Preparing an Economic Development Strategy

PREPARING An ECONOMIC DEVELOPMENT STRATEGY

IN

TEN EASY STEPS

By

Chuck Eckenstahler and Craig Hullinger

3/6/2009

Introduction

Every local governmental official is now challenged with the need to promote jobs and new investment in their community. The question asked is “How does our community accomplish this task?”

This question is often answered by chamber of commerce members, government employed professional economic developers, and/or an assembled group of academics. These individuals usually work with a large group of interested individuals offering their opinions of what programs and activities should be undertaken by businesses and government to stimulate the local economy.

The recommendations might include an improved effort to retain existing businesses or an effort to attract new businesses. Tasks could also include developing a business park or improving education to provide more skilled employees. It may also include efforts to improve our neighborhoods and downtown business districts to attract young well-educated adults who wish to live and work in an attractive and exciting community.

The responses differ, typically having as many variations as there are people discussing what should be done. To the lay person preparing the community economic development strategy can be an overwhelming and complex task; being something “best left to the professionals.”

The truth is that strategic economic development planning is rather simple. It is not rocket science. This article seeks to demystify preparation of an economic development strategy, simplifying the process into ten easy tasks. By answering simple, easily understood questions, a group of people can prepare a strategic plan organizing an economic development program for their community.

Question 1 - Who are we?

A simple question! Yes, we know we are a community of, for example, 5,000 people. That’s correct, but what do we know about ourselves? How many people do we have in the workforce and what are their ages? What jobs do they do and how much and what type of education do they have? How many are unemployed or underemployed? How many kids are in school, when will they graduate, how many will go on to college and how many will obtain other advanced technical training?

Many of these questions can be answered by data obtained primarily from the US Census. This information can provide a narrative and quantified description of who we are and who makes up the workforce. It can also identity their education and job skills. According to business site locators, available workforce is one of the top criteria of any firm seeking to expand or locate a new business operation.

Question 2 - What is our economy?

It is usually simple to identify the major employers. This typically includes school district and hospital. The city or county government and a few major businesses are also major employers. They account for a substantial number of jobs located in the community. However, there is a large segment (some estimate 80%) of jobs that are provided by smaller business that often times are overlooked in this simple tabulation and small businesses are the primary generator of new jobs.

Data from the US Census, US Department of Commerce and state employment agency can be useful in providing a narrative and quantified description of the number and type of jobs in the community. This data allows examination of the number of jobs and wage scale of the current jobs in the community. It can also help identify the growth (or decline) of these jobs over time, which is important to know to determine what specific jobs the community currently has and what types of jobs that the community would like to attract.

Question 3 - What are our problems and opportunities?

This is a more difficult question answered by a detached unemotional critical evaluation of “community competitiveness”.

One way to answer this question is to complete what researchers call a “SWOT” analysis. To complete a SWOT analysis, the community lists its economic Strengths, Weaknesses, Opportunities and Threats.

The completed list provides information identifying unique opportunities for existing business expansion and opportunities for recruiting new businesses. It also identifies weaknesses and future threats which may discourage business expansion and new business location, which may be remedied by specific community action.

For example, the SWOT analysis might disclose that the workforce has a concentration of skilled computer operated machine tool makers. This workforce can be offered to prospective businesses needing such workers. It may also disclose that the farmland designated for industrial development has no water and sewer and is not “shovel ready” for a business to immediately begin construction.

Question 4 - What are our strengths?

Like a well trained prize fighter, who patiently waits to use his “best punch” to win the fight, an economic development strategy must identify the community’s economic development “best punch”. Completing the SWOT analysis helps identify unique economic strengths that can define the “economic development knock-out punch” for use in the fight to create new employment opportunities in the competitive global environment.

Identifying the “knock out punch” is sometimes easy. It might be a unique geographic location affording superior logistic transportation amenities. Or it might be proximity to a nationally rated university. Or perhaps it might be a young highly educated available workforce. It could be an attractive recreational or small town residential lifestyle that the community offers to new residents. Regardless of the type of strengths identified, analysis of community strengths is necessary to select those specific opportunities that can be used to create new jobs within the community.

Question 5 - What do we want to be - our future vision?

Of the ten questions, this question is the most difficult to answer - what do we want to be?

This question is most often answered by a carefully worded vision statement, prepared by the consensus of interests that places into words a mental image of what the desired future should be. The phrase “Our Future Vision is that our community will be the premier regional location for business investment in 2015” is an example of a vision statement.

This statement tells a big story. It proposes that the community will be the premier location for new business investment when compared surrounding areas. It also provides a means to measure comparative success by measuring economic indicators such as 1) increased jobs, 2) an increase in number of businesses and 3) and an increase in business tax base within the community. It also gives a time period to measure success.

Question 6 - How do we get there?

With an understanding of our strengths, weaknesses and opportunities plus a vision of what the community wants to be in the future, answering this question may become clear. The answers become a list of specific actions that must be completed to either eliminate defined weaknesses, or maximize identified strengths to capitalize on identified opportunities.

For example, the lack of “shovel ready” sites can be remedied by investment in utilities, roads, and governmental approvals necessary to have the site ready for construction immediately upon receipt of a building permit. Another action may be a Tax Increment Financing District or a Business Development District or a Special Service Area to provide incentives for business investment. Other actions may include completion of community appearance projects, securing worker skill training programs for laid-off workers, or conducting a national marketing program to recruit new businesses to locate in the community.

Question 7 - What resources do we have and need?

Every community has resources, typically scattered among a large number of separate organizations. Key to answering this question is identifying these resources and involving them in developing the economic development strategic plan with agreements to “take-on” and fund specific work tasks.

A chart can be prepared listing the specific work task identifying the person or organization that is responsible for the task, when the work is to be completed and how it will be funded. Preparing this chart early in the strategic planning process also identifies work tasks that do not yet have a sponsor or funding.

In our example, a work task to install infrastructure for a “shovel ready site” may be assigned to the city public works department. Obtaining necessary planning and zoning approvals would be a task for the city Planning Department. The City Council could be assigned responsibility to begin city council sponsorship of a TIF district for a future business using tool making machinery equipment. The Community College could be asked to sponsor a workforce retaining effort with the chamber of commerce assigned the task of developing and implementing a marketing program.

The chart may also identify the need to involve other organizations or recommend formation of new entities to carry out specific works tasks. We might need a downtown development organization to sponsor a downtown redevelopment plan or a neighborhood redevelopment organization to sponsor redevelopment programs.

Question 8 - Who is responsible?

The key to successful implementation requires gaining commitments from specific individuals to complete work tasks. This “buy-in” of responsibility is critical to success.

In our model economic development strategy, the Mayor, Public Works Director, City Planner, Economic Development Director, President of the Community College and Chamber of Commerce Director would be named as “responsible parties” and charged with the duty to complete one or more specific work tasks.

Question 9 - How much does it cost?

Undertaking an economic development program costs money, typically more that any single organization has within their budget. Answering this question establishes a budget for each work task and identifies who is to provide the funding for the task.

Question 10 - How do we know when we get there?

In every successful economic development program the progress towards completion of each work task is periodically reported. It gives the opportunity to celebrate success and to modify the tasks if necessary to assure successful accomplishment.

Measurement tools to gage progress are critical. Useful milestones to measure success should be included as part of the Strategic Plan.

Some strategies break the process down into a number of separate categories, such as logistics, health care, energy, agri-business, retail, etc. Other approaches include a much quicker and simpler process, with the development of a on page strategy. This approach can sometimes be used as an interim until a full blown strategy can be developed.

On Line Examples

The following web pages show examples of recent Economic Development Strategies. Each effort is somewhat different, but most of them follow most of the ten items.

One Page http://peoriastrategy.blogspot.com/

Neighborhood http://www.renaissanceparkpeoria.com/

Regional http://www.edc.centralillinois.org/content/about-edc-central-illinois

Conclusion

Preparation of an economic development strategic plan is not an overly complex process and can be accomplished by answering ten questions to define a Vision for an economically improved community. Specific answers lead to identification of weaknesses that need to be remedied. The process also identifies strengths and specific opportunities with can serve as the base for a job expansion and business investment program. It provides a mechanism to identify specific work tasks, determine their cost and assign responsibility for their completion and means to measure incremental progress.

There are numerous resources to help communities prepare economic development strategies, including regional planning organizations and private consultants. While use of outside assistance brings technical skills and greater experience to the process, community representatives are still required to answer all ten questions, develop the vision and work tasks, and accept responsibilities to complete each work task.

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Economic Development Strategy Questions

1. Who are we?

2. What makes up our economy?

3. What are our problems and opportunities?

4. What are our strengths?

5. What do we want to be - our future vision?

6. How do we get there?

7. What resources do we have and need?

8. Who is responsible?

9. How much does it cost?

10. How do we know when we get there?

EXAMPLE STRATEGIC PLAN WORK TASK CHART

ECONOMIC DEVELOPMENT STRATEGIC PLAN Work Tasks
Work Task	Description	Budget	Funding Source	Responsible Party	Completion Date	Progress Measurement Tool

Easy to Print Link Below:

http://docs.google.com/Doc?id=dgp5tpcd_118pjfvkng6&btr=EmailImport

About the authors -

Chuck Eckenstahler is 35 year veteran of municipal planning, economic development and real estate consultant serving clients in Illinois, Indiana and Michigan, and a past contributor to the Illinois Municipal Review. He teaches economic development subjects in the Graduate School of Business at Purdue North Central, Westville, Indiana and serves on the faculty of the Lowell Stahl Center for Commercial Real Estate Studies at Lewis University, Oakbrook Illinois. He can be contacted at pctecken@comcast.net or by phone at 219-861-2077.

http://www.linkedin.com/in/chuckeckenstahler

Craig Hullinger AICP has 35 years of experience in economic development, city planning, and transportation planning. He is a Economic Development and City Planning Consultant. He was the Economic Development Director of the City of Peoria, Illinois, and a member of the American Institute of Certified Planners and Lamda Alpha. He was formerly Planning Director of Will County. He publishes a number of blogs on economic development. He can be contacted at craigullinger@gmail.com or by phone at 309-634 5557.

http://craighullinger.com/

Façade Improvement Programs

Façade Improvement Programs:

Getting the Private Sector Involved in Downtown Revitalization

Authors: Craig Hullinger, AICP and Diane Gormely-Barnes, AICP

A Facade Improvement Program can be a cost effective method of encouraging private sector reinvestment in older commercial areas. A program will usually provide partial funding for appropriate facade improvements that both enhance the appearance of the building and contribute to the overall character of an historic commercial area or central business district (CBD), most often as part of a larger improvement program.

The Village of Tinley Park, Illinois undertook a transit-oriented development (TOD) plan in 1998 that was sponsored by the Regional Transportation Authority of Northeastern Illinois (RTA). The RTA’s Regional Transportation Assistance Program (RTAP) provided matching funds for the development of the plan. The TOD plan was essentially a downtown improvement plan, focusing on enhancements to the train station area within the historic commercial core of the community. The community planning process, led by the Chicago-based planning firm of Camiros, Ltd., resulted in recommendations to enhance the appearance and viability of the “Old Town” area along Oak Park Avenue, adjacent to the Metra station.

Train stations were the focus of many communities when rail transport was king. The CBD of Tinley Park developed around the train station, a stop on the famous Rock Island Line. Most businesses and homes were within easy walking distance of the train station. As the town grew and the auto became dominant, wider modern roads diverted traffic away from the historic commercial buildings adjacent to the train tracks. The station area declined in importance and became a minor center relative to the large commercial centers developed at the intersections of major roads elsewhere in Tinley Park. The Village became concerned about the deterioration of “Old Town” and also recognized that some of the buildings no longer exhibited a character appropriate for an historic area, due to modern era renovations.

The TOD plan included numerous proposed improvements to Metra facilities, and also many landscaping, streetscaping and marketing enhancements. The Village and Metra have moved aggressively to implement the public sector initiatives of the plan, and a number of improvements have been made or are underway. These include the removal of an unsightly water tower near the tracks, parking lot and sidewalk upgrades, installation of a plaza near the station to serve as a community gathering space and CBD focal point, and the ongoing construction of a new Metra station. A new mixed-use building containing retail space and condominiums is also under construction on a key site in the area.

A very important and effective part of the plan was the development of Façade Improvement Guidelines, and the preparation of several specific facade improvement concepts for high visibility buildings in the area. The Guidelines address three specific development types found in the station area: traditional commercial facades built up to the sidewalk, auto-oriented buildings set back from the street, and older residences that have been converted to business use. Each façade improvement concept included a detailed illustration of the potential future appearance of the façade, juxtaposed with a photograph of the existing condition of the building. The sketches provided an improvement recommendation that each building owner could pursue with an architect or directly with a general contractor, depending upon the scope of the proposed façade changes.

The Village of Tinley Park then developed and marketed a Façade Improvement Program for buildings in the CBD, beginning with building owners for whom the Village had proactively funded improvement concepts. Under the Program, the building owner hires an architect acceptable to the Village to design (or in these cases refine) a façade concept and estimate the cost of the improvements.  Drawings are then submitted to the Village.  If approved, the Village reimburses the building owner for up to 50% of the cost of the façade improvements.

A picture is worth a thousand words. Village staff used the facade improvement concepts in meetings with property owners, the business community, and developers. The sketches were very effective in developing interest in building improvements by the private sector. Several buildings in the immediate area of the train station have been attractively renovated and house thriving restaurants that are highly visible to passing Metra commuters, providing outdoor dining areas and substantial new downtown activity, jobs, and sales tax revenue.

A Facade Improvement Program is a low cost and effective way to attract quality investment to a community. The facade improvement concepts were a very important outgrowth of the TOD plan.  They encouraged the active involvement of the private sector in area improvements. The improvements generated by the TOD plan and Facade Improvement Program jump-started a successful effort toward community revitalization.

The authors:

Craig Hullinger, AICP is a city planning consultant.  He can be reached at: 

craighullinger@gmail.com

http://craighullinger.com

Diane Gormely-Barnes, AICP, AIA, LEED AP 

 

is currently a Principal Planner with HNTB Corporation in Chicago, Illinois.  She was formerly a Senior Associate at Camiros, Ltd.  She can be reached at dcbarnes@hntb.com.

For more information on Tinley Park’s Façade Improvement Program and other “Old Town” initiatives, contact: Director of Planning for Tinley Park, IL at 708 444 5000.

The façade improvements at Ed and Joe’s Pizzeria were also based on historic photographs.  The decorative wooden façade and signage replaced dark, diagonal wood siding that had been installed in recent decades.

Teehan’s Tavern was upgraded with ground floor storefront improvements and new siding and trim above.  A raised outdoor seating area was also added to enliven the street.

Façade improvements proposed for the Holstein’s Saloon building were based directly on photographic evidence of its historic appearance in the early 1900s.  The new façade replaced a plain brick front that had been installed over the original ornate wooden façade.  A raised outdoor dining area was also created.

"Just Outside Chicago, There's a Place Called illinois

“Just Outside Chicago, There’s a Place Called Illinois”

Move your business and home to downstate

“Just outside Chicago, there’s a place called Illinois.”  The State of Illinois developed this catchy slogan for it’s tourism marketing program to encourage Chicago-area residents to visit the Illinois south and west of Chicago, instead of visiting Wisconsin and Michigan.  The strategy aimed to keep tourism and the dollars it generates in Illinois.

The strategy need not stop at tourism, though.  Communities in downstate Illinois should employ a similar strategy when attracting businesses and economic development.  Outside of the Chicago metropolitan area, the cost of home ownership and renting is tremendously cheaper.  The cost of doing business is also much less.  Congestion, often cited as a quality-of-life issue, is virtually non-existent:  “rush hour” in smaller communities is often the “rush minute”.

Demographic trends indicate that the problem is only going to get worse in Northeast Illinois.  Of Illinois’ population of 12 million people, 8 million citizens live in or around Chicago.  By 2030, Illinois is projected to grow over 15%, but of the 2 million more people living here, most will be living in or near metro Chicago.

While growth is encouraging, it also comes with associated costs.  Both Chicago and Illinois would be better off if some of the projected growth occurred in other Illinois communities.  The addition of two million more people to the Chicago area will create more traffic congestion and air pollution.  This will require increased capital expenditure at the federal, state and local levels as the transportation, protective and educational infrastructures swell to accommodate this growth. The increase in taxes need to manage this growth is rarely appreciated by citizens.

Illinois communities outside of Chicagoland could accommodate and welcome this growth.  Many communities are at best experiencing moderate growth, while many more are losing population.  These smaller communities often have housing stock, roads, schools, and other infrastructure that have capacity sufficient to the task.

This potential is illustrated by comparing two large metropolitan areas in Illinois. The moderately-growing Peoria metropolitan area is the second largest metro area in Illinois.  However, as the following table demonstrates, there are significant advantages to locating or relocating “downstate”:

	Chicago	Peoria
Median Home Price[1]	$274,700	$114,900
Average Commute Time (2000)[2]	35 minutes	20 minutes
“Cost of Doing Business” Rank[3]	90th	47th
Cost of Living Index Composite[4]	103.9	96.9
Student-Teacher Ratio[5]	16.40	14.40

Relocating Businesses and Employees Downstate

More and more people are controlling their own job location.  The Internet permits more people to work remotely.  Telecommuting allows mobile professionals to flee large, congested metro areas and work and live in a pleasant environment.  Free lance writers, advertising executives, entrepreneurs, artists, computer experts and even salespeople are typical of employees who often have control of their work location. Jack Manahan is a perfect example.  Manahan left the Chicago suburbs for Peoria.   As a home-based computer consultant to government, he simply drives 10 minutes to the airport when he needs to visit a client.  "I saved half the cost of my auto insurance and got a much nicer home in Peoria when I left Chicago.  And the rush hour is much less than in Chicago. Peoria is a pleasant place to live and work, without the hassle of a really big city. "

Long gone is the requirement for manufacturers, agencies, sales forces and consulting companies to be located in a large metropolitan area.  In fact, the cost of doing so might well outweigh the benefits.  The same connectivity that permits telecommuting allows business leaders the flexibility to move their entire company to smaller, more attractive communities where both the quality of life and the cost of doing business are better.  The marketplace is no longer local – it is global and requires little more than a strong technology and transportation infrastructure.  This trend is accelerating and will likely continue to be popular, especially as congestion increases.

Attracting a Retiree Migration South

Moving to a downstate community can also be an excellent retirement strategy.  Retirees can achieve substantial savings from the sale of their homes.  With Chicago’s real estate market rocketing skyward, retirees can often turn the sale of one home into the purchase of two:  A home in a moderately-sized downstate community that offers proximity to family and friends and offers all the amenities of city life, and possibly a second home for the winter months in the Sun Belt.  This move is especially appealing to those individuals who grew up downstate but moved to larger metropolitan areas for work reasons.

One budding strategy in attracting retirees is to build housing communities in conjunction with universities and colleges.  The housing can be privately developed, with alumni and faculty targeted as purchasers. The partnership is a win-win situation:  Alumni bring a love of the institution and serve as natural source of volunteers, donors, event boosters and even students in continuing education.  The city gets more homeowners and consumers in the local economy, but does not need to concern itself with these new citizens taking high-paying jobs or additionally taxing the local public school system.

Craig Harlan Hullinger, AICP, is a City Planning Consultant and the Economic Development Director for the City of Peoria. Craig has a BA Degree in Public Administration, a Master s Degree in Environmental Planning. Contact him at (309) 634-5557 or craighullinger@gmail.com  http://craighullinger.com

Christopher Setti is an Economic Development Specialist with the Economic Development Department of the City of Peoria. Chris has a BA in Political Science and a Master’s Degree in Public Administration.   Contact him at (309) 494-8618 or csetti@ci.peoria.il.us.

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[1] National Association of Realtors: http://money.cnn.com/pf/features/lists/nar_3q05/price.html#table

[2] Arbitron “Average Travel Time to Work Comparison.” www.arbitron.com/outdoor_companies/travel_result.asp

[3] Forbes Magazine, “Best Places for Business and Careers.” May 5, 2005.

[4] ACCRA Cost of Living Index, 2nd Quarter 2005

[5] www.money.cnn.com. “Best Places to Live 2005.”