The Rebirth of Older Industrial Cities: Exciting Opportunities for Private Sector Investment Smart Growth for the 21 st

1. The Rebirth of Older Industrial Cities: Exciting Opportunities for Private Sector Investment Smart Growth for the 21st Century A Presentation to the 6th Annual Smart Growth Conference May 19, 2006

2. Industry Clusters • Biotechnology • Information Technology • Financial Services • Travel and Tourism • Health Care • Traditional Manufacturing

3. Fundamental Proposition Cities have the ability to create their destiny, but they can benefit from having sophisticated partners who can help them develop tools and information to compete successfully.

4. Deal Makers/Action Steps Deal Breakers Organization by Sector

5. Deal Breaker #1 Due to rapidly changing market conditions in the global economy, municipal leaders in older industrial cities often lack complete, up-to-date information regarding the specific location needs of particular industries and the recruitment efforts of competing locations. As a result, they are not always fully prepared to assist firms in a timely and effective manner, helping to overcome obstacles to inner city investment. “When I have to send a manager overseas for six weeks, and they drink bottled water and eat peanut butter crackers they bring from home they don’t like it. If I offered to send them to Chelsea, Holyoke, or Lawrence, they’d take it in a minute.” -- IT executive

6. Deal Maker/Action Steps • Create a powerful self-assessment tool for cities to use to better clarify their economic development goals and identify their competitive strengths and weaknesses relative to other urban locations. Cities would have the opportunity to work with a team of private sector developers to undertake an internal review of all aspects of the development process using the assessment tool. • Provide ongoing economic development training for municipal leaders and managers that focus on how to respond to opportunities in different sectors.

7. Deal Breaker #2 Business decision makers have well-defined “cognitive maps” – perceptions or expectations—about the attributes of and opportunities in older industrial cities that can adversely affect the way they think about locating in these urban locations. “We were in Lawrence when it was the arson capital of the U.S. For a while, being there meant that we couldn’t always recruit our first choice for a position. However, we don’t have that trouble any longer. Lawrence is coming back.”

8. Deal Maker/Action Steps • Assist communities in combining resources regionally in order to market and respond to inquiries from firms, developers, and location specialists. • Assist cities in making their websites more attractive, graphically rich, easy to navigate, and more useful to firms, developers, and location specialists. Improved websites would include information on the characteristics of individual available parcels, zoning and regulation, available financial incentives, and background data on demographic and economic characteristics of the locality. Websites could include testimonials from existing business leaders and messages from city leaders indicating the support firms receive in their municipalities. • Enlist companies – the “urban pioneers” - already located in inner cities as ambassadors. Businesses offer the best testimony to other businesses on the advantage of urban locations.

10. Deal Breaker #3 Specific urban site deficiencies can add excessive costs to doing business in older industrial cities. “The mills were built when people walked to work. There is no parking and no room to create it.”

11. Deal Maker/Action Steps • Encourage the enactment of urban overlay zoning districts where there can be flexible use, expedited permitting, focused public safety efforts, and amenity packages essential to creating competitive advantage in an urban setting.

12. Expedited Permitting Specialized Industrial Cluster Focus Transit Connections Urban Overlay District Priority Infrastructure Mixed Use Development High Performing Schools Housing Public Safety Operations Leveraged Public/Private Investment Strategic Workforce Investment

13. Deal Maker/Action Steps • Make changes in the brownfields regulatory program to facilitate re-use of urban sites to facilitate faster clean up and further limit liability. • Change state rules overseeing municipal property taxation that force new owners to pay delinquent taxes of previous owners.

14. Deal Breaker #4 State and local review processes can add excessive costs to doing business in older industrial cities. “Once a product has passed its Phase III trials, we want to get the new product into production before another company does. Speed is so critical that we start building the production facility before the product is approved. “ – Biotech Executive

15. Deal Maker/Action Steps • Identify market ready sites and have them pre-permitted for industrial and commercial uses. The marketing of pre-permitted urban parcels can be done through city web sites, site finder services, and other commercial site services. • Empower someone in the administration to specifically oversee the development process and respond aggressively and proactively to the needs of firms considering the city as a site for location . • Create a permit system that allows for a single presentation of a development proposal to all boards with jurisdiction in the city and establish a specific time frame for community response in the initial stage of the review process. • Reframe state programs designed to encourage development of urban sites so that they do not have the unintended consequence of discouraging potential developers.

16. Deal Breaker #5 Traditional public sector financial tools such as tax abatements, tax credits, and subsidies, while often strategically important as a deal closer, are not sufficient to attract high value business investment if previous deal breakers are not overcome. “From our perspective, time is money. We may actually be able to make a deal work more effectively if we can receive expedited permits and infrastructure enhancements, than by factoring in a tax subsidy into our pro forma.” – Developer

17. Deal Maker/Action Steps • Use Tax Increment Financing to create revenue streams for critical infrastructure in urban locations. • Site state and municipal facilities in urban locations to stimulate creation of amenities and other attractions to spur private sector commercial and industrial investment.

18. Lead Actors • State Governments • City Governments • Regional Agencies • Business • Universities • Public/Private Partnerships

20. What did we do? • Survey 4,000+ corporate real estate and development professionals on location decisions: NAIOP (National and Massachusetts Chapter) CoreNet Global • Strong consistent response • 2 parts to the survey: Rate importance of 34 factors Open-ended section

21. What topics did we ask about on the survey? • Permitting Processes • Labor • Development and Operating Costs • Business Environment • Transportation and Access • Quality of Life/Social Environment

22. Which of the 34 factors received the highest scores? • On-site parking • Rental rates • Availability of appropriate labor • Timeliness of approvals and appeals

23. Which of the 34 factors received the lowest scores? • Municipal minimum wage law • Access to rail • Informative municipal website • Strong trade unions

24. When asked what they thought was most critical, what did respondents tell us? • Proximity to major highways, airports, and transportation routes • Rents, land costs, and lease costs • Availability of appropriate labor pool • Permitting, approvals, and appeals processes • Amenities and services nearby • Pro-business/development friendly city

25. The Self-Assessment Tool • We developed a new computer-based interactive Self-Assessment Tool for evaluating and interpreting a city’s assets, strengths, and weaknesses in light of the factors that firms and developers consider most important for site selection. • The self-assessment tool includes sections on: • City Characteristics • City Development Processes

26. What the Tool Does • The tool helps local officials understand: • The true “deal breakers” • How they should prioritize their activities • Data from various cities included in the assessment tool makes it possible for individual cities to compare themselves to other cities to determine how well they are meeting their own economic development goals. • The act of measurement assists officials in paying greater attention to the critical deal breakers and deal makers, provides a reality check on the types of industries they can attract, and gives added leverage in dealing with the real barriers. • “This is a great roadmap for the essentials for benchmarking our city’s economic development policy.” • Jay Ash, City Manager, Chelsea

27. The Framework for the Tool • City officials and staff working together answer 194 questions in 10 categories • The tool is rigorous but fair • The tool is available to take online • The results of the Self-Assessment Tool are secure and provided only to the local officials and no one else • The results provide an ability to compare your community’s economic development assets, strengths, and weaknesses to peer communities

28. Sample Report Page: What the Self-Assessment Tool Gives Back

29. Sample Report Page: What the Self-Assessment Tool Gives Back

30. Unique Report for Each Community • The Self-Assessment Tool report communities receive is unique based on responses to the 194 question survey • The report uses data from a group of peer communities to assess the relative strengths and weaknesses of your community • The report provides detailed information on what city attributes and services need most improvement to meet the competition for investment and jobs “Economic development is critical to our success as a city. In today's world, this requires an increasingly sophisticated relationship with private sector partners -- those that are here and we want to retain and those that we would like to come. This tool provides critical insights into our current readiness to play our part, and, more importantly, where we need to fix our process.” Mayor James Fiorentini, Haverhill

31. Interpreting the Results • The community’s results are color-coded to provide rapid analysis of how they are doing relative to peer communities • For each Self-Assessment Tool section, the results are interpreted in terms of what development and location specialists consider most important, somewhat important, and less important to attracting investment and jobs “I’m using this as a guidebook for re-tooling our development process.” Mayor Charles Ryan, Springfield

32. What does all this mean to cities? • The usual suspects (taxes, incentives, etc.) aren’t necessarily the most important. • There are a number of factors that matter to firms that cities can do something about (permitting, attitude).

33. What does all this mean to cities? • There are things that matter to firms making location decisions that are tougher for cities to address directly (labor, location), but cities need to recognize them and develop strategies to deal with them in order to win.

34. What does all this mean to the commercial real estate industry? • Cities are attractive opportunities for development. • They need help staying on your radar screen. • They need to partner with you to compete in the 21st century. • With your practical advice and insight, cities can tailor effective responses to opportunities in different sectors.

35. Where do we go from here? • Working with local regional and national organizations, we are exploring ways to open the opportunity up to any community to participate in the self-assessment process • We are also working with a number of groups including NAIOP to develop training sessions on the 21st century dynamics of development and the critical role of communities in that process “We want ‘face time’ with the developers so that we can better understand their needs and they can better understand our responsibilities. It needs to be a ‘win-win’ negotiation.” Mayor Dan H. Mylott, Fitchburg

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