Economic Development Blog

Written by
Rickey Hayes
Retail Attractions, LLC

(continuation from previous post)

Cities need to face reality. Every community has retail potential. If somebody living in your community travels out of your community to purchase goods or services, you are losing revenue. That is reality. Every community needs to know the reality of it’s retail potential, whether it’s bright or depressing, and then do everything they can to maximize their potential. Cities need to look for and face reality about the overall appearance of the community to outsiders and citizens alike. Communities need to face reality about their fiscal health and opportunities for growth.

At a minimum every community needs to:

• Improve their overall cosmetic appearance and put on their best face
• Look at what technology is available and implement what is affordable to stay up with the times
• Collect and provide current and relevant data on development related topics: sales tax growth, building permits, traffic counts, etc.
• Know their city limit population and their trade area population. Cities need to understand who lives there and who shops there. They need to know their income levels, education levels, age distribution, ethnic backgrounds, housing profile (basic data on what the residential development in the city looks like) and occupation classification for the local workforce.
• Understand basic real estate principles, land values and be sensitive to confidentiality issues and development criteria
• Have an understanding of how to partner with a retailer or a developer to create a good environment for investment
• Examine their development process to ensure it is as seamless and efficient as possible. I have encouraged each community I have worked with to take an unbiased look at their development process and have not seen one where some changes didn’t need to be made.

As overwhelming as this list seems, it is all necessary to make your community the most attractive destination possible to retailers looking to expand. Competition is fierce, and there are communities across the country getting their ducks in a row. If you don’t want to be left out, you need to do the same. Retail Attractions can help you put your best foot forward. We provide a wide range of services to help you turn your vision into your reality.

Contact us today to make a seemingly overwhelming task more manageable.

Written by
Rickey Hayes
Retail Attractions, LLC

Cities are essentially all the same, no matter how large or small. Urban, suburban, rural… It doesn’t really make a difference. In base terms, cities are the corporate entities in geographic locations where people have gathered to live and co-exist. Although vastly different in many ways, there is a basic commonality or cohesion in them all. The populace share basic needs… food, water and shelter. Outside the basic needs the population needs a way to earn a living, to pursue goods and services needed to survive and opportunities to “re-create”. In other words ways to live, work, and play.

Communities as they exist need to organize, communicate and govern themselves to continue the cycle of life. Our country’s history is rich in the fundamental element of the way society is governed. We are opinionated, very vocal, and each has his or her individual ideologies about how government should work. We often take for granted our freedom in this country, and wars and conflict have occurred since the beginning of time because of difficulties in being able to figure out how life should be lived.

Because there is such a diverse population in our community and every individual has an underlying ideology about how things ought to be, city government often finds itself in the cycle of turning on itself because the goal of improving the overall quality of life for the whole is swallowed up by those in power fighting to make their own little kingdom.

It takes a vision to change the climate of “what we have always done” to “what ought to be done for the good of the city”. Along with a vision, it takes a vision caster to allow people to “see” the reality of what could be. A vision is a unifying force in itself. Where the reality of a do-able vision exists, people will be gathering around it. Where a do-able vision exists and people willing to work together to implement the vision are assembling… the future is born.

Check back in a couple of weeks for action steps to create a vision for your city…

Written by
Rickey Hayes
Retail Attractions, LLC

My adult working career has been diverse to say the least. It has been a mix of retail, health care, law enforcement, non-profit, counseling and economic development in both the public and private sector. I have been married to the same wonderful woman for thirty one years, raised four children and developed a vast network of interpersonal relationships as well as. I have experienced life at many levels, and each one of these life stages has been an education in itself. Perhaps the single hardest thing to learn in each stage is how to live life in reality. And it is no different as we work for our city clients.

One of the most difficult tasks we face is getting the various elements of city government to look with focused eyes at reality. Reality is sometimes harsh, sometimes brutal. But living in reality is always the best way to live. Living in fantasy has been the downfall of many individuals and organizations. Fantasy is sometimes fed by ignorance, sometimes by deceit. Regardless of where fantasy comes from, living in a false world is never going to get us where we need to go.

Our federal government is currently trying to avoid default by implementing “extraordinary measures”. The first “extraordinary measure” will be the suspension of a category of non-marketable bonds known as State and Local Government Series securities or SLGS (often referred to as “slugs”). These securities are tailor-made for state and local governments and are designed to help them pay for their debt. The federal government can’t pay their bills so they are passing the buck to the state government. Our government is in this mess because they refuse to live in reality.

We see cities living in a false world where they think revenue is going to create itself. City managers and city councils are pressed to create new sources of revenue to meet growing budget demands across the board. The “way we have always done it” philosophy isn’t working in today’s economic climate. What cities need is a new vision and new leadership. Cities need to take responsibility and face reality. Sitting idly by waiting for something good to happen doesn’t change the quality of life in your community. At Retail Attractions our philosophy is simple. Identify the needs of a community and figure out the best plan of action to fill those needs. Contact Retail Attractions to help your community make positive change a reality.

Written by
Rickey Hayes
Retail Attractions, LLC

Last week I received an invitation to the Heartland Economic Development Course held in Kansas City next month. The course touts itself as the “highest ranked multi-state economic development course in the United States”. This course, like most of the regional ED courses held in different areas around the country, is accredited by the International Economic Development Council (IEDC). This course is a basic part of an economic development practitioner’s training program and is in fact required for the IEDC certification process. I attended the same course in San Antonio, Texas in 2001, and I can tell you the course is saturated with good, solid training and should be a part of every ED professional’s course of study. There is absolutely nothing wrong with the course. However, if you look at the course offerings highlighted on the marketing brochure you will find not one reference to or mention of retail recruitment. It’s all about the “smokestack” and industrial and manufacturing job creation. I would argue that there is more to economic development than this. There is a bigger picture.

Bottom line is this…when we were in school we knew we weren’t going to use half of the stuff we were being taught. And we were right. Education gives you a foundation, but economic development technique is not learned in a classroom. It is learned in the field. Successful economic development at its foundation is about improving the quality of life in a community. Real economic development is about relationships with the right people at the right time at the right location. Correct me if I’m wrong here, but I can point to some job creation successes that ultimately reduced the overall quality of life in a community. Is that successful economic development? Not in my book. I know this is sensitive stuff, but sometimes when we try to be sensitive and politically correct we lose sight of our goal. What is our goal? To face reality and move forward in a positive direction.

So what is reality? The fact is that when well planned national retail comes to a community, the quality of life in that city goes up. The adage “rooftops generate retail” is only part of the story. Just as residential growth can bring retail growth, retail growth can generate residential growth. When corporate America decides to relocate jobs from one geographic area to another, I can assure you that the retail goods and services offered and the overall quality of life in the prospective cities are at the top of the list of things considered when those decisions are made.

The following story is not fantasy…it is reality. I saw it with my own eyes in living color. From 2002-2007 the City of Owasso, Oklahoma experienced tremendous growth in both commercial and residential investment. Census data states Owasso grew 55% in population from 2000-10, and the city’s sales tax base and general fund revenue nearly tripled during that time. The sales tax revenue continues on an upward trend even in a “recession” economy. New commercial construction totaled more than 4.2 million square feet with over a quarter of a billion dollars in total value. The Owasso Independent School District built over $100 million in new facilities, and because of the increased property values, all this was done without raising taxes one penny. And a sleepy little bedroom community became what other cities have termed a “city on a hill”, a true regional shopping mecca. What is the driving force, the “reason”, for the continued growth and revenue? Retail. Well planned, incentivized retail.

Is that real economic development? I think so.

Our company teaches communities how to define their retail market and sales potential and then market themselves to the national retailers and restaurants. Our client cities that stick with us through the slow grinding process of retail development reap new retail, new revenue, and a new and improved quality of life for their citizens.

Is that real economic development? I think so.

Written by
Rickey Hayes
Retail Attractions, LLC

Anybody who knows me knows that I am a plain spoken kind of guy. I have found in my five decades of living that people need to say what they mean. Sometimes being “politically correct” and “being careful not to offend anybody” makes us unable to discuss reality. And let’s be sure of one thing… Reality IS that cities around the country are in competition for their very lives. An Associated Press article on Feb. 22, 2011, stated that the 2010 federal census data had confirmed that 1 out of 4 counties across the country were literally dying… death rates exceed birth rates and in-migration is not making up the difference. That is reality.

Some myths, or non-realities, commonly believed by communities include that the future is already fixed in some kind of fatalistic matrix and whatever is going to happen is going to happen anyway (for good or bad) and that there is nothing we can do to change the way things are. Our view, indeed anyone’s view, of “the way things are” is shaped by how we interpret our surroundings and the events taking place. How about changing the fundamental way we think about those events? Of course things and communities can be changed for the positive. It has happened in communities all over the world. If it were true that nothing could be different, we would all still be riding horses to work.

So…what needs to happen?

• First, face REALITY. If things are bad… streets, neighborhoods, tax revenue….whatever the problem is…it has to be fully acknowledged and analyzed.
• Second, somebody has to cast a vision. Maybe it is the mayor, city manager, or maybe it is a citizen or a student. What could our city be, unhampered by “what is” right now? A vision, properly communicated, is sometimes all the motivation that is needed.
• Third, someone has to lead. In my humble opinion, leadership or the lack of it is what is wrong in Washington, in state capitols, and in city halls all over this land. I’m not talking about politics…there is no lack of that. I’m talking about leadership.
• Fourth, communities have to devote time, energy, and yes, money to address issues. I can hear people saying it now… “that’s the problem…we have no money.” That situation alone should be enough to motivate communities to think differently about their circumstances. Being broke has motivated me many times to change my priorities.

Let me say one more thing. If you keep doing what you’ve always done…you are going to keep getting what you’ve always got. Changing your circumstances isn’t easy and it isn’t comfortable. But it’s necessary if you want your community to be a living, breathing, thriving city where citizens experience the quality of life, level of service, education, employment, opportunity and entertainment that makes your city the one they (and the businesses that serve them!) want to stay in and grow with.

Let Retail Attractions help you. We have helped dozens of communities in several states see and change reality. Our firm can help you cast a vision and set a course for a thriving community where people want to live, work, shop and dine. Contact us today to make a seemingly overwhelming task more manageable.

Written by
Rickey Hayes
Retail Attractions, LLC

One of the essential elements to recruiting national retailers is providing incentives to set your community apart from the 200 other communities vying for the same deal. There are a wide variety of incentives available for city governments to use and even more if the incentive is offered through a private organization. To help you understand the lingo a little better, I have outlined the most common incentives and included a brief description of each.

TIF - TAX INCREMENT FINANCING
Tax Increment Financing is a public financing method which has been used for redevelopment and community improvement projects in many countries including the United States for more than 50 years. With federal and state sources for redevelopment generally less available, TIF has become an often-used financing mechanism for municipalities. Similar or related approaches are used elsewhere in the world. TIF is a tool to use future gains in taxes to finance current improvements. The improvements will create those gains. When a public project such as a road, school, or a large retail development is carried out, there is often an increase in the value of surrounding real estate, and perhaps new investment (new or rehabilitated buildings, for example). This increased site value and investment sometimes generates increased tax revenues. The increased tax revenues are the “tax increment.” Tax Increment Financing dedicates tax increments within a certain defined district to finance debt issued to pay for the project. TIF is designed to channel funding toward improvements in distressed or underdeveloped areas where development might not otherwise occur. TIF creates funding for “public” projects that may otherwise be unaffordable to localities. Currently, thousands of TIF districts operate nationwide in the US.

PILOT (OR PILT) - PAYMENT IN LIEU OF TAXAS
A Pilot is a payment in lieu of taxes (also sometimes abbreviated “PILT”), made to compensate a local government for some or all of the tax revenue that it loses because of the nature of the ownership or use of a particular piece of real property. As an incentive for investment in taxable infrastructure or other facilities that create a public benefit, a PILOT may be negotiated to limit or defer the property taxes on a developer, striking a balance between public and private economic needs. In effect, the local taxpayers are subsidizing the commercial development, which might otherwise have gone elsewhere.

SALES TAX REBATE BACK TO DEVELOPER FOR COSTS OF PUBLIC IMPROVEMENTS
Sales tax rebates are incentive monies returned to the developer of a retail project for the actual costs of public improvements constructed in the project.

RETAIL DEVELOPMENT INCENTIVES FUND
Incentives support the expansion of existing retail businesses and the recruitment and development of new retail businesses. Cities have established Retail Development Incentives Funds administered by an overseeing entity. The funds are used exclusively for retail projects which are relocating to or expanding within the corporate limits of the cities and which are projected to generate new retail sales which in turn raise new sales taxes. Eligible recipients of these incentives are any retailer, any developer, or any owner of retail property in the cities is eligible for these incentives. The funds are discretionary funds and may be used only to support an expansion or location which would otherwise not likely happen without an incentive offer.
Eligible projects include, but not be limited to, these purposes:

• Road improvements, including turning lanes, traffic lights, resurfacing, lowering of grades, new extensions, and intersection improvements.
• Drainage improvements, including culverts, piping, and impoundment structures.
• Utility extensions.

No Retail Development Incentive can be effective and no payment made until a written contract has been executed by the business or by the developer or owner of the retail property benefitting from an approved Retail Development Incentive. Such contracts will include a “claw back” provision requiring the recipient to reimburse the Fund a pro-rated amount of the Retail Development Incentive received in the event that the benefited retail property should become non-productive.

LESS COMMON TYPES OF DEVELOPMENT INCENTIVES

• Sales tax deferral on construction (done through public trusts)
• Use tax deferred (not common in retail development incentives)
• Property assemble and acquisition
• Extension or provision of sewer, water, and other utilities to an area
• Incentives through downtown development authority (grants, CDBG monies and local incentives)
• Waiving building permit fees, sewer and water tap fees, and other local fees
• Sign, advertising, and marketing concessions

If your community is trying to develop an incentive plan that will be attractive to the investors but still fiscally rewarding to the city, contact us. Retail Attractions has extensive experience with incentives and has legal counsel available for even the most challenging proposal. Contact Retail Attractions to find out how to make your city irresistible to retailers.

Written by
Rickey Hayes
Retail Attractions, LLC
One of the most rewarding parts of my job is working with city managers around the country. Being a city manager may be one of the toughest jobs in the world because effective city managers successfully wear a variety of hats plus enjoy working extremely long hours. City managers must understand accounting, psychiatry, law enforcement, fire and emergency medical services, human resources, water and sewer treatment, storm water retention and detention, residential and commercial real estate, and organizational management. City managers need to be adept at managing complex situations, financing structures and economics. Probably the hardest part of the job, at least for me, is that city managers must attend a lot of meetings. Everybody knows that when you have to attend a lot of meetings it’s sometimes hard to get any (real) work done!

If that wasn’t enough, the effective city manager must be proficient in politics. In most communities we work with, the type of city government is the “council / manager” form of government. That means that although the city manager is the person in charge of the day to day operations of the city, he or she has at least 5 and sometimes as many as 9 or more bosses. Those bosses are elected officials who may not know the ins and outs of actually running a city, but who are elected by the stakeholders to represent them in city government. The city manager serves at the pleasure of the council, and through their representation, at the pleasure of the citizens of the community.

Managing a city is not a job for the faint of heart. Along with the enormous responsibilities we have already discussed, the city manager must continually be growing the local economy to feed the ever widening chasm of revenue needs of his community. Federal and state mandates have to be addressed. Streets need repair and maintenance. Rising crime rates may demand more police officers to keep the city safe. As the population grows and new residential areas come online, new fire stations and firefighters are needed.

To be effective, a city manager and council must share a clear vision of what the community could become if every part of community were pulling in the same direction. Then he or she must be able to share that vision with the community and nurture it in the heart of every citizen. A city manager has to be a leader and a motivator. Improving the quality of life for one individual is not that hard, but try improving the quality of life for a whole community.

We believe that cities can change their future in positive and rewarding ways that meet the visions they have for their communities. Well-planned retail development improves the overall quality of life by adding goods, services, additional property and sales tax revenues to a community… allowing even more of the vision to become reality for communities across the country.

Written by
Rickey Hayes
Retail Attractions, LLC

Recently I had the pleasure to return to my home town and present an analysis on the overall retail market of the City of Paris, Texas. Paris is a fine community, with a rich history and great people. But Paris, like a lot of other small, micropolitan markets faces a big world of competition with other cities across the country. In the past, smaller regional communities were competing against neighboring counties for manufacturing, industrial, and retail deals. Not in this fast paced, global marketplace. Towns must aggressively market themselves against the world.

Communities like Paris have to figure out a way to market themselves, fund aggressive incentive packages, and provide compelling and accurate data to potential investors while wrestling with budget shortfalls and decreasing revenues.

In times like these leadership in the community has to find a way to put differences aside and join forces to unite financial, educational, political, and social forces and wage all out war to create a vision that will stand up against the times and propel a city into the future. Petty political differences, racial tensions, and jurisdictional lines have to be brought into one common desire: to make the community all that it can be. Greed, personal advantage and gain, and back-room politics are increasingly hard to conceal in our information savvy times. Good old boy deals that were tolerated and overlooked in the past end up on the evening news.

Political tension stops development. No investor will risk the time delay, the moving targets, or an ambiguous development criteria when so many other opportunities exist in different locations. More competition for fewer deals demand that communities bring their “A” game. Will your city merely attempt to survive or will it prosper and flourish? Will it grow and morph into a better community in the future or will it slip into decay?