ED 101: Understanding Organized Economic Development – FL Rural Summit November 6, 2014.

Alex McCoy, MBA, CEcD – Putnam County Chamber

Abbreviations (a.k.a. Alphabet Soup)

• ED = Economic Development

• EDO = Economic Development Organization

• BRE = Business Retention and Expansion

• SBD = Small Business Development

• BA = Business Attraction

• WIB = Local Workforce Investment Board

• RFP = Request for Proposal

DEFINING ED

ED has Different Meanings to Different Constituents

• Average citizens

– Attracting/retaining jobs that pay living wages which they can perform; improve quality of life

• Elected officials

– Generate non-residential revenues to pay for services; jobs for constituents; political success

• Existing business community

– New customers; improved/new workforce skills; economies of scale; shared service burden; innovation

What is ED?

Organized ED’s Working Definition:– Organized ED is a deliberate set of programs,

policies, or activities intended to improve the economic well being and quality of life, and to create or retain jobs within a community over time

Goals of Organized ED efforts:

a) Create/Retain higher wage jobs

b) Grow the community’s non-residential tax base

c) Create and distribute wealth

d) Help local government plan for the future

• Is an ongoing-process• Is about doing a lot of

little things right by various players

• Requires a serious long term view/ commitment from the public to build the community’s wealth

• Is NOT an event• Is NOT a single act

performed by a single person

• Is NOT something that can be switched ON and OFF on a whim, with one year’s lost efforts taking several years to recover from

ED Is/Isn’t

What’s in ED?

• BRE

• SBD & Entrepreneurship

• BA

• Tourism

• Real Estate Development & Reuse

– Brownfields

– Downtown

– Product

• Workforce Development

• Strategic Planning / Public Policy

• Tech-Led Development

• Neighborhood Development

• Development Finance

– Projects

– Infrastructure

– Product

The ED Process

What’s Your Version of ED?

CompetitivenessMarketing RelationshipsGenerate Leads

Each of us has a position to play, and our performance affects the entire team

The County Store

• Cashier

• Security

• Maintenance

• Interior Design

• Price Marker

• Management

• Landscapers

• Human Resources/Training

• Sales, Marketing, Business Customer Service, Product Research and Development, & Growth Strategy Advisor

Tax Collector

Law Enforcement

Public Works

Planning & Zoning

Property Appraiser

Elected Officials/Manager

Parks & Recreation

Public Education

Economic Development Organization

Local EDOLocal Govt

Airport / Port Authorities

Tourism Dev Council (TDC)

Development Authorities

SBDC

CRAs / DDAs / Main Street

EFI / DEO

Regional Partnerships

Regional Council

Utility Providers (FPL, Duke)

Transportation (Rail, Port, DOT)

Workforce (WIB, WF, Schools /

College)

Banks

Others!!!!

Chambers

Local Partners

State / Regional Partners

Prospect, Consultant;

Client

Why is ED Important?

Successful ED Generates:

• Average Citizens Want: – Jobs that pay living wages so citizens can have the

“American Dream”

• Existing Businesses Want:– New markets and customers so they can grow

• Public Officials Want:– Non-residential tax revenue

– People with good jobs can afford to pay their taxes

– Growing businesses generate more revenue

Economic Security for All!!!

The Tax Base

TaxBase

Tangible Personal Property

Located in Putnam County

What Does This Have To Do With Us?

• Take ownership over their Tax Base• Many communities are passive when it comes to

growing their tax base and could do a better job expanding it by:– Be proactive with infrastructure expansions,

transportation enhancements, & creating product– Aggressively pursue producer projects– Engage existing stakeholders / businesses to

improve the existing business climate– Assist smaller businesses– Promote leadership development throughout

community

American Farmland Trust

• A group that assists farmers & ranchers protect their land, produce a healthier environment, & build successful communities

• Created a Cost of Community Service model to examine the cost / benefit impact of various land uses on local government

• Performed more than 125 studies in: CO, CT, FL, GA, ID, KY, ME, MD, MA, MI, MN, MT, NH, NJ, NY, OH, PA, RI, TN, TX, UT, VA, WA, & WI

Study’s Limitations

• Only one coastal community studied

• No really large MSA’s studied

• Communities provide different servicesdepending on the desires of the public

• Communities provide different levels of service depending on the desires of the pubic

Cost of Service Study

Cost of Community Service Study

Ratios

Leon

Co., FL

North-

ampton

Co., VA

Appling

Co., GA

Brooks

Co., GA

Colquitt

Co., GA

Miller

Co., GA

Mitchell

Co., GA

Thomas

Co., GA

Residential $ 1.39 $1.13 $ 2.27 $ 1.56 $ 1.28 $ 1.54 $ 1.39 $ 1.64

Com/Ind $ 0.36 $0.97 $ 0.17 $ 0.42 $ 0.45 $ 0.52 $ 0.46 $ 0.38

Ag/Open $ 0.42 $0.23 $ 0.42 $ 0.39 $ 0.80 $ 0.53 $ 0.60 $ 0.66

Source: American Farmland TrustProducers – Commercial,

Industrial; Ag / Open Land

Consumers – Residential

Economic Base Theory

“Primary Employer / Job”

• Firms that “Export” their goods outside the community actually “Import” new wealth

• “Export” firms tend to have higher multiplier impacts within local economies and create demand for “Secondary Employers / Jobs”

Primary Vs. Secondary Employers

• Primary Employers (ex: manufacturing, distribution, high-end services, etc.)– bring cash into the community by selling

their goods/services outside the community

• Secondary Employers (ex: retail, most service based firms, etc.) – recycle cash already in the local economy

– usually driven by local business conditions (ex: amount of area disposable income, number of customers, etc.)

$

)

A Look at Residential

• Assumptions: – 1) only source of $ is taxes;

– 2) only homes are taxed

• Jefferson County, 2014:– $24.92 Million Budget

– 5,444 Est. # Households, 2008-2012 (U.S. Census)

– Median Value of owner-occupied housing units = $113,800, 2008-2012 (U.S. Census)

• $24.92 Million / 5,444 Units

• Unit owes $4,577.52 in taxes to County

• (Fair Market Value (FMV) – Homestead) x .0083114 Mils

• $4,577.52 / .0083114 = $550,751.98

• $550,751.98 + $50,000 = $600,751.98

• Fair Market Value of each housing unit must be $600,751.98 for COUNTY to break even

• Ratio: $1 received for $5.28 spent– Required FMV / Actual Value of Home

Relaxing the Model

• Assumptions: – 1) taxes are 18.4% of revenue;

– 2) only homes are taxed

• Jefferson County, 2014:– $24.92 Million Budget

– $4.59 Million in Ad Valorem

– 5,444 Est. # Households, 2008-2012 (U.S. Census)

– Median Value of owner-occupied housing units = $113,800, 2008-2012 (U.S. Census)

• $4.59 Million / 5,444 Units

• Unit owes $843.13 in taxes to County

• (Fair Market Value (FMV) – Homestead) x .0083114 Mils

• $843.13 / .0083114 = $101,442.60

• $101,442.60 + $50,000 = $151,442.60

• Fair Market Value of each housing unit must be $151,442.60 for COUNTY to break even

• Ratio: $1 received for $1.33 spent– Required FMV / Actual Value of Home

Putnam County Parcel Type with Tax Value

Parcel Type Number %

Total 99,098 100.0%

Vacant Parcels 53,613 54.10%

Single Family 16,611 16.76%

Mobile Homes 15,301 15.44%

Ag/Green Belt 4,113 4.15%

Commerce, Ind* 1,294 1.31%

Government 1,092 1.10%

Institutional 451 0.46%

All Others 6,623 6.68%

* Includes Tangible Personal Property

Property Appraiser - Parcel Count Nov 11, 2010

Property Appraiser – Tax Value Oct 18, 2010

Ave Value Total Value %

$ 37,558 $ 3,721,874,216 100.0%

$ 2,080 $ 111,490,784 3.00%

$ 68,549 $ 1,138,670,948 30.59%

$ 29,188 $ 446,610,734 12.00%

$ 14,556 $ 59,868,067 1.61%

$ 1,026,757 $ 1,328,623,675 35.70%

$ 4,215 $ 4,602,336 0.12%

$ 69,397 $ 31,297,848 0.84%

$ 90,701 $ 600,709,646 16.14%

Taxbase

TimeToday

Baseline

Inflation

ResidentialGrowth

Level of Service

Tangible AssetDeprecation

Taxbase without (re)investment

Putnam Co. Top 2013 TaxpayersTOTAL TAXABLE VALUE *

NAME 20-Oct-08 17-Oct-13

1. Seminole Electric $267,161,206 $305,652,382

2. Georgia Pacific Corp. $274,885,961 $303,854,430

3. Florida Power & Light $157,885,864 $203,440,556

4. Continental / Lafarge $81,354,979 $65,102,556

5. Clay Electric Coop., Inc. $41,643,939 $45,480,880

6. Wal-Mart $13,733,574 $17,285,084

7. Putnam Community Medical Center $16,144,023 $16,256,378

8. BellSouth Telecommunications / AT&T $23,868,261 $15,758,581

9. CSX Transportation $14,738,976 $15,484,750

10. ComCast N/A $10,148,303

* Total taxable value includes real, tangible personal and centrally assessed properties.

Putnam County Property Appraiser: Final Tax Roll - Oct 17, 2013

Est. $113 MM

Contribution to County General Revenue as a % of Taxes Levied 1997 & 2009

1997 2009 1997 2009 1997 2009 1997 2009

Residential Commercial Industrial Agriculture

Alachua Co 51.3% 57.3% 12.0% 12.7% 1.8% 2.5% 2.6% 2.3%

Baker Co 36.7% 50.7% 6.0% 7.5% 1.5% 4.4% 19.3% 13.9%

Bradford Co 59.2% 62.6% 9.9% 8.7% 2.0% 1.4% 14.7% 10.0%

Clay Co 72.7% 75.9% 12.1% 11.6% 1.8% 1.6% 1.6% 0.7%

Columbia Co 48.6% 57.4% 13.5% 13.7% 2.4% 4.7% 10.0% 6.6%

Duval Co 57.5% 62.5% 18.0% 18.0% 6.5% 6.3% 0.3% 0.6%

Flagler Co 77.6% 79.4% 8.7% 9.0% 1.1% 1.2% 1.8% 0.5%

Nassau Co 68.3% 79.8% 11.6% 9.2% 3.2% 1.8% 5.5% 2.0%

Putnam Co 64.5% 66.0% 7.7% 7.3% 3.8% 3.2% 3.1% 1.4%

St. Johns Co 78.4% 80.5% 9.8% 9.2% 1.2% 1.1% 1.3% 0.6%

Volusia Co 73.9% 73.3% 13.2% 12.6% 2.2% 2.3% 0.9% 0.7%

Florida Average 69.2% 69.9% 13.6% 14.2% 3.1% 3.8% 1.5% 0.9%

Source: FL Statistical Abstract 1998 & 2010

* Excludes Tangible Personal Property Tax

Contribution to County General Revenue as a % of Taxes Levied 1999 & 2009

Community

1999 2009 1999 2009 1999 2009 1999 2009

Residential Commercial* Industrial* Agriculture

Gadsden Co 53.5% 63.5% 7.0% 7.4% 4.4% 4.0% 13.6% 8.7%

Jefferson Co 31.1% 52.5% 8.3% 5.9% 0.9% 0.9% 42.6% 24.9%

Leon Co 52.2% 60.5% 14.1% 13.8% 1.8% 1.9% 0.8% 0.5%

Madison Co 41.0% 47.5% 7.5% 7.0% 2.9% 6.9% 31.9% 21.7%

Suwannee Co 52.2% 58.8% 7.7% 10.0% 1.7% 4.4% 21.5% 15.3%

Taylor Co 44.7% 57.7% 8.5% 8.6% 9.7% 2.0% 16.8% 11.1%

Wakulla Co 56.9% 73.7% 5.1% 5.4% 1.4% 1.6% 6.8% 4.5%

Area Average 47.8% 59.2% 8.3% 8.3% 3.3% 3.1% 19.1% 12.4%

FL Statistical Abstract 2000 & 2010

* This is real property (buildings & land) & ignores tangible personal property tax

ED is Where Gov’t Can Spend $

to Make $

What Does All This Cost?

Incentives, Business Parks, Industrial Parks, Speculative Buildings, Marketing Materials, Trade & Industry Shows, Relationship Building & Maintenance Time, Researching on / for Clients, Meeting with Site Selectors, Expanding Water / Sewer / Road / Rail / Airport Capacity, Improving K-16 Educational Opportunities, Comprehensive Plans, Zoning, Future Land Use, etc., etc., etc. . . .

An Economist measures in

opportunities, not in money!!!

What Did You Forgo by Not Investing?

By Not Investing Over Time, Communities Lose Out On: Jobs, Increased Home Values, New Customers for Existing Businesses, Existing Business Expansions, Additional Tax Revenues for: New Schools, Textbooks, After School Programs, Art / Music Classes, Athletics, Teachers, Police Officers, Fire Fighters, Road Repairs, Jails, Parks, Reductions in Slum / Blight, etc., etc., etc. . . .

The Real Question Becomes:

“Can You afford not to do it???”

What Makes Great Quality of Life?

Stage 3

Summary: What is ED? & Why is it Important?

• ED means different things to almost everyone

• Organized ED is about growing wealth for a community, region, or state over time

• Quality ED adds to the Quality of Life / Place

• Communities need strong tax revenue to maintain/expand their existing level of service

• ED is only place communities can spend resources to generate new revenues

Thank You

Alex McCoy, MBA, CEcD

Putnam County Chamber of Commerce

Palatka, FL

386-328-1503

alex@pcccfl.org

www.putnamcountychamber.com