Survey of Local Economic Development Incentives

Transcription

1 Briana Paxton Donovan Rypkema PlaceEconomics April 1, 2015

2 1 Executive Summary In the spring of 2015, PlaceEconomics undertook a survey to try to understand what local incentives were being used in downtowns and neighborhood commercial districts. We wanted to learn about incentives for both buildings in the commercial districts but also for business retention, expansion and recruitment. Additionally we hoped to learn who provided the incentives, who funded the incentives and which of the incentives were most effective. The survey was conducted using Survey Monkey and was distributed both on Facebook and through an arrangement with the National Main Street Center. The Center graciously used their electronic information distribution system to notify members of the Main Street Network of the link to the survey. In all 306 surveys were completed. Responses came from 46 states and the District of Columbia. The results of the survey are found on the following pages. The answers are broken into three broad categories: information on the respondents; incentives for buildings; and incentives for businesses. Incentives are an important part of local economic development, but it is essential to use the right incentive at the right time and to use incentives not on an ad hoc basis but as a specific tool to advance a specific public policy objective. We hope that you find this information of use. Briana Paxton, Director of Research Donovan Rypkema, Principal PlaceEconomics April 1, 2015

3 2 Contents Executive Summary... 1 Contents... 2 The Respondents... 3 Building Incentives... 5 Business Incentives PlaceEconomics and Incentives... 18

4 3 The Respondents The first five questions dealt with the respondents themselves. The first question was Where are you located and the answers came from 46 states and the District of Columbia. 30.0% 25.0% What is the population of your city or town? 27.8% 20.0% 15.0% 19.9% 10.0% 12.9% 10.6% 9.3% 9.6% 5.0% 6.0% 4.0% 0.0% Fewer than 5,000 5,000-19, ,000-49,999 50,000-74,999 75,000-99, , , , ,999 More than 500,000 Does your downtown or neighborhood commercial district have an active Main Street program? Don't know 6% No 27% Yes 67% Yes No Don't know

5 4 How would you describe yourself? Attorney Employee of downtown/neighborhood business Employee of state government Consultant Architect Business owner Board or committee member Staff of other type of downtown/neighborhood Other city staff City planner Preservation activist Preservation professional Other Interested citizen Main Street staff 1.1% 2.2% 2.2% 2.9% 5.1% 6.2% 8.3% 9.1% 11.2% 11.2% 15.6% 16.7% 17.4% 19.2% 31.5% 0% 5% 10% 15% 20% 25% 30% 35%

6 5 Building Incentives The next group of questions asked about incentives for the rehabilitation of buildings in the downtown or neighborhood commercial area. Although this survey was primarily about local incentives, one question each was asked about national and state incentives. What types of Technical Assistance are used in your community to incentives building rehabilitation? NONE ENVIRONMENTAL ASSESSMENT FEASIBILITY ANALYSIS OTHER ENERGY ASSESSMENT 11.8% 13.8% 16.3% 17.7% 19.7% TENANT RECRUITMENT GRANT WRITING ASSISTANCE 31.5% 36.9% TAX CREDIT APPLICATION ASSISTANCE ARCHITECTURAL HISTORY/ARCHAEOLOGY RESEARCH ASSISTANCE 47.3% 50.2% 0% 10% 20% 30% 40% 50% 60% Who provides the technical assistance? LOCAL FOUNDATION COUNTY LOCAL DESIGN CENTER UTILITY COMPANY COMMUNITY DEVELOPMENT CORPORATION OTHER DOWNTOWN/NEIGHBORHOOD OTHER PRESERVATION ORGANIZATION CITY MAIN STREET PROGRAM 5.9% 5.9% 5.9% 10.3% 15.1% 17.3% 20.5% 29.2% 55.1% 57.3% 0% 10% 20% 30% 40% 50% 60% 70%

7 6 Who funds the technical assistance? LOCAL DESIGN CENTER BUSINESS IMPROVEMENT DISTRICT LOCAL FOUNDATION COUNTY TIF DISTRICT OTHER DOWNTOWN/NEIGHBORHOOD OTHER STATE PRESERVATION ORGANIZATION MAIN STREET PROGRAM CITY 2.8% 8.9% 8.9% 9.5% 12.3% 14.5% 15.1% 19.0% 21.8% 49.2% 59.8% 0% 10% 20% 30% 40% 50% 60% 70%

8 7 What types of Grants are used in your community to incentivize building rehabilitation? ACQUISITION ARCHITECTURAL HISTORY ADA COMPLIANCE ENERGY/ENVIRONMENTAL IMPROVEMENTS UPPER FLOOR HOUSING OTHER DESIGN NONE ROOF/WINDOW/EXTERIOR REPAIRS GENERAL REHABILITATION 6.5% 8.5% 10.0% 13.0% 16.0% 17.0% 17.0% 20.5% 26.5% 29.5% FAÇADE IMPROVEMENTS 69.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% Who provides the grant? 52.0% 43.9% 34.5% 16.9% 15.5% 10.1% 5.4% 3.4% 2.0%

9 8 What types of Financial Tools are used in your community to incentivize building rehabilitation? 48.9% 36.2% 31.6% 19.5% 10.3% 5.7% 4.6% 4.6% Who provides the financial incentive? 63.6% 39.4% 30.3% 20.2% 19.2% 13.1% 7.1% 5.1% 5.1%

10 9 What types of Local Tax Incentives are used in your community to encourage or facilitate building rehabilitation? 59.9% 20.3% 19.2% 17.4% 11.6% 6.4% NONE PROPERTY TAX REBATE PROPERTY ASSESSMENT FREEZE OTHER PROJECT TAX FREEZE SALES TAX WAIVERS Who provides the tax incentive? 91.8% 30.6% 21.2% CITY COUNTY OTHER

11 10 What types of Regulatory Incentives are used in your community to encourage or facilitate building rehabilitation? TRANSFERABLE DEVELOPMENT RIGHTS 3.8% FREE OR DISCOUNTED PUBLIC PROPERTY DISPOSITION OTHER PERMIT FEE MITIGATION 7.7% 8.7% 10.9% MUNICIPAL INFRASTRUCTURE 21.3% PARKING REQUIREMENT WAIVERS BUILDING CODE FLEXIBILITY ZONING CODE FLEXIBILITY 30.1% 30.6% 32.8% NONE 42.6% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Who provides the incentive? 100.0% 9.5% 6.7% CITY COUNTY OTHER

12 11 What Federal incentive programs for building rehabilitation have been used in your downtown or neighborhood commercial district? 68.0% 32.0% 21.1% 16.0% 15.2% 14.9% 12.9% What State incentive programs for building rehabilitation have been used in your downtown or neighborhood commercial district? 63.7% 19.7% 16.1% 14.5% 13.0% 8.8% HISTORIC PRESERVATION TAX CREDITS NONE ENTERPRISE ZONE ARTS/CULTURAL DISTRICT UNKNOWN OTHER

13 12 Have Preservation Easements been used in your community? Unknown 31% Yes 25% Yes No No 44% Unknown If yes, who is the easement holding organization? 34.6% 25.6% 28.2% 14.1% 7.7% 3.8% CITY LOCAL PRESERVATION ORGANIZATION STATEWIDE PRESERVATION ORGANIZATION OTHER NON- PROFIT ORGANIZATION OTHER GOVERNMENTAL ORGANIZATION UNKNOWN

14 13 Interestingly both the federal historic tax credit and state historic tax credits made the top three lists for both most effective and least effective. When the federal historic tax credit was listed as least effective it was often with a comment that either it wasn t generally used or that it didn t work for small projects. When state tax was listed as least effective it was often because of a cap on state credits or other limitations of the program. Of the building rehabilitation incentives you have identified above, which are the three most effective? Façade grant program Federal Historic Tax Credit State Historic Tax Credit Of the building rehabilitation incentives you have identified above, which are the three least effective? Federal Historic Tax Credit Loan programs State Historic Tax Credit

15 14 Business Incentives The final set of questions asked about local incentives for business retention, expansion and recruitment. What types of incentives are used in your community to Retain Existing Businesses? Free rent Sales tax rebates Real estate tax abatement Other Below market rent Grants Market analysis Training in budget and financing Low interest financing Business management assistance General business training Marketing assistance 3.8% 5.3% 13.5% 15.0% 17.3% 25.6% 26.3% 28.6% 29.3% 35.3% 47.4% 63.9% 0% 10% 20% 30% 40% 50% 60% 70%

16 15 What types of incentives are used in your community to help Existing Businesses Expand? Free rent Sales tax rebates Below market rent Other Business feasibility analysis Real estate tax abatement Training in budget and financing Market analysis Low interest financing Grants Business management assistance General business training Marketing assistance Business plan assistance 5.3% 8.3% 12.8% 18.0% 19.5% 24.1% 26.3% 27.8% 30.1% 30.1% 33.8% 45.1% 48.9% 50.4% 0% 10% 20% 30% 40% 50% 60% What type of incentives are used in your community to Attract New Businesses? Free rent Personnel training Business feasibility analysis Below market rent Other Business incubator Tax credits Real estate tax abatement Market analysis Low interest financing Grants Business plan assistance 7.1% 14.3% 19.0% 21.4% 23.0% 25.4% 27.8% 29.4% 31.7% 31.7% 34.9% 56.3% 0% 10% 20% 30% 40% 50% 60%

17 16 45% 40% 35% 30% 25% Do you require a Written Business Plan to be eligible for incentives? 35.6% 25.8% 40.9% 20% 15% 10% 5% 0% Yes No Depends on the business Who provides the business incentives? Local foundation Utility company Other downtown/neighborhood revitalization County SCORE College, community college or university Other Community Development Corporation Main Street program City 7.3% 10.6% 11.4% 13.8% 17.1% 26.8% 26.8% 30.9% 44.7% 60.2% 0% 10% 20% 30% 40% 50% 60% 70%

18 17 Who funds the business incentives? Preservation organization Business Improvement District Local foundation Local banks Other downtown/neighborhood revitalization program TIF District Other County Main Street program State City 5.2% 8.6% 8.6% 11.2% 11.2% 15.5% 15.5% 21.6% 37.1% 38.8% 62.9% 0% 10% 20% 30% 40% 50% 60% 70% Of the business incentives you have identified above, which are the three most effective? Grants Marketing Assistance Market Analysis Rent Reductions (essentially a statistical tie between Market Analysis and Rent Reductions) Of the business rehabilitation incentives you have identified above, which are the three least effective? Business Management Assistance General Business Assistance Business Plan Assistance

19 18 PlaceEconomics and Incentives Many communities rely on local incentives to take downtown revitalization from a great idea into reality. However, designing incentives that work and are well-utilized remains a challenge in communities across the country. Our incentives services are designed to help clients understand their community s economic anatomy, identify barriers to reinvestment, and determine how current tools can be refined or new incentives created to achieve community reinvestment goals. PlaceEconomics brings to each project a powerful combination of real estate and historic preservation expertise, a strong track record of assessing the impact of preservation and downtown revitalization, the latest research in incentives at the local level, and data-driven solutions. Services Workshops: PlaceEconomics staff facilitate stakeholder discussions on current incentives, needs, and opportunities. Workshops conclude by helping local stakeholders assemble a toolkit of incentives. Consulting: PlaceEconomics identifies barriers to preservation, reviews opportunities, assembles possible tools, and develops recommendations for targeted incentives. This may involve interviews and focus groups, in addition to extensive research. Modeling: Building on intensive research, PlaceEconomics runs real estate and economic models to evaluate and predict the results of new incentives in specific conditions. This option is best suited to communities that want extensive, detailed recommendations on how to jumpstart preservation projects or commercial revitalization efforts using a specific tool or for a specific building type. Each project is customizable to local needs and opportunities. Projects Our unique skills and extensive experience make us highly qualified to quantify the impacts of existing and potential incentives for preservation and revitalization. We have completed studies on the impacts of preservation grant programs in Connecticut, North Carolina, and New Mexico and demonstrated compelling results: the creation and retention of new jobs, investment, and additional tax revenue. In West Hollywood, California, we undertook the design of a local incentive program. Property level modeling was used to determine the economic benefits of certain potential programs on specific building typologies.

20 19 PlaceEconomics assessed the effectiveness of state historic preservation tax credits in Delaware, Georgia, and Iowa. Our findings demonstrated that the tax credits have significant benefits as an economic development tool. We are currently involved with the City of Seattle on evaluating and recommending incentives for older and historic buildings in neighborhood commercial districts. The National Trust for Historic Preservation commissioned PlaceEconomics to analyze the catalytic impact of tax credit projects on their immediate surroundings as part of the effort to preserve the Federal Historic Tax Credit. Research PlaceEconomics has conducted two nationwide surveys on the use of incentives. The first was done in collaboration with the National Alliance of Preservation Commissions and focused on preservation specific incentives. The second was undertaken in collaboration with the National Main Street Center and looked at local incentives for both buildings and businesses in the context of comprehensive revitalization efforts. Contact PlaceEconomics works with communities of all sizes to create targeted incentives that work. We approach each community individually by: 1) identifying the barriers to investment; 2) assembling a range of possible tools; 3) testing the impact of each on specific projects; and 4) making recommendations for assembling the most effective and efficient incentive toolkit. For more information on our incentives assistance or other services provided by PlaceEconomics please contact Briana Paxton, Director of Research at BPaxton@PlaceEconomics.com or write to us at PO Box 7529, Washington, DC Thanks for your interest.