Incentives or Community Revitalization? – Interview with Kate Singleton

CRSKate Singleton is the Principle and Director of Planning and Preservation and Downtown Revitalization Services at the CRS Group.  Kate and I are in several LinkedIn Groups together.  I have been consistently impressed with the thoughtfulness of her comments and the depth of her expertise.  I thought it would be interesting to tap into Kate’s experience and get her perspective on the choice of offering incentives versus investing in community revitalization as strategies for business attraction-retention-expansion.

I think you will find Kate’s responses to my questions insightful.  I believe her comments are exceptionally thought provoking and educational.  I hope you enjoy reading the interview as much as I enjoyed conducting it.

When I lecture on place branding, one point I always make is the importance of ensuring your community is investment worthy before you invest money in trying to communicate its brand promise. Based on your experience, is it common for community leaders to overlook structural challenges when trying to compete for capital investment from businesses?

Yes, I think that communities often overlook the need to do the basics including how the community looks to the outside. We often forget that we are in the age of the internet and what a powerful tool that is. People travel and they can see in an instance what a community is like—think Google Maps Streetview or a town’s website. People are more sophisticated than we often think. In a recent discussion with the principal of a company who consults to towns, cities and counties on economic development, he stated that downtown revitalization is always part of the discussion about overall economic development. Basically, he was stating that if the downtown is not vibrant, clean, buildings rehabbed and good infrastructure then trying to bring in companies and industries is harder to do–if not impossible. As one of my business partners says, “people don’t come to town to see the Walmart, they come to see—and live in– an authentic, unique, vibrant community. On a broader view, communities need to take a hard look at themselves: what does our town look like? When you come into town, what do people see-vacant strip shopping centers, junk yards, worn out infrastructure including broken concrete, lights that don’t work?

Why “brand” your community with a new image if your town can’t live up to that image?

Towns that do not address these issues will not succeed in successfully branding their communities and/or will fail to live up to the image they are presenting to the “outside” world. These efforts, usually funded by precious resources, will ultimately fail.

It is always great to see communities that pay attention to preserving the historical buildings that give their location character. But, preservation comes at a cost to the community. What are the some of the possible benefits of preservation versus tear down? What should a community leadership team be thinking about when they have to make the choice?

So, what is the “cost” to the community?  Is there really one? There is one if the property owner does not maintain the building just as there is a cost if a homeowner doesn’t maintain their home. The city has to have inspectors write up code violations and have extra police and fire service directed at these properties since they aren’t maintained. The city and the state lose tax revenue from those buildings—property tax and sales tax. Additionally, there is the cost of what I call “lost opportunity”. The downtown buildings were originally constructed to house small businesses and this is a purpose that they can–and do—serve today. If they are not available for small businesses to start in and grow, then the “opportunity” of that business including jobs and increased sales and property tax revenue is lost. Many towns have seen downtown housing—apartments and condos in the upper floors of buildings—as a way to provide a unique living opportunities and vibrancy to their downtowns. And, it can make a smaller community look very sophisticated to those visiting or looking for a location for their company.

So, the question becomes: What do we have to gain from rehabilitation of our older buildings (commercial and residential) and our downtown and neighborhoods?

At a time when people are more aware of environmental issues—going green, recycling and being sustainable—they understand that tearing down buildings isn’t any of that. Communities often look to tourism, especially heritage tourism, as a part of their economic development strategy. They understand that those dollars create jobs and add to the economic base. But, if you have no history as personified in your downtown and older neighborhoods, what is there to see and do?

There is an intrinsic value to these buildings. They help to define the community and differentiate from other towns and cities. Often, there is an iconic building that defines the history—and the future of the town. These buildings in downtown and the older neighborhoods define the “place” of a community. There is a lot of discussion about “New Urbanism”, “Place Making”, “Better Block” and “Town Centers”. When I asked where historic preservation fits into New Urbanism, Andres Duany, the leader of the New Urbanism movement, said to me, “they started it”. In other words, all these movements look back to the past and use the historic fabric as the anchor and build on that.

Leaders need to access what the loss of the building will truly be. They would be tearing down a resource that cannot easily be replaced. Why are they tearing the building the building down? Is there a “better” use for the land? How are they quantifying and qualifying “better”? What is the true cost of demolition? Have they done an analysis of the rehabilitation costs that takes into account the various incentives (20% Federal Historic Tax Credit, state tax credits, local incentives)? There are a multitude of questions to be asked before demolition takes place.

In Cincinnati, where I live, I have been very impressed with the repurposing of older buildings for modern needs. How prevalent is this approach nationally? What are the pros and cons of rehabilitating and repurposing a building versus knocking it down? Are there any best in class communities that come to mind as having done a noteworthy job at adaptive reuse?

This is a national trend that cities and towns of all sizes use as part of their economic development and community revitalization programs. There are great examples in towns and cities around the country. I suggest looking at the National Trust and National Main Street Center websites. Statewide preservation organizations and State Historic Preservation Programs have great examples on their websites. In Dallas, the Sears Warehouse (almost 1 million square feet) is now apartments. The former coffin factory next door is a NYLO hotel. There are great examples in small towns too.

Most locations have to work on a limited budget. And many companies seek incentives as part of the deal package for locating their business in your community. What are some of the questions a community leadership team should ask and answer before deciding in funds should be allocated to revitalization versus incentives? How can you best assess the potential for a taxpayer return on investment?

The first question a community should ask is does it fit in with our comprehensive plan for growth and our priorities as a community. If there’s no comprehensive plan and no pre-established priorities then the first step is develop a comprehensive development plan with set priorities. Since revitalization and new development should ultimately be included in a comprehensive plan, both are viable and will add to a community’s vibrancy.

Then a key question when deciding whether to use monies for incentives or revitalization is, “What is the return on the investment?” With revitalization you may have investment return in the form of higher property values, increased sales tax revenues, increased investment, greater employment and enhanced civic pride. One or all could be achieved with minimal investment on the part of the community.

When public funds are used for incentives you can ask the same questions. What is the return on the investment? The return to the community would also be in higher property values/taxes, enhanced investment, increase in employment and sales tax. However, depending on type of incentive(s) used, you could have significantly higher costs to the City than with revitalization and the community may or may not gain in civic pride. Not all economic development is positive and the city must also ask the question of whether the economic development project up for incentives is in keeping with the community’s development plan and desires of the city, i.e. a nuclear storage dump may be economic development but may not be a desired outcome of the community development plans and hence declined.

Revitalization also relies heavily, if not exclusively, on use of existing infrastructure, whereas not all economic development projects use existing infrastructure. Some economic development seeking community incentives may need additional infrastructure be built to support the development. This would cause a community to question whether the use of public funds is justified because it may stimulate additional investment in and around the initial investment. The building of water and sewer lines and increased capacity for a manufacturing facility on the edge of a community could stimulate others to build along the infrastructure corridor thus making a strong case for community investment in the initial project.

A community’s desire for density to develop up rather than out may further dictate whether revitalization offers a higher rate of return over incentives for new development. The amount of available and useable space/buildings would also have an impact on whether the community leans toward revitalization over new construction.

These are some of the questions that must be answered by a community and its leaders prior to developing and implementing an investment plan. The primary question the community must answer is, “What kind of a community do we want? Then follow with a comprehensive plan to achieve the desired results in a cohesive manner.

Most communities were built a building at a time and a business at a time, but there was usually an original town plan that was developed and followed. The plan was set forth by the community and followed so the garbage dump was on the edge of town and not next to the location for the elementary school. This is the usual case for why cities adopt zoning laws dictating who can do what when, causing a rather methodical development of a community rather than the chaotic approach of helter-skelter development and everyone for themselves.

If a community wanted to talk with a CRS Group representative about the services you provide, what is the best way to reach out?

Our website is www.crsgroupusa.com. We can also be reached through our emails: kate@crsgroupusa.com, kevin@crsgroupusa.com and tony@crsgroupusa.com. My specialties are local government, planning, downtown revitalization and historic preservation. Kevin Walker’s areas of expertise are economic development, downtown revitalization, special districts (TIFs, etc.) and business development. Tony Eeds is a registered architect with expertise in historic preservation, code analysis and downtown revitalization as well as building pro formas.

DISCUSSION

How do you think through the decision to invest in making your community inherently more competitive versus offering a company an incentive for locating, staying or expanding in your community? How often is that choice even explored in your community?  What are some aletrnatives you have seen that minimize the need for incentives?  In your opinion, does the economic development profession use incentives well or poorly?  Please share your perspective.

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