County government plays an important role in economic development, in Ohio and the nation. This presentation to new County Commissioners in Ohio on 02/10/2015 outlines current economic trends, how economic development is changing, and the role of Counties.
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Counties Play an Important Role in Economic Development
1. County
Commissioners
Association of Ohio
Lunch and Learn:
County Economic Development Essentials
February 10, 2015
February 10, 2015 Presentation by Mark Barbash 1
Mark Barbash
Executive Vice President
Finance Fund
2. February 10, 2015 Presentation by Mark Barbash 2
• Statewide nonprofit financial intermediary
• Est. in 1987 to connect communities with capital
• To date, $296.4 million invested in housing, economic
development, & community facilities leveraging over
$1.2 billion.
• Economic Development
• Small Business Lending
• Health care facilities and equipment
• Commercial Real Estate Development
• Healthy Foods Retail
FINANCE FUND: WHO WE ARE
3. February 10, 2015 Presentation by Mark Barbash 3
What is Economic Development?
Economic and Demographic Trends
Major Long Term Economic Transition
Practice of Economic Development
Economic Development in Ohio
Counties in Economic Development
So, what do you do now?
4. February 10, 2015 Presentation by Mark Barbash 4
What is Economic
Development?
5. • Improve the economic well-being…
• …Improve the quality of life
• …for a community or a region
• …by helping to create and/or retain jobs
• … growing incomes
• and the local tax base…
• …to provided needed services.
February 10, 2015 Presentation by Mark Barbash 5
What is Economic Development?
19. February 10, 2015 Presentation by Mark Barbash 19
Think, Plan & Act Regionally
55% of
County
Workers
Live
Inside
the
County
45% of
County
Workers
Live
Outside
the
County
38% of
County
residents
work
outside
the
county
Montgomery County Workforce Inflow / Outflow
20. • Companies are increasingly looking for a good quality of
life for their employees and executives:
• Arts, Culture & Recreation
• Education
• Diversity of Housing and Transportation Opportunities
• looking for What makes your community special?
• What makes your community special?
• Identify and leverage your strongest assets such as colleges,
universities, arts, natural resources, health care
• Do asset mapping on a local AND regional basis
• How is your community connected to your neighbors?
Place Matters: Enhance What
Makes Your Community Livable
21. • Total Projects: 93 (47 Expansion, 46 New)
– Projects connected with existing businesses: 78
– Average Jobs: 181
– High Jobs Number: 900
– Average Square Feet: 157,000
– Average New Jobs: 256
– Average New Square Feet: 203,000
• Big Deals:
– 1 Project; 1,500 jobs, Mfg. 1M Sq. Ft.
Source: Site Selection Magazine
Death of the Big Deal
22. Strategy #3: Double Down on
Retention & Expansion
• Keeping existing businesses happy should be
priority number 1!
• Why do businesses leave a home-town
location: a lack of expansion space.
• New businesses look for customers, suppliers,
strategic partners, and a quality workforce.
• The best Attraction Strategy is a strong
Retention & Expansion Strategy.
Double Down on Retention &
Expansion
23. • Communities that are working together in their
regions are more successful in business
attraction, retention and expansion
• …and the site selectors are paying attention.
• Do you understand what drives your economy?
• Do you have a partnership group that is
broadbased, has assigned responsibilities, and is
networked with the region and the state?
February 10, 2015
Collaboration is the New
Competition
24. February 10, 2015 Presentation by Mark Barbash 24
What Matters Most to Site Selectors:
1. State and Local Tax Structure
2. Transportation & Utility Infrastructure
3. Land/Building Prices & Supply
4. Ease of Permitting and Regulatory Process
5. Workforce Skills
6. Regional Economic Development Strategy
7. Legal Climate
8. Availability of Incentives
9. State Economic Development Strategy
Collaboration is the New
Competition
25. • Main Street Revitalization
• Small Business Technical Assistance
• Tech Based Entrepreneurship
• Economic Gardening
• Small Business Supply Chain
• 1099 Economy
• Incubation vs. Acceleration
Emphasize the Entrepreneurial
Strategy that Fits Your Community
26. • 90% of the research by a site selection company is
done BEFORE you are contacted
• Have a user-friendly website
• Link your site with your regional economic
development partner
• Easily accessible public services
• Keep your inventory of sites up to date
Technology has Changed the
Practice of Economic Development
27. • Retention and Expansion
• Attraction
• Workforce Development
• Main Street Revitalization
• Leverage a major regional asset
• Tourism
• Arts and Culture
• Targeted Industry or Industry Cluster
Develop a Mix of Strategies that
Responds to Your Community
28. • Use incentives strategically
• Create local incentives that make sense for your
community
• Provide for transparency and accountability
• The fewer the programs, the easier the deal
• You DON’T need to give away the kitchen sink: Be
strategic with your investment.
Fine Tune Your Financing and
Incentive Toolkit
29. Property Taxes based upon
Valuation
Sales Taxes based upon Sales
Revenue
Income Taxes based upon
Wages
Property Taxes based upon
Valuation
Fees and Transfer Payments
from other govt sources
It’s all about the Fiscal Impact of
Your Investments
30. Cost
• Short term Investment in
infrastructure, grants
• Roadway construction AND
maintenance
• Cost of tax incentives
(forgone revenue)
• Political
• Environmental impact
Benefit
• Property, income or sales
tax revenue
• Fee revenue
• Payments in Lieu
• New Job Opportunities
• Revitalized neighborhoods
February 10, 2015 County Economic Development Essentials Mark Barbash30
Understand the ROI of Your
Incentives and Investments
Take Informed Risk!
32. • Economic Development
• Business Attraction
• Industry Growth
• International Business
• Regional Network
Partners
• Community Development
• Housing & Partnerships
• Historic Prez Tax Credits
• Ohio Third Frontier
• Energy Office
• Small & Minority
Business
February 10, 2015
The Structure of Economic
Development in Ohio
33. February 10, 2015 Presentation by Mark Barbash 33
JobsOhio Network Partners
35. February 10, 2015
Economic Development Incentives:
Rules of the Game
• Start early
• Explain the strings up front.
• There are NO programs that provide 100% support
• Work with your economic development
professional
• Work with your JobsOhio Network Partner
• Not all projects can work with programs
• Be prepared to take informed risk.
• Be willing to walk away.
• If it sounds too good to be true, it probably is!
36. February 10, 2015
Economic Development Incentives:
What else is an incentive?
• Expedited permit review and processing
• Local one-stop-shop
• Have all key people at the table
• Infrastructure: Roadways, traffic signals, rail spurs,
connectivity
• Workforce partnerships with colleges/universities
• A “job ready” site
• Adequate sewer, water, utility service
• A good place to live, work and raise a family.
37. February 10, 2015 Presentation by Mark Barbash 37
The Role and Challenges of
Counties in Economic
Development
38. • Counties are Sponsors of Local Economic
Development Initiatives
• Workforce Challenges are at the Top of the
County Economic Development Agenda
• Collaboration is the Key to County Economic
Development Initiatives
February 10, 2015 Presentation by Mark Barbash 38
NACO, July 2014
The Role and Challenges of
Counties in Economic Development
39. Working Collaboratively
1. Developing the Regional Perspective
2. How to distinguish County priorities
3. How to link County priorities with City Priorities
4. Rural – Urban -- Suburban
5. Larger Urban Community in the County
6. No Urban Community in the County
7. Community College or University in County
February 10, 2015 Presentation by Mark Barbash 39
The Challenges of Counties in
Economic Development
40. Fiscal Challenges
1. Conflicting Priorities based on Fiscal Structure
2. Limited Financial Resources
3. Entitlement vs. Non-Entitlement
4. Others Jurisdictions Spending Your Resources
5. Limited authority
February 10, 2015 Presentation by Mark Barbash 40
The Challenges of Counties in
Economic Development
41. Ohio County Economic Development Tools
1. Infrastructure Investment
2. Highway maintenance
3. Workforce Development (WIB)
4. Land Banks
5. County level organization
6. Planning and Zoning
February 10, 2015 Presentation by Mark Barbash 41
The Challenges of Counties in
Economic Development
43. • Is there a county wide economic development
strategy with performance measurement?
• Have you established priorities, goals, tasks,
with assigned leads ?
• Is there a Collaborative Partnership?
• How inclusive is the partnership?
• Is there a working group of EDPros from the
region?
• Is there a toolbox that is appropriate to your
community and priorities ?
February 10, 2015 Presentation by Mark Barbash 43
Next Steps: Some Benchmarks and
Questions
44. So What’s the Dessert?
February 10, 2015 Presentation by Mark Barbash 44
45. Mark Barbash, EVP, Strategic Initiatives
markbarbash@financefund.org
(614) 774-7599
Finance Fund
www.financefund.org
(800) 959-2333 - (614) 221-1114
Notas del editor
Economic development is, at the core, about helping people who live in communities. And about communities where people want to live, work and play.
This is a distinction without a difference. Economic and community development are linked strategies that help grow your community. And economic development in a community is a matter of having a group of strategies, not one strategy.
Finally, the economy is coming back. We are seeing constant employment growth…
… and unemployment rate declines.
But the challenge for communities is that the country is taking much longer to come back than previous recessions. The country took 46 months to come back from the 2001 recession. The 2007 recession recovery has taken 76 months…and there are still citizens who have not fully recovered.
As an example, while productivity is up (from technology, globalization and and streamlining), family wages are stagnant. And if wages don’t recover, many communities cannot fully recover.
At the same time the economy if recovering, the nation is going through major economic and demongraphic transitions.
Demographics: The incoming “talent pool” is 40% lower than the outgoing “retirement age” pool. This means that there are fewer workers for vacant jobs. And to add to the challenge, many older people are choosing to work longer.
Connectivity: The internet has changed business models forever. And those businesses and industries that cannot adapt, are being left behind.
Technology: Robots, 3D printing, big data are significantly increasing productivity. And with increased productivity, potentially comes fewer job opportunities.
Education: Education continues to be the pathway to higher lifetime earnings.
As the economy changes, the economic development industry is also changing in response.
Thinking Regionally: Historically, economic development stopped at the jurisdiction boundary lines. But businesses think regionally, nationally and globally. Where are customers, suppliers, key partners? This is a map of the wind industry supply chain in Ohio.
Communities should think regionally as well. The people who live in our community more often workoutside of the community. And the people who work in our community also frequently live outside our community. This means that our economic development strategies should recognize this.
Montgomery County Employment: 236,910
Work in County, Live in County: 131,423 55.5%
Work in County, Live outside: 105,387 44.5%
Montgomery County Population 212,016
Live in, Work Outside: 80,493 38.0%
Live and Work in County: 131,523 62.0%
Companies look for good PLACES to operate. Their employees and executives are looking for good schools, transit, a diversity of education opportunities, and arts and culture.
Economic development is much less than the “big deal” now. Most of the expansion projects that we will work on are with existing companies, and most of the job creation numbers are much smaller. This means that communities should not be preoccupied with the big deal with lots of jobs, and concentrate on existing businesses that are growing.
And bringing new jobs into the community is mostly about the growth of existing businesses and their partners. Your existing companies are the best place to look for companies new to the community.
With the complexity of economic development, and the importance of workforce training, site selectors are looking for those communities that work together well. Is everyone at the table? Are you collaborating with the city next to you?
This is a recent survey of the priorities of site selectors. Many things are important, not just incentives.
With greater focus on existing businesses should come a focus on small business. But there are many models of small business strategies. Know what small businesses can grow in your community, develop the strategy that makes sense for your community.
And the internet has also significantly changed how site selectors identify communities to consider. They do the research on the web first, and narrow down the list. Your community will be eliminated even before you know you are under consideration. So a user friendly website, with current demographic data, and an up to date site inventory is critical.
The economic development strategies you choose should reflect your community’s needs.
Incentives should be focused on your community’s economic development goals.
Economic Development to a great extent is about the fiscal impact of development and raising sufficient capital to provide critically needed community services. So your incentive and investment strategy should also be based upon the impact of your work on basic services.
Investment should be evaluated on a cost/benefit evaluation. Are you investing resources in a way that your community sees a return? Have you defined what you want from your investment? Just revenue or more? Revitalized neighborhoods? New Job Opportunities?
Ohio’s economic development programs have evolved over the past few years. Understanding “who does what” is critical to having a successful local strategy.
At the state level, JobsOhio, a nonprofit private organization, is responsible for business attraction, marketing, most financial incentives and working with the regions. The Ohio Development Services Agency is responsible for most community development, housing and small business activities.
This is a map of the “network partners” who are charged with working with JobsOhio at on major attraction and R & E projects, and to be the entry point for state incentives and financial support for projects.
The state level is enhanced with a local/regional partnership. Each of six regions has a “network partner” who works with JobsOhio on major attraction projects AND local retention and expansion projects, and the network partner works with local government and economic devleopment organizations. This is an example of this relationship from Northwest Ohio.
There are some general “rules of the game” when working with incentives.
In addition to financial incentives, infrastructure and services provided by local government are critical components of business decision-making. Don’t overlook these opportunities to support business growth.
The role of counties in economic development is varied across the state, based upon the situation in each community.
The National Association of Counties (NACO) in a 2014 report, identified the three key areas where counties are making a difference in economic development.
The are challenges with the county role, again based upon the local situation.
Counties are not the only economic development group in the area. Depending on what other communities are in the county, and the industry focus, counties have the opportunity to help develop a regional perspective that is above local jurisdictional boundaries.
With that said, county government should identify strategic priorities that fit into the context of the region, and are specific to the resources and authority of county government.
If there is a major urban city within a county, sometimes there is conflict between the two entities as they try to play a role.
There is another type of challenge when there is no urban center in a county, which gives the county a different role.
Counties face similar challenges to other political jurisdictions. Two stand out as real issues: The first is the current formula for allocation of federal Community Development Block Grant funding which distinguishes between entitlement (larger) cities and counties, and non-entitlement areas, where funds are allocated by the state. The second involves authorities of other communities to commit county resources. The most obvious examples are tax abatement and tax increment financing, which city government has the authority to grant abatements/TIFs that uses resources from other taxing entities.
Counties should focus on resources that are more exclusive to their empowerment, and leverage those for economic development.
There are many questions that can be asked to assess a community’s economic development system. Here are some initial questions that newly elected County Commissioners (and others in economic development) can ask to start the discussion.
At the ribbon-cutting for Hamlet Protein in Findlay are (l. to r.) Ohio Gov. John Kasich, Danish Ambassador Peter Taksoe-Jensen, Findlay Mayor Lydia Mihalik, State Representative Robert Sprague, and Hancock County Commissioner Edward Ingold.
Gov. John Kasich told a Chinese businessman who has pledged to create 800 jobs at a shuttered auto plant near Dayton that “this is going to be one of your greatest philanthropic but also business investments.” Fuyao Glass Industry Group chairman Cao Dewang signed an agreement to locate an auto-glass manufacturing operation and invest $200 million into the former General Motors plant in Moraine that had been closed since 2008. The agreement was signed this morning at a Statehouse ceremony involving the property owner and Kasich.