6
Types of Community Economic Development Programs
Economic development programs generally take one of three approaches: 4 A firm-oriented approach, in which individual businesses receive assistance to help them grow and ultimately benefit the entire community 4 A place-based approach, in which a declining or at-risk area receives targeted investment to prevent or counteract long-term disinvestment 4 A people-oriented approach, in which certain disadvantaged or at-risk populations are targeted for job development or skills training Within each general approach, there are many individual programs. These programs can be used in tandem as well.
ECONOMIC DEVELOPMENT STRATEGIES
Firm-Based Strategies
Place-Based Strategies
People-Based Strategies
Business Attraction
Business Assistance
Business Development
Redevelopment
Commercial Revitalization
Employment Development
Microenterprise
Job Creation
Job Training
Job Placement
Types of Community Economic Development Programs
39
Firm-Based Strategies
Business Attraction Business attraction refers to efforts to encourage businesses to locate within a city or neighborhood. This is done through a number of strategies designed to help a city compete with other locations the business may be considering. These strategies range from tax abatements to infrastructure improvements to marketing schemes designed to reinforce a positive image for the area. Business attraction strategies can be tailored to appeal to a variety of businesses, from large corporations to individually owned small businesses. It can involve general efforts to promote an area for any business, or it can focus on specific businesses that are most likely to make a positive contribution to the existing community. For example, many programs (like Retail Chicago, described in chapter 2) focus on attracting grocery retailers to underserved neighborhoods. Business Assistance Business assistance attempts to support existing businesses and help them grow. Business assistance programs try to connect small businesses with technical resources such as financial planning, marketing, product development, and accounting services. Many programs also coordinate business expansion financing for assisted businesses. Small business assistance is usually offered through local government actors such as the small business commission, the chamber of commerce, or the economic development or community development department of the city government. The federal Small Business Administration works through many of these local programs to offer financing and training to many small businesses. Business Development Business development programs ease the entry of small businesses into a community, making it more likely that new businesses will be successful. Many programs offer assistance in developing start-up business and marketing plans or acquiring start-up financing. (For example, in Holyoke, Massachusetts, an organization called Nuestra Raices offers a small commercial kitchen to entrepreneurs who are building food-related businesses. One of these entrepreneurs now owns his own artisanal bakery and employs several community members.)1 Microenterprise programs (see People-Based Strategies) provide these same services to low-income individuals starting very small businesses.
40
Economic Development and Redevelopment
Place-Based Strategies
Redevelopment Redevelopment typically involves the physical and/or economic rebuilding of disinvested neighborhoods. In most cases this means the removal of blighted, abandoned, or even contaminated properties, the construction of new housing or commercial facilities, and the reconstruction of basic infrastructure such as streets, sewers, and sidewalks. In California, state law authorizes the creation of local redevelopment agencies that are given certain special powers enabling them to bring about this kind of large-scale physical transformation. Among these powers is the ability to force the sale of private property through the power of eminent domain and the ability to utilize tax increment financing to pay for improvement efforts. Section III of this toolkit goes into more detail about how California’s redevelopment law has helped communities attract and retain grocery stores. Commercial Revitalization Commercial revitalization programs attempt to bring economic life back to struggling commercial districts or corridors. The businesses in these commercial corridors have traditionally been small businesses primarily owned by and employing neighborhood residents. They allow convenient access to daily essentials for all community members and contribute to a vibrant neighborhood economy. Commercial revitalization programs focus on developing districts where businesses can locate successfully and increasing the ability of businesses to provide jobs and entrepreneurial opportunities for local residents. They accomplish these goals by improving the appearance of the streetscape (street, sidewalk, and building façades), strengthening safety and maintenance, attracting new businesses, and promoting the area to potential customers. Oftentimes, local government will work in collaboration with community groups to spearhead these efforts, organizing and attracting public and private investment until a neighborhood-based collaboration can manage the program independently. For example, when a new supermarket opened in the Jamaica Plain neighborhood in Boston, the city’s economic development officials worked with the supermarket company to fund façade improvements and other forms of technical assistance as part of a comprehensive commercial revitalization strategy.
Types of Community Economic Development Programs
41
People-Based Strategies
Microenterprise Microenterprise programs target entrepreneurs who face difficulty accessing traditional capital for assistance and loans to start small (often in-home) businesses and improve their economic condition. Microlending agencies are most commonly private nonprofits initiated by community-based organizations or neighborhood groups. The loan recipients are generally low-income and have little or no collateral to put down against the loan they receive. The loans are very small, and they are often coupled with business training intended only to allow the recipient’s business to attain a level of success necessary to obtain mainstream financial products. Employment Development Job creation programs aim to create new jobs for workers in certain targeted categories. Some programs invest public money in new businesses or, more often, in facilities for businesses that create new jobs for difficult-to-employ individuals. The federal government offers tax credits to employers for hiring certain difficult-to-employ workers.2 There are also state programs, such as the California Enterprise Zone Hiring Tax Credit, which offer tax deductions for employers that hire workers from targeted groups. Local governments sometimes offer job creation incentives similar to those described above. Job training programs try to give workers the skills they need in order to receive high-quality employment opportunities. Such training often targets skill-building applicable to industries that demand a great deal of labor in that community and can employ a large number of graduates from training programs. California’s One-Stop Career Centers often link potential participants with the training programs run in their area by either private or public agencies. Additionally, some government programs offer incentives to employers to provide on-the-job training to employees that would otherwise not be hired. The Private Industry Council of San Francisco’s On-the-Job Training financial assistance program and customized training subsidy is one such program. Job placement programs connect employers with employees who have needed skills but may not know about work opportunities. These programs can be private or public efforts and depend greatly on the job placement institution’s ability to establish a trusting relationship with the employing institution. In California, two statewide programs attempt to place employees. The One-Stop Career Centers collaborate with employment-training providers in the community and provide a one-stop resource for employers and job
42
Economic Development and Redevelopment
seekers to find one another through their Career Link Centers.3 The other statewide program, Cal Jobs, allows job seekers to enter their skills and experience into a résumé database for employers to view.
1 See http://nuestras-raices.org (last visited 11/3/06). 2 Examples include the Welfare to Work tax credit (a federal income tax credit for employers who hire long-term welfare recipients) and the Work Opportunity Tax Credit (a federal income tax credit for employers who hire employees from targeted groups including high-risk youth, ex-offenders, and people who receive food stamps, Temporary Assistance for Needy Families, or Supplemental Security Income). 3 See www.picsf.org/about/career_link.htm (last visited 11/28/06).
Types of Community Economic Development Programs
43
44
Economic Development and Redevelopment