Economic Development

CALED “State of California Economic Development”

With changes in resources and economic trends, the approach to economic development efforts in California have changed significantly in recent years. Prior to 2012, cities could rely on tax increment funding from Redevelopment Agencies (RDAs) to fund economic development. With Redevelopment dissolution, cities now must get more creative with limited funding sources. These trends have made this a challenge for local authorities. Economic development efforts have become more concentrated, shifting the focus from programs to projects. Furthermore, cities rely more heavily on regional economic development efforts or even developing multi-city strategies to market an area. Additionally, multiple partners, investors, and stakeholders, have increased transparency, which can lead to more complexity to getting a project done.

Nevertheless, local governments can do a lot to support economic growth in their jurisdictions, the following are some examples:

  • When selling city owned property, officials should aim to leverage those assets for the greatest economic impact, rather than just seeking the highest sale price.

  • With assets they continue to hold, local governments should also evaluate opportunities to leverage them for greater economic benefit.

  • Cities need to understand what it means to be “business friendly” and seek process improvements in order to attract more businesses to locate in their city.

  • Cities should embrace housing projects at all income levels. Recognizing the role that housing affordability plays in attracting and retaining a talented workforce, not to mention helping people improve their quality of life, some cities have started to warm up to housing developments, but many are still slow to react.

  • Cities should be aware of legislation at the state level that may affect resources and opportunities, and make their voices heard in order to inspire legislators to add tools for local economic development.

Facing a Unique Economic Development Challenge? Consider Taking a LEAP!

Recently, RSG partnered with the California Association for Local Economic Development (CALED) to assist with the expansion of CALED’s Local Economic Advisory Program, often simply referred to as LEAP. LEAP is an innovative technical assistance program helping cities, counties, and other communities across California achieve their economic development objectives. The program features one- or two-day events during which four leading economic development experts visit a community to tackle a specific strategic, policy, or program challenge presented by community leaders. The event culminates with the experts’ presentation to elected officials, staff, and business leaders, outlining near-term recommendations and action steps.

What kind of economic development challenge could be meaningfully addressed by a team of experts in just one or two days? Below are what we’ve found to be the top 3 characteristics of challenges that make perfect candidates for LEAP:

1.       A specific, clearly defined challenge…but no clear direction on where to start

2.       Visionary City/County staff eager to utilize an out-of-the-box approach to address the challenge

3.       Community leaders that are willing and available to participate in the process

Interested in participating in LEAP? Click here to learn more about the program!

Investment Capital in Economic and Real Estate Development

Image courtesy of George Entis, CBRE

Image courtesy of George Entis, CBRE

A recent CBRE study shows that the Los Angeles market has led all US metropolitan areas in foreign investment in real estate so far in 2016. Investment capital spurs economic development by supporting business growth. It boosts real estate development by funding acquisition and new development.

According to Investopedia, the average return on investment for commercial real estate has been about 9.5% in the past 20 years. While the real estate sector has outperformed the S&P 500 index during that time, it can vary greatly based on the type of real estate, the geographic market, and the investor’s acceptable risk level.

Capital investment in real estate is often misunderstood. For example, investors’ returns are based on capital market conditions and cannot be lowered to close a development feasibility gap. Contact RSG to learn more about investment capital’s role in economic and real estate development and how it can help your community.

Written by Dima Galkin, an Associate at RSG

Business and Industry Loan Guarantees in California

The US Department of Agriculture (USDA) offers business and industry loan guarantees in California as an economic development funding source to enable commercial lenders to provide more affordable financing for businesses in eligible rural areas and small towns. The program reinforces the existing private credit structure by guaranteeing loans for rural businesses, enabling private lenders to extend more credit. There must be sufficient collateral to protect the interest of the lender and the agency.

Borrowers can be for-profit businesses, nonprofits and cooperatives, federally-recognized tribes, public bodies and individuals. Guaranteed loan funds may be used for business conversion, enlargement, repair, modernization or development; purchase and development of land, easements, rights-of-way, buildings or facilities; purchase of equipment, leasehold improvements, machinery, supplies or inventory; debt refinancing when new jobs will be created and other conditions are met; and business and industrial acquisitions when the loan will keep the business from closing and/or save or create jobs.

Contact RSG to guide you through the process of obtaining a loan.

Written by Dima Galkin, an Associate at RSG

Customizing Economic Development

What is the perfect economic development strategy? It depends on the community.

People often describe the economic development strategy of corporate tax breaks and subsidies as an old strategy that fails to work in today’s environment. One of the newer economic development ideas suggests that creating vibrant neighborhoods with many amenities will attract the type of workforce that will in turn bring in established businesses and create new ones.

At RSG we know that there is no silver bullet for any community's or region's economic development. Each effort requires consideration for both a city's individual characteristics and broader trends.

Sometimes an appropriate subsidy can serve as a catalyst to turn a neighborhood or local industry around, especially if it supports a policy goal. Contact us today to learn how we can help you craft and implement the perfect economic development strategy for your town.

Written by Dima Galkin, an Associate at RSG

San Carlos Breaks Ground on a Landmark Hotel

 

The City of San Carlos recently broke ground on a new four-story, upscale, extended-stay Landmark Hotel. The hotel will include 204 guest rooms with individual kitchens, outdoor patio areas with a pool and sport court, fitness and laundry center, and a meeting room.

 

 

The hotel will be located near the City’s gateway entrance off the 101 freeway. It will provide much needed transient occupancy tax revenue to diversify the city’s tax base and increase revenues to fund services for the community. All buildings previously on the site have been demolished, and the entire project is expected to be completed in August 2017

RSG was involved in every step along the way from site assembly and acquisition, drafting purchase and sale agreements, relocating existing businesses, developer negotiations and agreements, and obtaining approval from local agencies. Call us to find out how we can facilitate your next project.

Written by Suzy Kim, a Senior Associate at RSG

Economic Development for People and Places

Aaron Renn recently wrote a thoughtful, balanced opinion piece about the dilemma between people-based and place-based economic development. People-based economic development is theoretically more effective. Place-based economic development, which is sometimes the only available approach for local governments because of their territorial nature, generally is structurally incentivized and provides quicker gratification.

At RSG, we are very familiar with this dilemma. Our clients are usually cities. We recognize that they need to generate property and sales taxes now to fund core services. Investments in education that pay off 20 years later (and possibly somewhere else) are needed, but difficult to justify. At the same time, with our focus on people and relationships, we know that people-based investments are more sound in the grand scheme of things.

Renn provides solid advice for state and federal governments to change the incentive structure to make it easier for local governments to pursue people-based economic development. Keeping in mind the glacial pace of state and federal policy change, we’re here to help cities balance economic development for both people and places.

Written by Dima Galkin, an Associate at RSG

Push to Expand Brownfield Cleanup in California

As developable land becomes increasingly sparse in California, federal and state governments have implemented initiatives to push developers toward the abundance of contaminated sites throughout the state. 

Among these initiatives is the recent introduction of Senate Bill (SB) 820, that seeks to extend the California Land Reuse & Revitalization Act of 2004 (CLRRA) beyond its set expiration date of January 1, 2017. The law has helped propel the cleanup and development of vacant hazardous waste sites across the state. CLRRA encourages revitalization of blighted properties by allowing purchasers of contaminated lots to negotiate a cleanup plan with the state in exchange for liability protection from damages associated with the original contamination. Senator Bob Hertzberg, along with sponsorship from CALED’s Brownfield & Land Revitalization Committee (BLRC), have been the leading force behind SB 820.

Another big movement to clean blighted sites has been the availability of numerous funding programs, all with varying eligibility requirements and fund limits. The Center for Creative Land Recycling recently held its “Back in Business: Resources for Redevelopment & Land Recycling” workshop, highlighting the major players involved in funding within California, including: US Environmental Protection Agency (EPA), California State Water Resources Control Board (SWRCB), and California Department of Toxic Substances Control (DRSC).

RSG understands that recycling abandoned and under-utilized properties is challenging for all parties involved, but with the right team and knowledge it can be a truly rewarding project. RSG is experienced with all facets of brownfield remediation, such as identifying and obtaining funding; projecting assessment, cleanup and development costs; community outreach; and management of third party consultants. We are also actively involved with CALED’s Brownfield & Land Revitalization Committee and pursuing new development opportunities with clients continually. Call us to find out how we can help you navigate the process.

Written by Nate Gunderman, an Associate at RSG

A Fresh Look at Economic Development

The Brookings Institution recently released a report with guidelines to prioritize growth, prosperity, and inclusion in economic development efforts. 

The goal of economic development, should be to “put a regional economy on a trajectory of higher growth that increases the productivity of firms and workers and raises standards of living for all, thus achieving growth that is robust, shared, and enduring,” according to the report. Economic development should prioritize building strong business ecosystems for core industries, improving the productivity of firms and people, and facilitating trade. These are the market foundations from which growth, prosperity, and inclusion emerge. The report recommends five action principles:

1.    Set the right goals, 
2.    Grow from within, 
3.    Boost trade, 
4.    Invest in people and skills, and
5.    Connect place.

The report has already received coverage from outlets with broad distribution, like CityLab, which said that the report calls for a paradigm shift in economic development thinking, away from competitiveness and growth for growth’s sake, and toward a more inclusive prosperity. Such coverage is important for the ideas and approaches to spread and be adopted more widely.

At RSG, we have long focused on making growth equitable for all community members: residents and businesses. Our economic development analyses incorporate Brookings’s action principles. Contact us to discuss how your city can achieve inclusive growth and prosperity.

Written by Dima Galkin, an Associate at RSG

Why I Love my Job

There are few things more personal than a home. Homes serve as more than a shelter; they are where life happens. Families grow in homes, and accomplishments are made in homes. Individually, those who lack the adequate funds to provide a home often feel lost and uncertain of their place. Furthermore, homelessness has economic and environmental effects on society as a whole.

While affordable housing programs alleviate many of these personal and societal stressors, they are only beneficial if they accomplish what they set out to do: provide homes at affordable rates for those less fortunate in our communities. Through compliance monitoring practices, I feel as if I am helping the residents of affordable housing projects by reporting both adherence to affordability requirements and compliance violations. By the end of every report, I feel as if my work will help strengthen the residents’ homes and their confidence.

Written by Nicole Miller who is a Research Assistant at RSG.