The Missouri Municipal
Review
The Official Publication of The Missouri Municipal League
January 2013
Economic Development 2013
Missouri Securities Investment Program A Cash Management Program for School Districts, Municipalities and Other Political Subdivisions
The Missouri Securities Investment Program (“MOSIP”) is a comprehensive cash management program for school districts, municipalities, and other political subdivisions. MOSIP was created in 1991 by the Missouri School Boards Association. MOSIP offers its participants a professionally managed portfolio with competitive money market rates. MOSIP stresses “safety of principal” as the number one objective and is rated AAAm by Standard and Poor’s. Registered Representatives
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This information does not represent an offer to sell or a solicitation of an offer to buy or sell any fund or other security. Investors should consider the investment objectives, risks, charges and expenses before investing in any of the Missouri Securities Investment Program’s portfolios. This and other information about the Program’s portfolios is available in the Program’s current Information Statement, which should be read carefully before investing. A copy of the Information Statement may be obtained by calling 1-877-MY-MOSIP or is available on the Program’s website at www.mosip.org. While the MOSIP Money Market Series seeks to maintain a stable net asset value of $1.00 per share and the MOSIP Term portfolio seeks to achieve a net asset value of $1.00 per share at the stated maturity, it is possible to lose money investing in the Program. An investment in the Program is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Shares of the Program’s portfolios are distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) (www.finra.org). PFM Fund Distributors, Inc. is a wholly owned subsidiary of PFM Asset Management LLC. Member SIPC. Standard & Poor's fund ratings are based on analysis of credit quality, market price exposure, and management. According to Standard & Poor's rating criteria, the AAAm rating signifies excellent safety of invested principal and a superior capacity to maintain a $1.00 per share net asset value. However, it should be understood nor a recommendation to The Missouri Municipal Review that the rating is not a "market" ratingwww.mocities.com buy, hold or sell the securities.
The Missouri Municipal
Review
January 2013
VOLUME 78, NO.1
The Official Publication of The Missouri Municipal League
CONTENTS
President
Mayor Pro Tem Susan McVey Poplar Bluff
Vice President
Councilmember Jan Marcason Kansas City
City Of Eureka: Proud Past, Promising Future by Julie Wood
10 /
The Distinctive City by Edward T. McMahon
18 / Public-Private Partnerships by Charles Renner
MISSOURI MUNICIPAL LEAGUE BOARD OF DIRECTORS David Bower, Mayor, Raytown; Conrad Bowers, Mayor, Bridgeton; Denise Chisum, City Clerk, Lee’s Summit; Roger Haynes, Deputy City Manager, Mexico; Bill Johnson, Director of Administration, Fulton; David Kater, Mayor, Desloge; Bill Kolas, Mayor, Higginsville; *Ron Monnig, Councilmember, Slater; Raeanne Presley, Mayor, Branson; John “Rocky” Reitmeyer, Alderman, St. Peters; Lisa Robertson, City Attorney, St. Joseph; Frank Roland, Mayor, Hillsboro; Kathy Rose, Mayor, Riverside; *Carson Ross, Mayor, Blue Springs; Stanley Salva, Mayor, Sugar Creek; Arthur Sharpe, Jr., Councilmember, University City; Tom Short, City Administrator, Carthage; Paul Ward, Councilmember, Kirkwood; *Gerry Welch, Mayor, Webster Groves; * Kevin
Wood, Mayor, Harrisonville.
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20 / Evaluating Risk: A City's Guide To Analyzing A Request For Economic Development Incentives by Mark Spykerman 22 / Grandview Celebrates Its Centennial, Builds For Next 100 Years by Ana Nixon and Dennis Randolph 25 / Cashing In: Missouri Communities Support Local Business by Laura Holloway 26 / Building More Effective Delivery Of Economic Development Projects by Daniel Bliss 30 / Missouri Department Of Economic Development Programs 31 / Communicating With Legislators 32 /
MML's 43rd Annual Legislative Conference
DEPARTMENTS 37 /
News From The Bench
38 /
Calendar Of Events / Member Accomplishments
Laura Holloway, Editor Contributing Editors: Dan Ross and Richard Sheets
AFFILIATE GROUPS: Missouri City Management Association; City Clerks and Finance Officers Association; Government Finance Officers Association of Missouri; Missouri Municipal Attorneys Association; Missouri Park and Recreation Association; Missouri Chapter of the National Association of Telecommunications Officers and Advisors; Missouri Chapter of the American Public Works Association; Missouri Association of Fire Chiefs. www.mocities.com
6/
14 / A 1980s Formula For Economic Development Still Successful by Gayla Roten, Jeanine Rann and Joe Lauber
e
President's Report
12 / City Of Perryville: City Leaders Share Strategies of Success
Immediate Past President Mayor Norman McCourt Black Jack
*Past President
4/
Missouri Municipal Review (ISSN 0026-6647) is the official publication of the Missouri Municipal League state association of cities, towns and villages, and other municipal corporations of Missouri. Publication office is maintained at 1727 Southridge Drive, Jefferson City, MO 65109. Subscriptions: $30 per year. Single copies: $5 prepaid. Advertising rates on request. Published bi-monthly. Periodicals postage paid at Jefferson City, Missouri. Postmaster: Send form 3579 to 1727 Southridge Drive, Jefferson City, MO 65109. To contact the League Office call 573-635-9134, fax 573-635-9009 or email the League at info@mocities.com. The League’s Website address is: www.mocities.com.
The Missouri Municipal Review
January 2013 / 3
President’s Report. . .
MML President Mayor Pro Tem Susan McVey Poplar Bluff
M
any city officials will take time this January to refocus on goals, whether in progress or new initiatives. Those goals can undoubtedly mean challenges, but the reward for those of us in local government is that our challenges lead us to a stronger and more prosperous community. While we sometimes have
the struggle of pulling all resources together, we have the perspective to see the broader picture of how working together at the local level moves us forward to a brighter future for our families and friends. The new year will bring debates and many questions regarding our communities’ future for 2013 and years to come. Your city is likely to struggle with budgets, tax issues and keeping up a high standard of service. But don’t lose sight of how valuable your work is to bring about a strong community. Your work now sets the stage for future generations. While you’re planning ahead for the new year, it’s important to keep your community’s economic development goals in mind and maintain a clear strategy for how you want to move forward. This issue of The Review can help. The following articles show you how to plan for the challenges development can bring and head off some important questions in the planning process. Look for ways to boost your main street and review the services offered by state government – there may be an important resource you and your team have not yet utilized. Of course, don’t forget your MML staff as a valuable resource for all of your goals. Take advantage of the de-
cades of experience League staff offers. If they can’t help, they are the first place to know who can. As you dive into this first issue of 2013 and learn about some of the economic successes, challenges and goals of your fellow communities, be sure to take a moment and review pages 32-33 for all the details of the upcoming MML Legislative Conference. This will be a perfect time to take advantage of all that MML has to offer – from networking and education to the opportunity to be a part of local government’s unified voice in the Missouri legislature. Best wishes to all of you in 2013!
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• Member City Websites • Daily Local News • MML Conferences • Latest Legislative Action • Publications
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Attorneys & Advisors
A 360° perspective. Successful Economic Development involves direct communication and comprehensive planning among the public and private sectors with a focus on balancing the demands of governance with the demands of the marketplace. Christine T. Bushyhead of MKL is uniquely qualified to assist her clients in this community building process with over 26 years of public sector experience in diverse roles, including city attorney, community leader, elected city councilmember and developer’s counsel. An advantageous 360° perspective.
www.mkllaw.com
christinebushyhead@mkllaw.com • 816.994.3509 Photo Credit: Tressie Gilmore
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The Missouri Municipal Review
January 2013 / 5
City Profile
CITY OF EUREKA: PROUD PAST, PROMISING FUTURE
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by Julie Wood
estled among the rolling hills and rivers of southwest St. Louis County is beautiful Eureka, Mo. Eureka is unique compared to other municipalities in St. Louis County for its retention of a small town atmosphere while still providing access to St. Louis. Beautiful local and state parks and surrounding terrain, quality schools, affordable housing and low crime are just a few of the amenities that make Eureka a great place to live, work and visit.
by fine fruit and agricultural land. The country roads to Crescent, Big River, Antire, Bald Hill, Glencoe, Allenton and History The Eureka area’s first known inhab- Clifty Creek all centered here. Eureka had itants were Shawnee Indians on the banks at that time a Catholic Chapel, a Methodist of the Meramec. Today, artifacts can be Church, a post office, a Freemasons’ Hall, found as evidence of their past occupancy three stores, a district school, two blacksmiths, a wagon maker, a saloon and a of the area. fresh air camp for poor and orphaned city The Missouri Pacific Railroad children. In 1900, the Children’s Industrial opened to Franklin (now Pacific) on July Farm began operating and later became 19, 1853. It is said that as the builders of Camp Wyman. Camp Wyman, now the railroad track came around the bend known as Wyman Center, is still operaton the east side of the present site of Euing camp programs for underprivileged reka and looked westward at the level children. land with no rocks and very little dirt to Eureka’s first high school class was move they cried out, “Eureka!," which held in 1909. Eureka’s schools over the translated from Greek means “I’ve found years have provided education to children it!” This is how Eureka received its name. from many areas including Fenton, Creve Eureka was laid out as a village in Coeur, Manchester, House Springs, Cedar 1858 by Strodt and Shands of St. Louis. Hill, Allenton, Eureka, Glencoe and othBy 1890, Eureka was a prosperous village ers. Today, the city of Eureka is served of approximately 100 homes surrounded by the award-winning Rockwood School District. A number of disasters have hit Eureka including floods, tornadoes and major fires. Such disasters led to the formation of the Eureka Volunteer Fire Department in 1945, when they constructed a firehouse and acquired equipment. In 1970, the Eureka Fire ProEureka was laid out as a village in 1858 by Strodt and Shands of St. tection District Louis. By 1890, Eureka was a prosperous village of approximately was formed and 100 homes surrounded by fine fruit and agricultural land. 6 / January 2013
The Missouri Municipal Review
now serves a 79-square-mile area. In 1972, the first ambulance was acquired by the District to serve the area made possible by citizen and community organizational efforts. In 1954, the city of Eureka was incorporated as a 4th Class city with land covering approximately 2.7 square miles. Over the years, the City has had a number of successful annexations and today is approximately 9.35 square miles. The city of Eureka’s annual budget has grown from approximately $3,400 in 1954 to more than $4 million today.
Recreation Six Flags St. Louis
Eureka is best known for being the home of Six Flags-St. Louis; 2 to 3 million persons visit annually. Six Flags, which opened June 5, 1971, was the third park to open in the chain. Fifteen other sites were considered before the organization settled on Eureka. When the park opened, it had eight rides including a Mule Go’Round. Today, the park features 36 rides in the theme park, nine of which are roller coasters, and nine rides and attractions in the water park (added in 1999). The park employs more than 3,000 persons each year. Six Flags-St. Louis is currently home to more roller coasters than any other theme park in Missouri. In 2013, the park will add a new coaster, the Boomerang. The new coaster brings a completely new intense and ferocious experience to the park; standing at 125-feet tall, this gravity defying, nerve racking, stomach crunching steel roller coaster will rocket you through a combination of thrill sensations unlike any other coaster experience at the park.
Winding Brook Estate
Eureka is home to Winding Brook Estate, Missouri’s only commercial lavender farm featuring 5,000 organically grown lavender plants and a pastoral setting that is an oasis for the soul. In high season, mid-June through July, the lavender puts on its biggest show, soothing visitors’ senses with the stirring sight of endless purple blossoms, the drone of www.mocities.com
bees and a fresh, woodsy fragrance. The blooming period slows for a while, and then, weather permitting, the plants give a repeat performance, stopping only after a hard freeze. Six times each spring and fall, Winding Brook Estate offers tea luncheons in the barn. The luncheons feature lavender in a variety of forms, with dishes such as baked apples with cinnamon and lavender caramel sauce, lavender poached pears and gorgonzola and strawberries dipped in lavender-flavored chocolate. To find out more about the lavender farm or to plan a visit, go to: http://lavender.windingbrookestate.com/. Eureka also is home to many other attractive recreation destinations: Hart Horse Farm and Jellystone Park Resort and Twin Rivers Canoe Rental, Brookdale Farm, Camp Wyman and Hidden Valley Ski Resort. Hidden Valley is wrapping up a $2 million expansion, making it the largest investment in its nearly 30-year history. After the expansion, the skiing terrain will increase by 30 percent, including the addition of a nearly 2,000-foot ski run.
City Parks
Eureka is an outdoor lover’s dream. The parks and recreation department has grown rapidly over the past few years, accomplishing many things with many more projects ahead. The department oversees and maintains more than 164 acres of park and public land that includes nine parks that feature trails, playgrounds, tennis, basketball, sand volleyball and handball courts, baseball, football and soccer fields, a stocked lake, disc golf course and a community center. An extremely unique feature at Kircher Park, located on the eastern edge of the City, is the presence of St. Louis Live Steamers (SLLS); an organization interested in the construction of model railroads. The City negotiated with SLLS to erect a track that runs small scale steam trains. The first phase of construction, in what is eventually to be a more elaborate layout, consists of a 1,000-foot main line, a reverse loop, passing sidings, a service area for locomotives and two storage/ workshop structures. Volunteers host public-run days in May through October where the community can enjoy free train rides and learn about steam railroad history and technology. The City has just commenced construction on a state-of-the-art recreation center. The 29,000-square-foot facility will consist of fitness and aerobics facilities, multi-level outdoor pool, several meet-
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ing room spaces, full kitchen and concession stand, gymnasium, babysitting rooms and house the Eureka Parks and Recreation Department. The new recreation center is certain to be a large draw for the community – completion is anticipated by late 2013. R o u t e 6 6 The new recreation center for Eureka is anticipated to be complete State Park, Rock- by late 2013. wood Reservation and St. Louis Elementary and Secondary Education, County’s Greensfelder Park are located and a “Gold Medal” rating from Expanjust outside of Eureka and provide many sion Management magazine. The District acres of trails and park land for the com- is comprised of 19 elementary schools, munity and visitors to enjoy. six middle schools, and four high schools The parks and recreation depart- (one in Eureka; Eureka High School). The ment also provides various recreational District has separate campuses for gifted, and cultural programming throughout early childhood and alternative high the year. Some of the more popular events school education. Rockwood employs and programs are Summer Concerts and more than 3,379 staff and has a graduation Movies, the annual Eureka Days Festival, rate of close to 95 percent, with a drop-out Mardi Growl Dog Parade, summer camps, rate just above 1 percent. Geggie Elemenmonthly senior luncheons and children’s tary and Blevins Elementary, both in Eureka, have been recognized as Missouri playgroups. Schools of Character with Geggie also receiving the honor as National School Award-Winning School District The city of Eureka is home to the of Character. In addition, the district has award-winning Rockwood School District. received a perfect score on the state’s “AnThe Rockwood School District has been nual Performance” report. Rockwood School District is St. awarded the “Distinction in Performance” award by the Missouri Department of Louis County’s largest public school sys-
The Missouri Municipal Review
January 2013 / 7
tem, serving more than 22,000 students. In 2012, the District celebrated the 100th anniversary of the first graduating class of Eureka High School. During the inaugural Alumni Hall of Fame Gala, the District honored the tradition of excellence that began with Eureka High School a century ago. Today, five elementary schools and two middle schools feed into Eureka High School, bringing its enrollment to more than 1,900 students. To learn more about the Rockwood School District, visit www.rockwood.k12.mo.us.
Economic Development
The city of Eureka has made a considerable investment in economic development. The City has hired a fulltime economic development director and partnered with the Eureka Chamber of Commerce to run one of four Missouri Welcome Center Affiliates in the state. The goal is to not only be a resource to travelers, but to recommend local attractions, restaurants, stores and convenience stations for them to visit before they continue on their journey. The City also has worked to update its image, adopting a new logo in 2010 and launching a more user-friendly website in 2011. The new website caters to residents and visitors alike. One unique feature is a search engine for find local businesses. This allows residents to search for goods and services easily, providing the resources to shop local at their fingertips. Eureka is making a considerable effort to maintain its lines of communication with the community. The mayor hosts multiple Town Hall meetings annually and issues a quarterly, full-color newsletter mailed to the entire Eureka zip code, highlighting community projects, public interest stories and various business updates/stories around Eureka. In addition to the quarterly newsletter, the City produces a monthly newsletter mailed with residents’ utility bills to inform citizens of board of aldermen actions, news around the City and community events. The City recently partnered with the Chamber of Commerce and fire department to put together an events line where people can call in and hear a list of events by month via telephone. Eureka also has a Twitter and Facebook page used to update followers on business specials, festivals and events around town: www.twitter.com/ EnjoyEureka and www.facebook.com/ EnjoyEureka. The City works hard to attract new businesses, adding 25 new businesses, including small business start-ups and national chains since January. Old Town 8 / January 2013
Eureka that was once home to many antique stores and specialty shops has seen a resurgence. O’Dell’s Irish Pub has opened a new business; Red Door Liquor is being erected at the location of an older building that was torn down, a new art gallery and boutique is undergoing renovation, and the Eureka Wine House is expanding. Eureka’s largest employers are Rockwood School District, Six Flags and Rotometrics. In 2010, Cenveo, a commercial printing enterprise, consolidated three facilities into one and opened a new facility in Eureka’s Industrial Park. They are enjoying their new space and expect to expand in the near future.
City Projects Water Softening
The city of Eureka manages its own water and sewer services for residents. The board of aldermen and mayor are pursuing a citywide water-softening project. This project has been a huge undertaking involving considerable engineering and a lengthy regulatory agency approval process. Eureka has five different well sites, and water-softening equipment must be installed at each site. By managing its own water and sewage operations, Eureka has been able to maintain very low and competitive rates. As a result of its softening efforts, costs will rise slightly, but remain well below those of neighboring cities.
Growing On Purpose
While many cities in St. Louis County are shrinking, Eureka has grown from 7,676 residents to 10,189 since the 2000 census. As we slowly emerge from the national economic situation, we expect steady growth to continue, particularly in the area of multi-family; primarily condos, town homes and senior living. The City has a condo project nearing completion and senior independent living development (repurposing a closed hotel) under construction. The goal will always be to ensure that new projects are beneficial to Eureka’s community with the least amount of impact to neighbors, while still maintaining reasonable growth objectives and sound property uses. The city of Eureka is committed to continuing to improve the quality of life for its residents. Investments in trails, a new recreation center and a citywide water-softening program are evidence in making Eureka the best “small town” in St. Louis County. Julie Wood is a graduate of Lindenwood University, where she earned a BA in Corporate Communication. She worked for the YMCA of Greater St. Louis in membership development for 10 years before taking on the role of director of economic development for the city of Eureka in 2010. Julie and her husband, Dr. Tracy Wood, live in Eureka with their five children. If you would like more information about the city of Eureka, please contact Julie at jwood@eureka.mo.us.
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The Missouri Municipal Review
January 2013 / 9
THE DISTINCTIVE CITY by Edward T. McMahon
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round the world, cities are seeking the recipe for economic success in a rapidly changing global marketplace. Indispensable assets in a post–industrial economy include: well–educated people, the ability to generate new ideas and to turn those ideas into commercial realities, connectivity to global markets, and multi-modal transportation infrastructure. Another critical, but often forgotten, asset is community distinctiveness. If I have learned anything from my career in urban planning, it is this: a community’s appeal drives economic prosperity. I also have learned that, while change is inevitable, the destruction of a community’s unique character and identity is not. Progress does not demand degraded surroundings. Communities can grow without destroying the things that people love. In 2010, the Knight Foundation teamed up with Gallup pollsters to survey 43,000 persons in 26 cities (where Knight-Ridder had newspapers). The so-called Soul of the Community Survey was designed to answer questions such as: What makes residents love where they live? What attracts people to a place and keeps them there? The study found that the most important factors that create emotional bonds between people and their community were not jobs and the economy, but rather “physical beauty, opportunities for socializing and a city’s openness to all people.” The Knight Foundation also found that communities with the highest levels of attachment also had
10 / January 2013
the highest rates of gross domestic product growth and the strongest economies. Place is more than just a location on a map. A sense of place is a unique collection of qualities and characteristics – visual, cultural, social and environmental – that provide meaning to a location. Sense of place is what makes one city or town different from another, but sense of place also is what makes our physical surroundings worth caring about. Author Wallace Stegner once said, “If you don’t know where you are, you don’t know who you are.” We all need points of reference and orientation. A community’s unique identity provides that orientation, while also adding economic and social value. To foster distinctiveness, cities must plan for built environments and settlement patterns that are both uplifting and memorable and that foster a sense of belonging and stewardship by residents. Planners spend most of their time focusing on numbers – the number of units per acre, the number of cars per hour, the number of floors per building. In the future, they will need to spend more time thinking about the values, customs, characteristics and quirks that make a place worth caring about. Unfortunately, many communities are suffering the social and economic consequences of losing their distinctiveness. When it comes to 21st century economic development, a key concept is community differentiation. If you can’t differentiate your community from any other, you have no competitive advantage.
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Capital is footloose in a global economy. Natural resources, highway access, locations along a river or rail line have all become less important. Education, technology, connectivity and distinctiveness have all become more important. Joseph Cortright, a leading economic development authority and president and chief economist of Impresa, a consulting firm specializing in regional economic analysis, says that “the unique characteristics of place may be the only truly defensible source of competitive advantage for communities.” Likewise, Richard Florida, author of The Rise of the Creative Class says, “How people think of a place is less tangible, but more important than just about anything else.” Unfortunately, the subtle differences between places are disappearing. Today, if you were suddenly dropped along a road outside of most American cities or towns, you wouldn’t have the slightest idea where you were because it all looks the same, including the building materials, the architectural styles, the chain stores and the outdoor advertising. Technology and the global economy make it easy for building plans drawn up at a corporate office in New Jersey to be applied over and over again in Portland, Phoenix, Philadelphia or a thousand other communities. Over the past 50 years, many of the world’s cityscapes and townscapes have gone from the unique to the uniform, from the stylized to the standardized. In recent months, there have been several surveys published, such as Zipcar’s “Future Metropolis Index” and Fast Company’s “Most Innovative
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Cities” list, ranking cities based on sustainability, innovation and efficiency. Some of the factors that were evaluated included the number of green buildings, the percentage of hybrid cars and the number of patents issued. These are all important, but sustainability is about more than new technologies. At its most basic, “sustainable” means enduring. A sustainable community is a place of enduring value. Doug Kelbaugh, the dean of the University of Michigan School of Architecture, put it this way, “If a building, a landscape or a city is not beautiful, it will not be loved; if it is not loved, it won’t be maintained and improved. In short, it won’t be sustained.” Distinctiveness involves streetscapes, architecture and historic preservation but as Cortright points out, it also involves cultural events and facilities, restaurants and food, parks and open space and many other factors. “Keep Austin Weird” is more than a slogan; it is a recipe for economic success. A distinctive city is a city that the young and well-educated want to live in, that boomers want to retire to, and most certainly a city that people want to visit. www.mocities.com
According to The World Bank and the World Travel and Tourism Council, tourism is the largest industry in the world. Tourism is about visiting places that are different, unusual and unique. The more one city comes to look and feel just like every other city, the less reason there is to visit. On the other hand, the more a city does to enhance its uniqueness, whether that is cultural, natural or architectural, the more people will want to visit. It is no accident that Paris – a city that looks and feels different - gets 27 million visitors per year, more than any city on the planet, according to Lonely Planet. Arthur Frommer, one of the world’s leading travel experts and founder of the well-known travel guide company, says that among cities and towns with no recreational appeal, those that preserve their past continue to enjoy tourism. Those that haven’t, receive almost no tourism at all. Frommer has been quoted as saying, “Tourists simply won’t go to a city that has lost its soul.” In the future, planners will have to help communities adapt to change while maintaining or enhancing the The Missouri Municipal Review
things that they value most. Lyman Orton, the principal of the Orton Family Foundation, a philanthropic organization that supports community development, calls this “heart and soul planning.” It is both a process and a philosophy. The process seeks to engage as many people as possible in community decision making. The philosophy recognizes that special places, characteristics and customs have value. Given all this, I believe that one of the big questions for cities in the future will be: Do you want the character of your city to shape the new development, or do you want the new development to shape the character of the city? Edward t. McMahon holds the Charles E. Fraser Chair on Sustainable Development at the Urban Land Institute in Washington, D.C. This article is a reprint from unbanland.uli.org, Issue April 2012.
January 2013 / 11
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hen it comes to development, the city of Perryville has taken a proactive approach. The community’s population is home to more than 8,000 persons. Although it is a smaller municipality, it has been recognized at the state and national level for its ability to attract successful development and industry to the area, offer training to sustain a qualified work force and secure stable community jobs. Major employers include Gilster-Mary Lee, TG Missouri and Saberliner, while a number of local businesses are multi-generational. One of the community’s success stories is the establishment of the Perryville Development Corporation, an organization credited with a strong role in bringing new industry to the community during a low period of employment. Recent development strengths are further highlighted in a recent Forbes magazine article, featured on the City’s homepage at www.cityofperryville.com. Below, city leaders share how Perryville has weathered the economic recession and maintain continued growth and development. Mayor Debbie Gahan, City Administrator Brent Buerck, and Economic Development Authority Executive Director Scott Sattler all offer insight. Q: What is the City’s philosophy when it comes to development in Perryville?
Gahan: I think we’re very proactive in our approach to both expansions and retaining our established industries, as well as in recruitment of new businesses. It is our hope that we can entice some ancillary industries that can supply and support our existing ones. Sattler: The City uses all the economic development tools available to a city including establishing tax increment financing districts in both the downtown and future development areas. It also has used chapter 100 bonds to help companies expand. Buerck: We have been blessed with an incredibly strong manufacturing base. We are trying to shift our focus to more technical jobs that would allow our children to return home after college, and seeing success with this. For example, Bank of Missouri recently located their statewide datacenter here and Citizens Electric Cooperative is in the process of building a new headquarters in the city of Perryville.
Q: What are the main factors that led to the establishment of the Perryville Development Corporation (PDC) and how does the corporation function?
Buerck: In 1954, some local business people were concerned that our entire local economy essentially hinged on a single industry. The PDC was created as an offshoot of the Chamber of Commerce with the goal of attracting new businesses. It is thought to have been one of the first such organizations in the country. It was originally a for-profit corporation, having sold 20,000 shares of stock at $10. This would help fund the purchase and development of industrial property. Some years later, the PDC saw the wisdom in converting to a not-for-profit organization, convinced community success was more important than individual investor profit. A successful partnership with Gilster-Mary Lee would ensure the PDC’s economic viability for years to come. Shareholders annually elect the PDC’s Board of Directors who, in turn, oversees the operations of the corporation. There is no paid staff, although the Chamber receives a small stipend for staff support.
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Q: What do you feel are
the main strengths in your community?
Gahan: I think our community has a very strong work ethic, in part due to our heritage that goes a long way to defining our workforce. We try to identify the needs of our businesses and support them with career and higher education programs. We have a wonderful collaborative relationship
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with our local schools and our Career Center, Perryville Area Higher Education Center, county officials, our Economic Development Agency, the Southeast Missouri Regional Planning Commission and the Perryville Development Corporation. Our lines of communication are always open to each other, and we are receptive to new ideas and concepts. We have a wonderful working relationship with all levels of government. Sattler: I feel that the long-standing public/private partnerships, the Perryville Development Corporation efforts and the local government’s willingness to invest in the infrastructure, foundation and marketing helped Perryville be prepared when the opportunities arose. The great base of employees skilled with mechanical and craft skills are essentials to manufacturing competency. In addition, the ethic to work productively has made our community conducive to manufacturing success.
Q: What other economic development initiatives would you like to see in Perryville?
Buerck: Some major goals are increased housing and more of the “next-level” jobs, allowing our college students to return to Perryville after school.
Q: What would you recommend to a community looking for new ways to attract businesses?
Sattler: Establishing public/private partnerships that look at where your community is today and where you want to be in the future. Then develop a plan to invest in the infrastructure to work towards those goals. Gahan: Attention to detail, no matter how small, in everything. Whether it is collaboration, communication, relationships, new ideas, technology, appearance, a positive approach is always the right direction. We will always go the extra mile to see how something might work, rather than say out of hand that it won’t. I know that sounds basic, but it is the foundation on which we have been built.
The Perryville Development Corporation is a 501(c) 3 corporation that is a subcommittee of the Perryville Chamber of Commerce. You must own shares to be a voting member of the corporation. •
In the 1950s, a group of local citizens donated their own money and formed the PDC to promote industrial growth. They purchased land for an industrial park and paid for the cost of attracting industry to the community that has kept the area’s unemployment well below average.
•
The owners of the PDC later gave up any right to personal gain by converting the organization to a not-for-profit corporation, leaving the gains realized from wise investments of the money in the new organization.
•
The PDC pledged $400,000 to help convert the St. Mary’s Seminary building to a higher education center providing the types of classes necessary to train and develop the local workforce needed to help industry grow.
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The City and the County have pledged additional funds to help with this project in order to raise the level of opportunity for everyone in Perry County.
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Visit www.cityofperryville.com to read the City's feature in Forbes magazine.
The Missouri Municipal Review
January 2013 / 13
A 1980s FORMULA FOR ECONOMIC DEVELOPMENT STILL SUCCESSFUL TODAY MAIN STREET® REVITALIZATION PLANNING + PRESERVATION + VOLUNTEERS = JOBS
O
by Gayla Roten , Jeanine Rann and Joe Lauber
n more t h a n one occasion, you m ay h ave fou nd you r s el f v i s i t i n g o r e ve n j u s t travelling through a small town or urban enclave that impressed you as an idyllic scene of true Americana right here in the heartland. Perhaps you live or work in one of these communities, and if so, good for you! We hope that you continue to cherish and protect it for future generations to enjoy. U n f o r t u n a t e l y, these Rockwellian scenes are becoming scarcer in our landscape. After the Washington, Mo., Main Street 2010 Census reports were published, one report pessimistically What Is Main Street®? stated that “rural America now accounts The purpose of local and for just 16 percent of t he nat ion’s statewide Main Street ® programs is population, the lowest ever. The latest to ensure the long-term success of 2010 census numbers hint at an emerging downtowns by supporting, educating, America where, by midcentury, city training and empowering revitalization boundaries become indistinct and rural organizations that are comprehensive, areas grow ever less relevant. Many professional and volunteer-based. Since communities could shrink to virtual ghost 1980, the Main Street ® method has towns as they shutter businesses and close undergone a few tweaks. Flexibility down schools, demographers say.”1 exists for each community practicing Despite gloomy prognostications the Main Street Approach® to annually such as this, in true Midwestern spirit, adjust its development plans to meet many communities have found a way to c u r rent c h a l lenge s i n t he m a rke t. create beautiful places that retain young However, the foundation remains the and old alike while attracting interesting same: Working the plan with volunteers businesses. But how are they doing this? wh o o p e r a t e o n f o u r p e r m a n e n t Entrepreneurs are often “lone wolves” committees – organization, promotion, pouring all of their energy into their design and economic restructuring – personal projects, which can lead to all based on preservation of historic fractured or disorganized commercial structures, adaptive re-use, and the areas when viewed as a whole. Like the p r e s e r vat ion o f lo c a l c om mu n it y wolf, it is important to remember that the culture. The Main Street ® program in pack provides strength, and the whole can Missouri is coordinated by the Missouri be greater than the sum of its parts. One Main Street Connection (MMSC). tool that has shown decades of success in organizing our local merchants into a Missouri’s Main Street Success cohesive group focused on preservation Stories of our great places and creating vibrant Although Main Street® is a national business districts is the National Trust program, we have some rather impressive for Historic Preservation’s Main Street® success stories right here in Missouri. program. Efforts undertaken in Lee’s Summit, 14 / January 2013
The Missouri Municipal Review
Wa s h i n g t o n a n d Cape Girardeau are indicative of the success that can be enjoyed by utilizing this program. Lee’s Summit has enjoyed more than $40 million of private and public investment in just the past 10 years a nd boasts on ly a five percent vacancy rate in the downtown district, which is a stark contrast to the doubledigit vacancy rates that persisted 20 years ago when the community adopted t he Ma i n Street Approach®. Washington has successfully taken on such projects as saving their historic post office building and postal services – a key anchor in their downtown. Since Washington began using Main Street ® as a preservation and economic development method in 1989, its downtown has seen $48,203,000 in private investment, $28,370,000 in public investment, 41 historic buildings rehabilitated, eight new buildi ngs constructed, 22 new housing units created in re-purposed historic buildings, 56 net new businesses and 383 net new jobs. And, as if those statistics are not impressive enough, Washington and Lee’s Summit have both won recognition by the National Trust Main Street Center, earning the Great American Main Street Award® for excellence in implementing t h e c o m p r e h e n s i ve, i n c r e m e n t a l methodology to revitalize their historic business districts. On a smaller scale, Cape Girardeau recently collected data on a Historic Preservation Tax Credit project, one of many ongoing in that community. The rehabilitation project for the 15 N. Main Street building incurred over $230,000 in expenses for the private owners. Of that amount, $212,000 was eligible for the 25 percent state HP tax credits (translating to $53,000 in credits). The economic impact of this project is evidence of the Main www.mocities.com
big-city ExpEriEncE. small-town valuEs.
816-525-7881 jlaubEr@laubErmunicipal.com www.laubErmunicipallaw.com
The choice of a lawyer is an important decision and should not be based solely on advertisements.
Street® success in Cape Girardeau: • Increase in employment from five persons to 30 in 5,000 square feet of rehabilitated commercial space. • Went from paying $2,000 per month in sales tax to $8,000 - $10,000 per month in sales tax. Generating approximately $3,600 more per mont h i n loc al sales ta x; a nd approximately $4,400 more per month in state sales tax. • Property tax revenue to county will increase. (Value of the building went from $225,000 to $370,000 immediately after rehabilitation.) • Increased propert y values for neighboring properties. • State income tax will be generated on 30 jobs instead of five. • Once considered an eyesore, this building has been transformed into a marketable and attractive source of inspiration for other building owners in the area to address their own needs. Wh ile di fferi ng i n size, demographics and local culture, each of the communities we offer as examples have one thing in common – a large base of volunteers. What makes them sparkle? www.mocities.com
Why are they willing to spend so much energy, time and other personal resources on revitalization work? Their homes, families, livelihood and their hearts are all engaged in the community. They have already “bought into” the local history, culture and traditions that make their town unique, and they have a stake in keeping it that way.
How (And Why) Does Main Street Work?
Historic commercial districts in small towns as well as urban districts are worth preserving for the inherent value they hold in the hearts and minds of people who live there and nearby.
Because these historic downtowns often do not have all the features that make for success in newer, planned shopping developments – immediate major highway access, proximity to affluent suburban households and unified management – they have failed to compete and are in decline. There are however, ways for traditional downtowns to be competitive and to regain some of their economic vitality. A comprehensive strategy for revitalizing is behind the philosophy of the Main Street Four-Point Approach®. Using this approach, MMSC, in partnership with the Missouri Department of Econom ic Development and the National Trust Main Street Center, offers
Economic Impact Since Missouri Main Street Connection Began Gathering Data From The Nine Accredited Missouri Main Street Communities in 2003: Private dollars invested in downtown buildings
$948,670,280
Public dollars invested in downtown infrastructure
$104,886,276
Net new businesses
395
Net new jobs
1,921
The Missouri Municipal Review
January 2013 / 15
Downtown Lee's Summit, Mo.
training in workshops and conferences, plus mentoring directly to Missouri communities. The movement in Missouri has gained significant momentum in recent years since the program began in 1989 with six pilot communities, expanding to 29 designated Main Street® participants this year. Another 118 communities have attended Missouri Main Street® workshops and conferences in recent years. Main Street ® advocates a return to com mu n it y s el f-r el i a nce, lo c a l empowerment, and the rebuilding of traditional commercial districts based on their unique assets – distinctive arch itect ure, a pedest rian-friendly environment, personal service, local ownership and a sense of community. It is a comprehensive strategy tailored to meet local needs and opportunities. The Main Street Approach is succeeding in communities of all sizes. Nearly 2,000 communities in the United States, both urban and rural in 43 states, are implementing the Main Street Four-Point Approach®. T h e M a i n St r e e t ® me t ho d i s incremental; it is not designed to produce immediate change. Because they often fail to address the underlying causes of commercial district decline, expensive improvements, such as pedestrian malls or sports arenas, do not always generate the desired economic results. To succeed, a long-term revitalization effort requires careful attention to every aspect of downtown, a process that takes time, skilled leadership and local capacity building. C i n d y M i l l e r, p r e s i d e n t o f Downtown Alive! Blue Springs, recently 16 / January 2013
commented on the training provided to their community as an Affiliate Grant recipient. “Thanks to the training and assistance the Missouri Main Street Program has given to our Downtown Alive group, we are implementing a comprehensive approach to downtown revitalization following the Four-Point Plan,” said Miller. "MMSC helped us host a downtown meeting to get citizen and business feedback, and helped Downtown Alive gauge community support. From there, we have formed our four groups, developed our work plans, enlisted volunteers and we are raising funds. We have been successful thanks to MMSC’s ground-up approach to revitalization.”
Are There Funds Available For Undertaking This Program?
Missouri Main Street Connection is not a direct source of funds. However, M M S C p r ov id e s “ b e s t p r a c t i c e s” in educating and engaging community leaders who are learning to establish successful revitalization programs and preserving Missouri com munities. All MMSC services are customized to fit the needs and r e s ou r ce s of t he c om mu n it y, a n d are designed to help Cape Girardeau, Mo. local revitalization participants learn The Missouri Municipal Review
a nd i mplement releva nt tools a nd techniques to address all aspects of commercial district revitalization. MMSC provides in-kind services for communities who are able to provide a certain level of matching funds for the program. While funding for these programs occasionally was provided or subsidized by local governments, these tight economic times have created a need for sustainable funding for downtown organizations all over the country. Here in Missouri, cities and their downtown organizations are increasingly looking to the establishment of community improvement districts to provide a source of funds for this purpose. These special purpose districts are authorized in Sections 67.1401 to 67.1571, RSMo. Community improvement dist ricts (CIDs), are empowered to provide funding for a wide variety of public improvements that are perfect for the needs of a downtown organization, i ncludi ng st reetscape, or n a ment a l lighting and benches. Additionally, CIDs can fund services like the promotion of tourism, recreational and cultural act ivit ies i n t he dist rict; CIDs a re authorized to promote business activity and economic development, including the recruitment and retention of developers and businesses; and can contract for economic, planning or marketing studies. CIDs are formed as political subdivisions or not-for-profit businesses. Political subdivision CIDs are authorized to impose sales taxes (up to one percent) or property taxes, in addition to special assessments and user fees. As a n exa mple of how t he s e economic development tools can be used, the city of Branson and Downtown Branson Main Street Association worked
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together to establish a CID to provide funding for a trolley program to shuttle shoppers between the City’s historic shoppi ng dist rict and the Branson Landing shopping and convention area. CIDs are currently being considered in Excelsior Springs, Cape Girardeau and Lee’s Summit, just to name a few.
The Final Word
Li ke ma ny ot her Ma i n St reet communities in Missouri, Cape Girardeau, Lee’s Summit and Washington have developed a successful revitalization program, in some cases over a period of 25 years, and they know that downtown revitalization happens again and again. It’s a steady progression, not a project. It’s a task that is never finished. That’s the nature of preservation-based economic development. It’s a relay race that goes on and on, with dedicated volunteers. To b e s u r e, t h e e nt hu s i a s t ic cooperation of city government is essential for the day-to-day revitalization work to continue and sustain success. Both public and private sectors have a vital interest in downtown. Each has a role and must understand the other’s strengths and limitations. Working together, the public and private sectors can marshal
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complementary resources to create successful economic strategies. Whether from a public or private background, from elected officials and city staff to shopkeepers up and down Main Street, the Main Street Approach® to revitalization i s ba s ed on volu nte er leadersh ip, and recognizes that revitalization is masterminded by ordinary people who accomplish extraordinary results. (Endnotes) 1 Rural US Disappearing? Population
Share Hits Low, by Hope Yen, Associated Press, July 28, 2011. For more in formation about the Missouri Main Street Connection and the local Main Street programs it mentors, contact Gayla Roten, 417-334-3014, glroten@ momainstreet.org, or visit http://www. momainstreet.org/.
Jeanine Rann, community development coordinator for Missouri Main Street Connection. She has been working to revitalize downtowns for 20 years as executive director for Downtown Lee’s Summit Main Street, Inc., Warrensburg Main Street and the DDA for Grand Haven, MI. Jeanine earned her degree in Public Relations and is certified as Main Street Manager. Contact jrann@momainstreet.org. Joe Lauber has dedicated his entire career to the practice of municipal law on behalf of public entities. In 2010, he established Lauber Municipal Law, LLC, after years of practice representing public entities at larger firms in the Kansas City area. Joe has experience representing municipalities statewide regarding a wide variety of economic development tools and is a regular speaker, author, and contributor for MML. He can be reached at 816-525-7881 or jlauber@laubermunicipal.com.
Gayla Roten, state director for Missouri Main Street Connection. Gayla has 20 years of expertise in downtown revitalization and the Main Street 4 Point Approach®. Gayla’s expertise includes organizational development, board and committee development, strategic planning, business development, fundraising strategies, marketing, grant writing and establishment of taxing districts. She has administered and raised funds from state, federal and foundation grant programs. Contact Gayla at glroten@momainstreet.org.
The Missouri Municipal Review
January 2013 / 17
PUBLIC-PRIVATE PARTNERSHIPS: TEAMWORK DIVIDES THE TASKS AND MULTIPLIES THE SUCCESSES by Charles Renner
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ddressing aging public infrastructure, encouraging private development, and responding to the needs created by population growth are priorities for many communities across Missouri. In each case, the challenges of tackling these objectives are too burdensome for any one funding source to undertake. And, in the current economic environment, community needs are growing as the resources to address them become more difficult to find. However, Missouri’s municipalities can clear this hurdle by participating in publicprivate partnership developments. The formation of integrated public-private partnerships can become the catalyst for achieving multiple objectives that leverage the contributions of each partner in a way that magnifies the results and sheds some of the limits imposed by constrained resources. Additionally, as the private sector looks for ways to reverse the impact of the most significant economic downturn since the Great Depression, the development community may find itself considering opportunities that cannot be seized through conventional debt and equity financing. Private developers are seeking new ways to leverage the costs and risks of raising real property to its highest and best use, but finding options is difficult. The lending community also seeks to find ways to change the title of distressed property from “bank owned” to “development under way.” In short, municipalities, developers and lenders all face different specific hurdles and, left to their own means, these hurdles can be too burdensome to clear. However, despite the challenges, municipalities and the private sector are concluding that the alternatives to taking action would be detrimental to long-term outcomes. It is in this circumstance that public-private partnerships, coupled with a productive combination of Missouri’s economic development tools, can serve as the preferred mechanism to get things done. 18 / January 2013
Generally, a public-private partnership can comprise a real estate development-related undertaking that includes a contractual arrangement between a governmental entity (federal, state or local) and a private sector developer that leverages their joint resources in order to accomplish an identified public benefit. On a small scale, publicprivate partnerships have been present in the economic development world for quite some time. Whether it is the formation of a transportation development district to increase signalization near a new retail project, or the implementation of a detailed maintenance agreement for a suburban residential development in order to enhance publically-owned amenities, the inclusion of a public-private partnership tends to magnify positive results. When the objectives become larger, leveraging a public-private partnership becomes all the more significant. One recent demonstration of the benefits of a public-private partnership occurred in Grain Valley, Missouri. Located just off of Interstate 70, approximately 25 miles east of Kansas City, Grain Valley is a city with rapid population growth and an anticipated demand for improved public infrastructure. The 2010 census figures revealed Grain Valley to have just under 13,000 residents, which is 149 percent of the 2000 census population. While modest in number, that rate of growth indicates the growing pressure on, among other things, the transportation infrastructure servicing the community. During the same time period that Grain Valley’s population was growing, the state of Missouri concluded that the Interstate 70 Interchange into Grain Valley, the City’s main access route, was in need of a significant upgrade. This conclusion led to an initial agreement between Missouri and Grain Valley, whereby the state would participate in the funding and construction of the interchange upgrade and related road improvements, as long as the City participated as well. The total cost of this project was estimated to be about $18.2 million, The Missouri Municipal Review
with the state contributing a little under $10.7 million towards that cost. Grain Valley was left to fund the remaining $7.5 million within a defined period of time. With a tax base of less than 13,000 persons, $7.5 million represents 61 percent of the City’s annual budget. In other words, a significant opportunity also had brought with it a significant challenge. At the same time, the City connected with a developer with an interest in undertaking a retail project on one of the four corners of land along the interchange. The possibilities generated by a new commercial development, including a top-tier movie theater and 60,000 square feet of new retail space, in this small community were apparent and exciting. What was less apparent, however, was how to bridge a nearly $9 million project cost gap in order to see this proposed development take place. Taken as individual challenges, it is possible to imagine a scenario where the developer would seek approval of economic development tool financing from the City, while the City was separately seeking to extract $7.5 million from its own budget for the interchange project. Recognizing these separate problems and a joint opportunity, Grain Valley’s leadership initiated a detailed public-private partnership with a developer that used several economic development tools and leveraged joint resources to significantly reduce the gaps facing both projects. This particular partnership included the use of a community improvement district (CID); a neighborhood improvement district (NID); an area-wide tax increment financing plan (TIF); and more traditional resources from both the City and the developer. The results provided the City with an anticipated revenue stream for $6.1 million of its $7.5 million obligation, including a significant upfront amount paid by the developer through special assessments on his property. And, the developer, whose project costs were increased by this program, saw the financing/equity gap closed by the use of economic development incentives www.mocities.com
approved by the City. On the development side, the first economic development tool engaged was tax increment financing. The TIF plan that captured 50 percent of all new sales tax revenue generated by the development, Economic Activity Taxes (EATS), along with incremental property tax revenue, came close to filling the private finance/equity gap necessary to support the commercial development, but didn’t quite make ends meet. The sales tax revenue that the development project would generate for the City was seen as a partial funding source for the interchange cost. However, in order to further shrink the City’s funding gap, a more sophisticated public-private partnership structure was designed. The developer agreed to the issuance of bonds through the use of an NID. The NID funded some public improvement costs on the development site. More significantly, the NID also funded $1.5 million of the City’s obligations under the interchange project contribution requirements. Bonds issued under Missouri’s NID statute are paid for by an annual special assessment levied against real property identified in a petition forming the NID. In this case, the only property subject to the NID special assessment was the developer’s property. In other words, the developer agreed to make annual payments to be converted into funds for the City’s portion of the interchange project. Next, the developer and the City agreed to form a CID over the development site and included authorization for a site-specific sales tax in the petition to form the CID. This served two added purposes. First, half of the new CID sales tax revenue was used by the CID to fund public improvements within the development area. Second, the remaining half of the CID sales tax revenue was captured as EATS under the TIF plan. The use of a CID sales tax within a TIF plan increases the available TIF revenue and reduces the burden on other local sales taxes affected by that same TIF plan (city and county sales taxes, for example). A CID also distributes representation between the City and the developer that further cements the public-private partnership nature of these combined undertakings. Finally, while the TIF plan on the development site brought with it a significant contribution toward both the developer’s costs and the City’s road program, a comparatively modest gap for the City still remained (The www.mocities.com
Development Site is area 2 Figure 1). A total $1.4 million of the original $7.5 million had not yet been addressed (see summary on Figure 2). The commercial project and interchange program would likely combine to stimulate further development within the other three corners of the area (see depiction below). Accordingly, the City expanded the TIF area to include all four corners of land surrounding the interchange location with the expectation that, as those remaining areas develop, they would have done so partly due to the current public-private partnership and the City would then be able to receive further economic participation from future development connected to the current work.
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1
2
4
These efforts in Grain Valley, and in numerous other municipalities elsewhere throughout Missouri, demonstrate the creativity and resource leveraging that is possible with the formation of public-private partnerships. Missouri provides a number of economic development tools that, when used proactively, can serve to facilitate development and assist municipalities as they work to answer the demands of demographic changes and aging public infrastructure. The collaboration of attorneys, versed in the use of these tools, along with financial and development professionals, can assist in creating opportunities to resolve today’s growth challenges. As many communities further their plans on how best to emerge from the economic conditions of the last several years, the municipalities that make the most of opportunities with private developers and economic development experts will likely be the jurisdictions that attract more private development. And, with the innovation derived from public-private partnerships, leveraged resources can demonstrate the versatility of the current menu of economic development tools found within Missouri. Charles Renner is a partner in Husch Blackwell’s Real Estate Department. He represents developers, business clients and numerous commercial and retail proprietors in the use of public financing tools.
Figure 1
Figure 2
The Missouri Municipal Review
January 2013 / 19
EVALUATING RISK: A CITY’S GUIDE TO ANALYZING A REQUEST FOR ECONOMIC DEVELOPMENT INCENTIVES by Mark Spykerman
“The man who goes the farthest is generally the one who is willing to do and dare." – Dale Carnegie “Risk comes from not knowing what you’re doing."
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hen considering the use of economic development i n c e n t i v e s , developers generally prefer that municipalities take Mr. Carnegie’s advice to heart. Developers will often promise job creation, new development and additional tax revenue to those municipalities willing to offer economic development incentives. Municipalities, however, are best served by following Mr. Buffet’s advice. Limiting risk is directly correlated to knowing what you are doing. When dealing with economic development incentives, evaluating and limiting risk requires municipalities to do their due diligence on (1) the capabilities of the developer, (2) the expected financial performance of the project, and (3) how the requested economic development incentives will work. Only then will they have a thorough understanding of the risks and prospective benefits of providing any requested economic development incentives. The types of risks that municipalities face are somewhat different than the risks faced by developers. While both developers and municipalities face financial risks, municipalities also face heightened political risks. Moreover, elected officials risk losing bids for re-election (or even facing recall movements) if the use of an economic development incentive proves unsuccessful or unpopular.
Financial Risks
Municipalities face financial risks related to economic development incentives regardless of whether or not a project proves successful. If a project 20 / January 2013
– Warren Buffet
is unsuccessful, any resources applied to such project will be wasted. These resources can include direct monetary contributions to a project, funding certain infrastructure improvements that would only be needed if the proposed project is successful or promises to pay project-related debt if other revenues are insufficient. Additionally, if tax abatement or tax increment financing were offered to incentivize an ultimately unsuccessful project, tax revenues that would otherwise be used to support public services are instead abated or redirected for the developer’s benefit without the municipality receiving a significant return on its investment. Even if a project is successful, the municipality is still taking a risk that the economic development incentives offered were not necessary for the project to succeed. Evaluating these risks before approval of economic development incentives is a challenge, but not an impossibility. First, a municipality should research a prospective developer. Two key considerations are whether or not a developer (1) has the financial capability to complete the proposed project and (2) has experience successfully developing and operating similar projects. Clearly, a municipality does not want to commit resources to a project that might never get completed. Nor should a prudent municipality risk its resources on a developer that does not have a track record of executing successful projects. Second, a municipality should have an accurate understanding of the expected financial performance of the project. Key considerations for this topic include reviewing revenue projections to determine if they are The Missouri Municipal Review
based on reasonable assumptions and if the requested economic development incentive is actually necessary to make the project financially feasible. Projections based on unreasonable assumptions (such as projections of retail sales that are above what can be reasonably expected) will lead to unfulfilled expectations and, depending on the structure of the economic development incentives, could lead a municipality to unknowingly commit to provide additional support to a struggling project. Accordingly, municipal officials should understand why such assumptions were made and what data supports the assumptions. A municipality also may want to have an experienced consultant review the assumptions on their behalf. Municipalities also should require sufficient information from the developer to determine if the proposed project is feasible with or without the requested incentives.1 Such information can then be used to determine if the requested incentive is necessary for the project to be profitable to the developer. Finally, municipalities need to ensure they have a full understanding of how the requested economic development incentives work. Municipal officials need to understand the legal requirements to implement a specific incentive, the sources that will fund the incentive and the restrictions on the use of such incentive. Legal prerequisites for the use of specific economic development incentives can vary significantly. The implementation of some incentives, such as certain forms of tax abatement2 or tax increment financing3, may require a blight finding. The use of tax increment financing requires a municipality to form a tax increment www.mocities.com
Rock. Hard place. financing commission to review the proposed incentive prior to its approval by the municipality’s governing body. 4 Community improvement districts5 and transportation development districts 6 require the creation of a new political subdivision that the municipality may or may not have control over. The funding sources for economic development incentives also varies. Economic development incentives are funded by three basic sources: (1) abating taxes that would otherwise be due, (2) redirecting revenues from existing taxes to pay project-related expenses and (3) levying new taxes and using those revenues to pay project-related expenses. Each of these sources present different risks. Evaluation of a proposed economic development incentive also requires an understanding of what projectrelated expenses the incentive will fund. Almost all economic development incentives limit what type of expenses that can be paid from the incentive. Moreover, the Missouri Constitution has restrictions against lending public credit or using public money for private purposes.7 Seeking legal advice may be necessary.
Political Risks
Almost all projects seeking economic development incentives have a physical impact on the municipality. For local residents, very few things are more of a stark reminder of an unsuccessful use of economic development incentives than driving by the halfcomplete or vacant shell of a building that was once touted as a glorious example of a public-private partnership. Such physical reminders often come with unwelcome media coverage and can cost the municipality credibility when it tries to sell another project to the public (conversely, successful www.mocities.com
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projects can remind residents that their elected officials are doing a great job). Evaluation of political risks, just like financial risks, requires the municipality to understand (1) the capabilities of the developer, (2) the expected financial performance of the project and (3) how the requested economic development incentives will work. Making sure a quality developer is involved is very important. Reputation and experience can be easily gauged from reviewing the developer’s past projects and talking to officials in other municipalities where the developer may have recently completed a project. A developer with a good reputation, relevant experience and the financial capability is more likely to see a project through to success. However, a municipality is likely to share in the blame for an unprepared developer’s failure. Municipalities also need a good understanding of the project finances and how the proposed incentives work so that they can avoid bad projects and negotiate the efficient use of incentives on worthwhile projects. Municipalities also need to be able to explain why a project warrants incentives and how those incentives work to the public, other affected taxing districts and the media; otherwise, they risk losing credibility and strained relationships with other taxing districts. Throughout Missouri there are countless examples of projects that succeeded because of the use of economic development incentives. One benefit from this history of successful projects is that municipalities can learn how best to identify projects that present less risks that are likely to succeed. Common sense and good judgment are two attributes that cannot be understated, but municipalities also may want to seek advice from attorneys or other conThe Missouri Municipal Review
sultants early in the process to ensure nothing is overlooked when evaluating potential risks. Mark Spykerman is an attorney with Gilmore & Bell, P.C. Mr. Spykerman’s practice focuses on representing municipal clients in the consideration and implementation of economic development incentives. He can be reached at 314-4361000 or mspykerman@gilmorebell.com.
(Endnotes) 1 Section 99.810 of the Revised Statutes of Missouri requires, as part of the tax increment financing approval process, that a municipality make a finding that the redevelopment area would not reasonably be anticipated to be developed without the use of tax increment financing. While such a finding is not legally required for the implementation of other types of economic development incentives, prudent municipalities should still consider whether a project could succeed without the requested economic development incentive. 2 For example, real property tax abatement under Chapter 353 of the Revised Statutes of Missouri requires the municipality’s governing body to find that the proposed redevelopment area is a “Blighted area” as defined in the statute. 3 See Section 99.810 of the Revised Statutes of Missouri. 4 See Section 99.820 of the Revised Statutes of Missouri. 5 See Sections 67.1401 to 67.1571 of the Revised Statutes of Missouri. 6 See Sections 238.200 to 238.280 of the Revised Statutes of Missouri. 7 Article 6, Section 23 of the Missouri Constitution.
January 2013 / 21
GRANDVIEW CELEBRATES ITS CENTENNIAL, BUILDS FOR NEXT 100 YEARS by Ana Nixon and Dennis Randolph
People make communities. But communities also are made of the buildings and infrastructure people use to live. As time passes and people come and go, the buildings and infrastructure, both public and private, act as the medium through which a community and its shape are passed on. Even the best infrastructure wears out and needs replacement. New people with new ideas and needs come to a community and want to place their mark in the present and the future. Often the transition from old to new is difficult for a community. The city of Grandview has survived this transition. As it celebrates its 100th anniversary as a city, it is entering its next century remembering and revitalizing the important features of the past. Just as important, Grandview is shaping itself with new ideas for future generations of citizens.
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r a n d v i e w b e g a n a s That’s the name. Let’s name the town town located right next to Grandview a m o d e s t f a r m i n g Grandview.” And so the town finally City Hall bordering Freedom Park. c o m m u n i t y c a l l e d got its name, and a post office was By this time, Grandview’s Main A n d e r s o n Street was bustling with a hotel, District, in honor of John restaurant, grocery and dry Anderson, the owner of the only goods store, a hardware store, general store in the area. In the drugstore and a blacksmith shop. late 1800s, farmers and other The first grade school was located residents were unhappy with alongside Main Street, as was the having to pick up mail at the post first church. It also was on Main office in a neighboring town, a Street that the first community full day’s trip away. They wanted Labor Day celebration took place. their blossoming area to have Labor Day celebrations also its own post office. Before they attracted people from neighboring could ask for one, they needed towns as well. All would gathered to choose a name for the town. on Main Street to watch turtle races and take part in potato races. There were several suggestions, but none seemed For most of the first half to fit. One day, John Anderson of the 20th century, this small, called a couple of friends (one Grandview's original depot remains in town next to City rural village remained surrounded of them was President Truman’s Hall and bordering Freedom Park. by gentle, rolling farmland. One maternal grandfather) out onto of the more prominent farms in the steps of his general store. Pointing conveniently placed in John Anderson’s the area was that of Solomon Young. out over the landscape, he declared to store on Fifth and Main Street. Young’s grandson, Harry S Truman, In February 1912, Grandview the future 33rd President of the United his friends, “Isn’t that a grand view?” One of the men replied, “That’s it! w a s o f f i c i a l l y i n c o r p o r a t e d i n t o States, spent much of his early adult J a c k s o n C o u n t y . life managing and working on the Also, it became a family farm in Grandview. Truman railroad division was active in the community, forming point and terminal a Masonic Lodge, serving on the school f o r t h e K a n s a s board, as Grandview’s Postmaster C i t y S o u t h e r n and a Jackson County road overseer. Railroad. This new The Truman farm home still stands on t r a n s p o r t a t i o n Blue Ridge and is owned and operated resource brought by the United States Parks Service. a n i n f l u x o f Grandview experienced much of its p e o p l e i n t o t h e growth in the period following World town, and by 1929 War II. This growth was due in part to Grandview had development of the original suburbs grown into a city in the Kansas City metropolitan area of 700 residents. and in part to the establishment of the A landmark of G r a n d v i e w ’ s Richards-Gebaur Air Force Base just history, the original to the south of Grandview. RichardsHistorical Grandview Labor Day Celebration depot, remains in G e b a u r w a s o n e o f G r a n d v i e w ’ s 22 / January 2013
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largest employers until its closure in the mid-1980s. Because of the closure, many military families transferred, leaving behind hundreds of empty homes and causing property values to decline. In the 80s, the frontage roads along 71 Highway were converted into oneway roads. Because of the resulting access limitations, several stores lost revenue and eventually shut down. Like other first-tier suburbs, Grandview started struggling with unexpected and often unrecognized problems, such as concentrations of elderly and immigrant populations, as well as outmoded housing and commercial buildings 1. For the next three decades, Grandview had its share of adversities and the population stagnated until around 2010. However, positive changes to strengthen the Grandview community started during the recent economic downturn, and these changes are now gaining momentum. Grandview is now a city of roughly 15-square miles with a population of more than 25,000 persons. The City has more than 11,000 total residential housing units, and boasts having around 600 local businesses employing more than 10,000 employees. New housing and retail developments, as well as infrastructure projects, are happening all around the City – sense a pride among the community is building again. Grandview has been going through a positive transformation over the last several years. Waves of younger people moving into the City have brought a strong sense of civic engagement and anchor solid families with disposable income. In addition, new infrastructure projects and new businesses gave city administrators, officials and community leaders the confidence and momentum needed to grow.
Centennial Anniversary Celebration
With a positive start to the second decade of the 21st century, it seems fitting to recognize the first, 100 years of Grandview and the optimistic beginning of its second hundred. With the strong support of businesses, organizations and community leaders, a committee began to plan a yearlong celebration with four great events for the entire community. To kick-off the celebration, the committee planned a centennial dinner in February 2012 to recognize present and past city officials, community leaders, business owners and longtime residents. The highlight of the dinner was a panel of three speakers, a Harry S Truman impersonator, a historian, and a former mayor recounting Grandview through the decades. The second and perhaps most significant of Grandview’s centennial celebration events was the Truman Heritage Festival – a three-day free admission event in May. For many years, the Grandview Historical Society organized and carried out Harry’s Hay Days festival. This one-day event attracted thousands of residents and visitors to the Truman C o r n e r s Sh op p i n g Center parking lot, one of the largest and busiest retail centers in the region. Over time the event dwindled, but still held a warm place in the hearts of many residents. In September 2012, the Music on Main event attracted more than The Centennial 6,000 persons to the City’s reconstructed Main Street.
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Committee decided there was an opportunity to revamp the festival and make it the biggest centennial anniversary celebration ever. To help in the rebranding of the event, the length was changed from one-day to three and the name changed to Truman Heritage Festival. It worked. Before announcing the last musical group on stage, Mayor Dennis, looking down on Main Street and seeing the street packed with people, said “We just made history!” The weather was great, the atmosphere was filled with positive energy, people of all ages walking, smiling and happily greeting one another. It was three days full of entertainment and joy – just like the City and community members had hoped. The reaction from the community was extremely positive. Expectations for the festival are high for next year, and the plan is to make it bigger and better. Citizen participation also was a great success at the third centennial anniversary celebration event called the “Grandview Day at The K.” Community members got together at Kauffman Stadium to watch the KC Royals play
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January 2013 / 23
against the Cardinals. The City sold 500 discounted tickets. The last, but not least, event was Music on Main in September that attracted more than 6,000 persons to the City’s newly-reconstructed Main Street. The event was not new to the community, but never before had such strong participation and success. With the various centennial celebration events, Grandview has started off its next century celebrating with its citizens making strides to rebuild a strong community where residents have a sense of ownership, volunteer more, support the schools and shop locally. The City also has not forgotten the importance of building for the future. Streets and revitalization have been a strong focus. It is through the continuing development and delivery of efficient and aesthetic infrastructure that we can strengthen the confidence of the community to enable them to be progressive and take action. The City’s most significant infrastructure project in the last couple of years has been the revitalization of its Main Street. In 2010, voters renewed the City’s transportation sales tax for 10 years. The priority project approved by voters included the improvement of Main Street from the historic downtown to the intersection with the new I-49. In December 2012, US 71 was designated I-49. The newly designated interstate will eventually connect Grandview and the metropolitan Kansas City area with southern Louisiana. For many years, US 71 has physically divided the City, but in the new century, rebuilt (and hopefully some new) connections will provide better connections for all traffic, especially pedestrian and other non-motorized traffic. This work complements the City’s adoption of a “Complete Streets” policy. A major objective of the City for many years has been the redevelopment and upgrading of the aging Truman Corner’s Shopping 24 / January 2013
Center. The next several years should see the redevelopment of the shopping center. The City also is anticipating the development of major commercial tract along the newly designated I-49, including development at 150 Highway, spurred by the nearby development of the Honeywell-NNSA site. Just as important, redevelopment of a mid-20th century shopping plaza, long known as G randview Plaza, into a modern educational facility containing the International House of Prayer University has led the City’s redevelopment at one of its most important intersections. Not to be forgotten, Truman Farm is the object of joint efforts of the National Park Service and the City to attract more attention and to incorporate it into the revitalization of the nearby Truman Corners Shopping Center. In addition to building and rebuilding, Grandview is planning for new communities and services in the City. An important kick-off to this planning has been the Mo150 Hwy corridor study. This is a comprehensive study of the Mo150 Highway corridor that contains much of the City’s undeveloped land. The enthusiasm The Missouri Municipal Review
for this study has set the stage for conducting a similar study along the I-49 Corridor that will concentrate on sustainability. Above all, the planning and construction is intended to direct the rebranding of the City and its various neighborhoods and communities. Key features of this rebranding effort include recalling the City’s past as a railroad center. This has led to development of key branding features that recall railroad components, including decorative sidewalks with rail and tie motif, trusses that replicate railroad bridges, towers that recall signal and switch stations. An important part of the rebranding effort has been identifying specific commercial and industrial centers of the City, in particular the west-side industrial corridor that runs the length of the City and contains a significant portion of the City’s industrial base. G randview h a s en t ered its second century as a City in an optimistic and aggressive fashion. The City has had a great past, and with the work of the community and all its members, looks forward to a great future. (Endnotes) 1 Footnote Based on a 2005 study by the Brookings Institution, a research group in Washington. Ana Nixon is the public information officer for the city of Grandview. Dennis Randolph is the director of public works for the city of Grandview.
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CASHING IN
Missouri Communities Support Local Business
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Photo: Stephanie Bell
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Photog raphy
by Laura Holloway
t's more than just a great excuse to head out for ice cream. Cash mobs are becoming a popular way to support local businesses in a community, and are increasingly popping up in the Show Me State. At least 10 cities in Missouri have promoted the importance of supporting local businesses using this creative method. In a typical cash mob, volunteer organizers promote a particular day and time, most frequently via social media, for participants to visit a local business and spend approximately $20. Business owners are notified of the event in order to prepare. Business owners enjoy the increased business and exposure both pre- and post-mob. Shoppers have the opportunity to support a cause they believe in, support a local business and perhaps discover a new favorite spot in their own hometown. Chris Bell helps to organize the Jefferson City (JCMO) Cash Mob, and has seen how the events become a win-win situation. "The people who like it most are those who have never been to that business before, who literally didn't know it was there," said Bell. "The day of the mob, it helps that business. But then there are patrons who will hopefully go back more regularly." The Kansas City Metro Area Cash Mob celebrates a one-year anniversary this month. The mob has enjoyed support via social media and local community members. Mob dates bring in about 50 people per chosen location. Photo: Stephanie Bell Mobbed businesses have also noted that patrons come in the days leading up to and after the mob, when it better fits the shopper's schedule. For some of the events, facebook fans of the local cash mob’s page will vote on the next business to support. The discussion via social media sites earns even more exposure for local retailers. "People feel like they're participating more," said Kathy Dobyns Ziegler, one of the KC Cash Mob organizers. "It's a great, thriving atmosphere."ď ą
Missouri Cash Mobs St. Louis
Jefferson City
Harrisonville
Independence
Kansas City Washington Joplin Cape Girardeau Chillicothe www.mocities.com
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January 2013 / 25
BUILDING MORE EFFECTIVE DELIVERY OF ECONOMIC DEVELOPMENT PROJECTS by Daniel Bliss
E
conomic development is a notoriously tough business. Most of all, it is expensive. Local and state governments have faced more than $300 billion in cumulative deficits since fall 2008, and the most recent comprehensive estimate indicates that they spent almost $65 billion in economic development subsidies in 2005 alone – almost $70 billion if accelerated depreciation writeoffs are included.1 That figure compares to $12.9 billion in the equivalent regional aid spent in the European Union, where regulators in Brussels have the power to limit economic development subsidies by local, state, provincial, and even the 27 national governments. At the same time, researchers in the United States have documented many situations where heavy spending on economic development may have done little more than shift economic activity within a community, rather than generating new growth. Given the huge expense and the limited government resources to pay for it, elected and appointed government officials, business leaders, and citizens need to search for alternatives that will effectively deliver economic and community development at a lower cost.
BETTER INSTITUTIONAL ARRANGEMENTS
The question is whether more sensible rules and regulations, com-
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bined with better institutional organization, would allow local and state government to improve their ability to finance and mobilize economic development without putting a new burden on taxpayers. Would better institutional arrangements – community development corporations, ongoing cooperation with neighboring municipalities, better working relationships between local and state governments – allow jurisdictions to enhance their bargaining power with business, along with their ability to put good ideas into action? Doing so offers the possibility of reducing economic development costs and improving results.2 Both circumstantial and researchbased evidence increasingly indicate that better governance can make a big difference. Disorganized policy formulation decouples the all-important mechanisms of “steering” and “rowing.” For example, if one group, department, or entity does the brainstorming and planning, and another handles the financing, disagreements between them often lead to many good ideas being left by the wayside. And if those two groups cover geographical areas that overlap but are not contiguous, the risk of disagreement – and therefore failure – multiplies. In contrast, a more coherent arrangement for governance can move economic development policies into action more effectively. The common themes for success include: • Having institutions or coalitions of stakeholders that both steer policy and make it a reality. • Using these common institutions or coalitions to build a widely shared, community-wide vision of the future. The Missouri Municipal Review
•
Thinking regionally and bringing neighboring communities together in some way. • Gaining active support from the state to build networks among local leaders, spread information among leaders and businesses, and foster cooperation among communities to reduce wasteful competition in the form of escalating subsidies. A 2010 survey confirms that economic development professionals support this kind of leadership.3 The survey, which interviewed people working on projects financed by the U.S. Economic Development Authority, indicates the need for a combination of regional coordination, organization and leadership to maximize the effectiveness of policy implementation and delivery in economic development. It is never too late for communities to implement inter-local or regional agreements between communities, and no start is too small. Simple transactions such as service agreements tend to trigger cost savings and lead to greater things in the future. A 2007 study of every Georgia municipality with populations of more than 2,500 found that formalized inter-community service agreements are significantly more likely to occur in situations where transactions among municipalities, such as cooperation on street projects or mutual aid for emergency services, have already yielded savings.4 There is no one organizational or financial path to more successful economic development. A particularly good example, because of its politically charged nature, is annexation and consolidation of governments. The city of Hibbing, Minnesota, annexed more than 170 square miles of township territory in 1979 to create what is by far the state’s largest municipality, by land area. This brought the airport and large areas of potential commercial land under city jurisdiction, creating a single entity for economic development. Yet many small town municipalities in northern Minnesota that appear similar have repeatedly failed to enact far more modest annexation proposals because of opposition www.mocities.com
from the township governments. Larger cities such as Louisville, Kentucky, have taken a different route and merged with their county governments to achieve significant economies of scale and improvements in tax base for many government functions, including economic development. But others, such as Des Moines, Iowa, have rejected this kind of consolidation, in part because of concerns that putting suburban politicians at least partly in charge of city resources would benefit the suburbs at the city’s expense. Indeed, the Louisville reform, passed in a referendum in 2000 and fully implemented by 2003, was followed by a significant redistribution of funding for public services away from much of the former City. This happened because suburban politicians had led an effective working majority on the new city county council, and they favored more fiscally conservative spending patterns. This loss of control can be difficult for central city communities, and shared services or joint powers agreements can achieve similar savings without the representational issues caused by consolidation. Strong leadership can cover for deficiencies in the process of making and delivering policy, at least temporarily. Mayors’ offices in large U.S. cities have long dominated other institutions and organizations in those municipal governments, an arrangement that has enabled big-city mayors to make great achievements – often followed by significant disruption on their retirement or death. In smaller communities, where governmental plans range from weak mayor-council systems to a councilmanager plan, governments often struggle to strike a balance between the continuity of a city manager and a stable bureaucracy, and the implications of direct management by the city council that means greater direct electoral accountability. But no matter the form of government, effective leadership is a prerequisite for success in economic development policy. Even the best-organized community needs a common sense of purpose and www.mocities.com
clarity from its leaders, and there is clear evidence that even cash-strapped municipalities can outperform much wealthier communities in the delivery of economic development projects if their leaders buy into a shared vision of their hometown.5 Outside assistance – for example, from state legislators, a member of Congress or a U.S. Senator – is also valuable, but may not be possible if there are strong internal divisions within a community over a development project. These patterns of assistance also tend to follow federal funding and federal support for economic and community development – both in the form of direct grants to municipalities and block grants to the states – has been cut much farther over the past 30 years than funding for transportation and infrastructure. So, while the provision of infrastructure and public services often gets a boost from outside leadership that has a vested political interest in a city’s health, economic development often stands or falls on the jurisdiction’s existing leadership.
WAYS OF IMPLEMENTING POLICY
For these and other reasons, local governments might want to consider a process of institutional reform and reorganization. This requires sensitivity and creativity, and particular attention to the customized needs of a particular community. One size does not fit all when it comes to improving the process of brainstorming, developing, financing and implementing economic development projects. Several distinct forms of policy delivery emerge among the Minnesota and Illinois communities studied for this research; these are explained below.
Private Development Corporations Operating With A Public Subsidy
The public sector subsidizes staff positions and operations, and private capital – including investments from local banks and individuals, and rents from existing projects provide the funding for
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new business investment. A variation on this format is to use public-private partnerships such as a community development corporation (CDC), in which the government or governments involved in supporting operations are represented on the board and exercise significant influence over policy. Both formats enable a large proportion of negotiating and deal making to take place within the development corporation, and therefore outside of state open meetings laws, although the CDC-style format involves greater coordination between the municipality and the private-sector side than a private corporation does. This level of privacy is often a key consideration for both local and outside businesses.
Regional Joint Powers Agreements
In areas where municipal governance is fragmented, building the economies of scale necessary to effectively manage economic development often requires coordination of planning, policy and resources. Whether a region of 50,000 persons is covered by one municipality or 10, an economic development department or agency is unlikely to need more than three or four staff members. Therefore, fragmented governance cannot operate as efficiently as a unified organization can. Coordinating such an agency, with the statutory powers a municipality has, to engage in economic development can be a challenge, as these entities have significant powers in finance and land management. Those powers must be effectively coordinated with a joint powers authority if the joint powers arrangement is to be effective.
Statutory Authorities
The boards of statutory authorities such as economic development associations and development councils typically include both city councilmembers and private citizens, and jurisdictions use them in a number of ways. These entities might have no active role, or they
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might work with staff to manage assets such as incubator buildings and revolving loan funds that help businesses make down payments. Statutory authorities establish a firewall between general fund money and economic development funds, protecting taxpayers and ensuring economic development continuity.
City Governments
No matter what form the government takes – city council, commission, mayor, administrator and/or city manager, in any combination – city governments are an important entity in economic development. Although long-standing legal precedent enables states to significantly restrict municipal activities such as borrowing and spending, city governments remain leading players in the financing and provision of economic development, using their taxing, borrowing and land-use management powers to make things happen. The committee structure of a city government is a significant part of this process, as it often filters projects long before they are considered by the city council. A fragmented structure can block new projects and enable “venueshopping” – the process by which the people who are best at gaming the system choose the committee, board or commission most receptive to their plans. Too many overlapping committees provide more venues to shop. Instead, city governments should aim to create a system that, through its simplicity and clarity, promotes the best project for the community instead of the project whose backers have the best knowledge of the government’s inner workings. A stable governing arrangement that is sufficiently empowered to achieve city goals is a potent asset in economic development. Take the case of Sterling, Illinois, where the 2001 bankruptcy of a steel mill left 1,500 people out of jobs and hundreds of acres of disused industrial land and buildings in a prime riverfront location. Through two city managers and three mayors, the City shepherded a 10year process of getting the newest part of the plant reopened, older buildings reclaimed and derelict structures removed as part of a brownfield project. Sterling had the organizational tools – expertise in the city manager’s office, consensus on the council, the legal authority through an industrial development commission – to handle complex land use problems. It also had continuity of leadership operating within this structure; the current city manager had been the assistant 28 / January 2013
city manager, and the two most recent mayors had both served on the council under their predecessor, who was mayor at the time of the steel mill’s bankruptcy.
Regional Governing Arrangements
" A stable governing arrangement that is sufficiently empowered to achieve city goals is a potent asset in economic development." At the state level, regional governing arrangements such as Portland Metro in Oregon and the Iron Range Resources and Rehabilitation Board in Minnesota provide a critical coordinating function for economic development policy in the areas under their jurisdiction. While the policies these agencies produce or promote might not be effectively customized to individual communities, they provide a forum for cooperation, reducing or eliminating wasteful and expensive competition for economic development among neighboring municipalities. Cities under such jurisdictions have a ready source for technical expertise, grant and loan funding, and in some cases, tax privileges, but they must form a close working relationship to ensure that these agencies remain responsive to particular community needs that might differ from agency goals as a whole. Without the coordinated decision making of regional agencies, communities have a strong incentive to compete with one another for the same pool of potential businesses.
Enterprise Zone Legislation
Most states offer standing benefits that individual municipalities or groups of municipalities may take up through enterprise zone legislation. A long-standing example is the Illinois Enterprise Zones Act. Passed in 1982, this legislation enables municipalities to coordinate with one another – or in the case of Chicago – subdivide into enterprise zone boards that manage select parcels of land within their jurisdictions. In southern Illinois, municipalities across a four-county region have formed a single enterprise zone board. The advantage – further coordination of decision making, along with a forum for the elected The Missouri Municipal Review
officials and other community leaders who typically form such boards to get to know each other better. These boards also provide municipalities with direct representation via local officials who are likely to be more immediately aware of their communities’ specific needs than state elected and appointed officials would be. The disadvantage – the existence of these boards is time-limited, and extensions must be approved by the state legislature. In Minnesota, the Job Opportunity Building Zone (Job-Z) program adopted by the legislature in 2003 does not give communities the opportunity to build cooperative arrangements; rather, they must apply directly to the state to designate specific sites for Job-Z benefits – a similar array of exemptions and abatements on sales and property taxes to those found in Illinois.
Outside Grant Finance
The importance of outside grant finance is shown in the example of Rock Falls and Sterling, Illinois, where a series of bankruptcies and mergers in the 200103 recession left the areas on the banks of Rock River that runs between the two cities, blighted and derelict. Between 2005 and 2010, Rock Falls secured $4 million in outside grant funding for the recovery of a single factory site that was severely contaminated. Now completed, the project is attracting interest from developers for a variety of uses, according to the City’s mayor. Neighboring Sterling was able to use existing institutions, including its city manager’s office, industrial development commission and the Greater Sterling Development Corporation to mount a large-scale rapid response to its own factory closures. Rock Falls had to start almost from scratch with building an organization. The first challenge was creating a community development corporation. The next step was getting the appropriate combination of local business leaders on the CDC board. An annual $100,000 city subsidy ensured both strong staff support and strong input for the City’s elected officials.
Grant Assistance From States And Federal Agencies
No amount of institutional reorganization at the local level will really compare with the impact state and federal governments have on the projects local leaders are able to fund. Of course, specific cases vary. A 2007 research report comparing Kansas with five other Midwestern states showed www.mocities.com
total economic development expenditures (not counting tax breaks) ranging from less than $10 per capita per year to a high of $75, in the state of Iowa.6 While subsidies for particular businesses often take place on an ad-hoc basis, with political connections and the level of public interest playing a role, there are substantial standing programs for subsidizing highways, utility infrastructure and brownfield reclamation. Better local organization is valuable to economic development because it provides a forum for a common vision and a consensus in the community to emerge – something that granting agencies take very seriously when deciding where to place their funds. That’s because a shared vision increases the chances that a policy will be implemented successfully, even in cities where a weak tax base and local economy would normally be expected to hinder new projects.7
THE IMPORTANCE OF STRATEGY
Even with institutions and organizations in place to deliver a strategy effectively, and good leaders taking key positions in those organizations, more is needed: an effective strategy. And evidence indicates that effective, representative institutions working within a simplified, streamlined and cooperative process generally tend to help such strategies emerge. In this regard, even the largest metropolitan areas sometimes have much to learn, as the city of New York demonstrates. This notoriously politically and institutionally fragmented metropolitan area often provides unproductive and expensive economic development subsidies to the financial services industry as the City and its suburbs fight over where these businesses will locate their offices. 8 The problem is that despite New York’s reputation for financial services, this industry can relocate easily. In contrast, New York’s media and other creative industries are captive in Manhattan because in this sector, proximity to other professionals and individual businesses is a major advantage. The implication is that if New York wants to fund economic development, it would do better to focus its attention on areas such as media and publishing that cannot easily leave the City. The lesson of building upon the businesses and resources your community already has is increasingly taken to heart by economic development professionals across the country, although it is sometimes neglected by political www.mocities.com
leaders. “Build it and they will come,” is not necessarily a successful strategy, especially when officials pin their hopes heavily on recruiting large, headlinegrabbing developments without keeping up the flow of smaller improvements. Whiteside County, Illinois – the home of Sterling and Rock Falls – has stayed close to the national average of unemployment despite massive job losses in large manufacturing employers. It has done so by pursuing a pattern of development defined by small-scale but frequent business expansions. Ogle County, Illinois, just 40 minutes away, has an unemployment rate that is three percentage points higher, despite having a major rail crossing and its associated massive warehousing and logistics investments. One final point is that, under U.S. and Canadian law, even the most talented, heavily financed and well-resourced local officials depend on a favorable operating structure from the state or province. This means that keeping state governments attuned to a community’s particular needs is an ongoing challenge. State officials typically focus on the big projects rather than the small businesses that tend to provide the economic engine for communities. Another challenge for local officials is keeping their states focused on the opportunities and pitfalls of economic competition within a state, rather than across state lines. Given the temptation to compete with other communities, state governments tend to loosen limits on local economic development subsidies, that can be expensive for local taxpayers. For example, Illinois recently passed an amendment to the state’s municipal code that enables a municipality to rebate potentially all sales taxes generated from a retail development. Previous law limited the rebate to the actual value of improvements to the property. This change provides flexibility for border communities to compete across state lines, but it runs the risk of conceding a bargaining point to developers that might make more aggressive demands for subsidies.
CONCLUSIONS
Laxer rules on subsidies almost always result in an expensive competition among local governments for economic development. This emphasizes the importance of participating in interconnected networks of policymakers, including institutions that bring officials from different groups together. With no The Missouri Municipal Review
one policy entirely under a jurisdiction’s control, the standing it has with others is a crucial asset. That, as much as anything, is why institution and organization building is such an important part of economic development. Footnotes 1 Estimate by Kenneth P. Thomas, political science professor at the University of Missouri at St. Louis: see Kenneth P. Thomas, Investment Incentives and the Global Competition for Capital (New York: Palgrave Macmillan, 2010). 2 See, for example, H.V. Savitch and Paul Kantor, Cities In The International Marketplace: The Political Economy of Urban Development in North America and Western Europe (Princeton, N.J.: Princeton University Press, 2002). 3 Brad R. Watts, George A. Erickcek, Jacob Duritsky, Kevin O’Brien, Claudette Robey, and James Robey,“What Should EDA Fund? Developing a Model for Preassessment of Economic Development Investments,” Economic Development Quarterly, February 2011. 4 Shrestha, Manoj and Feiock, Richard, “Interlocal Cooperation in the Supply of Local Public Goods: A Transaction Cost and Social Exchange Explanation,” Working Group on Interlocal Services Cooperation, paper 29, 2007. 5 Michael A. Pagano and Anne O’M Bowman, Cityscapes and Capital; Baltimore (The Baltimore, Maryland: Johns Hopkins University Press, 1997). 6 "John D. Wong and Matthew T. Stiles, Strategic Analysis of Economic Development Expenditures by Kansas State Government and Five Surrounding State Governments: FY 1989 – FY 2007, Condensed Edition," Hugo Wall School of Urban and Public Affairs Wichita State University, prepared for Kansas, Inc. 7 Pagano and Bowman. 8 Elizabeth Currid, “New York as a Global Creative Hub: A Competitive Analysis of Four Theories on World Cities,” Economic Development Quarterly 2006; 20. DANIEL BLISS is an assistant professor of political science at the Illinois Institute of Technology.
This article is reprinted with permission from the February 2012 Government Finance Review.
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T
he goal of the Missouri Department of Economic Development (DED) is to partner with local communities to provide quality jobs, economic growth and infrastructure improvements. One of the ways in which the state of Missouri strives to achieve this goal is through the use of statewide workforce programs. One such program is the Missouri Quality Jobs Program that allows new or existing employers to retain a portion of the income taxes otherwise paid to the state, thus encouraging the creation and retention of sustainable jobs in Missouri. Missouri also offers customized training programs that provide assistance to eligible Missouri businesses to reduce the cost of training, as well as community college new jobs training programs that provide assistance in reducing the cost associated with expanding a workforce or locating a new facility to Missouri for training services. In addition to workforce programs, the state of Missouri offers expansion programs to facilitate economic growth through the expansion of existing businesses in the state, as well as new start-up companies locating to Missouri. One such program is the Enhanced Enterprize Zone. These zones, of which there are more than 120 throughout the state, allow new companies creating as few as two jobs to receive tax credits against their corporate income tax. Missouri also offers the build incentive that serves to entice large businesses to locate to Missouri by reducing necessary infrastructure or equipment expenses when a need is demonstrated for funding. Lastly, Missouri has a Chapter 100 sales tax exemption on personal property that provides an exemption on tangible personal property purchased for non-manufacturing purchases. The Missouri Department of Economic Development understands that stable, growing communities are vital to the Missouri economy. Services represent an innovative and comprehensive approach to sustaining strong communities and expanding business and community growth through the use of technical assistance and financial incentive programs. Learn about each program below at www.ded.mo.gov.
Business Development
Action Fund Loan BUILD Business Facility Tax Credit Program Chapters 100 Sales Tax Exemption, Personal Property Enhanced Enterprise Zone Enterprise Zone Tax Benefit Film Production Tax Credit Industrial Development Bonds Industrial Infrastructure Grant Manufacturing Jobs Program Midwestern Disaster Area Bonds (MDAB) Missouri Export Finance Program Missouri Housing Development Comission Missouri Quality Jobs Program MORESA Mutual Fund Tax Apportionment New Markets Tax Credit Program Private Activity Bond Allocation "Tax Exempt" Bond Cap Qualified Energy Conservation Bond Small Business Incubator Tax Credit Small Business Loan Program Tax Credit for Contribution Program Urban Enterprise Loan Wine and Grape Tax Credit
30 / January 2013
Community Development
AmeriCorps Community Development Block Grant Community Facility Delta Regional Authority Family Development Account Tax Credit Program Neighborhood Assistance Program Youth Opportunity Program
Housing Development
Neighborhood Preservation Act Private Activity Bond Allocation "Tax Exempt" Bond Cap Rural Affordable Housing
Redevelopment
Brownfield Redevelopment Program Chapter 353 Tax Abatement Downtown Preservation Historic Preservation Land Assemblage Tax Credit Program Local TIF MODESA MORESA State Supplemental Tax Increment Financing
Disaster Relief Resources
Grow Missouri Disaster Loan Program Small Business Disaster Loan Program
The Missouri Municipal Review
Infrastructure (CDBG) and Site Development
Action Fund Loan Business Facility Tax Credit Program Community Facility Industrial Infrastructure Grant Interim Financing Loan Microenterprise Missouri Certified Sites Program Other Public Needs Rural Affordable Housing Speculative Industrial Building Loan Water and Wastewater
Small Business and Entrepreneurship
Grow Missouri Loan Missouri Technology Center Rebuilding Communities Small Business Incubator Tax Credit Small Business Loan Program Urban Enterprise Loan
Workforce Training
Customized Training Program Job Retention Training Program National Career Readiness Certificate New Jobs Training Program Rapid Response Program Work Opportunity Tax Credit
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T
COMMUNICATING WITH LEGISLATORS
he Missouri Municipal League is dependent on grass roots advocacy to defend local government interest in the General Assembly. We are usually opposed by powerful special interests that make campaign contributions and political endorsements but we have the “clout” of organized local government officials who can persuade and influence their legislators. However, to be effective, we must use our grassroots advocacy appropriately. The goal of a successful grassroots program is to communicate a credible message to key legislators, staff or other decisionmakers consistently and in a timely manner. The key element of grassroots communication is to get your message out to your elected officials as clearly and concisely as possible. Most people do not take the time to contact their elected officials, so just a few connections on a specific topic can really make an impact. A message from a fellow elected official or a city staff carries significant weight. Your communication with elected officials supports the League’s work in Jefferson City. It can change the way they vote. Writing, e-mailing, faxing, calling and face-to-face meetings are all effective ways to communicate your message to elected officials. The following communication tips will assist you in working with elected officials (local elected officials, state legislators, the Governor or Missouri’s congressional delegation).
Delivering The Message •
Get to know your legislators and their staff to determine their preferred method of communication.
•
Provide feedback to the League about what you learned.
•
Calling is very effective when you need to get your message across quickly.
•
Meeting with elected officials is an essential part of your advocacy efforts. Like you, elected officials have busy schedules so it is important to get your message across concisely and quickly. As a general rule, they often have more time to meet when they are home in their districts or when the Legislature is not in session.
•
Writing is a formal way to remind other elected officials that they are accountable for the choices they make and that their decisions have a direct impact on your shared constituents.
•
Emailing and faxing are more immediate ways to contact elected officials quickly. Not all elected officials prefer to communicate through e-mail, so find out what works best for them. To be safe, you can do both.
Spencer Fane Britt & Browne is pleased to welcome Elizabeth Garvin to the firm. Elizabeth brings more than 20 years of public and private sector experience in land development regulations, urban planning, and economic development, including: developmental approvals and incentives, comprehensive planning, project management and land use consulting. Elizabeth holds a Bachelor of Arts in Environmental Studies and received her Juris Doctor and Masters in Urban Planning from the University of Kansas. She has published many articles on urban planning and is a respected member of the American Planning Association. She is licensed to practice in Missouri & Kansas. 1000 Walnut Street, Suite 1400, Kansas City, MO. 64106
www.mocities.com
The Missouri Municipal Review
816.474.8100
January 2013 / 31
43rd Annual Missouri Municipal League Legislative Conference Capitol Plaza Hotel ♦ Jefferson City, MO ♦ February 12-13, 2013 TUESDAY, FEBRUARY 12, 2013
*Tentative Program
12:00 noon
Registration
1:30 p.m.
Welcome and Opening Remarks
1:45 p.m.
Overview of the 2013 Session: MO House of Representatives
2:15 p.m.
Key Municipal Issues
2:45 p.m.
Overview of the 2013 Session: MO Senate
3:00 p.m.
Break
3:15 p.m.
2013 MO House of Representatives Minority Caucus Perspective
3:45 p.m.
Economic Development Issues
4:15 p.m.
Tax Restructuring
4:45 p.m.
Adjourn
5:30 p.m.
Reception
6:30 p.m.
Dinner On Your Own With Legislators
WEDNESDAY, FEBRUARY 13, 2013 7:30 a.m. 8:00 a.m.
Breakfast - Capitol Plaza Hotel The Honorable Jay Nixon, Governor, State of Missouri (Invited)
Join fellow local leaders from across the state at the MML Legislative Conference to share information, learn about legislative issues, and visit with state legislators. The Conference will provide you with a unique opportunity to: ♦ Learn more about the issues pending in the Legislature; ♦ Participate in discussions with legislators and peers on a wide range of municipal issues; ♦ Visit informally with Senators and Representatives during the legislative reception; ♦ Hear first-hand from invited state officials and learn more about their programs and how they will affect your city. 32 / January 2013
The Missouri Municipal Review
www.mocities.com
43rd Annual Legislative Conference Capitol Plaza Hotel, Jefferson City, MO February 12-13, 2013
REGISTRATION: $130 per person; includes reception and breakfast.
All registrations to be made online, regardless of payment option.
For those who need to pay by check, please select the “Bill Me” option for your payment method. When you have completed the registration process, you may print off an invoice to submit with your payment and confirmation for your registration.
Online Registration Link; visit MML Conferences at www.mocities.com. HOTEL RESERVATIONS: The conference room block is currently open and will close on January 29. Please make room reservations directly with the Capitol Plaza by calling 1-800-3388088. (Additional rooms have been reserved at the Baymont Hotel Inn and Suites, across the street from the Capital Plaza Hotel, call 573-636-5231 for reservations.) CANCELLATIONS: Received by February 5, 2013, will receive a full refund. No refunds can be made after that date. If you have any questions please call the League’s office at 573-635-9134.
Places to Dine in Jefferson City (Please call for reservations for your delegation.) Alexandro’s Applebees Bingham’s Bones Chili’s Colton’s Steak House and Grill Das Stein Haus Domenico’s Italian Restaurant Hunan’s Longhorn Steakhouse Madison’s Café Ria’s O’ Donoghue’s Steak & Seafood Sapphire’s - Doubletree Hotel Prison Brews Red Lobster Yen Ching
www.mocities.com
2125 Missouri Blvd. 2319 Missouri Blvd. 1510 Jefferson 210 Commercial Ave. 3515 Missouri Blvd. 2415 Missouri Blvd. 1436 Southridge 3702W.Truman Blvd. 1416 Missouri Blvd. 3545 Missouri Blvd. 216 Madison 3550W. Edgewood Dr. 900 East High St. 422 Monroe St. 305 Ash Street 3519 Country Club Drive 2208 Missouri Blvd.
The Missouri Municipal Review
634-7740 636-6368 635-5388 636-8955 761-4765 635-5336 634-3869 893-5454 634-5253 636-9100 634-2988 636-5221 635-1332 636-5101 635-0678 635-6737 635-5225
January 2013 / 33
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The Missouri Municipal Review
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News From The Bench by W. Dudley McCarter
G
BOARD OF ADJUSTMENT ACTED ARBITRARILY IN GRANTING A VARIANCE
erald Schaffer (“Schaffer”) filed a variance application with the board of adjustment of the city of Cassville. Schaffer requested a variance to construct a carport within the five-foot setback restriction that applied to his residential property. The board of adjustment granted the variance finding that Schaffer’s property was unique and that it would be a hardship for Schaffer’s daughter and granddaughter to be exposed to the rain when they went from the car to the house. The city of Cassville filed a petition for review in the Barry County Circuit Court that issued a judgment reversing the board of adjustment. The Missouri Court of Appeals for the Southern District affirmed the circuit court, finding that the decision of the board of adjustment was arbitrary, capricious, unreasonable and unlawful, in Board of Aldermen of the City of Cassville v. Board of Adjustment of the City of Cassville, No. SD 31095 (Mo.App. S.D.2012). “Both the majority of courts and the commentators recognize two types of variances: an area (non-use) variance and a use variance.” Matthew v. Smith, 707 S.W.2d 411, 413 (Mo.banc 1986). Use variances are those that allow a landowner to use property in a manner that is not permitted under applicable z o n i n g o r di n a n c e s. Id . N on-us e variances allow the landowner to use the property in a manner approved by the ordinance, but allow the landowner to deviate from a restriction related to the permitted use and usually concern restrictions as to height of the structure, bulk of the structure or setback from a property line. Id. Here, the parties agree that the variance from a sideyard setback restriction is a non-use variance. Generally, the authority to grant a variance should be exercised sparingly and only when exceptional circumstances are present. Id. Here, Schaffer presented no evidence that his property was exceptional due to narrowness, shallowness or the shape of his property, or that exceptional topographical conditions or other www.mocities.com
exceptional circumstances prohibited him from using his property in the same manner as the other residents in his zoning district, as required by the City’s municipal code. The attributes of his property do not create the uniqueness, but his attempted use makes this property unique. The board of adjustment’s decision that the property is unique is unsupported by competent and substantial evidence. An applicant for a non-use variance must show that following the strict letter of the applicable ordinance will cause impractical difficulties or undue hardships. Baumer v. City of Jennings, 247 S.W.3d 105, 113 (Mo.App. E.D. 2008). “In deciding if there are practical difficulties, at the very least, a person seeking a non-use variance must demonstrate that, as a practical matter, the property cannot be used for a permitted use without coming into conflict with the restrictions contained in the ordinances.” Id. The phrase “practical difficulties or undue hardships,” does not refer to conditions personal to the owner of the land in question, but rather refers to the
conditions especially affecting the lot in question, and must be different from that suffered throughout the zone or neighborhood. Id. The determination of whether practical difficulties or undue hardships exist is a factual matter that is reversible only for an abuse of discretion. Id. Here, for Schaffer’s daughter and granddaughter to be subjected to rain or snow when going to or coming from the car is nothing more than merely an occasional inconvenience. Legislation granting relief by way of variance to zoning codes is not intended to relieve mere occasional inconvenience. Volkman v. City of Kirkwood, 624 S.W.2d 58, 61 (Mo.App. E.D. 1981). W. Dudley McCarter is with the law firm of Behr, McCarter and Potter, P.C., St. Louis.
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www.lowenbaumlaw.com January 2013 / 37
Member Accomplishments Emergency Preparedness Award The city of Kansas City, Mo., Office of Emergency Management received the 2012 Kansas City Power & Light Emergency Preparedness Award for its leadership in emergency planning and its activation of the Emergency Operations Center to support the 2012 All-Star Game events this past summer.
Distinguished Alumni Award Douglas Harms, city administrator for Des Peres, Mo., was recently honored as one of two recipients of the UMSL Public Policy Administration Distinguished Alumni Award. Harms has served as the city's administrator since 1985. He has served as a board member with MML and as president of the St. Louis Area City Management Association. In 2010, Harms received the Outstanding Local Government Achievement Award from East-West Gateway Council of Governments.
Train Town USA Jefferson City, Mo., has been awarded a membership in Union Pacific's Train Town USA Registry as part of the railroad's yearlong 150th anniversary celebration. During the ceremony, Union Pacific also presented Central Missouri Food Bank with a $10,000 donation.
Calendar of Events January 9 Missouri General Assembly Convenes 15 Last Day of Candidate Filing 17 MML West Gate Meeting, Richmond, MO 17 MCMA Professional Development Seminar, Univ. of Missouri, Columbia, MO 22 Final Certification to Election Authority 23 MML Central Meeting, Odessa, MO 24 Municipal Public Information Official Meeting, Columbia, MO 30 Southwest CCFOA Meeting February 1 MO GFOA Winter Seminar 7 12th Annual New Partners for Smart Growth Conference 12-13 MML Legislative Conference, Capitol Plaza Hotel, Jefferson City, MO 13 Northeast CCFOA Meeting 13 South Central CCFOA Meeting
25-28 MO Park and Recreation Assn., Annual Conference, Osage Beach 27 Southwest CCFOA Meeting March 10 MO CCFOA Spring Institute 11 MO CCFOA Master Academy 12-14 Missouri Rural Water Association Conference, Branson, MO April 28- Local Government Week May 4 For more events, visit the events calendar at www.mocities.com.
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Pictured above are (l-r): Jefferson City Mayor Eric J. Struemph, Union Pacific Public Affairs Director Ben Jones, Central Missouri Food Bank Director Peggy Kirkpatrick, City Administrator Nathan Nickolaus and Union Pacific St. Louis Superintendent Dan Witthaus.
38 / January 2013
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January 2013 / 39
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Published on Jan 22, 2013
The Missouri Municipal Review is the official publication of the Missouri Municipal League, featuring local government news and information...
