introduction to economic development & redevelopment robert s. ogilvie phd & hannah laurison...

Introduction to Economic Development & Redevelopment

Robert S. Ogilvie PhD

& Hannah Laurison MA

Davis, CA March 13th, 2008

Strategies for change

Economic development and redevelopment are two of the strategies that local and regional governments can use to try and improve conditions in low income places.

What is economic development?

The institutional changes made to promote economic betterment.

The social organizational changes made to promote growth in an economy.

Economic Development Strategies

Economic Development Institutions

Local Government Economic Development Agencies

Small Business Assistance Agencies

Economic Development Corporations

Community Development Corporations

Job Training and Placement Agencies

Business Organizations

Economic Development Financing Sources

Local Government

State Government

Federal Government

Community Development Financial Institutions

Private Foundations

Private Banks

Potential Economic Development Strategies for Securing Healthy Food in a Neighborhood

Supermarket Developmento Build a new full service supermarket

Small Store Developmento Build new produce markets or small format groceries

Corner Store Improvemento Identify corner store operators willing to offer fresh food

for sale in existing stores Mobile Markets

o Organize the sale of fresh produce from trucks with a weekly schedule

Farmers Marketso Organize weekly market

Limited powers

Economic Development & Redevelopment haven’t been able to stem the changes in the economy brought on by globalization

Economic Development & Redevelopment have been able to make targeted changes in many neighborhoods around the country, however.

What is Redevelopment?

Redevelopment is a public process that aims to improve the economic and physical condition of a designated (blighted) area

Blight is defined by state as being the presence dilapidated, vacant and abandoned buildings, and concentrated economic inactivity.

State law allows cities to set up redevelopment agencies, which can declare blighted areas as redevelopment areas.

What is Blight?

There are two types of blight according to California redevelopment law:

1.physical blight

2.economic blight

Physical blight defined

Buildings that are unsafe or unhealthy for persons to live or work.

Conditions that prevent or substantially hinder the viable use or capacity of buildings or lots.

Economic blight defined

Physical blight defined

Adjacent or nearby incompatible land uses that prevent the development of those parcels or other portions of the project area.

Subdivided irregularly shaped lots of inadequate size in multiple ownership – which hinders their physical development given present general plan, zoning standards and market conditions.

Economic blight defined Depreciated or stagnant

property values.

Impaired property values, due in significant part, to hazardous wastes on property.

Abnormally high business vacancies, abnormally low lease rates or an abnormally high number of abandoned buildings.

Economic blight definedA serious lack of commercial facilities that are normally found in neighborhoods, including grocery stores, drug stores, and banks and other lending institutions.

Serious residential overcrowding ... An excess of bars, liquor stores, or adult-oriented businesses that has resulted in significant public health, safety, or welfare problems.

A high crime rate that constitutes a serious threat to the public safety and welfare.

Powers of the Redevelopment Agency

1.Tax increment financing2.Eminent domain3.Improve blighted conditions4.Master planning authority5.Mobilize other public funds to incentivize

neighborhood improvement behaviors

The budget of the redevelopment agency is separate from the city/county budget. (This is critically important in California given the structural fiscal squeeze that most local governments operate under.)

Limitations on Redevelopment Agencies

Redevelopment agencies cannot do any developing

Redevelopment agencies can’t fund programs

Redevelopment agencies build infrastructure and give incentives to private developers to build in redevelopment areas

Tax Increment Financing (TIF)

Base Year Value

Taxes Increment Collected by the Redevelopment

Agency

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

Year 1 Year 3 Year 6 Year 9 Year 12 Year 15 Year 18 Year 21 Year 24 Year 27 Year 30

Redevelopment continued: (Eminent Domain)

Eminent domain is the inherent power of the state to seize a citizen's private property for a public use.

The Fifth Amendment has been interpreted to require that just compensation be paid when the power of eminent domain is used, and to require that properties can only be taken for "public use". These requirements are sometimes called the takings clause.

The controversy around Redevelopment

In its initial form, Redevelopment was known as Urban Renewal – as Slum Clearance.

There were other names for Urban Renewal as well – like Negro Removal.

The controversy around Redevelopment

In the 1950s and 1960s, Urban Renewal displaced vast numbers of people from many urban neighborhoods around the country (like the Fillmore in San Francisco and Acorn in West Oakland)

The controversy around Redevelopment

Eminent domain continues to be very controversial.

So does the fact that redevelopment agencies turn the seized property over to private developers

Opponents say that this favors the interests of wealthy redevelopers over those of small business owners and individual home owners.

Recent limitations around eminent domain.

Many redevelopment agencies have decided to renounce the use of eminent domain over residential property

The potentially positive side of redevelopment (from a public health perspective)

Construction of affordable housing

Constructing mixed use/ smart growth developments

Low Income Housing Set aside

Since 1976 California redevelopment agencies have been required to set aside not less than 20% of their tax increment for "increasing, improving, and preserving the community’s supply of low and moderate-income housing"

Positives of redevelopment

Attracting food retailers to low income neighborhoods

The potentially positive side of redevelopment (from a public health perspective)

Rehabilitating Brownfields

Improving Air quality

Increasing opportunities for physical activity

How you can influence redevelopment

Redevelopment is a public process, and state law requires public participation in the planning and approval of redevelopment plans.

Redevelopment plans must provide for the participation of property owners, business owners, renters, and representatives of local social service agencies in plan implementation, so long as they agree to participate in a way that conforms to the plan.

How you can influence redevelopment

Participation usually happens through the venue of the Project Area Committee (PAC), which is an elected body. (In many communities this is the minimum)

Pursue community benefits agreements. (These can include living wage policies, local hire ordinances.)

Get involved if you want to affect the process!

Funding Healthy Food Retailin low-income communities

Funding Healthy Food Retail

There are many programs at the federal, state, and local level to support access to healthy food retail in low-income communities through grants and loans

Programs lack coordination, can be highly technical, and are subject to budgetary fluctuation.

Health is usually not an explicit priority

How can public funding sources be used?

To conduct feasibility studies or market analysis

To influence the behavior of the private sector

To incentivize good corporate citizenship (fair labor practices, healthy foods)

To bridge the financial gap on complex development projects

Local farmers

A USDA grant helped the Rainbow Farmers Cooperative develop a business marketing plan

Federal Resource:USDA Rural Development Value-Added Agriculture Producers Grants

VAPG funds feasibility studies or business plans to establish value-added marketing opportunities

The Rainbow Farmers Cooperative used the grant to help socially disadvantaged and limited resource farmers sell produce in urban and rural markets.

Farmers Markets

El Dorado County received a grant from the California Dept of Housing and Human Development to conduct a farmers market feasibility study

State Resource: CA Dept of Housing and Community Development Block Grants

Support planning and technical assistance, infrastructure development and lending programs for businesses benefitting low and moderate income people

State CDBG funds are limited to smaller cities and counties

How can public funding sources be used?

To conduct feasibility studies or market analysis

To influence the behavior of the private sector

To incentivize good corporate citizenship (fair labor practices, healthy foods)

To bridge the financial gap on complex development projects

Supermarket

First grocery store in downtown LA since 1947 will open in summer 2008 with an investment from CalPERS.

State Resources- California Public Employee Pension Funds

CalPERs created the CA Urban Real Estate Initiative to direct $3 billion in underserved communities

CURE seeks both a financial and social return (“double bottom line”)

How can public funding sources be used?

To conduct feasibility studies or market analysis

To influence the behavior of the private sector

To incentivize good corporate citizenship (fair labor practices, healthy foods)

To bridge the financial gap on complex development projects

Corner Stores

City Produce received a small business improvement loan from the SF Redevelopment Agency

Local Resource: Redevelopment Agency grants and loans

Base Year Value

Taxes Increment Collected by the Redevelopment

Agency

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

Year 1 Year 3 Year 6 Year 9 Year 12 Year 15 Year 18 Year 21 Year 24 Year 27 Year 30

How can public funding sources be used?

To conduct feasibility studies or market analysis

To influence the behavior of the private sector

To incentivize good corporate citizenship (fair labor practices, healthy foods)

To bridge the financial gap on complex development projects

Public Markets

Midtown Global Market in Minneapolis used tax credits to develop a 80,000 sq ft public market with 50 local vendors

Federal Resources – New Market Tax Credits

US Dept of the Treasury

CDFI Fund

CDEInvestors

Tax Credits

Investments/equity

Businesses

SummaryEconomic Development resources can be used to:

Conduct feasibility studies or market analysis

Influence the behavior of the private sector

Incentivize corporate citizenship

Bridge the financial gap on complex or risky development projects

Gaps in funding

Explore policy opportunities

But consider fiscal context

Link carrots and sticks

For example, limit location of mobile vendors except where selling healthy items

Good governance practices (time=money)

For example, allow expedited review for healthy food retail

Attracting economic development resources to your project

This is a political process

Articulate need for project through data

Community mobilization

Involve elected and appointed officials

Participate in General Plan update process

www.healthyplanning.org

Database of healthy food retail funding programs

Toolkit on Economic Development and Redevelopment

Quarterly newsletter on healthy planning and economic development

Role of Public Health Professionals

Role for Public Health advocates

Data, data, data to justify focus on healthy food retail

Participate in General Plan updates – economic development and redevelopment agencies must conform to General Plan

Community involvement in setting economic development priorities

Identify interested parties

Decision makers – elected and appointed staff

City/County staff

Technical partners

Project allies – and opponents

Potential motivators

Tax revenue Job creation Quality of life Business development Blight removal Smart growth Profit

Contact us:

Planning for Healthy Places

Public Health Law & Policy

(510) 302-3308

info@healthyplanning.org

www.healthyplanning.org