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COVID-19 Economic Response and Recovery

Revitalize Neighborhood Business Districts

Why:

In this way, you will make neighborhoods more livable, help retain essential services, and support household wealth building.

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COVID-19 Economic Response and Recovery

Support Mainstreet/Downtown Businesses by Increasing Local Tourism

Benefits:

  • Facilitates additional spending at local businesses during a time when people are not traveling as much

Risks:

  • Spending will just be redistributed within the city, rather than be additional
  • Many city-backed marketing campaigns are poorly targeted, executed or measured

Impact: Medium
Implementation time: Slow
Cost: Low. This primarily is leveraging existing media and advertising resources to promote local neighborhoods.


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COVID-19 Economic Response and Recovery

Reallocate municipal tax revenues to replace general fund cuts, such as tax increment financing, property tax, sales tax, and real estate transfer tax

Why:

Cities in every US state use TIF revenue. Cities allocate funds generated from TIF districts into specific budgets, which are not co-mingled with general fund revenue. This lack of co-mingling is usually a legislative requirement.

However, this should not stop cities from creatively analyzing the activities which are able to be funded under TIF to see if there are opportunities to substitute general fund programs with complimentary TIF-funded programming

Background:

TIF revenues are often used to finance infrastructure, as well as development/ redevelopment projects, that would not be feasible “but for” the TIF financing.

The program works as follows:

  • The city borrows money through a bond issuance, or another debt instrument, to improve a distressed property.
  • As the property improvements are completed and the property’s assessed value increases, incremental tax revenue is generated.
  • The city repays the bonds from the incremental revenue.

TIF legislation is constantly changing and can sometimes be politically charged. Understanding your local rules and “philosophies” regarding TIF is a critically important first step


At the same time, cities should think about ways to broaden the use of TIF. For example:

  • Marketing efforts, which are specific to a TIF district, can be leveraged to promote the wider community. At the very least, continued marketing efforts of TIF districts may provide some relief to general fund marketing allocations.
  • Community improvement projects (CIPs) and district maintenance.
  • Cities typically “charge” these expenditures to the general fund or other funding streams, but reallocating TIF revenues to these purposes may help offset other departmental expenditures. This, in turn, could free up general fund revenues for economic development programming.
  • Paying for staff/personnel costs.
  • Fund property acquisitions.
  • Creating immediate economic development opportunities (such as ad hoc events).
  • Enhancing security/district services.

The Council of Community Development Finance Authorities (CDFA) has produced a comprehensive Tax Increment Finance Center. For more information on the CDFA Tax Increment Finance Center, click here.

Impact:

The Hatchery is projected to create 900 jobs and $25 million in pre-tax wages in five years.

Why:

Real estate property taxes are one of the most stable and significant sources of revenue for many cities, and so can support expanded economic development programming.


Background:

Many city and state governments are heavily reliant on property taxes. While many cities offer property tax abatements and rebates for specific projects, few allocate or reallocate a percentage of the tax revenue for economic development projects and operations.

Such allocations can be used to:

  • Acquire property, including raw land and rights-of-way, for high-priority economic development projects. These could be industrial parks and mixed-use developments that will generate a return on investment.
  • Fund commercial rehabilitation, expropriation of private property (eminent domain), redevelopment, or storefront improvement programs. Such investments, which physically improve underperforming real estate, will typically help seed additional capital investment.
  • Fund local incentives, contributions to economic or workforce development partners, or outsourced programming.

Why:

Although sales taxes may not be stable during challenging economic times, they can still relieve some of the pressure on the general fund to pay for economic development programming.

Moreover, many sales taxes are paid in part by people residing outside the city.

States such as Wyoming, Nebraska, Oklahoma, Texas, and Missouri allow cities to levy local sales taxes for economic development purposes. Go here to learn more about Texas’ experience.


Background:

While it may be challenging to introduce a new tax at this time, many cities and states allocate a proportion of local sales tax revenue for community economic development efforts. The funds are used to fund:

 

  • Specific economic development programs
  • Local buy campaigns
  • Incentives for reinvestment,
  • Enhanced services and staffing,
  • Capital investments Sales tax may also be rebated to support new or expanded entertainment, hospitality, recreation, retail, etc. offerings.

Why:

While real estate transfer taxes can be somewhat volatile, they also offer a sustainable source of funding. They are also specific in nature, so the impact on the general public is limited. As such, they tend to be expended for very specific purposes for the communities which paid them. To reduce volatility, cities can transfer some of the revenue from these taxes to a revolving economic development fund which continues beyond a single fiscal year.


Background:

Real estate transfer taxes are imposed on the transfer of title of real property. In most cases, they are based on the value of the property transferred.

Legislation in 37 US states permits such taxes and cities often have the ability to levy the tax and use it for purposes, such as:

  • Allocate money to an economic development incentive fund for targeted businesses and industries.
  • Provide funding for neighborhood commercial enhancement programs which help stem blight, and leverage private sector investments through a match program, or tax credits.
  • Fund travel, contracts for services, continuing education and training, trade show promotion and events, marketing, special events, and opportunistic one-time activities.

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COVID-19 Economic Response and Recovery

Provide Access to Funds and Resources for Tourism Businesses to Adapt

Why:

Keeping local, small businesses is critical for the recovery of your tourism economy. By helping them develop new online communications and sales channels, create new lines of business, or repurpose and adapt their space, you are helping to create longterm revenue solutions.

Do:

  • Do spend time building the trust and confidence of your member businesses.
  • Do regularly engage with your business owners and provide support based on their differing levels of digital literacy.
  • Do set aside considerable time at the beginning to sort out payments from Shopify to vendors.

Don’t:

  • Don’t assume any knowledge. Create stepby- step guides, and share information on how businesses can take good photographs, buy ads, and market their businesses on social media.

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COVID-19 Economic Response and Recovery

Provide Technical Assistance to Small Businesses

Why:

Since COVID-19, travelers, particularly younger travelers, have a heightened awareness of environmental sustainability and social and racial equity. As a result, they are more likely to look for evidence that destinations are taking steps to address these issues.


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COVID-19 Economic Response and Recovery

Place-Based Strategies: Promote Neighborhoods and Increasing Access to Commercial Space

Overview:

Launched in 2013 — and modeled on the work of La Cocina in San Francisco, CA — SPICE Kitchen Incubator provides training, technical assistance, and affordable commercial kitchen space to refugees and other underserved residents who are interested in starting food businesses in Salt Lake County. SPICE Kitchen’s partnership with Salt Lake County dates back to its inception, when county officials helped attract seed funding from American Express to establish the project, and stems from a county-wide focus on integrating and supporting new Americans. Today, the incubator’s annual operating budget is $400,000, 15% of which comes from local public dollars. An additional 20% is funded by income generation, while the majority of funding comes from private foundations, corporations, and Community Reinvestment Act dollars from financial institutions.


Project Components:

SPICE Kitchen Incubator provides access to affordable commercial kitchen space; industry-specific technical assistance in areas like marketing, operations and access to capital; workshops from staff and partner organizations on key food business topics; and support with market access and positioning. The SPICE incubation model includes these four phases:

  1. Application and enrollment (<1 month): Participants who are recruited from the local community and via local refugee resettlement networks attend an orientation session and go through an intake assessment to determine product viability, entrepreneurial drive and other necessary characteristics.
  2. Pre-incubation (6-8 months): Participants receive training and technical assistance to develop their business plans, including product development, marketing, finances and operations. This can include financial coaching and credit repair, if necessary, in anticipation of the soft launch of the enterprise.
  1. Incubation (8 months-4 years): Those who succeed during pre-incubation are invited to set up shop in the commercial kitchen, where they continue to receive technical assistance, opportunities to access capital and resources to grow their business, and market access support.
  2. Graduation (ongoing): After meeting certain incubation benchmarks, participants graduate from the program and most move their business out of the commercial kitchen, though as alumni they can continue to rent space and access technical assistance and support.

During COVID-19, SPICE Kitchen has shifted entirely to digital training, building in remote digital skills training via phone first to ensure access to their training platform. The primary focus has been on guiding entrepreneurs through the types of relief support available, eligibility for different forms of relief, and one-on-one help completing the application process.

Since its founding, SPICE Kitchen has served over 130 low- to moderate-income participants, helped launch eight food trucks and three brick-and-mortar restaurants, and helped entrepreneurs collectively earn over $3,230,000.



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COVID-19 Economic Response and Recovery

Activate Vacant Buildings

Why:

In this way, you will support local businesses and create short-term construction jobs as well as good, neighborhood jobs, and fill a long-time vacant building.



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COVID-19 Economic Response and Recovery

Encourage Local Tourism

Why:

Travelers’ inclinations and behaviors have been transformed because of the fear of getting infected, trapped, or quarantined. As a result, travelers are looking for opportunities to travel to destinations which are closer to home, familiar, predictable and low risk.


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COVID-19 Economic Response and Recovery

Invest in Capacity Building of Nonprofits

Why:

In this way, you are extending their ability to do local outreach, leveraging additional funding sources, and building neighborhood capacity to deliver local programming.

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