Types of Economic Types of Economic Development OrganizationsDevelopment Organizations

PublicPublic

PrivatePrivate

Public-PrivatePublic-Private

Public EDO’sPublic EDO’s

Independent AgenciesIndependent Agencies Regular Local Gov’t departmentsRegular Local Gov’t departments Part of one of the local departmentsPart of one of the local departments Part of the local gov’t manager or Part of the local gov’t manager or

mayor’s officemayor’s office

Public EDO’s Encourage Econ Development Public EDO’s Encourage Econ Development Thru Implementation & utilization of:Thru Implementation & utilization of:

Infrastructure ImprovementsInfrastructure Improvements Eminent domainEminent domain Ownership of landOwnership of land Control of right of waysControl of right of ways Zoning and regulatory powersZoning and regulatory powers Special permitsSpecial permits Special Improvement Dist.Special Improvement Dist. Tax Increment Financing agreements (TIF’s)Tax Increment Financing agreements (TIF’s) Construction and operation of public facilitiesConstruction and operation of public facilities Business incentives both tax and non-tax varietiesBusiness incentives both tax and non-tax varieties Business Marketing, retention & expansionBusiness Marketing, retention & expansion Entrepreneurial/minority business assistanceEntrepreneurial/minority business assistance

Characteristics of an Innovative, Characteristics of an Innovative, Entrepreneurial Public Sector OrganizationsEntrepreneurial Public Sector Organizations

Catalytic & Catalytic & FacilitatingFacilitating

Community-OwnedCommunity-Owned CompetitiveCompetitive Mission-DrivenMission-Driven Results OrientedResults Oriented

AnticipatoryAnticipatory DecentralizedDecentralized Market-OrientedMarket-Oriented EnterprisingEnterprising Customer-DrivenCustomer-Driven

Types of Public EDO’sTypes of Public EDO’s

Local GovernmentsLocal Governments Regional Planning OrganizationsRegional Planning Organizations State Economic Development State Economic Development

OrganizationsOrganizations

Executive Director

Deputy Director

Business Development Finance & Administration

Assist. Dir. Administrator Assist. Dir. Mgr Account. PR Procurement

Potential ProblemsPotential Problems

Duplication of work between departmentsDuplication of work between departments Staff may make assumptions about what Staff may make assumptions about what

others are responsible forothers are responsible for Poor coordination of department effortsPoor coordination of department efforts Ability to build consensus, but difficulty in Ability to build consensus, but difficulty in

spurring actionspurring action Poor communication or coordination with Poor communication or coordination with

field officesfield offices Duplication of mission and/or efforts Duplication of mission and/or efforts

between area EDO’sbetween area EDO’s

Advantages of Public EDO’sAdvantages of Public EDO’s

Access financing mechanisms to leverage Access financing mechanisms to leverage private investmentsprivate investments

Direct access to sources of public funding Direct access to sources of public funding (CDBG, revenue sharing)(CDBG, revenue sharing)

Municipal powers: taxing authority, Municipal powers: taxing authority, eminent domain, ownership of land, rights eminent domain, ownership of land, rights of way, zoning, and regulatory powers and of way, zoning, and regulatory powers and the ability to construct and operate public the ability to construct and operate public facilities and services , which can be used facilities and services , which can be used in economic development initiatives.in economic development initiatives.

Advantages continuedAdvantages continued

Access to other city or county resources Access to other city or county resources such as planning, research, and public such as planning, research, and public works.works.

More likely to have better buy-in from More likely to have better buy-in from public officials and executives for public officials and executives for economic development initiativeseconomic development initiatives

Can use their municipal powers and Can use their municipal powers and planning capability to create/coordinate planning capability to create/coordinate city and countywide policies and strategiescity and countywide policies and strategies

DisadvantagesDisadvantages

The economic influence of public EDO’s is The economic influence of public EDO’s is essentially limited to their surrounding essentially limited to their surrounding political areapolitical area

Public EDO’s face municipal debt Public EDO’s face municipal debt limitations, which restrict economic limitations, which restrict economic development finance.development finance.

Often prohibited from lending money Often prohibited from lending money directly to the private sector and often directly to the private sector and often cannot participate in profit-making cannot participate in profit-making ventures.ventures.

Disadvantages ContinuedDisadvantages Continued

Normally cannot build or operate non-Normally cannot build or operate non-public facilities.public facilities.

Elected official turnover can cause Elected official turnover can cause inconsistent economic development inconsistent economic development policies.policies.

Commitment by officials may vary.Commitment by officials may vary. Private organizations often mistrust Private organizations often mistrust

governmental activities.governmental activities. Public disclosure laws may prevent private Public disclosure laws may prevent private

negotiations with relocating businesses or negotiations with relocating businesses or developers.developers.

Private EDO’sPrivate EDO’s

A Private EDO is defined as an A Private EDO is defined as an organization with the express mandate of organization with the express mandate of promoting economic growth, but which promoting economic growth, but which has no public control of governance and has no public control of governance and no formal links to government. A private no formal links to government. A private Edo can rely more on its own decision Edo can rely more on its own decision making process to act quickly and flexibly. making process to act quickly and flexibly. Private agencies can lack adequate clout Private agencies can lack adequate clout with local policy makers, potential major with local policy makers, potential major limitation. limitation.

Types of Private EDO’sTypes of Private EDO’s

Chambers of CommerceChambers of Commerce• Membership ServicesMembership Services• Business MarketingBusiness Marketing• Business AdvocacyBusiness Advocacy• Job TrainingJob Training• Neighborhood and downtown Neighborhood and downtown

revitalizationrevitalization• Business AdvocacyBusiness Advocacy• Regulatory reformRegulatory reform

Types of Private EDO’s con’tTypes of Private EDO’s con’t

Community Development Community Development CorporationsCorporations

Community Development Financial Community Development Financial InstitutionsInstitutions• Community Development BanksCommunity Development Banks• Community Development Credit UnionsCommunity Development Credit Unions• Community Development Loan FundsCommunity Development Loan Funds• Communtiy Development Venture Communtiy Development Venture

Capital FundsCapital Funds

Private AdvantagesPrivate Advantages

Serve as intermediary through which individuals can Serve as intermediary through which individuals can deal with the government on behalf of a private client.deal with the government on behalf of a private client.

Not directly accountable to a broad constituency.Not directly accountable to a broad constituency. Organized to make decisions quickly.Organized to make decisions quickly. Perform functions and activities that may be in the Perform functions and activities that may be in the

public interest but are not necessarily allowable by public interest but are not necessarily allowable by “government activities” for a municipal corporation.“government activities” for a municipal corporation.

May invest equity capital and generate profitMay invest equity capital and generate profit Can raise funds in the private marketCan raise funds in the private market Can receive donations (nonprofit corporations only)Can receive donations (nonprofit corporations only)

Advantages con’tAdvantages con’t

Are able to successfully insulate individual Are able to successfully insulate individual investors from risk.investors from risk.

Free to utilize subsidiary for-profit and nonprofit Free to utilize subsidiary for-profit and nonprofit resources for project development purposes.resources for project development purposes.

Can receive some federal (like SBA) funds.Can receive some federal (like SBA) funds.

Private EDO DisadvantagesPrivate EDO Disadvantages

Lack powers of eminent domain and other public Lack powers of eminent domain and other public land management powersland management powers

May lack public sector support and commitment, May lack public sector support and commitment, which means they take risks in assuming which means they take risks in assuming responsibilities for economic development. This responsibilities for economic development. This may make it unprofitable and inefficient for them may make it unprofitable and inefficient for them to assume the responsibility for economic to assume the responsibility for economic development without government cooperation.development without government cooperation.

May face excise taxes on investment income (1-May face excise taxes on investment income (1-2% annually)2% annually)

Disadvantages con’tDisadvantages con’t

Face strict prohibitions on self-dealing. For Face strict prohibitions on self-dealing. For example, a director is prohibited from selling an example, a director is prohibited from selling an asset to the foundation even on terms extremely asset to the foundation even on terms extremely favorable to the foundation. Finally minimal favorable to the foundation. Finally minimal annual distribution of assets are required.annual distribution of assets are required.

Since the private agency must support itself, Since the private agency must support itself, sometimes efforts are shifted away from sometimes efforts are shifted away from economic development.economic development.

Public/Private EDO’sPublic/Private EDO’s

Public-Private organizations are Public-Private organizations are usually formed as a result of cost usually formed as a result of cost savings and collaboration. Public-savings and collaboration. Public-private organizations share long-private organizations share long-term goals related to the social, term goals related to the social, political, and business environment political, and business environment in a community.in a community.

Public-Private ParticipantsPublic-Private Participants

CEO’s form major businessesCEO’s form major businesses Utility representativesUtility representatives Chambers of CommerceChambers of Commerce BanksBanks Industrial ParksIndustrial Parks Real Estate Developers and brokersReal Estate Developers and brokers Accounting and law firmsAccounting and law firms Public and private colleges Public and private colleges Labor organizationsLabor organizations

Successful CharacteristicsSuccessful Characteristics

Clearly defined missions that address concerns of Clearly defined missions that address concerns of public and private sectorspublic and private sectors

Internal autonomy over the organizationInternal autonomy over the organization Consensus among members regarding the Consensus among members regarding the

mission of the organization and how to implement mission of the organization and how to implement the missionthe mission

Adequate funding to achieve goalsAdequate funding to achieve goals The commitment of the public & private sectorThe commitment of the public & private sector Established performance measures & Established performance measures &

benchmarks to justify continued support and benchmarks to justify continued support and fundingfunding

Public-Private AdvantagesPublic-Private Advantages

Excessive politicization of the EDO’s work is less Excessive politicization of the EDO’s work is less likely to occurlikely to occur

Neither public nor the private EDO’s have the Neither public nor the private EDO’s have the degree of freedom in hiring, firing, and setting degree of freedom in hiring, firing, and setting salaries than public-private agenciessalaries than public-private agencies

Greater risk takers because directors and board Greater risk takers because directors and board members do not run for election. An unpaid members do not run for election. An unpaid board has little to lose from making bold board has little to lose from making bold decisions. Able to use resources and powers decisions. Able to use resources and powers without public limitations (red tape, citizen without public limitations (red tape, citizen review, civil service restrictions) review, civil service restrictions)

Public-Private AdvantagesPublic-Private Advantages Free to expand on gov’t powers, are not restrained by city Free to expand on gov’t powers, are not restrained by city

charters. Can invest in nonprofit and profit ventures if charters. Can invest in nonprofit and profit ventures if neededneeded

Some agencies can take on projects, proposing the project, Some agencies can take on projects, proposing the project, sampling public reaction and allow gov’t/planning to sampling public reaction and allow gov’t/planning to support of oppose.support of oppose.

Private sector has three things the gov’t needs:Private sector has three things the gov’t needs:• Resources, knowledge, and public supportResources, knowledge, and public support

Public is less willing to support public sector spending. I a Public is less willing to support public sector spending. I a public agency wants to develop a project, it may find a public agency wants to develop a project, it may find a better source of funding in the private sector than the better source of funding in the private sector than the legislatorlegislator

Draws on a broader range of expertise. Working together Draws on a broader range of expertise. Working together builds upon & creates news skills and understanding of builds upon & creates news skills and understanding of various points of viewvarious points of view

Public-Private Public-Private Financial Advantages Financial Advantages

Mobilization of resources, and financially flexibleMobilization of resources, and financially flexible Maximize use of available gov’t fundsMaximize use of available gov’t funds Use financing tools to pay for large, revenue- generating Use financing tools to pay for large, revenue- generating

infrastructure projectsinfrastructure projects Can invest in private business venturesCan invest in private business ventures Municipal debt ceiling does not affect public-private EDO’s Municipal debt ceiling does not affect public-private EDO’s

borrowing powersborrowing powers Able to accept donations due to tax exempt status, offer Able to accept donations due to tax exempt status, offer

tax advantages to contributorstax advantages to contributors Insulate governance from financial risk through Insulate governance from financial risk through

incorporation lawsincorporation laws Potential self supporting through management and service Potential self supporting through management and service

fees and/or membership duesfees and/or membership dues

Public-Private DisadvantagesPublic-Private Disadvantages

Not under the same degree of public control, Not under the same degree of public control, limiting its accountabilitylimiting its accountability

Limited accountability may cause a public-private Limited accountability may cause a public-private EDO to forfeit a portion of their influence if the EDO to forfeit a portion of their influence if the public sector and the citizenry are not public sector and the citizenry are not satisfactorily representedsatisfactorily represented

Limited accountability can also restrict its Limited accountability can also restrict its freedom of actionfreedom of action

New Organization ChartNew Organization Chart