Economic Development, Base and Projections

Question 1

supports local economy by exporting goods whose purchase brings new money into the local economy
* traditionally, this was manufacturing, agriculture adn mining, currently includes any industry bringing in money from non residents (tourism and grant activities)

Answer 1

Basic Sector

Question 2

Retail, trade, services, and local government expenditures that provide goods and services primarily to local residents and which are therefore largely dependent on local economic conditions

Answer 2

Nonbasic Sector

Question 3

Economic Base Analysis Assumptions

Answer 3

basic sector is primary mover of local economy (local economy will grow because basic sector is bringing in additional money); some of this money remains in local economy, increasing the demand for goods and services provided by nonbasic sector

• money stimulates both onbasic adn additional basic activity

Question 4

cycling of economic activity

Answer 4

multiplier effect; input-output models estimate sector-specific multipliers

Question 5

Equation and goal of location quotient

Answer 5

to identify the basic and nonbasic sectors; “ratio of ratios” that compares an industry’s share of local employment to its share of national employment

(Regional employment in industry / Total regionalal employment) divided by
(National employment in industry/Total national employment)

Question 6

Location Quotient Greater than 1?

Answer 6

• inferring that region has more employment in this industry than is needed to support local economy and creates a surplus for export
• industry is basic

Question 7

Location Quotient Less than 1?

Answer 7

local employement share is less than its national employment share and is non basic

Question 8

Shift share economic base projection

Question 9

Basic-sector employee estimates; why does the equation assme that the industry’s share of local employmen is equal to natoinal employment?

Answer 9

location quotient assumed to be 1

Question 10

How do you caluclate the base multiplier?

Answer 10

total local employment for a year/total basic employment ofr a year

Question 11

projection of **direct, current public costs and revenues **resulting from population or employment change to local jurisdiction

Answer 11

Fiscal Impact Study/Analysis

Question 12

focuses on municipal revenues

Answer 12

Cost-revenue analysis

Question 13

Three Core Activities of Economic Development

Answer 13

(1) Business recruitment and attraction
Conduct a Business Location Profile: identify which types of industries are expanding and what are they looking for (type of labor force, educational needs, land needs, complementary industries in area, housing,etc.)
Identify and promote what your community has to offer in relationship to those needs

(2) Business retention and expansion
Prevent companies from leaving by identifying problems and helping to resolve
(EX: Industrial Revenue Bonds, assist in creation of new markets, facilitating move to new locations, help obtain government approvals, land for expansion of landlocked businesses)

(3) Enterprise and small business development
Business Incubtator Programs, SBA, microloans (small, short term focused on purchase of supplies, fixtures, machinery)

Question 14

takes into account both tangible and intangible costs revenues of particular project or program compared to what a community gains

Answer 14

Cost Benefit Analysis

Question 15

analyzes multiple strategies a community can use to achieve the same outcome –> results in finding most efficient choice that will have the same end results

EX: multiple approaches to building a 4-lane highway

Answer 15

Cost effectiveness analysis

Question 16

exclusively on the costs and revenues associated with specific form of growth –> result is a statemetn of net governmental surplus or deficit expressed in purely financial terms

Answer 16

Cost revenue analysis

Question 17

helps determine if a project or scale of development will generate sufficient revenues to defray necessary public service costs
* clarifies financial effects of policies and practices by projecting net cash flow to public sector; used to make informed deicsions about changes to land use reuglations or proosed development projects

Answer 17

Fiscal Impact analysis

Question 18

Difference between Fiscal Impact Analysis and Cost Revenue Analysis?

Answer 18

A “fiscal impact analysis” , whifocuses specifically on the projected change in government revenues and costs due to a new project or policy, particularly within a local jurisdictionle a “cost-revenue analysis” is a broader term encompassing the total income and expenses related to a specific activity or project, without necessarily focusing on the impact on government finances alone; essentially, a fiscal impact analysis is a specialized form of cost-revenue analysis applied specifically to government finances and potential impacts on public funds.

Question 19

the amount of revenue needed NOW to have adequate money in the future

Answer 19

Present Value

Question 20

governmetn loan to company to build or buy facility, land, or equipment

• Local government issues bonds - investors purchase bonds, funds used to make up the loan; interest on bond repayment generally tax free to investor
• Company repays the bond, city retains ownership of land/facility during repayment period, company pays minimal taxes
• At end of repayment period, ownership transfers to company

Answer 20

Industrial Revenue Bonds

Question 21

* State and local program for economically distressed areas targeted for improvement; business who locate or expand in zone and create jobs can receive tax exemptions and credits (sales taxes, utility taxes)
* Businesses get the money
* created under the Clinton administration to help distressed areas be more competitive with more prosperous areas;
* Possible incentives: hiring tax credits, property tax abatement, net interest deduction for lenders (those making loans to businesses in these zones), sale stax exemptions, income tax credits, faster permitting
* State programs have been around since the 70s
* Only for urban areas

sought to reduce unemployment and generate economic growth through the designation of Federal tax incentives and award of grants to distressed communities. The monies for the first round of —— have been criticized for undertaking more community development activities in areas such as education, housing, and infrastructure than they did economic opportunity activities such as job training and assistance to businesses.

Answer 21

Enterprise (Community) Zone

Clinton Administration Program: Empowerment Zones, Enterprise Communities

Question 22

2017 Tax Cut and Jobs Act to encourage investment in struggling neighborhoods by offering tax breaks
Lets investors reduce their taxes by putting money into projects that aim to create jobs and improve these areas
* Most projects have been market-rate multifamily housing
* Investors get the money
* Public-private partnerships, expedited permitting process, grants or other abatements
* Three Separate Tax Incentives
1. Temporary deferral on previously earned capital gains
2. Exclusion of taxable income on new gains
3. Basis step-up of previously learned capital gains invested in Opportunity Funds
* Eligibility requirements are not as robust as those of other federal programs, such as Low Income Tax Credits

Answer 22

Opportunity zone - Federal Government

Question 23

special taxing districts; funds used for improvements established by vote of residents;

Answer 23

Downtown Development Authorities (DDAs

Question 24

• special assessment districts and funds are used for infrastructure or expanded services (marketing, promotion, maintenance) , usually for specified term
• controlled by nonprofit entities formed by property owners
  *

Answer 24

Business Improvement Districts

Question 25

* Nonprofits * Created based on finding of slum and blight (data and analysis of physical/economic conditions like vacant lands, income, infrastructure, housign costs, property values) * Use data and analysis of physical and economic conditions and then adopts **Redevelopment Plan** * Typically issue bonds from redevelopment trust funds for the deposit of **TIF revenues** in the future when they pay off the bonds Activities * Infrastructure improvements * Give grants/loans * Land assembly (use eminent domain if plan in place or by willing seller) * Provide money for marketing/promotions * Innovative policing * Affordable housing projects

Answer 25

Community Redevelopment Agencies

Question 26

Used to revitalize traditional commercial districts within the context of historical preservation Connection to historic preservation; Developed by National Main Street Center of the National Trust for Historic Preservation in Chicago! Strategic Plan to create walkable urbanism Character, housing (moderate and high density), retail (entertainment, boutique, regional retail, lifestyle, book stores) in walkable districts, culture (arena, museums), public infrastructure, community involvement, employment, marketing (rebranding), involving non-profit organizations, social values (housing affordability, “equity”)

Answer 26

Main Street Programs

Question 27

4 Key Areas of Main Street Programs

Answer 27

1. Organization: building consensus and cooperation among public/private groups and identifying sources of funding for revitalization activities 1. Design: enhancing district’s physical appearance through rehab, compatible new construction, public improvements 1. Promotion: marketing the commercial district through events and advertising to attract customers, potential investors, new businesses, residents,and visitors 1. Economic restructuring: strengthening the districts economic base and creating new opps through analysis and appropriate mixed-used development

Question 28

* sum of corporate stock, long-term debt, and retained earnings; overcapitalization occurs when a company has issued more debt and equity than its assets are worth * Market value of the company is less than the total capitalized value of the company; overcapitalized company may be paying more in interest and dividend payments than it has the ability to sustain long term

Answer 28

Capitalization

Question 29

* contractual clause where money already paid to grantees for guaranteed economic dev outcomes must be paid back under certain conditions when those guarantees are not met; used in certain governmental economic dev contracts * EX: Scripps biotec in Palm Beach County; if you haven’t created 550 med high tech jobs by said date, we will take back $1B that we’ve given you

Answer 29

Clawback

Question 30

refers to the spillover effect the presence of a particular type of job has on additional local economic activity. Example: If there is one new high tech job which creates three total supporting jobs in the community, then there is a multiplier of three for every new high tech job created.

Answer 30

Multiplier Effect ## Footnote Similar to base multiplier

Question 31

* reduction of or exemption of taxes granted by a govt for a specified period, to encourage certain activities such as investment in capital equipment (buildings); a tax incentive is a form of tax abatement * Govts want to attract or keep businesses in its community → offer tax abatement in the form of a temporary reduction in general business, property (Enterprise Zone) or even federal income taxes (e.g., Empowerment zones) * Some localities also offer property tax abatement to owners who restore or improve historic properties in designated locations or neighborhoods * Usually time limited

Answer 31

Tax Abatement

Question 32

Minimum number of people necessary before a good,service, or infrastructure can be provided in an area EX: putting in central sewer extension, water service Used in Walter Cristaller’s Central Place Theory

Answer 32

Threshold Population

Question 33

Economically distressed **rural & urban zones** designated by USDA & HUD* Businesses in zone can avail themselves of Federal grants and federal tax incentives* Businesses get credits for hiring people within the zone. * Economically distressed rural & urban zones designated by USDA & HUD * Businesses in zone can avail themselves of Federal grants and federal tax incentives * Businesses get credits for hiring people within the zone * Includes substantial training funds & social services funds * Requires community participation/input into the plans

Answer 33

Empowerment zones ## Footnote Opportunity Zones (2017) emphasize private investment and offer tax benefits to investors, while Empowerment Zones (1993) emphasized community-led initiatives and tax credits for businesses, Enterprise Zones (1993) offer tax reliefs to business that are actually located in the disinvetsed community

Question 34

* Agency of Federal government that assists and protects interests of small business * Loan programs - guarantees laosn amde by private lenders * funds can be used for start up and working capital, acquisition of land and buildings, machinery and equipment, etc.

Answer 34

Small Business Administration

Question 35

Examples of CRA Activities

Answer 35

* infrastructure improvements * grants and loans * land assembly * marketing/promotions * cultural/sports destinatoin * affordable housing * innovative policing EX: Commercial Property Improvement Grant with 50% matching reimbursable funding

Question 36

proovides development funds to states to assist physically and economically distressed cities and urban counties addressing the amount of private investment stimulated, the number of permanent jobs created or retained, and the degree to which the grantees' tax bases were expanded. "Leverage" occurs when the UDAG investment generates a greater amount of private investment, and, therefore, economic growth. Analysis of the levered private investment should take into account all public funds that are in evidence and applicable to the project.

Answer 36

Urban Development Action Grant

Question 37

*Spin-off created by a different types of economic activity *Reflects the full economic impact of spending a dollar showing that the impacts extend beyond the original expenditure *You buy groceries for $50; grocer pays wages & supplies; your spending may result in $100 or more being spent in the community

Answer 37

Economic Analyses - Economic Measure Multiplier (Ripple) Effect

Question 38

Seed money established; loans made & repaid; funds re-loaned to next applicant

Answer 38

revolving loan fund

Question 39

Collection of investments that prioritize ESG factors Demonstrate a commitment to sustainability EX: green stocks/bonds/ exchange-traded funds (investment funds that track an index of green companies or sectors), mutual funds, impact investments (made with the intention of generating social and environmental impacts along financial returns), real estate and infrastructure (investment in sustainable buildings, clean energy projects, or other environmentally-friendly infrastructure projects)

Answer 39

Green Portfolio

Question 40

State program for economically distressed areas targeted for improvement; business who locate or expand in zone and create jobs can receive tax exemptions and credits (sales taxes, utility taxes) Businesses get the money

Answer 40

Enterprise Zone

Question 41

* Clearly defined process of determining eligibility of designating areas in which the municipality or other govts have the authority to engage in redev projects including both prevention and elimination of blight and provision for PPPs * Choosing partners that is fair, open, equitable, transparent and demonstrated to be the best choice for the public interest * Mechanisms to prevent the use of partnerships to subvert the responsibilities that are imposed on the public agency through enabling legislation or case law to provide due process, demonstrate public purpose and establish a nexus between the public purpose for redevelopment and the means to achieve that purpose * Assurance that PPPs adhere to adopted plans * Requirements for clearly defined responsibilities and liabilities for PPPs are laid out * Usig redevelopment to address environmental justice and gentrification issues * viable strategies to address issues faced by neighborhoods whose commercial and cultural fabric may be disrupted as a result of redevelopment activity * stategies that promote diverse communites and transit friendly communities

Answer 41

Equitable Redevelopment

Question 42

property which MAY be complicated by presence of hazardous substances, pollutant or contaminant; if it’s too contaminated, it may become superfund site

Answer 42

Brownfield

Question 43

economically obsolescent, outdated, failing, underused real estate asset or land; have infrastructure in place and access to needed services and thus prime for redevelopment

Answer 43

Greyfield

Question 44

undeveloped land in city or rural area; used for agricultural or landscape design; often used for agriculture or landscape design or left to evolve naturally. Often considered for urban development but typically required added access to needed infrastructure or services

Answer 44

Greenfield

Question 45

Fixed vs. variable cost?

Answer 45

Fixed costs are expenses that remain constant regardless of production volume, while variable costs fluctuate directly with the level of production. Understanding these differences is crucial for businesses to manage costs effectively, budget accurately, and make informed decisions about pricing and profitability

Question 46

James W. Rouse and Benjamin C. Thompson European-style shipping markets to revitalize downtown areas in major US cities during the late 20th century, focused on a mix of local tenants instead of regional/national chain stores, shop stalls, and common areas

Answer 46

Festival Marketplace ## Footnote Rouse also pioneered indoor shopping malls, developed the new town of Columbia, MD, Baltimore's Harbor Place, and Boston's Faneuil Hall

Question 47

Which decade is associated with urban decay and why did it happen?

Answer 47

The 1970s and 1980s are strongly associated with urban decay. This decline was a complex phenomenon driven by a confluence of factors, including deindustrialization, depopulation to the suburbs, economic restructuring, mass car ownership, and the impact of policies like "redlining". ## Footnote Downtown redevelopment: adaptive reuse (office to housing) using rezoning, by right, reducing setbacks, bulk, and intensity requirements for residential housing, real estate strategy by adding urban entertainment, rental housing, affordability, for sale housing, local serving retail, adn office employment

Question 48

* a geographic area from which a community generates the majority of its customers. Sometimes a community may have more than one (such as a convenience and a destination area). * Knowing the size and shape of each area is extremely important because its boundaries allow for the measurement of the number of potential customers, their demographics, and their spending potential. This information provides valuable insight into your community’s customer base and allows you to calculate demand for stores, products, and services. Other geographic areas often used include: 10 – Minute Walk-Time – representing the area close to downtown where many residents can walk to retail, services and social gatherings. Study Area – the core downtown area often defined by a Business Improvement District and often representing the highest commercial and/or residential area in the community.

Answer 48

Market Retail Trade Areas

Question 49

a small consulting firm that does not pay taxes on its income but passes through profits and losses to stockholders in proportion to their stock holdings in the corporation

Answer 49

S corporation