Meda Sanity And Insanity


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December 09 presentation to Mihcigan Economic Developers Association on economic development agency cooperation and collaboration

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Meda Sanity And Insanity

  1. 1. SANITY AND INSANITY IN GOVERNMENTAL COOPERATION Chuck Eckenstahler Michigan Economic Developers Association Economic Development; Pushing the Boundaries December 4, 2009
  2. 2. Introduction <ul><li>Economic Development models - </li></ul><ul><li>“ Old Norm” </li></ul><ul><li>- Race for tax rateables </li></ul><ul><li>“ New Norm” </li></ul><ul><ul><li>- Regional cooperation </li></ul></ul><ul><li>The role of economic developers? </li></ul>If you don’t have a dream….. … never get anything done! CIA Chair John Brielmaier 9/30/09
  3. 3. Sourced from: Rethinking Federal Policy for Regional Economic Development . By: Drabenstott, Mark. Economic Review (01612387), 2006 1st Quarter, Vol. 91 Issue 1, p115-142, 28p; ( AN 20356049 ) * With additions by: Professor Anthony B. Sindone, Purdue University North Central, College of Business and Organizational Leadership - [email_address] Chuck Eckenstahler – [email_address] 10/29/2009 Qualified Workforce Expanding Labor Pool Complementary Human Capital Connectiveness Distinct Regional assets, such as: Human Capital Higher Education Amenities Health of Existing Businesses Government Funds – Subsidies and Tax Breaks Industrial Infrastructure Keys to Success Education – Training Workforce Talent Clusters Community Place Making Social Networking Entrepreneurship Clusters Commercializing Research Industry Consolidation and Cost Cutting Deregulation Financial Incentives to Firms Industrial Parks Strategies Workforce Education and Training Skill Set Cross Utilization Workforce Occupational Mobility Social Capital Innovation and Entrepreneurship Scale Economies Export Base Drivers Occupational Skills Present to Future * Regional Competitiveness Early 1990’s to Present Cost Competition Early 1080’s to Early 1990’s Industrial Recruiting 1950’s to early 1980’s ERAS IN REGIONAL ECONOMIC DEVELOPMENT AND PRACTICE
  4. 4. PEORIA RANKED NUMBER 16 FOR MIGHTY MICRO CITIES Next Generation Consulting (NGC):
  5. 5. Post Recession Economic Development Survey <ul><li>1. Small businesses will increase job counts more quickly than larger businesses </li></ul><ul><li>2. It is easier to expand the job base of an existing company than locate a new one </li></ul><ul><li>3. Entrepreneurial “start-up” businesses sponsor a “locally connected” job base </li></ul><ul><li>4. Lack of traditional financing sources will limit “start-up” and “second stage” business growth </li></ul><ul><li>5. Regional collaboration is needed for national and global business recruitment efforts </li></ul>
  6. 6. Post Recession Economic Development Survey <ul><li>6. Partnering with others increases funds for advertising and promotion </li></ul><ul><li>7. Supply chain business recruitment is superior to “shot gun” recruitment attempts </li></ul><ul><li>8. Targeted business recruitment will change as new post recession business linkages form </li></ul><ul><li>9. Community preparedness; existing sites, buildings & workforce will no longer optional </li></ul><ul><li>10. Pre-approved incentives increase chances for success </li></ul>
  7. 7. The New Norm <ul><li>1. BER* – stop out migration and job loss </li></ul><ul><li>2. Combined recruitment to increase funding and reach </li></ul><ul><li>3. Area wide branding to increase global identity </li></ul><ul><li>4. Focused approach using web based marketing & communications </li></ul><ul><li>5. Focus on supplier/vendor relationships </li></ul><ul><li>* “BER” business expansion and retention </li></ul>
  8. 8. The New Norm <ul><li>6. “Cluster Analysis” identifying Regional Competitive Advantage </li></ul><ul><li>7. Pre-Packaging of incentives </li></ul><ul><li>8. “Shovel ready” site availability </li></ul><ul><li>9. Incentive “tied” to job creation </li></ul><ul><li>10. Focus on small business, entrepreneurialism and research commercialization. </li></ul>
  9. 9. Importance of New Business Formation New jobs created by businesses with less than 20 employees 1980-90 - 56% 1990-95 – 49% SBA Data * 1979 David L. Birch “The Jobs Generation Process” 2/3 new jobs created by small businesses  
  10. 10. Where will the Jobs Come From? 2/3 jobs created by young businesses Where will the Jobs Come From? Kaufmann Foundation November 5, 2009 2006 - 2007
  11. 11. Where will the Jobs Come From? SBA approves 36% fewer loans in FY 2009 $3.9b less than 2008 WSJ 11/19/2009
  12. 12. Michigan's Cooperation Tool Kit Do we have all the tools we need? <ul><li>Act 7 Intergovernmental Cooperation Act </li></ul><ul><li>Act 425 – tax base sharing </li></ul><ul><li>Authorities – 8 + TIF’S </li></ul><ul><li>Joint participation laws – </li></ul><ul><ul><ul><li>Joint Municipal Planning Act </li></ul></ul></ul><ul><li>Nonprofit corporations </li></ul><ul><li>L3C – Socially Responsible LLC </li></ul><ul><li>New Michigan Development Act - HB 5346 </li></ul><ul><li>My opinion we do! </li></ul>
  13. 13. We can conclude……….. <ul><li>New legislation </li></ul><ul><li>cannot mandate </li></ul><ul><li>the “New Norm” </li></ul>
  14. 14. What Prompts Cooperation <ul><li>Mandates – MPEA, MPO, EDA-EDD </li></ul><ul><li>Fed. Project Notification (A-95 Review) </li></ul><ul><li>Increased financial advantages – MNRTF </li></ul><ul><li>Shared financial responsibilities – municipal authorities </li></ul><ul><li>Financial need </li></ul><ul><li>Political pressure </li></ul><ul><ul><li>Perceived cost savings </li></ul></ul><ul><ul><li>Perceived increase </li></ul></ul><ul><ul><li> (or no loss) of services </li></ul></ul>
  15. 15. What Prompts Cooperation K-12 Population 2010 – 2030 Nationally 15.7% growth Michigan 7.9% growth 142 district to loose 10-15% enrollment 21 districts to loose 26-50% enrollment Detroit Schools Enrolment loss 70,000 last 7 years 2008 student capacity 153,000 After “downsizing” capacity 90,000 <41%> 20 of 192 schools closed 28 more school closings suggested 19 new or remolded school <ul><ul><li>Better government management </li></ul></ul><ul><ul><li> “ right sizing government </li></ul></ul>
  16. 16. Live Within Your Means <ul><li>School Bond Issue Ballot History </li></ul><ul><li>1,273 issues 1995 - 2008 </li></ul><ul><ul><li>49.7% approved </li></ul></ul><ul><ul><li>85 average annual issues </li></ul></ul><ul><ul><li>range 17 – 166 per year </li></ul></ul><ul><li>2009 </li></ul><ul><ul><li>17 issues </li></ul></ul><ul><ul><li>12 replacement - 5 increase </li></ul></ul><ul><ul><li>10 replacement approved </li></ul></ul><ul><ul><li>2 increase approved </li></ul></ul>
  17. 17. “SANITY” Says <ul><li>1. We have tools to cooperate </li></ul><ul><li>2. We must by certain laws and grant assistance leverage </li></ul><ul><li>3. We probably don’t have a choice in some instances (infrastructure) </li></ul><ul><li>4. Might need to due to political pressure </li></ul><ul><li>5. Might need to due to financial necessity </li></ul>
  18. 18. “INSANITY” Barriers Include <ul><li>1. Historical “mind set” about governmental structure </li></ul><ul><li>2. Tax revenue need </li></ul><ul><li>3. Suspicion and lack of trust </li></ul><ul><li>4. Lack of experience </li></ul>
  19. 19. Attitude Change Agents <ul><li>1. Impending doom – “low tide” - </li></ul><ul><ul><li>lowers all boats syndrome </li></ul></ul><ul><li>2. The “Michigan Miracle” </li></ul><ul><li>3. Defining moment </li></ul><ul><li>– changing state/Midwest </li></ul><ul><li>economic competitiveness </li></ul><ul><ul><li>By the late 1990s, many national </li></ul></ul><ul><ul><li>observers were shaking their heads </li></ul></ul><ul><ul><li>in wonder at the improbable </li></ul></ul><ul><ul><li>economic turnaround, which became </li></ul></ul><ul><ul><li>known as “The Michigan Miracle.” </li></ul></ul>
  20. 20. Drivers of the New ED Norm <ul><li>1. “Place” and “Social Capital” </li></ul><ul><li>2. Community based leadership </li></ul><ul><li>3. Innovative governance </li></ul><ul><li>4. Making our own way </li></ul><ul><li>– vision and action steps </li></ul><ul><li>5. Realizing “doom” can happen </li></ul><ul><li>6. Realization “total” community is greater than the sum of its parts </li></ul><ul><li>7. Realization success will be driven from within </li></ul>
  21. 21. EXAMPLE COOPERATION UPTOWN CORRIDOR IMPROVEMENT AUTHORITY <ul><li>Formed July 13, 2009 </li></ul><ul><li>District parcels - 138 – 5 in Township </li></ul><ul><li>Township “front-end” loan to CIA </li></ul><ul><li>Township supports CIA goals – create a compact downtown with commercial entryways </li></ul><ul><li>$8.4m infrastructure & streetscape </li></ul><ul><li>Development Tax Increment Financing Plan </li></ul><ul><li>Hearing/adoption – December 14, 2009 </li></ul><ul><li>Support by College and County </li></ul>
  22. 22. What made this Cooperation Work <ul><li>Strong Leadership by Civic and </li></ul><ul><li> Political Leaders </li></ul><ul><li>Recognition of a Vision based on </li></ul><ul><li>Sound Planning Principles </li></ul><ul><li>We’re All in it Together Now </li></ul><ul><li>Place Matters </li></ul><ul><li>– We Have to Take Advantage of It </li></ul><ul><li>If you don’t have a dream….. </li></ul><ul><li>… never get anything done! </li></ul>
  23. 23. Questions <ul><li>Chuck Eckenstahler </li></ul><ul><li>PHONE </li></ul><ul><li>219-861-2077 </li></ul><ul><li>EMAIL </li></ul><ul><li> [email_address] </li></ul><ul><li>LINKEDIN web: </li></ul><ul><li>Blog </li></ul><ul><li> </li></ul>