In December 2017, the National Institute of Building Sciences published Natural Hazard Mitigation Saves: 2017 Interim Report. This report shows that acting to reduce the impacts of floods, hurricane surges, wind, earthquakes, and wildfires is a sound financial investment. Such action, often called mitigation, can result in significant savings of lives, money, and property. The Institute’s objective is to provide information to key decision-makers at federal, state, and local levels so they can develop more resilient communities that can better withstand natural disasters. This post summarizes the report’s findings.
Federal tax reform is likely to be enacted before the end of the year. While the final form of the bill has not been determined, it is nearly certain that federal historic preservation tax credits—an important financing mechanism for preservation of historic properties—will be significantly affected. In fact, most observers anticipate that the value of the tax credits will be diminished by tax reform, thereby making historic preservation projects more difficult to finance and complete. For that reason, some real estate developers have asked local government owners of historic properties to convey those properties to new ownership before the end of the 2017 tax year (December 31, 2017) in order to “grandfather” those projects under the older, more favorable rules. This post briefly describes how federal tax reform could affect historic rehabilitation projects and offers some guidance for North Carolina public officials who wish to respond (on a very tight deadline) to a request to transfer historic properties owned by local governments. Continue reading “Local Government Owners of Historic Property Asked to Convey Property by End of 2017: What Public Officials Should Know”
How can a city more effectively fight blight—vacant, abandoned, and dilapidated housing? The city of High Point tried to find some answers last year with help from the Center for Community Progress and the UNC School of Government.
My economic development expert-colleague Tyler Mulligan and I were honored to play a part in this extensive effort that included a variety of city departments, Guilford County officials, and neighborhood organizations. Tyler focused on how best to navigate housing code enforcement law. My focus was on how best to use property tax collection remedies to recoup housing code enforcement costs. You can read the full report produced by the Center for Community Progress here; today’s blog summarizes the relevant property tax collection issues.
My best advice to High Point and other cities combating blight was simple: use your property tax bills! Continue reading “Fighting Blight with Property Tax Bills”
Last year, nursing assistants in Goldsboro earned $11.83 an hour (median wage) for a mean annual salary of $24,610. Is this a sufficient wage to sustain a person who wants to live and work there?
Affordable housing for different demographic groups in North Carolina communities has been discussed in several prior blogs, including ones about affordable housing for teachers, seniors and those living in rural areas. A different perspective is available with the use of easily-accessible, wonderfully-detailed data from the Bureau of Labor Statistics (BLS) Continue reading “Making the Case for Affordable Housing: Using BLS Statistics to ask Hard Questions About Salaries vs. Local Housing Costs”
The N.C. Commerce Park in Alamance County, North Carolina is an economic development success story that underscores how vital interlocal and regional collaboration is for community and economic development. It highlights the power of partnership and also the importance of local leaders that share a collaborative mindset.
Many small towns and rural areas had an economy that was built on a single economic sector (for example, logging, mining, or manufacturing) that has changed significantly by technology and/or market forces, leaving residents without jobs and governments without a healthy tax base. Some communities respond with an economic revitalization strategy that seeks to attract major employers to replace lost jobs. Another approach is “Smart Growth” economic development, which builds upon existing assets, takes incremental actions to strengthen communities, and builds long-term value to attract a range of investments.
This past year, the U.S. EPA released Framework for Creating a Smart Growth Economic Development Strategy: A Tool for Small Cities and Towns. This tool is intended for small to medium sized cities and towns that have stagnant population growth, struggling economies, and areas of divestment. It is the latest in a slew of resources available from EPA on Smart Growth, including other tools, publications, technical assistance, and case studies. Continue reading “EPA Resources on Smart Growth Economic Development”
Matthew Desmond has authored a scrupulously researched, stimulating and compelling book that should be of interest to everyone in the apartment industry, every low-income housing advocate, any student of American neighborhoods and every public official.
Examinations of urban poverty are nothing new, but this study of the causes and consequences of evictions on families, housing quality and the fabric of neighborhoods is innovative, thought-provoking, and readable. The author looks to bring this overlooked aspect of American poverty and inequality to a broader audience. Continue reading “Evictions: A vicious cycle for people in poverty”
Strengthening local food economies can be viewed as an important part of a holistic approach to community development. Local food can be a positive contributor to social capital, public health, environmental preservation, and overall quality of life. It also can be an important component of local economic development. In thinking about the development of robust local food economies, a lot of attention is given to the poles of local food supply chains: namely, local farmers and farms on one end, and outlets for distribution on the other, such as farmer’s markets, co-ops, and CSA operations. But for many local farmers, too little attention is given to the intermediary steps in the supply-chain. The intermediary steps together constitute a critical infrastructure for local farmers that can make a huge difference in making a local food operation viable or not.
In July 2013, I wrote a blog proposing a four-part framework for understanding if specific local organizations have the capacity to implement CED programs. How well does this framework hold up when actually used? We answer this question using interviews with 31 local partners, over the past two years around a single, federally-funded, locally-administered community program in North Carolina. About half have given up on running the program. Continue reading “Is Your Local Community Partner Ready To Go?”
County officials from Tarheel County as well as City officials from the county seat were approached by two residential developers who are seeking to construct housing that is affordable to low and moderate income (LMI) persons. One developer, DoGooder Inc., is a private, for-profit developer who intends to construct multi-family housing in which half of the twenty apartment units will be rented at a rate that is affordable to LMI persons. DoGooder is financing the project through conventional private financing but has asked the City and County for a cash subsidy to “make the project feasible.” The other developer, Good Habits for Humans, is a nonprofit corporation whose staff and volunteers plan to construct one single family home and sell it to a family headed by a LMI person. Good Habits has asked the City and County to provide a cash grant to help them pay for staff supervision and construction materials for the project.
This post describes the legal authority for the City and County to provide the requested subsidies and explains some important differences between City and County authority in this area. Continue reading “Local Government Support for Privately Constructed Affordable Housing”
I often think about ways in which local government matters in the daily lives of citizens. This month, a major study was released showing how local conditions, and community and economic development, infrastructure, and planning in particular, may have a direct impact on the most basic quality of life indicator Continue reading “Live Long and Prosper: Does CED Impact How Long We Live?”
Back in September, this blog highlighted a new program from US EPA to work with small businesses nationwide to develop and commercialize technologies that tackle critical environmental problems: the Small Business Innovation Research (SBIR) Program. Now the US Department of Energy’s Office of Energy Efficiency and Renewable Energy has launched its own program to assist small businesses, the Small Business Vouchers (SBV) pilot program. The Small Business Vouchers program links small businesses who promote clean energy technology with the DOE National Laboratories. Continue reading “More Federal Funding Available to Grow Clean Energy Small Businesses”
A developer in town is seeking approval for a large new real estate project. The zoning and subdivision ordinances call for the developer to construct and dedicate public streets and parks and water infrastructure. But, the city has plans for some additional improvements adjacent to the development—a greenway on adjoining property and some intersection improvements nearby. The developer’s contractors will already be on site, grading land and constructing improvements. Could the city just pay the developer to build the city’s improvements, too?
The answer is yes. But, of course, there are limits and procedural requirements. Cities and counties may enter into agreements for certain improvements—beyond those required as part of the development approval—to be made by a developer. The General Statutes include overlapping authority for contracting for public enterprise improvements, roadway improvements (cities only), as well as general reimbursement agreements. This blog outlines the basics of those overlapping authorities. Continue reading “Reimbursement Agreements”
As this blog is being written, water and community managers from across the country are talking about the water crisis that is occurring in Flint, Michigan. The City made a decision several years ago to discontinue buying Lake Huron water from Detroit in favor of an alternative supplier who was planning on constructing a major new transmission line to provide a “less costly” supply of Lake Huron water. While waiting for the project to be completed, the City relied on water from the Flint River. This source of water was determined to have a different chemical composition that led to water line corrosion causing lead to enter the drinking water supply. In addition to the acute public health impacts of the crisis, the impoverished community is facing a huge price tag to address their infrastructure problems. Continue reading “Four Finance Facts about Flint”
In past posts, we have discussed how governments can use financing programs to encourage energy improvements and how energy improvements can turn undesirable properties into economic opportunities. In fact, economic development and job creation are some of the major benefits touted by governmental energy programs, even above and beyond the potential environmental benefits of such programs.
The non-profit American Council for an Energy-Efficient Economy (ACEEE) has written extensively on the job creation benefits of energy programs, including a fact sheet and a series of case studies. Many other entities have put out their own case studies, such as World Resources Institute (WRI).
But what is the best way to measure job creation? Is there a consistent, accepted methodology to measure the economic impact of energy programs so that programs can be compared to each other? Continue reading “How to Measure Job Creation from Energy Efficiency and Renewable Energy Programs”
A local real estate developer, Al Czervik, proposes to construct a mixed-use development with residential, office, and retail space. The city council likes the development plan because it is consistent with the council’s vision for the area. Czervik, seeing incentives being offered to convince companies to locate in North Carolina rather than other states, misses the significance of the competition element of those incentives and thinks his development, too, should receive incentives. He requests a $1 million cash grant ($100,000 per year for 10 years) from the city to “make the project work.” Czervik is unwilling to promise jobs, of course—because it is the tenants who will provide jobs, not his development—but he is confident that tenants with jobs will locate in the development and therefore he seeks a subsidy nonetheless. Czervik’s request gets the attention of the city attorney, who is well aware that this request rests on very shaky legal ground (as explained in this blog post and this law review article). How might the city attorney frame the legal issues for city council members, who are initially receptive to Czervik’s request? Continue reading “Cash Grants for Real Estate Developers without Competition for Jobs—A Constitutional Quandary”
Small water systems serving 10,000 people or less comprise more than 94% of our nation’s public water systems. They are a large and diverse group, and are managed by a wide variety actors – from local and tribal governments, to mobile home park owners, to homeowners associations, to shopping mall operators and hotel managers. These managers often have many other, very different responsibilities and often face challenges in running the water system. In 2011, 25 percent of the nation’s smallest systems violated health-based standards in part due to their geographic isolation, small staff size, growing infrastructure needs and small customer bases. And as we wrote about earlier this year, small water systems with financial difficulties are more likely to have violations.
Since 2012, the Environmental Finance Center at UNC and the Environmental Finance Center Network have been working to help educate and build financial and managerial capacity within small water systems. Through our work under the Smart Management for Small Water Systems Project, we’ve noticed 5 dangerous myths in financial planning. These myths can appear wherever water system planning occurs, but seem to be most prevalent among smaller communities that are considering creating a new or significantly expanded water system.
In previous posts, we have discussed where to find data to help make smart financial and managerial decisions. Another vital data source for any enterprise is its own financial statements, from which enterprises can calculate key financial indicators. In March, we discussed operating ratio. This post will discuss another key financial indicator–debt service coverage ratio.
Debt service coverage ratio is an important indicator for many aspects of community and economic development. For this blog, let’s look at key financial indicators from the perspective of a business-like unit within government–a water or wastewater system. Key financial indicators are a way for that enterprise to get a snapshot of its financial health and to determine whether it needs to make adjustments to its rates, and they should be calculated annually when financial statements are released. Debt service coverage ratio, as the name suggests, measures the system’s ability to pay its long-term debts. Continue reading “Key Financial Indicators: Debt Service Coverage Ratio”
North Carolina law offers a variety of exemptions, exclusions, and appraisal benefits for property used to provide housing for low- or moderate-income residents. Here is a quick summary of those special rules with links to the full statutes and to more-detailed blog posts on related issues. Continue reading “Special Property Tax Rules for Affordable Housing”
It varies and it depends. Need more details? It may cost as little as a few hundred dollars to connect to a rural water system in some areas of the state or $10,000 or more in other areas such as the coast or fast growing urban centers that are facing high infrastructure costs to add capacity. If $10,000 sounds excessive, consider that connection charges in certain communities in the country facing severe water supply and infrastructure challenges can run as much as $35,000 to $50,000 for a new connection. The median combined connection cost for a single family water and sewer connect charged by the 328 utilities who provide both services and were included in a connection charge survey completed last month came out to be just under $2,400.
Continue reading “How much does connecting to a water and wastewater system cost?”
In previous posts, we have discussed where to find data to help make smart financial and managerial decisions. Another vital data source for any enterprise is its own financial statements, from which enterprises can calculate key financial indicators.
Let’s look at key financial indicators from the perspective of a business-like unit within government–a water or wastewater system. Key financial indicators are a way for that enterprise to get a snapshot of its financial health and to determine whether it needs to make adjustments to its rates, and they should be calculated annually when financial statements are released. One important financial indicator is operating ratio, which measures the ratio of annual operating revenues to annual operating expenses. To be a true enterprise fund that is self-supporting, a system should strive to have at least as much operating revenue as it has operating expenses, if not more. Otherwise, the system would be operating at a loss.
Three important headlines for economic and community development officials appeared in the past several days in the New York Times, Washington Post, and, closer to home, the News and Observer. Continue reading “Three Headlines, Two Futures for North Carolina?”
Ever need to know how many single-family wood-framed houses were sold in the Midwest last year? Or the latitude and longitude of every farmers market in Wisconsin that sells herbs, flowers, and soap? What about the number of planes that sat on the tarmac more than three hours this past June? Or the annual sales volume of book stores in the United States for the past 20 years?
These might sound like crazy questions, but all of the above information is available through the federal government’s data portal www.data.gov. Data.gov houses more than 130,000 data sets that are freely available for download (and, no, that’s not a typo—more than one hundred thirty thousand data sets). These data can be invaluable resources for making smart managerial and financial decisions for our economic development, community development, and environmental services. Continue reading “Where to Find Data for Smart Managerial and Financial Decisions”
Almost ten years ago, in the town of Bushwood, North Carolina, the “generous” owner of the historic textile mill building just off Main Street donated the property to the town (it was difficult to maintain and the owner didn’t want to pay property taxes on it any more). The town accepted the property, hoping that it would be able to find a new private owner who would redevelop the property and retain the historic character of the building. Some potential buyers have kicked the tires on the building, but no one has made an offer. Due to the value of the land and the excellent location of the parcel, the property appraises for $300,000.
The town recognizes that it needs to market the building more actively—and that it may need the help of experts. “Old Mills R Us,” a regional historic preservation nonprofit with a mission to preserve historic mill buildings, has a proposal for the town:
- The town will sell the mill to the nonprofit for one dollar.
- Old Mills R Us (OMRU) will market the property and sell the mill to a private developer who will redevelop the property while retaining the historic features.
- Rather than charging a broker fee, OMRU will simply keep the proceeds from the sale at whatever price OMRU can get.
Can the town enter into this transaction with OMRU? Short answer: not on these terms. This post explains why and suggests some alternatives. Continue reading “Sale of Historic Structures by NC Local Governments for Redevelopment”
$12 million in one hour: That’s not a report of the ticket sales for the Garth Brooks and Trisha Yearwood’s Greensboro show last week. That is how much the City of Denver raised directly from the citizens of Colorado for the final phase of its Better Denver capital campaign. This past August, the City of Denver offered general obligation bonds in $500 increments to Colorado residents, and they bought them right up! Approximately 1,000 Colorado residents purchased an average of 24 mini-bonds apiece. The City anticipated a five day sale. They were turning people away after one hour.
North Carolina property tax law, nicknamed the Machinery Act, contains over 60 full or partial exemptions for property as diverse as free drug samples, uranium 233, and Loyal Order of the Moose clubhouses.
A number of these exemptions are aimed at property that might be part of a local government’s community economic development plans. This blog attempts to identify these economic development exemptions and summarize their key statutory provisions. If you think we’ve missed any relevant exemptions, please don’t be shy—that’s what the comment section is for! Continue reading “Property Tax Exemptions and Community Economic Development”
Securities laws rarely provide the introductory hook writers dream about, but they do represent a substantial challenge that many real estate developers must address. Over the last two years, the United States Congress and North Carolina State House each proposed crowdfunding legislation that lessens the regulatory burden for small-dollar securities offerings. The federal Jumpstart Our Business Startups Act (federal JOBS Act) and North Carolina Jumpstart Our Business Start-Ups Act (NC JOBS Act) are designed to assist startup companies and small businesses; however, real estate professionals and economic development managers should also be aware of the new fundraising tools now at their disposal. This post outlines how existing federal and state securities laws are modified by crowdfunding legislation, beginning first with an overview of the existing securities laws, and followed by a deeper dive into each of the federal and state law changes. Continue reading “Crowdfunding for Development: A Primer on Federal and North Carolina Securities Law”
In a recently released report, the National Association of Counties (NACo) examines the special role that county governments play in the process of economic development. The report’s findings are based on a national survey of U.S. counties and case studies of local economic development in 34 selected counties. The findings suggest that counties implement their economic development activities in a collaborative manner by working with other local governments, state government, nonprofits, regional organizations, and private sector entities. Continue reading “The Role of U.S. Counties in Economic Development”
In the span of a week, Americans witnessed two important days – Tax Day on April 15th, and Earth Day on April 22nd. While we saw many celebrations on Earth Day, on the infamous day that tax forms are due, moods were likely less cheerful as individuals throughout the country struggled to understand and complete a myriad of tax forms. However, perhaps the close proximity of these two important days is appropriate: taxes do play a crucial role in many environmental finance systems. For that reason, at this time of year I often try to relieve my form-fatigue with some reflection on the role taxes play in paying for environmental programs.
A long-time School of Government Faculty Member, Jake Wicker, used to say that governments never really pay for anything. Governments do the collecting – it’s the people who pay. I’ve always remembered this and try to keep it in mind as I work with communities to Continue reading “Taxes and Environmental Finance”
A previous post by Tyler Mulligan explained how local governments can utilize land banks to address vacant, abandoned, and tax foreclosed properties in their community. This post provides an example of a successful land bank in Genesee County, Michigan – home to the city of Flint – and discusses key elements of the Genesee model that may be useful for other communities. Continue reading “Land Banks in Action: Genesee County, Michigan”
Imagine a county wondering what to do with its old courthouse that is sitting vacant in the middle of downtown. Perhaps the county wants to use part of the building as the commissioners’ meeting room, but the rest of the courthouse would sit unused, literally gathering dust, because the county doesn’t have the funds to renovate and up fit the entire building (it can barely afford to renovate one courtroom for the commissioners’ meeting room). Now imagine the county partnering with a private developer who would enter into a long-term lease for the unused space, renovate it, and rent it to a local businesswoman who will turn that space into a quaint bookstore and café, brightening up the downtown district (and providing a convenient place for commissioners to grab a quick bite to eat before meetings). The developer will finance 60% of the entire cost of the project and get a return on his investment from the rental income generated by the bookstore and café. Sounds good, right? How does the county structure this kind of contract? Who handles the bidding for the construction and renovation work? Who is responsible for ongoing maintenance? Can a private developer even finance improvements to a public building? How on earth does the county bid this kind of contract?
The new P3 contracting method sets out a statutory framework for this and similar public-private partnerships (“P3”). This contracting method was authorized by the General Assembly during the 2013 legislative session in the same bill that authorized the design-build and design-build bridging alternative construction delivery methods (S.L. 2013-401/H857 ). Codified in the new G.S. 143-128.1C, P3 contracting is available to all public entities in the state. Continue reading “New Construction Delivery Methods – Public-Private Partnerships (P3)”
In his Inferno, Dante places usurers in the seventh circle of Hell along with profligates, blasphemers, and those violent towards people and property. These damned souls dwell in the innermost ring of the seventh circle, where they must sit in a flaming desert surrounded by falling tongues of fire. Considering there are only nine circles in Dante’s Hell, this placement speaks volumes about his attitude towards these “financiers.” Few would begrudge an individual for expecting a reasonable interest on a loan payment today; indeed, our entire international banking system has been built upon the idea of lending money on interest. Millions have benefitted from bank loans to help with everything from home purchases to small business creation. However, increasing disparity and barriers to traditional capital markets have given birth to an entity that would make even the Inferno’s usurers cringe: payday loans. Continue reading “Payday Lenders & North Carolina’s Capital Showdown”
On January 27, 2014, the North Carolina General Assembly’s House Committee on Food Desert Zones heard testimony about food deserts in North Carolina. A “food desert” is defined in the Food, Conservation, and Energy Act of 2008 as an area “with limited access to affordable and nutritious food.” Maps and census tract data about food deserts can be found in the Food Access Research Atlas compiled by the U.S. Department of Agriculture (USDA).
Food deserts are often found in low-income areas. A recent media report pointed out that North Carolina contains 349 low-income food deserts; that is, communities with a high proportion of low-income residents and containing no supermarkets (1) within one mile in urban areas or (2) within 10 miles in rural areas. While it might seem counter-intuitive for farming communities to lack access to food, rural areas are particularly susceptible to food deserts. As pointed out in my 2010 report on rural asset-building strategies (co-authored with Lisa Stifler), looking forward, food deserts are expected to increase in number in rural areas as rural populations decline and food industries continue to shift food distribution channels to larger superstores in more populous communities. With low-income food deserts now located in 80 out of North Carolina’s 100 counties, food deserts are increasingly being viewed as a statewide issue requiring a coordinated policy response. This post describes some of the policy approaches presented to the House Committee on Food Desert Zones and then takes a closer look at a proposed approach involving development finance tools, such as loans and grants. Continue reading “Food Deserts and Development Finance Options in North Carolina”
In the fall of 2013, a blog post on special assessments for financing infrastructure included a short description of the Town of Hillsborough’s use of this finance strategy. Hillsborough was the first local government in North Carolina to borrow money and pledge special assessments as security for a loan. In learning more about this tool, we have conducted informational interviews with the local elected and administrative leadership. A series of blog posts will differentiate special assessments from other project financing tools, shed light on unique aspects of the implementation process, and review the town’s areas for deliberation.
The following provides background on the Town of Hillsborough’s case, and then discusses various financing options for project infrastructure. Continue reading “Town of Hillsborough: Special Assessments (Part I)”
The Community Development and Block Grant Program (CDBG) is one of the key public sources of funds for community water and sewer projects in North Carolina and across the country. While the amount of funds available for water and sewer projects is not as large as other federal programs such as joint EPA/State funded Clean Water and Drinking Water Revolving loan programs, or the United States Department of Agricultural Water and Waste Disposal Grant and Loan Program, the State Administered program has been an essential tool for lower wealth communities that may not have had the financial capacity to take out commercial or subsidized government loans. Larger units of government receive funds directly from the Housing and Urban Development (HUD) through their entitlement program and are responsible for how those funds are allocated.
Water and Sewer funding is one of many eligible uses of the pool of CDBG funds that states receive each year from HUD to help smaller local governments. States must adhere to federal regulations and guidelines in allocating and using funds, but have a wide latitude to customize their programs to meet the needs of their individual states. Regent legislative changes in North Carolina have resulted in significant changes in the amount of funds Continue reading “Update on CDBG Funding for Water and Sewer Projects in North Carolina”
The City of Memphis, Tennessee was an early adopter and frequent user of HOPE VI funds to demolish traditional public housing and redevelop mixed-income sites. Over the past 15 years, the Memphis Housing Authority (MHA) has received more than $155 million Federal dollars to demolish five public housing complexes that had housed over 1,200 residents, only one fifth of whom returned to rebuilt housing. In 2009, MHA announced that it was preparing to demolish and redevelop the city’s last remaining traditional public housing complex, Foote Homes, and its sister site, Cleaborn Homes, together comprising 497 housing units (1).
On paper, it looked like the redevelopment of Foote Homes and its surrounding neighborhood, Vance Avenue, was a foregone conclusion. MHA won a Choice Neighborhoods grant of a quarter million dollars to redevelop Foote Homes, and the broader Vance Avenue area was slated to be redeveloped into a tourist destination called Triangle Noir, with infrastructure, commercial, and housing upgrades funded by a $102 million TIF (2). But MHA may have jumped the gun with its grand plans for the area’s redevelopment.
An emerging new source of supply for affordable senior housing is the adaptive reuse of historic buildings. These projects not only create much-needed new units of senior housing, but also offer communities a creative solution to their historic buildings, many of which are in dire need of renovation. Affordable senior housing as the primary use in a historic redevelopment project can can work well, financially, because the projects can be structured to access State and Federal Historic Preservation Tax Credits along with Federal Low-Income Housing Tax Credit (LIHTCs).
In North Carolina, at least 19 historic buildings have been adaptively reused for low-income senior housing since 2000. School buildings are the most common type of historic structure that has been historically renovated in North Carolina for affordable senior housing. The Paul Braxton School located in Siler City is one such example. Built in 1922, this school sat empty for nearly 25 years until Community Housing Partners (CHP) converted its 32 classrooms into apartments. Architecturally distinctive, this school is one of the few surviving civic examples of the rarely implemented Art Deco style in Chatham and Randolph Counties. Continue reading “Historic Building Reuse for Affordable Senior Housing”
Cities suffering from significant population losses are sometimes referred to as “shrinking cities.” Most notably, the City of Detroit has lost 25 percent of its population from 2010 to 2000. When comparing the City’s peak population of 1.8 million in 1950 to today, the population has decreased more than 60 percent to about 700,000.
The decreasing population in Detroit has left many buildings vacant, in particular residential units. The US Census estimated that close to 100,000 residential units, or 27 percent of all of its units, are vacant. This rate is more than twice as high as the national residential vacancy rate of 12 percent. Vacant properties hurt neighborhoods because high vacancy rates can encourage criminal activity, increase risk of fires, and reduce property values.
While Detroit is an extreme example, many communities face similar problems, whether from population decrease or high foreclosure rate. Community development experts recommend four strategies to manage vacant and abandoned properties: Continue reading “Strategies to Manage Vacant and Abandoned Properties”
On October 6-9, the International Economic Development Council (IEDC) held its annual conference in the ‘City of Brotherly Love,” Philadelphia, Pennsylvania. This year’s conference theme was Transformation, Innovation, Reinvention: Creating Tomorrow’s Economy Today. Several of the concurrent sessions offered unique resources and perspectives on the field. A few interesting points from select sessions are highlighted below: Continue reading “Highlights from IEDC Annual Conference 2013”
Last month I hosted a webinar here at the School of Government, in partnership with the Center for Environmental Farming Systems (or CEFS for short), on the topic of local foods and local government. I was fortunate enough to have with me a who’s who of local foods experts to talk about different aspects of the local foods movement as a way of introducing the topic to local government officials, and perhaps more importantly, serve as a springboard for local conversations between local officials and local food system stakeholders as to how local government can be a catalyst in growing and nurturing vibrant local/regional food systems.
Yesterday, Sept 4th, community leaders, elected officials, school administrators and a team from Self-Help gathered in NE Central Durham to celebrate the opening of a revitalized historic asset. The historic YE Smith School, a 54,000 square foot building originally constructed in 1910, is the new home to the Maureen Joy Charter School. The project involved a $10 million investment in a building that sat vacant for 40 years, located in a community and neighborhood with above average crime, poverty and economic distress (map here). After 3+ years of work, the final result is the relocation of a successful public charter school into a modern, technically sophisticated and architecturally stunning building. How was such a project possible? What finance tools were used? Who were the funding partners? What are some key ingredients to transformative redevelopment projects? Continue reading “Historic School Redevelopment (Durham, NC)”
Say you have learned of a community economic development (CED) program that seems to be a perfect fit for your area. The need is already there and well documented, the program provides the right mix of projects, and all the program financial resources are available and already approved. All that is needed is the local government to ‘do it’ – that is, officially apply, implement, administer, and report on the program at the community level. Seems like a slam-dunk, right? Now imagine what your reaction would be if the city or county manager turned it down?
It might be that the local government simply can’t take on any more, no matter how wonderful an opportunity the proposal seems to be. This scenario is the basis for a new conversation in local government policy arenas – the issue of local capacity. Continue reading “Does Your Community Have the Capacity to Undertake Community Economic Development?”
This is the fifth in a series of blog posts on tools available to local governments to assist small businesses. Previous posts have covered revolving loan funds (parts I and II), loan loss reserves (III) and capital sources for loan funds (IV). The fifth topic in this series is crowdfunding.
The history of crowdfunding in the United States can be traced to 1885 with the construction of the Statue of Liberty. While the Statue was donated by the French government, the United States was responsible for paying for a granite plinth for the Statue. The American Committee of the Statue of Liberty was formed to raise $250,000 (or $6.5 million today), but was unsuccessful. To assist, Joseph Pulitzer released an ad in his newspaper, the New York World, requesting donations. More than 160,000 people responded to this request helping the Committee meet its goal.
As demonstrated in this story, crowdfunding is the collection of funds, primarily in small amounts, from many people in order to finance different types of projects including music albums, new gadgets such as the Pebble watch, and renovation of building for new office space. With the emergence of social media and crowdfunding platforms such as Kickstarter and Indiegogo, crowdfunding is becoming a popular tool for entrepreneurs to raise funds from their networks and strangers across the world. Continue reading “Small Business Access to Capital (Part V): Crowdfunding”
Funding sources to capitalize revolving loan funds is the fourth topic in a series on tools local governments can use to assist small businesses. As discussed in Part II of this blog post series, local governments across North Carolina are using revolving loan funds to support their small businesses. A difficulty in establishing revolving loan funds is capitalizing them. The federal government currently offers at least five programs to assist local governments and nonprofits capitalize revolving loan funds: Continue reading “Small Business Access to Capital (Part IV): Funding Sources to Capitalize Revolving Loan Funds”
In Part I of the mega sites blog, we presented the “body-building” rationale for this industrial recruitment tool. In Part II, we’ll look at some risks of a mega site regimen and begin by introducing a new analogy:
Attracting a major manufacturer with a mega site is a bit like fishing in a crowded pond. After crafting a shiny lure and casting it strategically, you can only hope that 10-pound bass doesn’t take someone else’s bait.
If you make the catch, then the returns are significant. For instance, an economic impact analysis of the Jefferson County, TN, mega site projects that over 30 years it would yield $11 in local tax revenue for every $1 the public invested to develop the site. But, if you don’t land that fish, such speculation can come at significant cost to taxpayers. Continue reading “Mega Sites: Part II – Luring the Big Fish”
This is the third in a series of blog posts on tools available to local governments to assist small businesses. Previous posts have covered revolving loan funds (parts I and II). A second option is a loan-loss reserve fund.
What is a loan-loss reserve fund?
A loan-loss reserve fund (LLRF) involves a partnership between a non-financial institution, such as a local government, and a financial institution. The non-financial institution deposits money in a financial institution for the purpose of creating a loan loss reserve for loans made to small businesses associated with the non-financial institution.
Whenever a financial institution makes a loan, it has to set aside a certain percentage of that loan to cover any potential losses from a default. Financial institutions prefer to set aside as little funding as possible because these funds sit idle. This set aside is called a loan-loss reserve. Continue reading “Small Business Access to Capital (Part III): Loan-Loss Reserve Fund”
The main purpose of Community Development Financial Institutions (CDFIs) is to expand access to capital in low-wealth and underserved communities in order to foster economic development and revitalization. Many of these communities have been left out of the financial mainstream, unable to access financial services and capital from traditional banks. In recent years, particularly after the Great Recession, the credit market tightened even further. Large banks pulled back from small business lending and enacted tighter lending criteria. As a result, many entrepreneurs—even those that were previously able to secure small business loans—were left struggling to access the credit they needed to startup or expand their businesses. That is where CDFIs come into play.
CDFIs are typically smaller institutions that are able to evaluate businesses on a broad range of criteria—not just credit scores— and benefit from a close relationship with their borrowers Continue reading “Role of Community Development Financial Institutions in North Carolina”
Program-related investments (PRIs) are a tool that many foundations use to achieve philanthropic goals and financial returns. In contrast to traditional grants, PRIs include loans, equity investments, loan guarantees, or other investments from foundations. Common program areas funded by PRIs include affordable housing, community economic development, and education.
Both for-profit and not-for-profit entities that advance the mission of the foundation are eligible to receive PRIs. However, the IRS dictates that foundations cannot use PRIs for political campaigning or lobbying.
Traditionally, foundations have sought to address community issues primarily through the distribution of grants. The IRS dictates foundations must make annual distributions of at least five percent of the average fair market value of the foundation’s assets. For the most part, these charitable contributions are delivered primarily through grants. The remaining 95 percent of assets are kept in an endowment and invested in order to maintain or increase its value. Continue reading “Program-related investments (PRIs): A potential funding source for community economic development?”
What draws and retains residents to a specific community? Are there characteristics that make a local jurisdiction a particularly livable place, and can this concept be measured? As many local jurisdictions seek strategies to encourage economic development, some are giving equal attention to the concept of livability to ensure the benefits of their communities are preserved or flourish as a result of such efforts. While there are limitations and challenges to measuring livability or quality of life, jurisdictions in the United States and abroad have embarked on efforts to capture and measure it through comprehensive indices. Such a comprehensive index attempts to measure the tangible and intangible variables of quality of life through a collection of indicators organized around topical areas (e.g., health, education, transportation), possibly producing a composite score.
Historically, measuring society’s position and progress has focused on economic indicators. In fact, The Consumer Price Index and Dow Jones Industrial Average are two such examples of commonly-used indices. However, such economic measures provide a very narrow view of well-being, neglecting to evaluate other important aspects of life. Additionally, while national indexes are useful, they may not translate to the local level. As such, interest in developing and applying indices for the local level have grown as community leaders look for measures that reflect the daily experiences of its residents, as well as approaches to guide projects and policy decisions. Continue reading “Measuring quality of life or “livability” within a community”
The STARworks Center for Creative Enterprise is located in Star, North Carolina. The organization is a product of the Central Park North Carolina Regional Partnership, a non-profit partnership between seven counties in the south-central region of North Carolina. The mission of both STARworks and Central Park is to support a new economy through entrepreneurship and job creation in the creative, agricultural, and alternative energy industries throughout the region. STARworks supports small businesses by providing inexpensive work space, technical assistance,and shared resources.
STARworks recently received a $1.175 million grant from the Economic Development Administration (EDA) of the U.S. Department of Commerce. The grant was awarded to support redevelopment of a 187,000 square foot, former textile mill into a new home for Central Park NC Regional Partnership and STARworks. The excitement of receiving a sizable federal grant was quickly quashed when the organization’s leadership learned details of the grant’s security requirements and payout provisions. Adequate security for the grant meant that the value of the project provided sufficient collateral and, in cases where additional funding had been provided by other sources, the EDA maintained an acceptable lien position.
Given the particular circumstances, STARworks needed an innovative solution in a short time period in order to meet EDA’s requirements. Continue reading “Federal grant funds for redevelopment: Overcoming challenges with “security” and cash flow”