Posted on Apr 11, 2010
Truly cool cities don’t need marketing campaigns—just ask the folks in Austin or Boulder. But what if your city isn’t cool and wants to be? Michigan is trying to answer this question with its Cool Cities campaign, a statewide initiative to spur economic development by making Michigan, well, cooler.
What makes a city cool—and how cool is Columbia, Missouri? An even better question is why are cities across the country focusing so much attention on something that seems completely unrelated to a strong and vital economy?< Michigan surveyed residents and key recruitment targets and came up with a list that mirrors what many experts are calling for, including Richard Florida, author of The Creative Class and researcher into what makes cities thrive in today’s world. Number one in the catalog of cool? Walkable communities—followed closely by vital downtowns, arts and culture, recreational options, historic preservation, mixed-use developments and tolerance for diversity.
Hard to argue with great amenities like these—but why are they so important to economic development?
Besides being the backbone of a great community, these amenities all appeal to workers in the new economy—knowledge workers in creative fields who will relocate to cities that provide them with “peak experiences.” Whether this is intellectual stimulation, outdoor recreation, great culinary experiences or distinctive neighborhoods, the up and coming talent is looking for more than just a job with a good salary. Even better, they’re willing to pack up and move to a city that can provide them with these peak experiences.
This signals a dramatic shift in how we need to approach economic development. In the old economy, cities attracted businesses by offering them cheap labor or abundant natural resources. Incentives became a must as cities competed with each other to attract companies. Significant global changes have made this a losing battle for many U.S. cities. In the new economy, the focus shifts to ideas, innovation and technology. Next-generation cities are attracting educated, talented and creative people by providing them with physical and cultural amenities. Hit critical mass and companies will locate where the talent base is.
So, how is Columbia doing when it comes to cool?
We’re certainly on the forefront in many areas. We have a vital central city with great dining and entertainment options. We have an extensive park and trail system, with more federal funding on the way. We’re also fortunate to have a strong knowledge base—not only are we home to three colleges but we’re also working on key projects like the Bond Life Sciences Center and the Mid-Missouri Technology Business Incubator. Best of all, we score high on one of the most important indicators of cool—authenticity. As cities across the nation become more generic, the creative class and the knowledge workers will be seeking out cities that have the very authenticity we tend to take for granted.
Could we do more? Of course. What we really lack is a bold, coordinated effort among the government, business and non-profit sectors to turn Columbia into a next-generation city—a city that builds its economic base upon creative and talented people and then actively sets out to recruit them.
Creating the type of city that appeals to this talented core of people has other benefits as well. As we work to improve these types of amenities in Columbia, we’ll be creating the type of city we’d like to live in as well. Because really, who doesn’t want to be cool?
Posted on Apr 5, 2010
PRSA’s quarterly magazine recently cited an alarming statistic: 49 % of Americans are dissatisfied with their jobs. Equally gloomy is the fact that 64% of workers under 25 are unhappy.
This is likely the result of several factors. A soft economy makes it tough to move on to a more suitable job and people are seeing fewer promotions or salary increases. Maybe though, the traditional job market isn’t keeping up with the changing outlook of employees. If the younger work force is bored, that will only get worse as the next generation of young people join the job market.
Is the solution to revamp the tried-and-true work structures in order to accommodate younger workers and non-traditional ways of working? Or perhaps quality of life becomes even more important to people. Downtowns have always been seen as places where jobs are created. Maybe now they can be seen as places where employees are created.
Posted on Feb 1, 2010
There’s been a lot of talk of a new development program called Tax Increment Financing (TIF). I’ve put together this overview designed to describe how this program works and highlight what TIF can do for a downtown.
Tax Increment Financing (TIF) is a way to help encourage the development of catalytic projects,particularly in a downtown area where lack of economic investment could eventually lead to blight.It’s also reserved for projects that would not occur without this assistance.Any project can be submitted for review by the TIF Commission and to date, two projects have–a mixed use development on the corner of Tenth & Locust and the Tiger Hotel.The Tenth & Locust project is a combination of retail (possibly a grocery store) on the ground floor, offices on the second, and apartments on the upper floors.
The Tiger Hotel, a Columbia landmark, is currently unused save for a few offices and meeting rooms. (Bleu Restaurant is not in the Tiger building.) The project would rehab the
building as a boutique hotel.
What is TIF?
A TIF leverages the future taxes a project will create in order to help fund the project. How exactly does this work?
First, a property owner secures a bank loan for 100% of the project costs backed by his or her own collateral–the city does not guarantee the loan. If the project fails, the developer is on the hook for the entire amount.
Second, the property tax assessments are frozen at current levels. All taxing entities–city, schools,county, the Special Business District–continue to receive the same amount of property tax revenue as they do right now. Only the increase in property taxes goes to the project.
Third, the sales taxes are also frozen at current levels–but the increases are split between the project and the taxing entities. Any taxing entities receiving sales tax will continue to receive their current amount plus 50% of increase in sales taxes generated by the project.
Fourth, the increase in taxes is used to pay off a portion of the loan, usually 15-19%. TIFs usually take between 15 and 23 years to pay off, although a successful project can be paid off even sooner. When the loan is paid off, the tax revenues increase to their new levels and everyone benefits by receiving those additional revenues. The Special Business District benefits because not only do we have those new taxes (to help provide more services and programs) but we also have a new development that will serve as an economic catalyst in an area that sorely needed it.
What TIF is not.
• A TIF is not an added tax. Consumers will not be paying more for goods or services.
• A TIF is not funded by the city. A developer does not simply receive a check from the city nor are any taxes abated.
• A TIF is not secured by the city. A developer assumes 100% of the risk when it comes to the bank loan and the project itself. City bonds are not used.
• Tax revenues will not decrease. All taxing entities will continue to receive their current tax revenues and some will see an additional 50% of new sales taxes. All entities will see an increase in revenues if the tax rate increases.
• TIFs are not just for blighted areas. TIFs can also be used for conservation areas–areas that could become blighted if no action is taken to repair or rebuild the infrastructure, buildings,etc.
• TIFs are not suitable for non-profits. Because TIF is a tax-based incentive,organizations that pay no taxes cannot benefit. A non-profit that wants to use TIF must become a for-profit entity.
• Schools will not be overburdened. The schools will continue to received their current tax revenues and these projects–a hotel and apartments designed for adults without children–will not add more children to the school system.
Why do we need TIFs?
The future economic strength of The District depends on smart development projects–infill development projects built on empty lots, rehabbed older buildings, building up rather than out, and creating space for more residents. Even though the last few years have seen a building boom here in Columbia, very few of these building projects were located downtown. If these projects didn’t happen in boom years, how can we expect them to happen now?
We can learn something from the significant increase in historic renovations downtown. This level of development would never have happened if not for the State Historic Preservation Tax Credit. This tax credit helped property owners bridge the gap between what the banks were willing to loan and what the project would really cost. TIF will serve this same function for larger projects, many of which are either new or ineligible for tax credits. Without this new incentive we simply won’t see the catalytic projects needed to bring our city to the next level–nor will it help us compete with cities such as Springfield, St. Louis and Kansas City who are already using TIFs to create more exciting, attractive and economically strong downtowns.
Posted on Jan 4, 2010
NPR had a story this morning on where this decade’s jobs will come from. The disheartening news was that 6 out of the top seven fastest-growing jobs are low-skill, low-wage jobs.
The top ten:
1. Registered nurses
2. Home health aids
3. Customer service representatives
4. Food preparation and serving workers
5. Personal and home care aides
6. Retail salespersons
7. Office clerks
9. Nursing aides, orderlies and attendants
10. Postsecondary teachers
According to Harvard University labor economist Lawrence Katz:
“The challenge is to move those jobs up the skills ladder. There’s no reason, he says, that home health care workers couldn’t be better educated to provide patients with greater value and, as a result, command higher wages to improve their own living standards.”
The trick, he says, is to “professionalize” these jobs.
1) Perhaps we need to think differently about the service industry. We can’t thrive as a nation by serving hamburgers to each other.
Some of the long-time property owners here in our downtown were retailers. They started out selling shoes, then started a business, then bought the building. That’s retail but it’s not a career to sneeze at. Well-educated or well-trained retailers can go head to head with the nationals because they have the knowledge and support system necessary to be successful.
2) Perhaps we need to stop obsessing over manufacturing jobs, say goodbye to large scale industries and put our money and efforts towards other areas. Why can’t we use Apple or Microsoft as a business model rather than General Motors and US Steel?
Posted on Jan 4, 2010
Here in Columbia we have a new business incubator focusing primarily on life sciences. It fits nicely with the University of Missouri’s focus on biomedical (particularly veterinary technology), agriculture and sustainability and renewable resources.
We also have an arts incubator of sorts, Orr Street Studios. Artists can rent small studio space and share a public gallery and a part-time marketing/events person. The interaction between artists of all types helps get their creative juices flowing.
What about a similar set up for small businesses? Creative companies, non-profits and other professionals often start out with a skeleton staff and a budget best reserved for things other than rent. Small offices, public meeting room, space to gather, even a shared kitchen. Even among different fields, the ideas and the energy would be contagious. Can you imagine how much more creative you’d be than if you were sitting alone in a home office?
Posted on Dec 8, 2009
A Kauffman Foundation report offers some interesting insight into the job market:
“If one excludes startups, an analysis of the 2007 Census data shows that young firms (defined as one to five years old) still account for roughly two-thirds of job creation, averaging nearly four new jobs per firm per year. Of the overall 12 million new jobs added in 2007, young firms were responsible for the creation of nearly 8 million of those jobs.”
They found this trend in the Columbia, MO job market as well. The last five years have seen:
Posted on Nov 25, 2009
We’re all aware of the NIMBY phenomenon–“Not In My Backyard”–but I’ve begun noticing a new one, NIICHI or “Not If I Can’t Have It”.
A small but vocal group of business and property owners recently came together in our city to oppose Tax Increment Financing, a new development incentive designed to encourage more downtown infill projects. TIFs are designed to keep the current tax revenue stream steady while using future taxes that will be created from the project to help fund the project. However, these opponents characterized the program a literally taking money away from the schools or the city and giving it to property owners–to the point where the public began to think that the developer was being handed a large check.
Their primary argument, though, was that they didn’t have any help when they started their business, so why should someone else get help. Setting aside the fact these are public programs to which any qualified person can apply, it demonstrated a strong emotional undercurrent–a belief that there are limited resources and helping one person necessarily means another will be harmed. (Interestingly, the two projects under consideration were a hotel and an apartment building–both guaranteed to bring new customers into their businesses. In other words, two projects designed to increase the size of the pie.)
Part of this stems from what’s happening at the national level. With the downturn in the economy, both the past and the present administration have supported wide-ranging stimulus packages in an attempt to get it back on track. Government stimulus means that future tax dollars are being used to help out certain groups of people today. For someone struggling to support their own family and manage their debt, this is easily seen as a program designed to take money out of their pocket and give it to someone else.
This may be a passing phenomenon–people feeling the pinch of a tight economy–but it’s something to watch for. How can we do a better job of explaining a development incentive as something that creates a bigger pie? Better yet, how do we do a better job of designing incentives so that everyone feels the benefit?
Posted on Nov 22, 2009
Like many who work in downtown economic development, I often have people approach me asking, “Why don’t we get a Gap? (Interchangeable, of course, with Banana Republic, Ann Taylor, Loft, Eddie Bauer, or Abercrombie.) It’s a legitimate question. These stores are usually found down the road at the mall and the demographic of the customers often fits well with a particular downtown. However, it may be the wrong question.
First of all, Gap and many of these larger retailers are struggling–not just because of the economy but because of some strategic errors in how they positioned themselves. Ann Taylor and Banana Republic are struggling, mainly due to a few years of dull offerings. Ann Taylor’s new line may help but Banana is still trying to find a niche. Abercrombie focused on casual wear, missing out on the dress and jewelry trend that hit a few years back. They’ve just started adding dresses to their collection. Eddie Bauer’s coming in a distant third with the outdoor/casual set, mainly because they were producing clothing that was too rugged-looking for normal wear but not good enough for actually wearing outdoors. Their stores now carrying the First Ascent Expedition Outfitting suited for actual mountaineering–if the large photo displays of rugged men scaling Everest are any indication. (By the way, the line does appear to be creating some excitement–in the store I visited, this section was by far the most crowded, albeit with people who probably avoid even driving in the snow.)
The economy’s hit local apparel stores as well but the one thing they have going for themselves is that they’re nimble. A good retailer can spot trends and move quickly on them, rather than waiting for the corporate structure of an Ann Taylor to make a course correction. Nationals design their own lines so if it fails, it fails together. Locals buy from a range of lines and, like many in our downtown, they actually make their own apparel or rely on local artisans for their jewelry. If a piece fails it’s not a harbinger of a failed line; instead they can move quickly to the next option.
Nationals certainly have their place and that place is often in a downtown. But let’s not look at them as the saviors of a downtown. Instead, take a look at what makes the locals so successful and figure out a way to franchise that.
Posted on Nov 22, 2009
I recently gave a talk to a group of professionals from South Korea who were participating in the University of Missouri’s Global Leadership Program, a year-long program designed to teach government officials and other professionals the intricacies of American business, culture and language. Before my talk began I had a chance to talk with several of them about what issues downtowns in South Korea were facing. The answer was surprising, although it shouldn’t have been.
“Our downtowns are suffering because malls were built on the outskirts of town and everyone’s going there to shop.”
I guess we’re all more alike than we think.