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Name of Group© 2005 to Present
Community & Economic Development Program
Economic Development 101 for Small Towns
Jonathan Q. Morgan, Ph.D.
NCLM Annual Conference October 24, 2011 – Raleigh, NC
Name of Group© 2005 to Present
Community & Economic Development Program
Learning Objectives
Understand the process of economic development (ED)
Understand the role of local govt. Examine ED trends, strategies, and
tools Consider challenges for local
governments and small towns
Name of Group© 2005 to Present
Community & Economic Development Program
The Process of Economic Development
Name of Group© 2005 to Present
Community & Economic Development Program
Economic Development Goals
• Job creation• Private investment• Tax base expansion• Wealth creation • Higher quality of life• Higher standard of living
Name of Group© 2005 to Present
Community & Economic Development Program
The ED Process
Source: Eisinger, Peter K. 1988. The Rise of the Entrepreneurial State: State and Local Economic Development Policy in the U.S. University of Wisconsin Press.
lower unem ploymentreduc ed poverty
higher personal inc om es
inc reased dem and fo r goods and servic es
new jobsinc reased
private investm ent
governm ent induc em ents and
as s is tanc e
em ploym ent mutiplier
Name of Group© 2005 to Present
Community & Economic Development Program
What is the single most important role of local govt.?
A. Provide incentives to businesses when requested.
B. Create a positive business climate.
C. Provide strategic leadership and facilitation.
D. Provide quality services and amenities.
Name of Group© 2005 to Present
Community & Economic Development Program
Survey Says…
MOST IMPORTANT ROLE OF LOCAL GOVERNMENTProvide quality services and amenities 35.9%Provide strategic leadership/facilitation 31.8Create a positive business climate 24.9Offer incentives to companies 4.6
n = 217
Source: Jonathan Q. Morgan, The Role of Local Government in Economic Development : Survey Findings from North Carolina, UNC School of Government, 2009.
Name of Group© 2005 to Present
Community & Economic Development Program
What Matters to Businesses?
• Sites and Buildings• Access to Suppliers and
Markets• Workforce/Labor• Financial Capital• Regulatory Environment• Transportation and Utilities• Incentives• Taxes• Quality of Life
Name of Group© 2005 to Present
Community & Economic Development Program
What Matters Most for Manufacturing Firms
Source: Area Development, 25th Annual Corporate Survey, 2010.
1. Highway accessibility97.3%
2. Labor costs 91.03. Tax exemptions 90.94. Occupancy or construction costs
89.85. State and local incentives
89.36. Corporate tax rate 86.37. Availability of skilled labor
85.98. Inbound/outbound shipping costs
84.09. Energy availability and costs
82.110. Availability of buildings 81.0
Name of Group© 2005 to Present
Community & Economic Development Program
What Matters Most:Quality of Life Factors
1. Low crime rate 84.6%2. Healthcare facilities 72.23. Housing costs 68.44. Housing availability 66.45. Ratings of public schools 61.26. Climate 56.37. Colleges and universities 53.28. Cultural opportunities 48.79. Recreational opportunities 48.2
Name of Group© 2005 to Present
Community & Economic Development Program
Incentives
Name of Group© 2005 to Present
Community & Economic Development Program
State ED Incentives in NC
Corporate tax credits and exemptions Grant programs Industrial revenue bonds (IRB) Low-interest financing Infrastructure assistance Industrial training
Name of Group© 2005 to Present
Community & Economic Development Program
Top Local Incentives in NCZoning and permit assistance 59.0%Infrastructure improvements 56.2Cash grant incentives 42.4One-stop permitting 30.0State development zone 24.0Land or building acquisition 23.0Site preparation 19.4Subsidized land or buildings 17.5
Source: J.Q. Morgan, The Role of Local Government in Economic Development : Survey Findings from North Carolina, UNC School of Government, 2009.
Name of Group© 2005 to Present
Community & Economic Development Program
Are ED Incentives Effective?
Not typically the most important factor in location decisions
Can tip the scale in some casesDo not compensate for major
shortcomings in a locationTend to benefit prosperous
communities
Name of Group© 2005 to Present
Community & Economic Development Program
Trends in Economic Development
Name of Group© 2005 to Present
Community & Economic Development Program
Evolution of Economic Dev.
Traditional Approach Industrial recruitment Cheap labor Incentives Individual firms and
sectors Large branch plants
New Approach Existing industry Talent and creativity Targeted incentives Industry clusters Entrepreneurship Regional collaboration Quality of place “Green” development
Name of Group© 2005 to Present
Community & Economic Development Program
Growth vs. Development
Quantitative:
More– Jobs– Businesses– People
Qualitative:
Better– High-wage jobs– Quality of life– Diversification– Sustainability
Name of Group© 2005 to Present
Community & Economic Development Program
Trends in Economic Dev.
• Strategic focus, targeting, and evaluation of efforts
• Shift from sole emphasis on industrial recruitment
• Alternative ED approaches
Name of Group© 2005 to Present
Community & Economic Development Program
Asset-Based Development
• Relates to the local context of a place
• Leverages distinctive community assets
• Strengthens locally to attract externally
Name of Group© 2005 to Present
Community & Economic Development Program
Themes of Asset-Based Dev.
• Know your niches• Build on local strengths• Grow your own• Develop people and place• Look within for economic
opportunities
Name of Group© 2005 to Present
Community & Economic Development Program
Economic Development Strategies
Name of Group© 2005 to Present
Community & Economic Development Program
Economic Dev. Strategies
1. Business recruitment/attraction
2. Business retention/expansion
3. Business creation (“gardening”)
4. Creativity and talent cultivation
5. Place-making
Name of Group© 2005 to Present
Community & Economic Development Program
Business Recruitment Basics
• Clearly defined point of contact in the community
• Up-to-date information on the community and its assets
• A “modern” web site • A targeted marketing strategy• Connections with regional and state
efforts
Name of Group© 2005 to Present
Community & Economic Development Program
Top Recruitment Tools in NC
Responding to prospect inquiries 68.7%Regional partnership 65.4Partnership with chamber 59.4Website/community profile 57.1Building and sites inventory 42.4Provide high quality of life 41.9Cash grant incentives 41.5
Source: J.Q. Morgan, The Role of Local Govt. in Economic Development, UNC School of Government, 2009.
Name of Group© 2005 to Present
Community & Economic Development Program
“Product” Development
• Infrastructure • Land and sites• Business/industrial parks• Speculative buildings• Property rehabilitation and
reuse
Name of Group© 2005 to Present
Community & Economic Development Program
Partnering on Product Dev.
• Kerr-Tar Industrial Hub project, now called Triangle North– Network of specialized industrial parks in
Franklin, Granville, Vance, and Warren counties
• North Mecklenburg Industrial Park– Cornelius, Davidson, and Huntersville
Name of Group© 2005 to Present
Community & Economic Development Program
Business Retention
• Formal process for addressing business needs and concerns
• Get businesses involved in the community
• Facilitate collaboration and joint ventures among firms (clusters)
• Recognize and celebrate existing firms
Name of Group© 2005 to Present
Community & Economic Development Program
Top Retention Tools in NC
Existing industry calls and visits 48.4%Business networking 30.9Cash grant incentives 29.0Partnering with other local govts. 28.6Worker training assistance 28.6Partnering with non-govt. entities 28.6Surveys of local businesses 24.9Source: J.Q. Morgan, The Role of Local Govt. in Economic Development, UNC School of Government, 2009.
Name of Group© 2005 to Present
Community & Economic Development Program
Why Business Retention is Important
• Most significant source of new jobs and investment
• Existing companies contribute to the tax base and employ residents
• Builds the local economy from within
Name of Group© 2005 to Present
Community & Economic Development Program
BRE = Business Retention + Expansion
• Keeping jobs and investment is important
• But so is helping existing firms grow and expand in order to create more jobs and investment
Name of Group© 2005 to Present
Community & Economic Development Program
Industry Targeting (Clusters)
Washington, NC (Beaufort County)• Supporting marine trades and boat
building businesses• Partnered with community college to
develop specialized training programs in welding, etc.
• Created incubator to assist small firms that supply boat manufacturers
Name of Group© 2005 to Present
Community & Economic Development Program
Business Creation/“Economic Gardening”
• Entrepreneurship • Information brokering• Specialized infrastructure • Social capital - networking • Business incubators
Name of Group© 2005 to Present
Community & Economic Development Program
Business Creation Basics
• Youth entrepreneurship training (K-12)• Adult entrepreneurship training• Networking opportunities• Mentoring and technical assistance• Access to financial capital• Links to higher education and sources
of innovation
Name of Group© 2005 to Present
Community & Economic Development Program
Top Small Business Tools in NC
Small business development center 27.2%Business incubator 15.7Marketing assistance 15.7Revolving loan fund 14.7Property improvement grants 11.5Microenterprise program 9.2Source: J.Q. Morgan, The Role of Local Govt. in Economic Development, UNC School of Government, 2009.
Name of Group© 2005 to Present
Community & Economic Development Program
An Example: Brevard, NC
• Pop. 6,643; Transylvania County• Supporting entrepreneurs• Using local retired business
executives to provide consulting and assistance to existing small firms and start-ups
Name of Group© 2005 to Present
Community & Economic Development Program
An Example: Dillsboro, NC
• Population 206; Jackson County• Entrepreneurship support for
local artisans• Using methane gas from the county
landfill to power studios for artisans• Incubator for fledgling artisans
Name of Group© 2005 to Present
Community & Economic Development Program
Creativity and Talent Strategies
• Workforce development• Community amenities• Arts and culture • Leadership development• Social capital
Name of Group© 2005 to Present
Community & Economic Development Program
Workforce Development
• Improving K-12 public education• Meeting skill needs of target industries• Industry specific training for displaced
workers• Advanced skills for incumbent workers• Support services like child care,
transportation, and career advice
Name of Group© 2005 to Present
Community & Economic Development Program
Place-Making
• Quality of life amenities• Downtown development• Historic preservation• Arts and culture• Tourism development• Resident and retiree attraction
Name of Group© 2005 to Present
Community & Economic Development Program
Place-Making in NC
AYDEN (Pitt County) – Population 4,620• Comprehensive strategy for downtown
revitalization• Partnered with Main Street Program• Improved streetscapes and expanded a
façade grant program to attract businesses• Branding: downtown Ayden is “Close to
home, close to your heart”.
Name of Group© 2005 to Present
Community & Economic Development Program
Place Making in NC
EDENTON (Chowan County) – Pop. 5,394• Residential development through
historic preservation• Partnered with Preservation NC to
transform a blighted cotton mill village• Used CDBG funds to upgrade water/sewer• The unique and historic mill homes have
attracted artists and entrepreneurs
Name of Group© 2005 to Present
Community & Economic Development Program
Strategy Selection
1. Business recruitment/attraction
2. Business retention/expansion
3. Business creation (“gardening”)
4. Creativity and talent cultivation
5. Place-making
Name of Group© 2005 to Present
Community & Economic Development Program
“Homegrown” Approaches
1. Place-based Development
2. Creativity and Talent Cultivation
3. Economic Gardening
Place-making
Creativity & Talent
CultivationEconomic Gardening
AC
D
B
A. Social capital Arts and cultureInfrastructure
B. Quality of life
C. Entrepreneurialculture and support
D. Human capital (people)
“Homegrown” Economic Development
Name of Group© 2005 to Present
Community & Economic Development Program
Challenges for Small Towns
Name of Group© 2005 to Present
Community & Economic Development Program
Top Barriers for Local Govt. in NCAvailability of sites and buildings 60.8%Lack of infrastructure 44.2Lack of capital/funding 42.9Limited no. of major employers 37.3Lack of skilled workforce 27.6Inability to retain young people 21.2Citizen opposition 17.1Lack of leadership 16.6
Source: J.Q. Morgan, The Role of Local Govt. in Economic Development, UNC School of Government, 2009.
Name of Group© 2005 to Present
Community & Economic Development Program
Challenges for Small Towns
“Old economy” vs. “new economy”Growth vs. “development”Residential vs.
industrial/commercial developmentCommercial property conversion
and reuse
Name of Group© 2005 to Present
Community & Economic Development Program
Challenges for Small Towns
Building analytical capacity to use incentives wisely
Measuring performance and impactsKnowing when to collaborate and
when to compete
Name of Group© 2005 to Present
Community & Economic Development Program
Want to Know More?
• The Role of Local Government in Economic Development: Survey Findings from NC. UNC School of Govt., 2009.
• Find a Way or Make One: Lessons Learned from Case Studies of Small Town Dev., Economic Dev. Journal, 2009.
• Small Towns, Big Ideas. Available at: www.sog.unc.edu/programs/cednc/stbi/
Name of Group© 2005 to Present
Community & Economic Development Program
Contact Information
Jonathan Q. Morgan, Ph.D.
UNC School of Government
CB# 3330, Knapp-Sanders Bldg.
Chapel Hill, NC 27599
919-843-0972
morgan@sog.unc.edu
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