Cities anticipate increased focus on jobs, revenues sources

This is the third post in a series this week discussing different perspectives on the results of NLC’s 2013 Local Economic Conditions Survey.

Last week’s findings from National League of Cities’ Local Economic Conditions (LEC) Survey indicated that local economies have improved over the last year, but cities are still struggling in pivotal areas – notably with a workforce skills gap and tepid improvements in the commercial property market.

This year’s Local Economic Conditions survey included a new series of questions asking city officials about the policy areas that they anticipate focusing on in 2013. Although these findings were not included in our research brief on the LEC survey, they are important to examine for what they reveal about local officials’ priorities. These findings suggest that city officials will continue to focus on core areas of local government that protect the welfare and safety of residents while increasing their focus on areas that create new jobs and revenue.

Focus on welfare of community and citizens will remain steady

At the end of the day, local governments are the on the ground government responsible for protecting citizens safety and welfare.  In core areas like public safety (56%), education (59%), and environmental sustainability (58%), city officials anticipate “no change” in focus in 2013.

Further, with city officials reporting that unemployment (66%), median income level (57%), demand for survival services (56%) and workforce skills (53%) are a major/moderate problem for their cities, the majority of city officials anticipate their focus on services to vulnerable populations will remain steady in 2013.  Specifically, the majority of city officials anticipate no change in their focus on affordable housing (60%), safety net services (68%) and workforce/job training (58%).

 Increased focus on areas of job growth, revenue sources, and creating quality places

While focus on services remains steady, city officials anticipate increasing their focus in policy areas that strive to create jobs, new revenue and build quality places.

Percent of City Officials Anticipating Change in Policy Focus

Despite the recent less-then-stellar press about economic attraction/recruitment, this is still the bread and butter of city government, with 75% of city officials reporting that they anticipate increasing their focus on business attraction and recruitment in 2013. This should not come as much of a surprise, as the majority of city officials report that commercial vacancies (65%) and unemployment (66%) are major/moderate problems for their cities. Attracting tourism dollars is also on the agenda for the majority of city officials, with 57% anticipating an increased focus on tourism and entertainment in 2013.

The results from this new series of questions in the LEC survey also point to a balanced economic development approach focused not only on business attraction, but also on helping new companies start and grow, as well as retaining those companies that are already located in a city. Sixty-four percent and 61 percent of city officials report they anticipate increasing their focus on business retention and small business/entrepreneurship support, respectively, in 2013.

Responses suggest that city officials will also focus on creating places where people and businesses want to be.  Seventy-three percent of city officials report that they will be increasing their focus on downtown/commercial redevelopment, 62 percent will be increasing their focus on infrastructure and 57 percent anticipate increasing their focus on community and neighborhood development.

Mirrors State of the City Addresses

These results mirror the themes that mayors across the county have been presenting in their 2013 State of the City Addresses. According to NLC’s annual blog series on the topic, city officials are laying out bold visions in the areas of economic development, infrastructure, public safety, and education, like Baton Rouge, Louisiana’s neighborhood revitalization program, entrepreneurship efforts in Salt Lake City, Utah, infrastructure improvements in Beaverton, Oregon and a renewed focus on quality K-12 education in Columbus, Ohio.

Learn more about NLC’s Local Economic Development Survey.

Latest in Economic Development

This week’s Latest in Economic Development looks at a new regional partnership in St. Louis, ideas for improved small business permitting, more on a library co-working space, and the economic development effects of the sequester.

Have thoughts to add? Comment below or send to mcconnell@nlc.org.

St. Louis City and County announced a new partnership for economic development. The partial merger still preserves each individual jurisdiction’s economic development offices, but will combine “business development and attraction, loan programs and entrepreneurship efforts” under one umbrella. According to St. Louis Mayor Francis Slay, “We’re going to work together to make sure that business lands in St. Louis. And whether its city or county, we all benefit. It’s a regional economy. And we have to stop competing against each other.” The move received support from the business leaders who stressed that businesses want simplicity, leaders who work together, and one agency to interface with.  To learn more about regional economic development, check out NLC’s brief on the topic.

Waiting in line at city hall is a drag, and mayors are looking for solutions to simplify processes for new businesses.  As a finalist for Bloomberg Philanthropies’ Mayors Challenge, St. Paul Mayor and NLC First Vice President Chris Coleman makes a case for Permit Saint Paul, an online portal to secure businesses licenses and permits. The idea is to help residents avoid  the bureaucratic morass that can be part and parcel of the in-person licensing and permitting process. (Check out the other city finalists here at the Huffington Post.)

In San Antonio, Mayor Julián Castro is also trying to streamline things for small and new businesses. The Mayor is calling for a library-based one-stop shop where businesses could “get information, and the resources, the market data and the assistance they need to start their business.”

Speaking of libraries and small business, Atlantic Cities has details on Arizona State University’s “Alexandria Network.” The program will set-up dedicated co-working spaces and offer entrepreneurship courses and training in public libraries. According to Atlantic Cities’ Emily Badger, libraries are an ideal venue for the effort because “they offer a more familiar entry-point for potential entrepreneurs less likely to walk into a traditional start-up incubator.” The first location, mentioned in the last Latest in Economic Development, will be launching in partnership with the city of Scottsdale, AZ. next month.

Well, it’s happened, and the direct economic development effects of the sequester will largely play out in communities with defense-driven economies. It’s no surprise that the greater Washington, DC metro region will take a hit.   Military communities like Hinesville, GA and Killeen, TX, which expects 6,000 furloughed workers at Fort Hood are bracing for the impacts. And the three percent growth rate of the Greater Phoenix region is predicted to be cut by about half because of the sequester.  According to Mayor Scott Smithof Mesa, AZ, the region’s big economic contributors like Boeing will be fine, while smaller suppliers who depend on contracts with the larger companies will likely be the ones that suffer most.

Learn more about NLC’s economic development work here.

The Latest in Economic Development

The Latest in Economic Development is back after a holiday hiatus and we’re kicking the year off with a look at a new program in NYC, the Bay Area’s food truck related growth, Phoenix’s economic recovery, and a round-up of the new city rankings.

Have thoughts or pieces to add? Comment below or email me at mcconnell@nlc.org.

Businesses in New York City get a new way to interface with government.

As part of a city-wide effort to provide more business services online, New York City’s Department of Consumer Affairs (DCA) launched a new live chat to help answer questions about regulations. According to Crain’s New York Business, business owners who sign in to the system are greeted by a DCA staff person and asked, “How can Consumer Affairs help you today?” in a Google Chat type format. In addition to the new online chat system, the city hopes to have 80% of applications for business permits and licenses online by the close of 2013.

Food trucks are in high demand, but they’re not the only businesses profiting from the mobile food craze.

According to Ben Worthen in The Wall Street Journal, the addition of an estimated 250 food trucks in the Bay Area has generated demand for other local businesses like vehicle customizers and logo makers.

Recovery is good, but will cities repeat past mistakes?

The Phoenix region was one of the hardest hit by the recession and is now experiencing a quicker than average recovery. However, Richard Shearer and Shyamali Maya Choudhury caution in The New Republic, Phoenix and other similar regions’ recoveries are driven by the same consumption industries like hospitality, retail, construction and real estate that “sunk their economies” in the first place. Further, these regions must move  “from a growth model focused inward and characterized by consumption to one that is globally engaged and driven by production and innovation.”

Not to be outdone by all Golden Globes, the new year brings a sort-of “best dressed list” for the economic development crowd.

Forbes released its “America’s New Tech Hot Spots” using research from the Praxis Strategy Group.  According to the ranking, which measures growth in science, technology, engineering and mathematics-related (STEM) jobs,  traditional tech hot spots have remained flat or lost STEM employment while “…double-digit rate expansions of tech employment have occurred in lower-density metro areas such as Austin, Texas; Raleigh, North Carolina; Columbus, Ohio; Houston and Salt Lake City.” The Washington, DC region came out on top in the rankings.

While San Jose, California was slighted in the aforementioned “America’s New Tech Hot Spots,” it took top billing in The Milken Institute’s Best Performing Cities, which uses a variety of weighted metrics (job growth, wage growth, concentration of tech companies, etc.). The Austin and Raleigh metropolitan areas captured the second and third spots.

What is Economic Gardening and Why Does it Matter?

Economic Gardening, which first started in 1987 in Littleton, Colo., is increasingly being put forth as a mainstream strategy to grow local economies. Yet, it’s still a concept that is largely unfamiliar to many people.

Want to learn more about economic gardening? Sign-up for NLC’s webinar on January 22nd.

It’s An Economic Development Strategy

In short, it’s targeted support for companies that are already in your community, to help them grow.

According to the Edward Lowe Foundation, economic gardening is often referred to as a “grow from within”  strategy. In contrast to traditional business assistance, economic gardening focuses on strategic growth challenges, such as developing new markets, refining business models and gaining access to competitive intelligence.

The strategy centers on providing market research to so-called second stage companies – growth-oriented businesses with external market potential that have moved beyond the startup stage. Typically, second stage companies employ 10-99 people and bring in at least $1 million in revenue each year. Chris Gibbons, who pioneered the program in Littleton, described the economic gardening process to a local Denver news blog:

” We do market research, competitor intelligence, industry trend work, search engine optimization and Graphic Information System mapping, and a lot of tools that big companies have. If you’re a company of 5,000 to 10,000 people, you probably have that stuff in-house. But if you’re a company of twenty, thirty people, you’re doing good just to make and sell and get it out the door. You don’t have the excess people to go and do that sophisticated stuff, and that’s what we do for them.”

For more on second-stage companies, check out You Know You’re a Second Stage Company When… (isn’t small business humor the best!)

To Help Generate Jobs and Revenue

Adding jobs is a primary priority for most cities. However, there are only so many large economic attraction deals each year and lots of communities vying for them. Further, as detailed in the New York Times , the use of  the large incentive packages to attract companies continues to be controversial, especially as the public calls for greater transparency and accountability with public funds.

Given the challenge of attracting new companies, economic gardening provides tools for communities looking to support companies that are already in their backyard. And research suggests that these second stage companies can be big job generators because of their capacity to grow.

But It’s No Silver Bullet

Any economic development program should be rooted in a long-term strategy based on a community’s strengths and weaknesses.  While economic gardening is an appealing idea, as with any economic development tool, it’s no silver bullet.

To date, there is not much data available on the effectiveness of programs. According to Chris Gibbons “ the program has helped entrepreneurs double the job base in Littleton from 15,000 to 30,000 and triple the retail sales tax from $6 million to $21 million over the past 20 years.” Additionally, according to an economic impact analysis of Florida’s pilot economic gardening program, GrowFL, companies who participated in the program created an average of 5.2 net new jobs per company.

Challenges with economic gardening include overcoming a lack of trust in the resources a city can bring to the table, building awareness about programs, and actually identifying second stage companies.

This is echoed by Doug Bene, Economic Development Manager for the city of Longmont, CO, who oversees the city’s economic gardening program. According to Bene, a challenge is finding and engaging with second stage companies who may not be involved with the city beyond the permit and zoning processes, and further convincing business owners that the city has something of value to offer them.

These challenges are common with many government-led business assistance programs. Working with trusted partners, like the chambers of commerce, universities, SBDCs or trade groups can help overcome some of these barriers.

Also, an economic gardening program is not a quick fix. According to Gibbons, “It is important for cities to understand that economic gardening is not a quick answer to a plant shutting down. It is not a fad diet, it is a lifestyle change. You cannot expect silver bullet solutions to sudden economic woes. Economic gardening takes time to put into place and time to reach a critical mass of growing companies.”

Still want to learn more about economic gardening?  Attend NLC’s upcoming webinar. Here are the details:

NLC Economic Gardening Webinar

Tuesday, January 22, 2013

2:30– 3:30 p.m.

Speakers:

  • Penny Lewandowski, Vice President, Entrepreneurship & Strategic Direction, The Edward Lowe Foundation
  • Kara Palmer Smith, Director, Business Development, GrowFL Program Director, Economic Development Council of Tallahassee/ Leon County, Inc.

Have comments or questions? Post below or email me at mcconnell@nlc.org.

Asheville, NC – Focusing on its Strengths

It’s rare to find an economic development handbook or guide that doesn’t proclaim “Focus on your strengths. ”  It is the unofficial motto of economic development. But somehow these unique strengths look strikingly familiar from city to city, like a game of economic development Mad Libs; the word “clusters” with a choose-your-surname – bio, green, tech, etc.  NLC’s new case study on Asheville, NC profiles a region trying to truly capitalize on its unique strengths.

Building off its abundant biodiversity, a history of homegrown remedies, and a tendency to embrace all things natural, the region is striving to help entrepreneurs create and manufacture natural products and supplements, food, and craft beverages.  To do this, the region is trying to create an “entrepreneurial ecosystem” that delivers a more seamless and supportive environment for entrepreneurs.

While region is not without challenges — for example, talent and financing — it presents a number of lessons learned for regions across the country:

  • Create incubators and other shared services that match an area’s strengths;
  • Have the right staff and partners involved in programs and coalition groups;
  • Do research on potential programs and visit other communities before implementing a new program at home;
  • Build partnerships and connections with various entrepreneurial and small business service providers versus duplicating services.

Check out the full case study for more details. For comments, questions, or to learn more about NLC’s economic development work – email me at mcconnell@nlc.org.

How Do I Attract Businesses to My Community?

“How do I get companies to locate in my city?” was a top question at packed sessions at the National League of Cities Congress of Cities.

Tracey Nichols, Director of Economic Development for the City of Cleveland encouraged elected leaders to promote their regions first and communities second. Making negative comments about neighboring communities while courting a perspective business often backfires and sends messages of regional dysfunction.

Greg LeRoy, Executive Director of Good Jobs First echoed the need for regional cooperation and pointed to the Metro Denver Economic Development Corporation Code of Ethics as a best practice.

Susan Liberty, Vice President, Infrastructure and Economic Development at McGuireWoods Consulting stressed that companies want to see predictability from elected officials and city government staff.

Other take-aways for local elected officials:

–       Have streamlined and transparent regulations.

–       Be honest and upfront about timelines.

–       Make sure your development services and permitting staff cooperates with economic development staff.

–       Have existing businesses communicate the merits of your community to prospect businesses.

–       Workforce matters – no amount of incentives make up for the lack of readily available talent.

–       Quality of life is important. Companies want to locate in a place where their employees want to live.

The Latest In Economic Development

After a brief summer hiatus spent writing about craft beer and economic development, the Latest in Economic Development returns to its normal, weekly posting. This week’s post focuses on port expansions, gambling and economic development, microlending, and mega-events.

Have things to add? Email me at mcconnell@nlc.org

The eastern seaboard is engaged in a port arms race as cities like New York, Baltimore, Miami, Savannah, and Norfolk, Virginia expand their port infrastructure to accommodate  planned “supersize container ships” coming through the expanded Panama Canal in 2015. According to The New York Times, “ this sense that the new set of locks now being built to allow giant ships throughout the canal will bring riches 1,000 miles or more to the north is shared by industry and government officials along the East Coast and the Gulf of Mexico, who have promoting multimillion – and in some cases multibillion dollar port projects for years.” Yet, with so many cities and ports competing for the same share of new traffic, there are concerns that the riches may not live up to expectations.

Maryland continues to push to expand its gambling avenues. The state passed legislation last week which, if approved  by voters in November, transforms “Maryland in a few short years into one of the most concentrated casino markets outside Las Vegas,” writes The Washington Post. While supporters of the plan tout “the promise of thousands of new jobs and tens of millions of dollars in additional revenue flowing to the state and host counties…opponents have warned that Maryland risks an oversaturated gambling market.”  Indeed, there are signs that while Maryland’s largest and newest casino is performing well, its smaller, older venue’s profits have plummeted. Further, nearby West Virginia officials also are “closely monitoring the situation” because of the potential “threat to the revenue stream for that area.”

Maryland isn’t alone, more states continue to turn to gambling as a budget solution and economic development generator writes Steven Malanga in The City JournalInterstate competition and empty state and local coffers are driving the interest as “states don’t want to be left behind as their neighbors institute more and more varieties of gambling” and thus take their potential share of tax revenue. Malanga warns that “gambling has often disappointed as a fiscal tool and a economic development strategy”  as it competes for limited dollars “and the new gambling enterprises seem merely to be siphoning money from elsewhere in the economy instead of generating new economic activity.”

Microloans are in high demand from small businesses. According to the Federal Reserve Bank of New York’s Small Business Borrowers Poll, microloans (loans under $100,000) “are in the highest demand and are tougher to secure compared to larger loans.” The New York Fed lists challenges facing small businesses in securing these loans  include “less-established firms, weaker sales performance, and infrequent banking relationships.” Further they found that firms seeking these microloans do so “to finance payroll, inventory and cash flow.”

According to the AP, Microloan programs are becoming more active in the U.S. Nationwide there has been a 25 percent increase in microloan distribution between 2008 and 2010 and “in cities like Miami, New York, Houston and Los Angeles, a small but growing group of mostly immigrant and minority entrepreneurs are turning to microfinancing.”  Philadelphia small businesses will soon have a new source for microloans, through FINANYA, a CDFI. The effort’s funding will come from 6 major banks, a loan from the Small Business Administration, and a grant from the City of Philadelphia’s Commerce Department.

Do mega-events, like next week’s Republican Convention in Tampa, create the projected economic wealth for their host cities?  According to Carl Bialik for The Wall Street Journal print and blog, it’s debatable ( for example, Tampa’s host committee is predicting an economic impact between $175 -$200 million). Questioning the validity of such projections, he cites that most economic impact studies are produced by the organizers or sponsors of the event; there is questionable legitimacy in counting event related government spending on security and transportation as “…those funds could have been spent elsewhere – or remained with taxpayers”, and the use of multiplier effects  can over estimate the economic impact on the local economy.  Yet, there may be some conditions where cities can benefit. For instance, if a mega-event is planned during a time of year not popular with tourists.