introduction to economic development & redevelopment robert s. ogilvie phd & hannah laurison...
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Introduction to Economic Development & Redevelopment
Robert S. Ogilvie PhD
& Hannah Laurison MA
Davis, CA March 13th, 2008
Strategies for change
Economic development and redevelopment are two of the strategies that local and regional governments can use to try and improve conditions in low income places.
What is economic development?
The institutional changes made to promote economic betterment.
The social organizational changes made to promote growth in an economy.
Economic Development Strategies
Economic Development Institutions
Local Government Economic Development Agencies
Small Business Assistance Agencies
Economic Development Corporations
Community Development Corporations
Job Training and Placement Agencies
Business Organizations
Economic Development Financing Sources
Local Government
State Government
Federal Government
Community Development Financial Institutions
Private Foundations
Private Banks
Potential Economic Development Strategies for Securing Healthy Food in a Neighborhood
Supermarket Developmento Build a new full service supermarket
Small Store Developmento Build new produce markets or small format groceries
Corner Store Improvemento Identify corner store operators willing to offer fresh food
for sale in existing stores Mobile Markets
o Organize the sale of fresh produce from trucks with a weekly schedule
Farmers Marketso Organize weekly market
Limited powers
Economic Development & Redevelopment haven’t been able to stem the changes in the economy brought on by globalization
Economic Development & Redevelopment have been able to make targeted changes in many neighborhoods around the country, however.
What is Redevelopment?
Redevelopment is a public process that aims to improve the economic and physical condition of a designated (blighted) area
Blight is defined by state as being the presence dilapidated, vacant and abandoned buildings, and concentrated economic inactivity.
State law allows cities to set up redevelopment agencies, which can declare blighted areas as redevelopment areas.
What is Blight?
There are two types of blight according to California redevelopment law:
1.physical blight
2.economic blight
Physical blight defined
Buildings that are unsafe or unhealthy for persons to live or work.
Conditions that prevent or substantially hinder the viable use or capacity of buildings or lots.
Economic blight defined
Physical blight defined
Adjacent or nearby incompatible land uses that prevent the development of those parcels or other portions of the project area.
Subdivided irregularly shaped lots of inadequate size in multiple ownership – which hinders their physical development given present general plan, zoning standards and market conditions.
Economic blight defined Depreciated or stagnant
property values.
Impaired property values, due in significant part, to hazardous wastes on property.
Abnormally high business vacancies, abnormally low lease rates or an abnormally high number of abandoned buildings.
Economic blight definedA serious lack of commercial facilities that are normally found in neighborhoods, including grocery stores, drug stores, and banks and other lending institutions.
Serious residential overcrowding ... An excess of bars, liquor stores, or adult-oriented businesses that has resulted in significant public health, safety, or welfare problems.
A high crime rate that constitutes a serious threat to the public safety and welfare.
Powers of the Redevelopment Agency
1.Tax increment financing2.Eminent domain3.Improve blighted conditions4.Master planning authority5.Mobilize other public funds to incentivize
neighborhood improvement behaviors
The budget of the redevelopment agency is separate from the city/county budget. (This is critically important in California given the structural fiscal squeeze that most local governments operate under.)
Limitations on Redevelopment Agencies
Redevelopment agencies cannot do any developing
Redevelopment agencies can’t fund programs
Redevelopment agencies build infrastructure and give incentives to private developers to build in redevelopment areas
Tax Increment Financing (TIF)
Base Year Value
Taxes Increment Collected by the Redevelopment
Agency
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
Year 1 Year 3 Year 6 Year 9 Year 12 Year 15 Year 18 Year 21 Year 24 Year 27 Year 30
Redevelopment continued: (Eminent Domain)
Eminent domain is the inherent power of the state to seize a citizen's private property for a public use.
The Fifth Amendment has been interpreted to require that just compensation be paid when the power of eminent domain is used, and to require that properties can only be taken for "public use". These requirements are sometimes called the takings clause.
The controversy around Redevelopment
In its initial form, Redevelopment was known as Urban Renewal – as Slum Clearance.
There were other names for Urban Renewal as well – like Negro Removal.
The controversy around Redevelopment
In the 1950s and 1960s, Urban Renewal displaced vast numbers of people from many urban neighborhoods around the country (like the Fillmore in San Francisco and Acorn in West Oakland)
The controversy around Redevelopment
Eminent domain continues to be very controversial.
So does the fact that redevelopment agencies turn the seized property over to private developers
Opponents say that this favors the interests of wealthy redevelopers over those of small business owners and individual home owners.
Recent limitations around eminent domain.
Many redevelopment agencies have decided to renounce the use of eminent domain over residential property
The potentially positive side of redevelopment (from a public health perspective)
Construction of affordable housing
Constructing mixed use/ smart growth developments
Low Income Housing Set aside
Since 1976 California redevelopment agencies have been required to set aside not less than 20% of their tax increment for "increasing, improving, and preserving the community’s supply of low and moderate-income housing"
Positives of redevelopment
Attracting food retailers to low income neighborhoods
The potentially positive side of redevelopment (from a public health perspective)
Rehabilitating Brownfields
Improving Air quality
Increasing opportunities for physical activity
How you can influence redevelopment
Redevelopment is a public process, and state law requires public participation in the planning and approval of redevelopment plans.
Redevelopment plans must provide for the participation of property owners, business owners, renters, and representatives of local social service agencies in plan implementation, so long as they agree to participate in a way that conforms to the plan.
How you can influence redevelopment
Participation usually happens through the venue of the Project Area Committee (PAC), which is an elected body. (In many communities this is the minimum)
Pursue community benefits agreements. (These can include living wage policies, local hire ordinances.)
Get involved if you want to affect the process!
Funding Healthy Food Retailin low-income communities
Funding Healthy Food Retail
There are many programs at the federal, state, and local level to support access to healthy food retail in low-income communities through grants and loans
Programs lack coordination, can be highly technical, and are subject to budgetary fluctuation.
Health is usually not an explicit priority
How can public funding sources be used?
To conduct feasibility studies or market analysis
To influence the behavior of the private sector
To incentivize good corporate citizenship (fair labor practices, healthy foods)
To bridge the financial gap on complex development projects
Local farmers
A USDA grant helped the Rainbow Farmers Cooperative develop a business marketing plan
Federal Resource:USDA Rural Development Value-Added Agriculture Producers Grants
VAPG funds feasibility studies or business plans to establish value-added marketing opportunities
The Rainbow Farmers Cooperative used the grant to help socially disadvantaged and limited resource farmers sell produce in urban and rural markets.
Farmers Markets
El Dorado County received a grant from the California Dept of Housing and Human Development to conduct a farmers market feasibility study
State Resource: CA Dept of Housing and Community Development Block Grants
Support planning and technical assistance, infrastructure development and lending programs for businesses benefitting low and moderate income people
State CDBG funds are limited to smaller cities and counties
How can public funding sources be used?
To conduct feasibility studies or market analysis
To influence the behavior of the private sector
To incentivize good corporate citizenship (fair labor practices, healthy foods)
To bridge the financial gap on complex development projects
Supermarket
First grocery store in downtown LA since 1947 will open in summer 2008 with an investment from CalPERS.
State Resources- California Public Employee Pension Funds
CalPERs created the CA Urban Real Estate Initiative to direct $3 billion in underserved communities
CURE seeks both a financial and social return (“double bottom line”)
How can public funding sources be used?
To conduct feasibility studies or market analysis
To influence the behavior of the private sector
To incentivize good corporate citizenship (fair labor practices, healthy foods)
To bridge the financial gap on complex development projects
Corner Stores
City Produce received a small business improvement loan from the SF Redevelopment Agency
Local Resource: Redevelopment Agency grants and loans
Base Year Value
Taxes Increment Collected by the Redevelopment
Agency
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
Year 1 Year 3 Year 6 Year 9 Year 12 Year 15 Year 18 Year 21 Year 24 Year 27 Year 30
How can public funding sources be used?
To conduct feasibility studies or market analysis
To influence the behavior of the private sector
To incentivize good corporate citizenship (fair labor practices, healthy foods)
To bridge the financial gap on complex development projects
Public Markets
Midtown Global Market in Minneapolis used tax credits to develop a 80,000 sq ft public market with 50 local vendors
Federal Resources – New Market Tax Credits
US Dept of the Treasury
CDFI Fund
CDEInvestors
Tax Credits
Investments/equity
Businesses
SummaryEconomic Development resources can be used to:
Conduct feasibility studies or market analysis
Influence the behavior of the private sector
Incentivize corporate citizenship
Bridge the financial gap on complex or risky development projects
Gaps in funding
Explore policy opportunities
But consider fiscal context
Link carrots and sticks
For example, limit location of mobile vendors except where selling healthy items
Good governance practices (time=money)
For example, allow expedited review for healthy food retail
Attracting economic development resources to your project
This is a political process
Articulate need for project through data
Community mobilization
Involve elected and appointed officials
Participate in General Plan update process
www.healthyplanning.org
Database of healthy food retail funding programs
Toolkit on Economic Development and Redevelopment
Quarterly newsletter on healthy planning and economic development
Role of Public Health Professionals
Role for Public Health advocates
Data, data, data to justify focus on healthy food retail
Participate in General Plan updates – economic development and redevelopment agencies must conform to General Plan
Community involvement in setting economic development priorities
Identify interested parties
Decision makers – elected and appointed staff
City/County staff
Technical partners
Project allies – and opponents
Potential motivators
Tax revenue Job creation Quality of life Business development Blight removal Smart growth Profit
Contact us:
Planning for Healthy Places
Public Health Law & Policy
(510) 302-3308
www.healthyplanning.org