, investments, loans, and tax breaks. They might be used to provide capital, reduce taxes, prepare or purchase a facility or site, build or extend infrastructure, or recruit and train a workforce.

Over the past few weeks several communities in the Greater Washington region have either proposed or implemented changes to their incentives policies in the hopes of attracting more technology companies. Here is a quick rundown of some of their actions:

Arlington, VA: Proposed expanding the definition of eligible businesses that can take advantage of Technology Zone incentives that reduce the Business Professional and Occupational License tax on gross receipts. If implemented, smaller business (<100 workers) and expanding firms (not just new businesses) in a broader set of technology fields will be eligible for a 50% rate reduction ($0.18 instead of $0.36) in all 4 of the County’s Technology Zones.

Digital DC: The District of Columbia has committed $1 million to a venture fund that would provide $25k-$250k grants to early stage tech entrepreneurs locating in a designated corridor in the city. These businesses would also be eligible for funding for building rehabilitation or office construction. Digital DC adds to existing DC Tech Incentives and incubator/accelerator programs supported by the city.

WeWork co-working space in DC’s Shaw neighborhood, part of the city’s newly designated technology corridor. Photo Credit: WeWork

WeWork co-working space in DC’s Shaw neighborhood, part of the city’s newly designated technology corridor. Photo Credit: WeWork

Prince George’s County, MD: Approved creation of a science and technology business district in order to create jobs by providing tax incentives, streamlining permitting and approvals, and fostering collaboration among academia, government and industry. The district in the northwestern portion of the County includes College Park (University of Maryland), Greenbelt (NASA Goddard Space Flight Center) and Beltsville (USDA).

Alexandria, VA: A Business Tax Reform Task Force has as one of its objectives to “identify revenue or other incentives that the City can deploy to attract businesses and encourage beneficial development aligning with the City’s Strategic Plan.”

Incentives have become more important to business investment decisions and the day-to-day work of economic development. We founded Smart Incentives because we believe it is vital for state and local leaders to have access to high-quality business intelligence, data and analytical tools to make the best decisions for their community.

Smart Incentives helps communities make sound decisions throughout the economic development incentives process. We serve cities and economic development organizations by providing in-depth business research on companies seeking incentives and business case analyses for incentive projects. Smart Incentives is also at the forefront of efforts to develop better processes for monitoring compliance and evaluating the effectiveness of incentive programs.

HarpelEllen Harpel is President of Business Development Advisors (BDA) and Founder of Smart Incentives. She has over 17 years of experience in the economic development field, working with leaders at the local, state and national levels to increase business investment and job growth in their communities. 

Contact: eharpel@businessdevelopmentadvisors.com or ellen@smartincentives.org. Follow Ellen on Twitter @SmartIncentives.

WUF7: The Mayors Forum Part II — Individual City Solutions

This is the fifth post in a series of blogs on the World Urban Forum 7 in Medellin, Colombia.

wuf7-roundtable-mayors

In my previous blog, I wrote that the focus of the Mayors Forum was on inclusiveness in order to create a “city of opportunity.” However, I would be misleading you if I implied that each mayor was striving to create a “city of opportunity” in the same way. What they shared was an outcome. How they got there very much depended on how developed, how democratic and how wealthy the city is.

This was exemplified by the diversity of approaches for creating a city of opportunity. Some focused on transportation, others on broader infrastructure, others on job creation, others on education, and still others on public spaces, and for most, a combination of different strategies was necessary. But two things did seem to underlie their approaches regardless of the strategy: inclusiveness and money.

The mayor of Barcelona, Spain underscored this when he said, “We can have the noblest ideas, but if we do not have the financial resources to draw upon, there is nothing that we can do to change our cities and create opportunities for our residents.” He called on national and state governments to respect the work that cities do by ensuring that cities have the resources they need to be a city of opportunity. And the mayors of Medellin, Colombia and Asker, Norway reiterated the importance of involving all residents in the decision-making process and not just the rich or advantaged.

In Santiago de Chile, this process enabled the city to move forward with the development of an adequate urban mass transit system. Prior to development of this system, the city and its residents were supporting the 30 percent with cars, while the rest had to make it on their own. Once the city came together to discuss a solution to the problem of moving its residents from home to work and school, they were able to reach agreement that there needs to be a transportation system, including roads and mass transit, that provides 100 percent of the population with access to everything the city offers.

In Nanjing, China, the focus has been on building a metro system that will serve the poorest sections of the city. While not sharing the deliberative process that led to this decision, the mayor did note that if they failed to create a system that benefited the poorest, the city would remain divided and the poorest residents would have no opportunities to access education, jobs and important social services.

And the mayor of Medellin, Colombia, chimed in by underscoring yet again the importance of his city’s metro system to the least advantaged residents of Medellin, and how important it has been to ensuring that they can get to work, to school and to the services they need. “We were able to transform a two-hour or more commute by bus and foot from the most remote sections of the city into a 45-minute commute to the downtown. In this way we were able to give our residents back two and one-half hours of their day, and increase their happiness.”

In Delft, Netherlands and Budapest, Hungary, the opportunities provided by effective transportation networks were already there; what was lacking was the ability for many of the residents to enter the job market because the skills they had were not the ones local businesses wanted. Delft’s strong technology sector, a driver of job creation, was limited in its ability to absorb unskilled workers. To address this, the city entered into agreements with construction companies, service providers and others who hire lower skilled workers, requiring that they first hire local unemployed residents before recruiting from elsewhere.

Budapest, a city with low relatively low unemployment, still faced enormous employment issues. Long term unemployed residents were not being hired, and young people were also not being incorporated into the workforce. In response, the city set up its own public works program for low skilled workers and worked in partnership with local businesses to ensure that long-term unemployed workers were considered for jobs; and if they were not hired, the city would step in with high-skilled opportunities. The same was done for the city’s youth.

For some of the mayors, there could be not hope of creating a city of opportunity unless the city was safe. In Johannesburg, South Africa and Gombo, Congo, the latter having just been torn apart by a civil war where young people were often soldiers, the response could not simply be having more police. Efforts to move the youth away from violence required their complete engagement in each city’s development, so that the young people saw a future for themselves in the city in which they live.

Finally, many of the mayors spoke of the need for accessible and meaningful open spaces, and educational systems that included pre-school and after-school programs.

But all of this came down to one issue for each of these mayors, and that was the creation of a city filled with opportunity, where every resident feels a part of the city, has pride in their city, and benefits from being part of the city. As the mayor of Medellin put it, “We want every resident to be happy; to feel good about where he or she lives, and to benefit from every aspect of life that the city has to offer.” Something every United States mayor wants for their residents as well.