CEcD POSSIBLE ESSAY MATERIAL: Real, Finance, BRE

What are Local Public Sector Development Tools, Resources, and Practices?

There are a variety of tools to encourage and assist in the redevelopment of property. Each tool provides some form of aid to the developer. 1- The reduction of the development cost, 2-financing costs, 3-reduction in operating costs, 4-facilitation of the redevelopment process. Economic development organizations can help make a project feasible by providing a variety of local funding tools for developers and businesses. These incentives include loans, loan guarantees, tax abatements, and grants. The decision to offer developers public financing options often depends on the costs incurred by the community for each.

LOCAL PUBLIC SECTOR DEVELOPMENT TOOLS, RESOURCES, AND PRACTICES:

There are a variety of tools to encourage and assist in the redevelopment of property. Each tool provides some form of aid to the developer. The reduction of the development cost, financing costs, reduction in operating costs, or facilitation of the redevelopment process.

Discrete methodologies:

There are discrete methodologies used to analyze the market for different land uses such as housing, retail, commercial office, industrial, hotel, entertainment/arts, and parks/recreation space. Each one of these methodologies can ultimately solve for quantity in acres or in square feet of (space consumed), market share (as a percentage of a broader area), and rents/prices (m dollars per square foot).

Structuring deals (gap financing):

There are many different funding sources available to the economic developer. The economic developer should be able to bring together a number of different gap financing strategies tailored to the specific real estate project that needs public assistance. No two projects will have the same funding structure and a number of techniques will be available to fill a funding gap. The project itself may be equity or debt financed-typically both-and from a number of sources, which will alter how the project finances itself in the long term. Care must be taken to ensure that the right funding options are selected for the project because the final structure of the financing may affect the final profitability and use of the development.

Summary:

There are many resources, strategies and steps an EDO can take to protect and help restore its business community in the unfortunate event of a disaster. Whether reaching out to businesses, communicating with city officials, or advocating with federal agencies, the many roles an EDO serves require it to be fully engaged both before and after a disaster. Although not all impacts of a disaster can be mitigated, EDOs have proven time and again that their actions can make the difference for local businesses and push the community toward a faster recovery.

Lease/Sale Contracts

There are standard contracts to sell and lease property, although they may be changed during negotiations. If the property is to be sold to a business upon completion, a purchase contract is prepared prior to construction. It stipulates that the sale will commence upon satisfactory completion of construction. Similarly, a developer may agree to sell the property to other investors once construction is complete and a specified portion of the building is leased. At a minimum, lease contracts specify the lease amount, escalation, tenant allowances, responsibility for operating costs, and tenant obligations, jf any. Although each lease is individually negotiated, leases for anchor tenants or any tenants that prelease prior to construction are usually more favorable to the tenant than later leases. If the developer chooses to employ an outside broker to handle leasing, there will be a listing agreement between the two parties stipulating the brokerage commission and other terms.

Overview of Financing:

There are very few developers who can complete a project using their own money. Most look to private sector lenders and equity investors for a major share of the project financing. Many developers are now fee-based which means they have little investment in the project and work to earn a fee at the conclusion of the project. Importantly, many developers will have some expertise in gap financing and will be able to help both the public and private sector partners understand where gap financing is required. The recent global financial crisis has put a dismal spin on access to financing. For example, the downward pressure on the credit ratings of certain municipalities and state governments has raised the cost of capital for development purposes. Moreover, the number of foreclosed properties on the market has increased the supply of available units whether it is residential, commercial or industrial. That being said, there are still viable deals to be made, but the economic development organization must efficiently garner its resources to "do a lot more with less."

Federal Incentives

There is a precedent for federal government action that addresses major recovery needs, such as the tax-free bonding that was implemented in New York City after September 11th and the federal tax incentives available in designated Gulf Opportunity Zone (GO Zone) communities after Hurricane Katrina. • GO Zone Bonds: Gulf Opportunity (GO) Zone bonds were passed after Hurricane Katrina in 2005 to encourage reinvestment in Louisiana, Alabama, and Mississippi. GO Zone bonds are tax -exempt bonds that essentially serve as a low-interest loan for businesses that issue them. Businesses could also receive tax incentives for redeveloping property in the zone area. • September 11 Bonds: After September 11, Congress provided tax-free bonding authority to New York for the rebuilding of the destroyed area. Half of the bonds were allocated by the state's governor and half by the mayor of New York City. This enabled local and state government agencies to raise more capital to fund infrastructure projects.

What "essential government function" Public use bonds are intended to address?

They are used for public purposes such as highways, schools, bridges, sewers, jails, parks and government buildings.

Adult Training Program:

This DOL program provides activities that increase employment retention, earnings, and occupational skill attainment of participants. This program aims to improve the quality of the workforce, reduce welfare dependency, and enhance the productivity and competitiveness of the nation's economy.

Site Visit Surveys Using Volunteers:

This is the oldest model for business retention and expansion visitation programs, developed by New Jersey Bell Telephone in the 1970s and since emulated in many other locales. Volunteers may be recruited from local employers, the chamber of commerce, community organizations, and educational institutions. Each volunteer conducts a small number of interviews with local businesses (usually four or five) over a short time period (usually two weeks). The effort is coordinated by the economic development organization, which develops the survey mechanism and trains the volunteers. If possible, it is best to send two volunteers on each interview. The BRE program manager should establish clearly defined debriefing protocols for volunteer-based programs. Volunteers may not be knowledgeable about the various resources available to businesses participating in the program. Immediately following the visit, volunteers should debrief the BRE manager on the bottom-line needs of the businesses, especially if there are potential red flags.

Site Visit Surveys Using Economic Development Staff:

This model is becoming increasingly popular with economic development organizations for a number of reasons. First, many organizations now have staff whose primary responsibility is business retention and expansion. Second, more and more economic development professionals have private-sector experience themselves or some formal business and management education, allowing them to "speak the language" of business and gain the confidence and trust of those they interview. Third, this model is most appropriate for building on-going business retention and expansion presence in the community, which is one of the most important elements of a credible BRE program.

To avoid payment problems:

To avoid problems, loans should be reviewed at least annually. The review should assess the financial health of the borrower, compliance with loan covenants, and assess if there is any change in collateral. • Payment is current: payments on time Maintain normal screening activities • Late: payment is 10 days overdue Contact principal • Delinquent: payment is 30 days overdue. Renegotiate/ restructure terms

Credit Analysis

To avoid regular defaults and delinquencies, and the consequences associated with bad loan performance, you must be aware of the risks each proposal entails. This requires a credit analysis of all potential deals. Credit analysis considers four factors: ~ The debt coverage ratio ~ The loan to value ratios (collateral) ~ The validity of guarantees ~ The personal integrity of the borrower

Exactions and Impact Fees:

To fund capital improvements, impact fees and exactions are levied at the time of subdivision or other approval steps. These fees may be set by law or partially or fully negotiated. Developers also may be required to contribute land for public purposes such as schools, parks, or public facilities. Sometimes developers even make the capital improvements themselves. State courts often require that the exactions and impact fees pass a "nexus test", a test that determines whether the fee is reasonable and fair to cover the cost for public services or public improvements needed by the project.

The BRE representative should understand a company's industry prior to the interview:

To make on-site interaction more valuable, the BRE representative should understand a company's industry prior to the interview as well. An industry analysis includes a review of an industry's recent performance, its current status, and the outlook for the future. It is important to track developments in the industry over time. A sudden change or decline in the industry may force a local company to respond rapidly by cutting jobs or relocating. Analyses can be accessed in industry-specific magazines, publications and websites. Many site selection publications offer periodic analyses of specific industries such as automotive, manufacturing and plastics.

4. Long Term-Approximately three to four months after the conclusion of the survey effort:

Update Firms on Progress in Dealing with Community-wide Issues that Impact the Business Climate. Examples of community issues and responses include: • Increased police patrols in a manufacturing district where business owners felt that vandalism was a problem. • Creation of a one-stop business permitting center in response to concerns of a burdensome permit issuance process. • Availability of a new training program through the local community college that responds to business needs identified in the survey.

Justification for gap financing:

Using public resources in this type of financing scheme should only take place for deserving projects that have a clear public value. Helping to finance a historic downtown building to stimulate other downtown reinvestment, or financing the clean-up of a contaminated site probably are in the public interest. Often the costs of preservation or environmental clean-up exceed "greenfield" development costs, so a little help from the community is valuable and cost-effective. Gap financing analysis, therefore, requires close scrutiny of market studies, pro-formas, cost estimates, revenue projections, and related factors to assure that the project (1) truly needs public dollar support and (2) furthers other private development that should not need, or need much less, gap financing now that a "market" has been re-established with public support.

Venture Capital:

Venture capital can be defined as equity investment in small, growth-oriented businesses, typically at the seed, start-up, or early expansion stages. Venture capitalists invest in promising new businesses (or, in many cases, in promising concepts for a new product or service) with the expectation of potentially very high returns. Since these new businesses or products are based upon ideas that have yet to be tested in the marketplace, failure rates are very high; one study estimated that even the most experienced private venture capital funds have success with roughly one in every 10 investments. But that one in ten investments must create a tremendous rate of return to sustain the venture capital business model.

Economic Demographic Analysis:

Via an economic and demographic analysis, a practitioner or developer can project the regional forecast for jobs and household growth and examine how much of that growth may impact the market conditions for a particular project. Accurately interpreting the volumes of economic and demographic data is important to understanding project viability.

Ethics and Confidentiality:

Volunteers need to be introduced to economic development ethics and business retention and expansion confidentiality issues. This would be a good time to share the EDO's own code of ethics or to refer to IEDC's ethics code. The training should explain why BRE surveys are confidential. It is vitally important that every volunteer understand the confidentiality responsibility that comes with BRE surveys.

It is important to determine whether the industry is growing or declining:

What is causing this trend? What trends are expected in the coming years? How does this impact the company in your town? Other factors to understand include the distribution system for products and services in the targeted industry and how technology is changing the industry. Is there technology that has become standard in the industry? The on-site visit can help determine if the company has access to this technology and is able to compete.

Research:

When a community decides to finance a project, it is important to do research. 1. How feasible is the project? 2. Will revenues cover cost? 3. Are those receiving the funds creditworthy? 4. Does this loan benefit a project that meets the economic development goals of the community?

Public-Private Development Agreements:

When an EDO initiates development through a Request for Proposal. the developer and the EDO enter into a set of development agreements. There is an initial memorandum of understanding followed by a binding master development agreement. The final agreement will specify the roles and responsibilities of the public and private sectors in redevelopment. If the public sector owns the property. it will include a long-term land lease or sale contract depending on the method of disposition. For a sale. EDOs usually do not transfer property until the closing of the construction loan to protect their interest. If the public sector is to share in any future project revenues and profits. the agreement must provide details on computing that share. including the process for public-sector verification that distributions are correct. There may be supplementary agreements to address other components of development, such as the public- and private-sector roles in infrastructure improvements.

Relevancy of financial ratios to and financial statements:

When applicable, ratios are applied to help interpret and analyze the financial data. As we have seen, ratios measure relationships between the various financial statement accounts. Like the financial statements, ratios are not an end in and of themselves, but an analytical tool. Ratios also vary greatly among industries. It may be useful to compare ratios to an entity's past performance, industry averages to which the entity belongs, or to companies in the same industry provided the companies are similar. Sources such as Risk Management Association (RMA) provide ratio averages for various industries.

2. Set Program Policies:

a. Determine policies for operation of the program. • Will the program target a specific industry? • How many businesses should be included in the program at any given time? • Is the program geared only toward businesses that are financially challenged? • Should assistance be targeted to firms that exhibit the greatest growth potential (and presumably the greatest potential for generating new jobs)? • Does the company have to be locally owned? b. Determine the criteria for businesses to participate in the program. • Does the company have to reach a certain size threshold (employees or finances) to be considered for the program? • What share of employment in the region does the business have to provide? • At what level does the business have to contribute to the regional export base? • Does the business have to be in a particular stage of growth? • If the firm is a subsidiary of a corporation, to what extent does headquarters have to be involved? c. Determine the cost structure for technical assistance services. • Will businesses be expected to pay a fee? 1. Will the fee be based on: 2. Number of hours served? 3. Type of technical assistance? 4. Size of the firm? 5. Technical assistance provider? • If services are offered for free, is there a limit to the number of service hours provided?

Return on Assets

a. Evaluates whether management has earned a reasonable return with the assets under its control b. Return is defined as "net income" and "average total assets" are: (total assets at the beginning of the period = total assets at the end of the period)/2 c. ROA = Net Income/Average Total Assets

1. Identify Technical Assistance Partners and their roles:

a. Identify local resources that could serve as partners in a BRE program. • What professional accounting, marketing or legal firms in the community provide pro bono services? Would they participate as a service provider in the BRE program? • Is there a local Small Business Development Center (SBDC)? • Are there small business organizations that have the capacity to assist local businesses? • Is there a community college or university nearby that has a business support program, incubator, business students and/or a SBDC? • Are there local utilities that could be potential partners? • Is there a workforce development agency that could be a potential partner? b. Meet with technical assistance partners as a group or individually. An EDO should know: • In which technical assistance areas can each provider Assist; • The capacity of each partner to provide technical assistance; • The role and expectations of each service provider; • If an agreement needed to formalize the technical assistance partnership.

Operating Margin

a. Illustrates the overall operating success of the business for the period being measured b. Percentage of net sales and shows the company can retain a reasonable amount of the profit c. Operating Margin on Sales = Operating Income/Net Sales

Selling, General and Administrative Expenses (SGA)

a. Include variable and fixed expenses, as well as production and selling and period expenses b. Difficult to analyze since it's a mixture of dissimilar components which are discretionary (salaries) and impacted by other factors (depreciation, rent, interest)

Return on Sales (ROS)

a. Indicates the degree of efficiency to which a company utilizes its financial resources b. States annual return (profit) as a percentage of sales c. ROS = Net Income/Net Sales

Quick Ratio

a. Like the current ratio, but focuses on cash b. QR = current assets - inventory / current liabilities c. Should be at least 1:1

Loan Documentation and Servicing:

a. Loan Documentation b. Loan Servicing c. Loan Closeout

Inventory Turnover Ratio

a. Measures the average number of times inventory was sold over the period b. Value of inventory is valuable for analysis since it is a form of collateral c. ITR = Cost of Goods Sold for Period / Inventory for Period

Current Ratio

a. Most common measure of short-term debt b. CR = current assets / current liabilities c. the higher the ratio, the more solvent the business, creditors want 2:1

Days Receivable

a. The amount per credit extended per dollar in sales b. The average number of days it takes a firm to collect c. Should not be more than 1/3 than net selling terms d. DR = Accounts Receivable * 360 / Sales

4. Follow up and evaluate:

a. Was the technical assistance useful? If not, why? b. Were the goals and objectives of the program met? c. Are the businesses interested in additional services? d. Is the EDO or the technical assistance provider responsible for follow-up?

Underwriting:

a. Working with Lenders b. Loan Review Process c. Key Factors of Underwriting (The 5 C's)

Average Days Inventory

a. measure of the average number of it takes for a company to sell its inventory b. DI = (Inventory / Cost of Goods Sold) x 360

Accounts Receivable Turnover

a. the number of times receivables are collected during the year b. ART = net sales / accounts receivable

Extended Amortization Schedule

amortization schedule is no longer the actual life of the loan, resulting in lower monthly payments, with a balloon payment of the balance at the maturity of the loan

Merchandising

any act promoting the sale of the commodities or goods that are bought & sold in business

Sales and General Administrative Expenses

any other operating expenses that are accrued in the period of the income statement, including officers' salaries, rent, utilities, fringe benefits, advertising, etc.

Basic Equation of Balance Sheet

assets = liabilities + equity

General Partnership

business organization owned by 2 or more people who agree to act as partners and share equal ownership and responsibility; not a taxable entity but partners are taxed on individual shares

Prepayment Penalties

certain percentage of outstanding balance of a loan is charged buy the lender if the borrower repays the total amount of the debt in advance of the maturity date

Variable Expenses

change proportionately with the amount of production or sales, and are typically related to cogs

Outreach/ Relationship Building:

With a team of service providers in place, outreach can be conducted to build stronger relationships with business owners and managers. Outreach can be conducted in a number of ways: periodic surveys; targeted focus groups; cluster groups; and in-person visits to key businesses. While not all businesses may be targeted for outreach, there should be a conscious effort to build a solid relationship with the business owner or branch manager of firms that are strategically important to the community.

Working Capital Needs

Working capital focuses on the most liquid assets used in the nonnal operation of an entity. It is synonymous with current assets and current liabilities on the balance sheet of an entity: cash, marketable securities, accounts receivables, accounts payables, accruals, short-tenn loans, inventory and prepaid expenses, such as rent or insurance.

Zoning changes:

Zoning changes will require greater review than permits and must be approved by the city council. Such requests must be weighed against the city's planning goals, the preference of the neighborhoods and neighbors, and the political disposition of the government Unlike permits, which are often only granted for a set time period, zoning changes are usually permanent Zoning changes are more likely if they are consistent with the community adopted land use plan. The land use plan provides broad development parameters over a 10-20 year period. Many states require that zoning be consistent with the community's adopted land use plan. However, if there is a redevelopment plan there is a possibility that required zoning changes will be incorporated within the redevelopment plan so that only approval of the plan is required.

Zoning:

Zoning is the regulation of use, shape, and bulk restrictions on development. Zoning approval can range from a few simple reviews In a complicated and time-consuming process. If current zoning permits the proposed development, then the development plans need In be reviewed to see that they meet development standards. Development standards are the part of the zoning code that deals with measurable constraints such as density, building heights, setbacks, and parking spaces. Density is often measured by floor area ratio (FAR). FAR is the ratio of gross floor area in a building In the Intal site size. For example, a 100,000 square foot vacant site is subject In a maximum 5 FAR. Therefore, the developer can build a maximum 500,000 sq. ft. building. Local regulations may allow some components, such as underground parking, to be omitted from FAR calculations.

Equity Financing

a capital investment that does not obligate the repayment of the investment, but instead investors receive partial ownership in the venture

Debt Financing

a capital investment typically made by commercial banks that must be repaid within specific time period based on a pre-established schedule

Guarantees

a promise by a third party for partial liability

Return on Equity (ROE)

a. A criterion with which investors evaluate whether a company has successfully utilized the equity in the company b. ROE = Net Income/Average Total Equity c. financial stability = 10-20%

3. Provide Technical Assistance:

a. Define the scope of services to be provided. b. Define the time period of service provision. c. Define the expected role of the business being helped. d. Define the expected outcomes.

Have a fairly consistent stream of media coverage:

While judgment is required to determine what is newsworthy, the goal should be to have a fairly consistent stream of media coverage. This helps remind local businesses that the BRE program is available to assist them. It will also build support for the program and for the participating organizations among political, business, and community leaders.

Technical Assistance and BRE:

While large corporations have the financial capacity to hire top consulting firms to help their managers successfully confront these and other challenges, small and medium-sized firms usually do not. Therefore, assisting small and medium sized companies can have a big payoff in business retention and expansion, as these firms account for an increasing proportion of job creation in today's economy. A well-coordinated technical assistance program can provide the equivalent of expensive consulting expertise to small and medium-sized firms at little or no cost to the business. Technical assistance may vary from simply answering a firm's questions to engaging in a more formal, long-term relationship with the company to address systemic problems.

Special Concerns for Property Reuse- Relevant regulatory guidelines that pertain to property reuse:

While regulations vary by locality, some basic considerations affect all projects including building, fire and special codes and accessibility codes.

Other Income

includes any other monies earned, such as interest revenue

Intangibles

intangible measure of the character and integrity of the borrower serves as a final evaluation criteria of credit analysis

Secured Loans

loans backed by collateral, and can be short, medium, or long-term repayment schedule

Bonds

long-term debt instruments sold publicly or through investment houses to raise capital; interest rates are not tied to market; bondholders receive biannual interest payments (coupon) and lump sum payment of principal at maturity (generally 10-40 years)

Liquidity Ratios

measure the enterprise's short-run ability to may maturing obligations including current ratio and quick ratio

Tax Increment Financing

mechanism to capture future tax benefits of real estate improvements to pay present cost of those improvements by freezing property tax assessments at a base year (which continues to go to taxing jurisdiction in subsequent years) while increases in tax revenue is allocated to TIF district and is used to pay down debt on bonds. Bond proceeds are used to finance public infrastructure or to support a specific project through property acquisition, environmental remediation, loans, or other means In short, it is a self-financing technique used to support infrastructure projects. Within the designated TIF district, the assessed valuation of real estate is frozen at the point just before the project begins. The increase in resulting tax revenues from the new development above that level is used to pay off the debt incurred by the development.

Accruals

money owed to providers of goods or services for which no official bill exists or billing process takes place (wages, interest, payroll taxes, benefits, rent)

Gross Profit

net sales minus the cost of goods sold

Liabilities

obligations of the business (accounts payable, loans, deferred revenue)

Real Estate Development Accelerator (REDA) Tax Abatements

offer an abatement window that shuts in incremental phases for subsequent developers/property owners. offsets the greatest risk (new, unproven markets)

Convertibility

option that allows a lender to convert a debt investment into common stock

Warrants

options that enable lenders to purchase a specified number of shares of common stock at a pre-negotiated price

Sole Proprietorship

owned and operated by one individual who is personally liable, income/expenses reported on individual income tax return, simplest form

Nonrecourse Loans

debt holder does not have recourse to personal assets

Recourse Loans

debt holder has recourse to the personal assets of the borrower to satisfy payment

Cost of Goods Sold

direct costs associated with the generation of revenue

Assets

economic resources owned by the business that will benefit future operations (cash, accounts receivable, equipment, land, inventory, etc.)

Net Income

excess of revenues of the related expenses for the period of the income statement

Fixed Expenses

expenses that do not vary with production, such as rent, insurance, debt service payments, etc.

Historic Rehabilitation Tax Credits

federal income tax credit of 20% on qualified expenditures for the substantial rehabilitation of certified historic structures

Credit as a Risk Factor

goal of creditors is to reconcile the risk with the reward, this the higher the risk, the higher the return must be

Venture Capital

professional financers that seek companies where there will be a possibility of very substantial returns on their investment, typically within 3-7 years

Land Banking

public acquisition and reservation of land for future use

Land write-down

public sale of land for less than its market value, with the difference acting as a subsidy or incentive

Tax Abatements

reduction or exemption of a taxpayer's obligation to pay taxes for a specified period of time to encourage development thru tax relief

Investing Activities

refers to cash flows that arise from purchases and disposals of plant assets or investment (usually where negative cash flows are reported)

Financing Activities

reports the cash flows between an organization, its stockholders, and its creditors; can be negative

Compensating Balances

requirement that the borrower maintains cash covering a certain percentage of the loan amount in an interest bearing account

Leverage Requirements

requirements that the borrower maintain certain financial ratios, generally current ratio, debt to equity ratio, and networking capital, or does not take further debt

Sinking Fund

requires the borrower to deposit funds regularly throughout the period of the loan to assure repayment of the total debt at maturity

Operating Activities

shows the cash results of the revenue and expense transactions of the business (cash inflows & outflows)

The economic development practitioner frequently must collaborate with a number of different service providers that can help the business. These include:

sources for financing, technical assistance, management and technological assessments, workforce training and retraining, and finding new markets. Some of these resources are provided by the public sector at the local, regional, state and federal levels, while others are provided by the private and nonprofit sectors.

Subchapter S Corporation

special type of corporation where dividends are paid out before taxation

Variable Interest Rate

the interest rate charged is not fixed, and therefore, may fluctuate over the life of the loan in response to market conditions

Maturity

the length of time an investment is scheduled to be repaid; the longer it is the greater the risk

Promotion

the organized package of merchandising, advertising & positioning of product in marketplace

Condemnation

the taking of property upon paying fair price including relocation costs

Air Rights Transfer

the transfer of rights to develop above or below a piece of public land while maintaining public rights to ground level and/or underground

What is the role of the public sector in development finance?

to invest in ventures or projects where the economic and social benefits outweigh the risk of financing and based on factors such as job creation, neighborhood development, tax revenue increases, etc.

Average Total Assets or Equity

total at beginning of period + total at end of period / 2

Revenues

total earnings accrued by the sales of goods and services

Short-Term Secured Loans

typically for less than one year, using working capital including AR financing, inventory loans, time or lease sales financing

Community Development Venture Capital (CDVC)

uses equity finance to build businesses that benefit ow-income people & distressed communities

Recommendations that come out of Market Feasibility include:

• "Highest and Best" land use(s) - What land uses provide the greatest level of economic value today and tomorrow? • Orientation and target consumer - Who is the customer for this project, and what are their needs? • Market Positioning - How should this project be positioned in the marketplace to differentiate it from the competition? • Pricing - What are the achievable rents and/ or prices that this project can achieve, and do these prices justify the cost of construction? • Construction Type - What type of construction n (wood frame, steel concrete, etc.) do the prices justify, based on financial modeling and do these construction types deliver the type of project as envisioned? • Features and amenities - What features and amenities must this project deliver in order to be successful/? How do these features and amenities impact the overall construction cost or management cost of the project? • Absorption/Sales - How quickly will this project sell in the marketplace, and will this time period be in·line with the type of financing that it has secured? • Profitability - Does the developer or EDO recognizing a profit in the venture, and if not, what incentive must be offered in order to generate profit?

Businesses may look for new space for many reasons, such as:

• A business's surroundings have changed over time such that it is no longer an appropriate location. • The business is expanding and needs space to build additional facilities. • The business is providing new products that require different infrastructure than the current location offers. • The property where the business is located has been identified by the community as a location for another project. • The surrounding neighborhood has deteriorated to the point that a firm is suffering from factors such as crime, deteriorated infrastructure, and low quality municipal services.

Networking:

• A network of similar firms within industrial segments, firms with contractual relationships, or firms located in certain neighborhoods or industrial areas having mutual interests which compels them to engage in such interaction. Economic development organizations can support local businesses by organizing networks of similar firms within industry segments, firms with contractual relationships, or firms located in certain neighborhoods or industrial areas. • Economic developers can help to initiate such networks and provide organizing support for them, ut networks should be led by the participating companies themselves. As relationships develop, ideally, the network expands, and member firms find opportunities to partner with one another to develop new products, form joint ventures, or enter new markets. Networks of small businesses have had considerable success in creating jobs and furthering economic development in countries such as Italy and Denmark, as well as a number of states and regions in the United States and Canada. • Formal networks provide additional benefits for local economic development. They provide a mechanism to aggregate and project the voice of the cluster, helping economic development professionals better understand their needs. Networks also help mobilize private sector leadership and help reinforce a region's brand. For example, a technology council signals that the region has a critical mass of technology companies and that it values the industry's presence. • There are two basic structures for networks: horizontal and vertical. A horizontal network is cross• sectoral (I.e., member companies may not operate in the same industrial sector), made up of firms with common customers, technology, or distribution channels. A vertical network typically comprises businesses in one industrial sector that are interrelated for a specific purpose, such as one dominant manufacturer and its suppliers, distributors, and consultants. Vertical networks are increasingly relevant as large corporations continue to downsize and outsource work that formerly was performed in house.

Survey Local Businesses:

• A survey of local businesses should be distributed immediately after a disaster. This is one means for tracking a disaster's impact on local businesses as well as assessing their resource needs such as capital funds and technical assistance Supplemental congressional funds and additional federal agency resources may be supplied to a region if the community can demonstrate significant business damage. In many cases, devastated communities are unable to provide the federal government with reliable data on business impact. • The BOO should work with its partners to disseminate an outreach survey for local business owners to complete in order to gather intelligence. The method of communication will depend on which communication lines life most reliable and may include direct mail, telephone (landline and cell), website, email, town hall meetings, conferences or workshops, surveying at the BRC, local media, or door-to-door canvassing.

Advantages of special manufacturing/industrial zones include:

• Allows manufacturers to remain in their current location over a longer time frame; • Preserves jobs for residents who may be displaced if the manufacturer is forced to relocate; • Preserves land for future expansion of existing manufacturers; • Allows similar businesses to co-locate; • Allows manufacturers access to relevant infrastructure, such as a port or rail terminal; • Avoids land use incompatibilities such as when residents complain about nigh t time traffic, smells, etc.

HELPING FIRMS OPEN NEW MARKETS:

• An important goal of any local or regional economic development program is to bring new dollars into the area, rather than to simply re-circulate existing dollars. This is done by exporting the products and services of companies to other markets. The survival and expansion of many companies depends on identifying new markets for their products or services. Companies may do this by adapting their products for new industries, or by expanding their reach into new regional or international markets. A BRE program should be able to help link a company with resources to identify and learn to operate in new markets. • Buyer-supplier programs encourage companies to purchase from local vendors. They can help an area recapture sales that were occurring outside of the community, thus keeping dollars in the local market (import substitution). Buyer-supplier programs may be implemented by developing a database of local producers and suppliers, and sponsoring local trade shows and vendor fairs. Databases should allow businesses to research local companies by product type or NAICS code, and provide companies' contact information and product or service descriptions. Trade shows and vendor fairs provide opportunities to increase sales through face-to-face contact that might otherwise not occur.

Evaluation & Selection The responses to the RFP should be evaluated against criteria weighted by importance. Criteria typically include the following:

• Appropriateness of project concept; • Benefits to the community in terms of economic development objectives; • Financial risk and return to the development agency; • Knowledge and experience with similar projects; • Financial strength to consummate the proposed deal; • Design appeal (If applicable); • Thoroughness, creativity, and clarity of response.

Process- (Format) Community Involvement Strategy:

• As part of a community involvement strategy, the EDO should consider whether or not to include a media relations campaign. If the project is highly visible and community consensus is crucial, the media should be included in the process. Information provided to the media should be consistent and timely. • Finally, the timing of involvement should be included in the community involvement strategy. In some instances, early involvement by the community is an important element for success. Again, this helps to build consensus and the community's capacity for involvement. However, the timing of involvement will depend on the community's characteristics and the goals for the process.

Establish a Tiered System of Business Re-entry:

• Business closures can severely limit access to essential services and products (grocery, gas, daycare, health services, etc.) in the impacted area. The closures also mean decreased employment opportunities for local residents and a significant decline in the tax revenue base. • To respond to this issue, emergency management personnel have developed a tiered system of community reentry following a wide-scale evacuation. The purpose of this tiered system is to allow for the safe, orderly return of community members, such as emergency responders, critical service providers, relief workers, businesses and citizens and to facilitate a timely response to the disaster.

1. Local Sources:

• Chamber of Commerce • Economic Development Organization • Business License Information • Temporary Worker/Hiring Agencies

Meetings

• Choose a convenient location for all participants, preferably transit and handicapped accessible. Ideally the meeting is within or adjacent to the "study area." A downtown meeting at city hall or the chamber of commerce for a neighborhood economic development strategy will suggest that policy makers and planners are not all that serious. Make sure that the room reserved for the meeting is an appropriate size (not too big or too small) and set up appropriately. Community meetings are often held at YMCAs, schools, community centers, and other rooms available for nonprofit/community use. If necessary, meeting organizers should find out if a sign language or other foreign language interpreter is needed. • Promote the meeting as targeted as possible. Direct invitations to the most affected businesses and residents should be mailed. Announcement should appear in general circulation newsletters. The EDO website and other public web sites should announce a general invitation. Even posters in the windows of merchants can assure maximum participation. • Provide written material and graphics (if appropriate) to participants before the meeting. Participants need time to reflect on information and should not be expected to comment on material they have not reviewed. At the meeting, the written material and an agenda should be provided. In lieu of pre-meeting information, key maps and charts should be posted conveniently so that registrants can browse and talk among themselves informally before the meeting starts. Scheduling a two-hour meeting and allowing the first 30 minutes for browsing can be informative and comforting to the crowd. • Take notes and ensure that notes taken during small group activities are collected at the end of the meeting. Additionally, there should be a sign-in sheet requesting the name, address, telephone number, and e-mail address of all participants. If the focus of the meeting is a "study area" (downtown, neighborhood, etc.), registrants should be asked to circle their homes or businesses on a large map or aerial photo in order to illustrate the distribution of representation at the meeting. • Provide food and refreshments. This is especially true if the meeting is in the early evening or early morning. This allows participants to focus on tasks - rather than their hunger - and conveys a message that their presence is valued. Announce ahead of time that refreshments/continental breakfast/light lunch will be available. Food draws greater attendance. • Attend the meeting. The person(s) responsible for the project or plan should be there to listen to participants, receive feedback on proposals, and comment on the feasibility of suggestions. However, they should act as convener and host rather than an authority. For instance, they should not feel as though they must answer every question posed at the meeting. If the participants are to be drawn into the process, they must feel as though their opinions and suggestions are taken seriously and will be used in the process. Likewise, public officials representing the area should attend if at all possible. They, too, should not act like authorities, but they will learn an immense amount about the relevant issues in a manner which is not readily translatable through reports or consultant presentations. • Support staff should attend the meeting As noted above, staff should not feel as though they must provide answers to every issue discussed. However, staff can provide answers to technical questions to enable informed discussions.

Loan Closeout:

• Closeout is the legal process required to end the commitment of the borrower to the lending agency. An attorney often performs closeout procedures, but efficient loan portfolio staff ensures that it is performed in a comprehensive and prompt manner. • Most closeout procedures involve the lending agency sending the borrower documentation that the loan has been paid off in full and ensure that all liens against the borrower are removed. Verbal agreements are not sufficient. • Prior to closing out a loan, it is important to check any inter-creditor agreements arranged with any private lender or other lender. If the borrower still has to repay funds to any other lender, notify the lender that the borrower has completed their obligation to the lending agency. This too should be communicated in writing.

In order for communities to connect workforce and economic development issues, they must:

• Combine and coordinate job creation and job placement activities • Design ways to involve the business sector in workforce development decision-making • Make good use of labor market and other relevant economic development information-gathering activities i.e., databases, retention surveys and regular interaction with business)

Inventory of local infrastructure:

• Communities benefit from taking a yearly inventory of local infrastructure to determine if improvements need to be made based on the current or expected needs of businesses. • Communities should take stock of how well the current infrastructure meets the needs of local businesses and identify possible improvements to aging water pipes, roadways, power grids, bridges or sewer systems. • A community must be prepared to make changes to the existing infrastructure as local business needs change. If a business EXPANDS or DIVERSIFIES, or as TECHNOLOGY NEEDS CHANGE, so must the physical environment that serves the business. • BRE outreach efforts will help the community identify the needs of specific firms before it is too late. • Many infrastructure improvements are funded out of the state or community's capital improvements budget. Typically, capital improvements are planned years in advance, with projects ranked on a number of criteria.

The Role of Community Colleges:

• Community colleges frequently are ideal partners for linking workforce training with business retention and expansion efforts. First, community colleges already have programs in place for many occupational and vocational specializations (e.g., computer technicians, machinists, HV AC technicians, applied health sciences workers, electricians and more). • Second, community colleges can typically draw upon a wide range of adjunct instructors, which provides them with flexibility in both meeting businesses' programmatic needs and in providing training at suitable times. • Third, community colleges can usually provide quality training at a much lower cost than competing, for-profit training centers. • There is a large amount of information-sharing among two-year institutions, many of which have formed their own networks and consortia to interact on the latest manufacturing technologies and training techniques for companies. • In Texas, the member institutions of the Gulf Coast Consortium of Community Colleges have developed some 400 programs to build interdisciplinary, collaborative research teams and training programs in the biological sciences at their intersection with the computational, chemical, mathematical, and physical sciences.

Weaknesses of feasibility study provision:

• Completing a predevelopment feasibility study can be very expensive. • It is likely to be redundant if the private sector will have to conduct them anyway.

Weaknesses of land assembly (with condemnation):

• Condemnation is politically controversial • Because condemnation requires extensive legal expertise, it can be an expensive and time-consuming process. • Laws may prevent or restrict condemnation that is followed by sale to a for-profit entity. • The cost of acquiring a site is often significantly higher when condemnation is used. The relocation of existing tenants and legal fees often raise the purchase price above market value. When this is the case, it is often necessary to have a public subsidy to make the project financially feasible.

The RFP should include a list of submission requirements (an RFP outline is included below):

• Corporate qualifications, information on similar projects; • Project team organization, individual resumes; • Developer understanding and approach; • Proposed development program and commitments; • Public-sector responsibilities; • Private-sector responsibilities; • Conceptual site plan and drawings; • Capital costs and financial deal (provide a standard form); • Financial credentials.

There are also numerous non-tax incentives that can be considered:

• Customized industrial workforce training; • Technical assistance; • Consulting services; • Productivity assessments and evaluations; • Technology commercialization and deployment; • Land acquisition assistance; • Infrastructure improvements; • CDBG Section l0810an guarantees; • Financial incentives, including: a. Venture capital; b. Direct loan and grant programs; c. Revolving loan funds; d. Utility discounts; e. Small-issue IDB financing; f. Loan guarantees for building construction, machinery, and equipment; g. Aid for existing plant expansion.

The market analysis process varies by land use (office, industrial, retail, etc.). However, in general it should follow some basic guidelines:

• Define the market area (or primary and secondary market areas). • Evaluate the supply of current and future competitive properties and tenants. • Evaluate area market demand from customers for retail and housing uses and for tenants for all land uses. • Assess the expected demand and projected absorption rate for the market area. • Compare the project with similar projects on a cost or rental-per-square foot basis, taking into account various site factors, such as access, visibility, physical or perceptual boundaries, vacancies, amenities, design considerations, etc. • Estimate the overall market capture, absorption, and sales prices or lease rates of the proposed project. • Identify amenities and characteristics of the subject property that give it a competitive edge in the market (These can be refined later).

Before setting up an RLF the organization needs to:

• Determine the mission, goals and policies of the fund. • Develop operating procedures and set up the legal structure. • Identify the target population. • Determine the RLF original and sustaining funding sources. • Establish loan rates and loan collection policies. It's also important to consider how to keep the funds revolving, how to perpetuate the fund and how much of the fund will cover administrative overhead and replenish loss due to inflation. Regulations imposed by the original funding must also be considered.

The benefit in Developing an industrial park

• Development of an industrial park gives current manufacturers the opportunity to expand into modem production facilities in a secure, well maintained, and aesthetically attractive environment. • Industrial parks are best located near a major highway in order to speed delivery time of both supplies and finished goods. If the park is located close to residential neighborhoods, it is optimal to have a landscaped buffer on the periphery of the park. • It is important to make sure that the demand exists among manufacturers for a new location. An industrial park makes the most sense as part of a BRE program if the community has several manufacturers that are outgrowing their current space. The businesses also should benefit from being close to one another for potential collaborations. • As with a major commercial development, it is essential to have at least one anchor tenant whose presence will lend credibility and stability to the park.

Bond financing

• Each public entity, from states to sizable regional districts, to cities large and small, and even fire districts, use bonds to finance various projects and services. The use of bonds is especially useful for redevelopment projects that may involve a substantial investment, but lack financial resources. • There are two major reasons a public entity will borrow money. First, bonds help communities spread the cost of a project over its expected life span. Second, communities rarely have the cash on hand to cover large-scale capital projects.

Role of Educational Institutions regarding workforce and BRE:

• Educational institutions, from K-12 schools to technical and community colleges and universities, play a fundamental role in workforce development. Primarily, the goal of educational institutions is TO SUPPLY INDIVIDUALS with the education and skill-sets necessary to FULFILL THE DEMANDS of the labor market. • Educational institutions generate economic activity in the regions where they are located. They are prime "anchor institutions" - those that are permanently situated in a community and play a role in economic development activities (e.i. community colleges. universities. hospitals. foundations. cultural institutions and utilities). • The educational institution can partner with an EDO to launch clusterbased economic development initiatives, respond to retention-related training needs and even help design and deliver the BRE survey. • Worker shortages can be a reason for existing businesses to relocate elsewhere. A strong BRE program that builds a working relationship with educational institutions can mitigate a shortage of talent, but to do so, economic developers will need a better understanding of available and needed skills in their community. • Many communities have prepared labor shed analyses to better understand the skill sets, employment levels and where each of their employees resides. Moreover, a labor shed analysis helps practitioners understand underemployment, the availability of prospective employees to change employment, current and desired occupations, wages, hours worked, and distance people are willing to commute to work. • The U.s. Census Bureau has developed a data repository and analysis tool to help practitioners understand their communities' workforce characteristics. The tools on this website allow practitioners to conduct a labor shed analysis' and use a number of other useful data tools to gain a better understanding of the community's workforce characteristics.

DISASTER RECOVERY & BRE:

• Every area of the globe is vulnerable to disasters, whether they be natural (e.g., earthquakes, floods, and hurricanes) or man-made (e.g., terrorist attacks). Disasters often strike with little or no warning, and the damage can be staggering. In addition to the dramatic social and humanitarian consequences a disaster can cause, communities can also experience sudden economic losses and dislocation. In disaster-impacted communities, economic development organizations (EDOs) and chambers of commerce often lead economic recovery efforts by helping local businesses respond to impacted employees, facilities, customers, and supply networks. However, your organization must make preparations ahead of time to ensure that it can stay in touch with local businesses after any type of major incident and establish an effective plan for disaster response and recovery. • Even small actions taken in advance will put your community in a better position to respond to a disaster and shorten your community's recovery time. Existing relationships with businesses are crucial during a disaster as communication channels can become disruptive and chaotic. Local businesses are likely to call on your organization for guidance and direction.

Federal Procurement Opportunities:

• Federal procurement processes in the United States are published in the Federal Acquisition Regulation (http://www.acquisition.gov). FedBizOpps.gov (FBO), which can be found at http:llwww.fbo.gov, is the prime location for RFPs from the United States government. Opportunities can be searched by date, location, agency and keyword. Businesses selected to provide goods or services to the federal government must undergo periodic audits called contractor procurement system reviews. This is to ensure federal regulatory compliance and to monitor the use of public funds. • At FBO, government departments are able to upload contracts valued over$25,000 to provide a comprehensive database of business opportunities. Businesses are able to standardize submissions for government contracts across agencies, which levels the playing field for government tenders. All necessary tender documents can be uploaded by the government organization for viewing by prospective contractors. • The FBO website also allows for customizable searches of existing contracts. The contracts can be filtered by date and deadline, agency, contract type, industry type, location, and desired contractor type. The system allows businesses to create a login, bookmark certain contract types, place bids easily, show expressions of interest, and check statistics on past FBO contracts. • In summary, the FBO aims to make the federal contracting process and its opportunities transparent and accessible to firms. Economic developers can benefit from learning how to use the website and from publicizing government contracts that are out to tender in their area to local businesses.

Project Concept & Objective

• First, the issuing agency must formulate the project concept. This effort includes project goals and objectives, market analysis, conceptual design, financial analysis and funding options. The concept must also describe the expected relationship of the city and EDO with the developer and with the manager of the site, if different than the developer. In deciding the lead local EDO, consideration should be given to keeping certain developer information confidential. • The EDO board and its staff should establish policies about prospective developer contact with the EDO. Developers and related parties should have to contact the EDO staff prior to contacting its board members. This prevents undermining the authority of the staff. Many EDOs stipulate that answers to individual questions are provided to all prospective developers. Procedures should be specified in the RFP. • The lead agency may also want to include a local developer in the development and/or review of the RFP or hold a developer workshop to preview the RFP concept and solicit feedback. Many times, communities put together proposals that may look good on paper but in fact neither support the market nor prove to be economically feasible.

If the decision is made to hire a consultant, the development agency should c1early identify the problem and determine what the consultant's end product should be. Before approaching a consultant, the agency should define the following:

• Goals and objectives of the consulting product; • Process for finding and selecting consultants • Problems, challenges, and issues that need consulting support; • Technical, administrative and political constraints; • Role of the agency in the consulting effort; • Budget and schedule for consulting services; • Work tasks to be accomplished;

Procurement Opportunities:

• Government entities and some large institutions, such as universities and hospitals, have procurement programs that are designed to increase the number and types of vendors used. Procedures differ, but most programs are designed to increase competition and open up more opportunities to small and medium sized businesses. • Usually, procurement programs involve a competitive bidding process in response to a request for proposals (RFP). Responses to RFPs are reviewed and rated. Contracts typically are awarded to bidders that are able to provide the services at the lowest price. • In some cases, a certain percentage of the contract may be set aside to go to a specific type of company

At the heart of each cluster is a group of core firms. These firms typically dominate the cluster. Targeting clusters involves:

• Identifying core industries in the community or region and determining which industries have the greatest growth potential. Can be achieved through location quotient analysis, analyzing industry trends, and through speaking to industry representatives. Identifying and targeting firms that support that industry, such as suppliers and buyers or businesses that would benefit from networking with cluster firms. Found by surveying local core industries on their key or potential supplier and buyers.

Process of Screening Borrowers:

• If there are specific applicant qualifications, the lender will have to conduct a preliminary screening of loan applicants to determine if they meet the basic loan program qualifications. • This screening is NOT part of the loan review process. The screening process generally involves going over the written loan applications and meeting with the applicants. • Practitioners should request information up front. Asking for information can weed out unmotivated borrowers or serve as a red flag that the potential borrower needs technical assistance to prepare a business plan or other related assistance. • For incomplete or weak proposals, practitioners should assist by diagnosing the project's shortfalls, identify and explain what changes or steps are needed to create a sound project, and work with the proponent to secure services to improve their plans. (Getting the hair of the dog) • The relevant information the lender needs to know is the economic feasibility, financial statistics, and management capabilities and background.

A formal BRE program identifies the hurdles and challenges facing local businesses and provides assistance to address those issues. Technical assistance provided through a BRE program can help a business:

• Increase its competitiveness in the wider marketplace (e.g., economic gardening initiatives, business intelligence and analytic programs); • Assist it with expansions that add new jobs (e.g., site selection assistance); • Keep it from relocating to other areas (e.g., economic development incentives at the city, county and state levels); • Help it survive economic difficulties (e.g., business continuity planning, pre-disaster planning and post-disaster recovery help); • Connect it to networks (e.g., manufacturing extension partnerships, chambers of commerce, regional cluster initiatives, angel investment networks, etc.).

Areas in which colleges and universities can help a BRE program address workforce issues:

• Infrastructure Improvements- Colleges and universities play an active role in creating quality places. • Management Training- Colleges and universities that have business administration programs provide courses across a broad range of disciplines that are useful to senior management of local firms. • Recruitment of Graduating Students- Some students may be interested in remaining in the community after graduation. • Targeted Academic Programs- In communities where a particular industry is dominant, the BRE program should explore setting up an academic program that specializes in the industry. Such a program can provide a steady supply of new graduates with knowledge of the industry's latest technological advances, as well as provide continuing education, technical assistance, and research and development support to local firms.

Weaknesses of infrastructure provision:

• Infrastructure investment can be expensive. • Public infrastructure investment may delay the project, discouraging private investment. • If the project fails, the community may be left with useless infrastructure. • Investment could create issues of fairness. Given limited resources, which projects should be supported with public infrastructure?

Engaging Business Community in Disaster Preparation:

• Involving the business community in the disaster preparation process at an early stage will help to ensure their specific needs are addressed in emergency plans and increase their resilience to the disaster's impact. Yet business owners and executives don't naturally see their role in a community's disaster preparedness effort. • Step 1: Establish an Economic Recovery Team- An EDO can play a critical role in engaging business leaders in disaster preparedness efforts, particularly those businesses that may have important resources for response and recovery. It is recommended that an economic recovery team be formed ahead of a disaster to specifically address the post disaster economic recovery issues that a community may face. The team should be comprised of both private- and public-sector representatives to ensure effective communication and to reveal any potential conflicts and or duplication of effort. The team would review the community's emergency response plan to evaluate how the business community and local economy might be impacted by decisions laid out in the plan. This economic recovery team would also play a role in working with emergency management personnel to influence a tiered system of re-entry for critical businesses that need early access back in the community following a disaster.

Business Climate:

• It is important to understand the impact that government regulations and policies have on companies, and the types of technical assistance the economic developer can provide to address these issues. Complicated, bureaucratic processes can stifle entrepreneurs, limit expansion, and drive away new investors. Practitioners should identify the different factors that impact business operations and how they can make processes easier or less costly. • For example, many jurisdictions have building, plumbing, mechanical, and electrical codes that were developed decades ago and have been haphazardly amended over the years. These outdated codes do not fit well with modem construction techniques, increase construction costs, and may even force a firm to hire a consultant to shepherd permits for plant modifications or expansions through the relevant agencies. • Sometimes, state environmental or health and safety enforcement agencies are unresponsive to business concerns, or unhelpful to permit applicants, hindering retention and expansion efforts. • Such factors can cause businesses to expend valuable dollars on meeting government requirements, rather than investing in the business. For example, in a system that has strict permitting and licensing requirements, the business may need to spend resources to prepare paperwork, on consultant fees and application fees, and the business owner's rime in regulatory meetings.

Strengths of land assembly (with condemnation):

• Land assembly allows for the return of parcels to economic use, supports redevelopment efforts, and helps mitigate blighting forces in the community. It is a valuable tool used in cases when a government deems the acquisition of property vital and necessary to the public interest. • Land assembly encourages private investment by avoiding wasted time and uncertainty on the part of the developer. • Condemnation allows an EDO to assemble abandoned lots and buildings, whose ownership extends back a number of generations, making it difficult to establish a clear title. Without a clear and legal title, the property cannot be transferred or redeveloped. • Land assembly deals with speculative property owners. In many cases, one or two property owners hold up an entire redevelopment project by refusing to sell or demanding a purchase price greatly exceeding market value.

If the borrower is having trouble meeting its debt payments the lender may want to refinance or restructure the loan to avoid further deterioration of the loan. Restructuring options include:

• Lengthening the amortization of the loan; • Requiring only payment of interest over the life of the loan and a balloon payment of the principal at maturity; and • Lower interest payments. If these courses of action fail, the lender may be forced to foreclose on the loan. This may require liquidation of pledged collateral. If there is no collateral, the lender can take legal action against the borrower and sue for repayment.

The first step is to develop a series of realistic objectives and goals for the BRE program. These should take into consideration what was learned through the SWOT analysis and should:

• Leverage existing strengths so as to capitalize on the best opportunities available to the community. • Address major weaknesses that, if left unattended, may pose threats to the community's ability to retain and expand its existing employment base.

Meetings Build Consensus- Use consensus-building skills:

• Listen to one another; • Define an agenda; ask for comments on a draft agenda; • Encourage the participation of everyone; • Respect all opinions; • Identify and work towards common goals; • Vote only as a last resort.

The RFP should require the following from the consultant:

• Listing of the tasks the consultant is assuming; • Work plan; • Specific responsibilities of consultant's staff; • Detailed timeline and list of deliverables; • Corporate capabilities statement and resume of all personnel working on the project; • List of similar recent projects, information of persons who can testify to the consultant's expertise; • Executive summaries or complete reports from projects that the consultant has recently completed.

As in business attraction, a key role for economic development organizations is to maintain a database of available real estate, developed and undeveloped. Information can be gathered from tax records and from real estate brokers. The database should contain basic information on available properties, such as:

• Location; • Zoning; • Immediate past use (If known); • Square footage (for buildings) or acreage (for raw land); • Monthly rent per square foot, or purchase price; • Utility access and providers; • Rail/highway/air access; • Listing broker; • Property owner. It is well worth the time and effort to cultivate relationships with real estate brokers who handle listings in your jurisdiction. By establishing relationships with brokers, your organization can learn about available properties sometimes months before the current tenant's lease expires. Moreover, the EDO can be a valuable intermediary by preserving the anonymity of businesses that are seeking new space, at least in the early stages of the process.

Both Programs (BRE & business attraction) maintain a database of available real estate, developed and undeveloped. Information can be gathered from tax records and from real estate brokers. The database should contain basic information on available properties, such as:

• Location; • Zoning; • Immediate past use If known); • Square footage (for buildings) or acreage (for raw land); • Monthly rent per square foot, or purchase price; • Utility access and providers; • Rail/highway/air access; • Listing broker; • Property owner.

When a group of local business requires new space, there are a number of approaches that communities can use to facilitate those expansion and retention efforts:

• Many communities have special manufacturing and industrial zones set aside for those uses only. • Develop an industrial; • Occasionally, local government can use EMINENT DOMAIN to obtain property for a Business.

Tools used in business retention and expansion activities are similar to those used to attract new businesses to a community. These include:

• Marketing; • Assistance with land and buildings; • Infrastructure; • Financial assistance, including linking companies with available sources of capital; • Development of a competent workforce through training and retraining; • Technical assistance and assessments; • Availability of technology resources; • Export assistance; • Assistance with ways to reduce energy costs and comply with environmental laws and regulations; • Assistance with permitting and licensing; • Various forms of tax and non-tax incentives.

As with attraction programs, the BRE program should target companies that:

• Match community assets or competitive advantages; • Match the community's development goals; • Could operate from another community altogether; • Export products or services from the community; • Have potential to expand or diversify the economy; • Are indicated in the SWOT analysis.

Marketing the BRE Program:

• Media and Public Relations • Partnerships • Trade Shows

Workforce Importance:

• No single factor is more important in business investment decision-making than labor. This is reflected in widely published annual surveys of U.S. corporate leaders and insights of economic development professionals and others who seek to attract, retain, or help businesses expand. • Workforce availability factors, especially in high-skill industries, drive business location and expansion decisions. Therefore, workforce development is more important than ever before. From small, rural communities to large urban centers, economic developers are increasingly using workforce development programs to assist local businesses. • Small and medium-sized companies typically do not have the financial resources to pay for extensive employee screening and training programs. As such, they will benefit substantially from both a better-qualified pool of prospective employees and from low-cost training programs. • Finally, and most importantly, a well-trained workforce, combined with effective infrastructure for providing training programs, can give a community a distinct competitive advantage. Unlike incentive payments and tax abatements, this investment in human capital cannot be easily, quickly, or inexpensively duplicated by competing communities.

Once the needs of an individual firm are identified, it is the economic developer's job to initiate the response to those needs. One of the core functions of a BRE program is to provide or make technical assistance available to businesses. Such services can assist businesses in a number of different areas:

• Operations management (e.g., plant layout, inventory management systems); • Marketing/sales (e.g., developing exporting strategies); • Financial control systems; • Workforce training and development; • Strategic planning (e.g., writing and updating a business plan).

Indicators of potential problems include:

• Payment pattern changes • Bounced checks • Change in loan payment account • Financial record keeping deteriorates • Income stream fluctuates greatly • Borrower conceals information

Solicitation Document The solicitation document, with incentives (If relevant), should be approved prior to issuing the RFP. An RFP should include most or all of the following:

• Project concept and background: Type of development, how it "fits" with the rest of the area; • Market study or briefer market summary; • Suggested deal structure including public funding if appropriate; • Operational relationship; • Preliminary financial analysis (optional); • Schedule for project and developer selection; • Evaluation criteria and selection process; • Rules for contacting agency and political leadership; • Submission requirements; • Confidentiality statement. The responding developers should be given enough latitude to respond creatively. That is, the RFP should not be so rigid that it stifles conceptual novelty. It should demonstrate a way for the developer to participate and realize a return on investment and encourage the developer to respond with an even better way to participate and realize public and private objectives.

The most relevant types of incentives for post-disaster BRE include:

• Property Improvement/Restoration Incentives: These can be used to defer property taxes on renovations and improvements to facilities. • Equipment/Machinery Incentives: This includes exemptions on property, sales, usage, franchise, or state income taxes on new building materials, machinery, and equipment. • Retention/Reinvestment Incentives: There are based on saving jobs and investments of a company that may be in danger of closing.

The types of activities the economic development organization may undertake as part of its BRE program include the following:

• Provide resources directly to the firm, as in the case of a public economic development agency with financial and technical assistance programs. • Act as a broker between the sources of assistance and the company needling them, and package several forms of assistance available from different sources to assist the company . • Advocate for the business community's concerns, especially as they relate to the policies and procedures of local and state government. Advocacy is often based on the information learned from face-to-face conversations with business owners and managers who are encouraged to discuss all aspects of the local business climate during the BRE visit.

Advantages of industrial parks include:

• Providing manufacturers with new, state-of-the-art space (e.g., optimal plant layout), which will enhance their competitiveness. • May reduce insurance costs and aid in employee attraction and retention for firms currently located in blighted areas. • May also help business attraction efforts by providing class A industrial space.

Strengths of infrastructure provision:

• Public infrastructure can provide the physical environment to make the project happen. • Investment in infrastructure may give a public entity more control over the design of the project. • Investment in infrastructure for one project may provide public benefit for the entire community. • An investment, like a parking garage, may provide revenues.

Advantages of Tech-Prep include:

• Recruitment and training costs for participating businesses are drastically reduced, as businesses are supplied with a steady stream of trained, qualified workers. • Increases the portion of a community's labor force possessing professional/ technical certifications, providing evidence of a well trained workforce which can be used in marketing a community. • Successful Tech-Prep programs often include career counseling for each student during the 9th and 10th grades to help match their aptitudes and interests with the various academic tracks available (college prep, tech prep, general). An identified interest and an aptitude for coursework help ensure that students pursuing Tech-Prep are focused and motivated to succeed.

Marketing the Solicitation Document The solicitation document is sent to a list of developers to respond. This list can be compiled by drawing on various sources.

• Regional real estate journals; • Local commercial leasing guides; • Discussions with fellow professionals; • National organization annual directories (e.g., IEDC, Urban Land Institute, National Association of Industrial and Office Properties, International Council of Shopping Centers, state and local builders associations); • Responses to advertising in local and perhaps national newspapers; • Internet / e-marketing services.

Alternative Approaches to Identifying Target Industries:

• Sectoral analysis • Cluster analysis

Financial services that should be providing in Short• and Long-term:

• Short-Term/Gap Financing • Establishing a bridge loan program • Establishing a business grant program • Establishing a Revolving Loan Fund

Predevelopment study activities may include:

• Site selection and land assembly analysis. • Market analysis. • Traffic/parking analysis. • Conceptual design. • Environmental review. • Engineering analysis, including assessment of soil, topography, and existing utilities. • Political feasibility - community attitude assessment. • Financial feasibility to determine the supportable equity and debt and likely terms and conditions.

Set-asides at the federal level are for the following types of businesses:

• Small Business Administration's Competitive 8(a) Program; • Small Business Administration's Emerging 200 Imitative; • Small Business Administration's HUBZone Certification; • Service-Disabled Veteran-Owned Small Business; • Women-owned Small Businesses; • Veteran-Owned Small Business. The economic developer may support local businesses in pursuing these opportunities in several ways, such as providing assistance in searching for procurement opportunities, or helping businesses qualify for set-aside programs. For example, many communities have set-asides for minority- and women owned businesses. Some locations have set-asides for any local small business. Sometimes, the set-aside does not go directly to a minority-, women- or locally owned business, but the prime contractor must engage such a business to fulfill a certain percentage of the contract.

Educate Local Businesses on Business Continuity Planning:

• Small- and medium-sized businesses have strong roots in the local economy and are often more vulnerable to disasters than large businesses. When disaster strikes, a number of these businesses lose their customer base, property, inventory, and sales records in a single day. To enable business operations to continue even after a major event, small- and medium-sized businesses should draw up formal business continuity plans. These plans describe a clear set of actions for a business and its employees to follow in order to quickly restore its core business functions after a disaster. • Since small business owners are quite busy and may not feel they have the time or resources to prepare a plan, economic developers can help. EDOs and chambers should consider bolding a workshop and/or webinars to disseminate important disaster-related information such business continuity planning as well as the need for obtaining business interruption insurance. These events can summarize the various planning resources and provide 'how to' steps for businesses to create their own plan. • Careful thought should be given to a convenient time, location, and format of the event as well as appropriate promotional efforts so the maximum number of small business owners will participate.

Cluster strategies are most effective when organized at a regional level and coordinated among all relevant economic development organizations:

• Some cities and counties have begun to organize their business retention initiatives on a regional scale. The Dayton Region/Montgomery County Business Retention and Expansion Program, for example, includes 15 political jurisdictions and private partners (e.g., the chamber of commerce) in the Dayton, Ohio, metropolitan statistical area. The region created an extranet database to improve government agencies' understanding of business clients' needs and provide data for strategic decision-making. • Similarly, BRE efforts can be organized around specific industries. The role of the economic developer is to support the industry or cluster by organizing meetings; ensuring that service providers customize their services based on that specific industry or cluster need; and to monitor the progress of the BRE program in serving the identified industries or clusters. • San Diego, Calif., focused its investments on building a critical mass of biotech companies, spending resources to grow the businesses it had and cultivate related new firms. While strong initial assets played a critical role, it was the region's purposeful cultivation of the cluster that made San Diego a national biotechnology leader.

List the 3 common project categories for networks:

1) Input (purchasing, training, R&D); 2) Processing (manufacturing, technology, TQM) ; 3) Output (new products/services, commercialization, export) ;

List the 4 steps in brokering sources of venture capital:

1) Know the capital providers; 2) Develop mechanism to identify candidates; 3) Link entrepreneurs with sources of technical assistance; 4) The entrepreneur closes the deal;

List common criteria used in incentive decisions:

1) Number of jobs created 2) Quality of jobs 3) Minimum investment requirement 4) Reporting requirements for environmental, OSHA, and labor laws and regulations 5) "But for" determinations 6) Corporate citizenship

BRE FINANCE:

1) Small Business Loans 2) Linking Entrepreneurs to Sources of Capital 1. Financing Options: • Venture Capital • State Venture Capital Programs • Pension Fund Set-Asides • Angel Networks • Capital Networks

Steps in RESPONSE to immediate threats from a disaster include:

1) Triage efforts 2) Business re-entry 3) Business recovery centers 4) Federal resources are distributed

Explain benefits of a Workforce Development focus:

1) Upgraded community workforce skills largely remain in the community 2) Offers lower-cost training alternatives providing better qualified employment pool 3) Well-trained workforce increases a community's competitive advantage

Marketing: The marketing program is designed to target two sets of audiences:

1) the potential borrowers. 2) the potential lenders. For businesses, the purpose of marketing is to inform them of available services and loan programs. For lenders, the message should emphasize the opportunity to cross market loan programs and the economic potential of collaborating on the loan deals.

The following are key considerations for tax exemption:

1- Does the project involve a manufacturing or processing activity? Based on the IRS code, tax-exempt financing is only available for manufacturing or processing facilities and equipment Manufacturing or processing is defined as the production of tangible personal property or value added processing. Only 25 percent of the bond issue may be used for equipment or facilities that are not directly involved in the manufacturing process. 2- Are the capital costs of the project less than $10 million? The IRS code limits the size of bond issues to $10 million. Subtracted from this $10 million cap are the company's other capital expenditures, no matter how they are funded, incurred in the same city as the project during the period three years before and the years after the bonds are issued. 3- Will the project have some public benefit? State laws generally require that the project results in some public benefits, such as increased employment, job retention, or some other direct consumer benefit 4- Will the project involve the acquisition of an existing building? The IRS code requires that if bond proceeds are used to acquire an existing building, an amount equal to at least 15 percent of the amount of the bond proceeds used to acquire the existing building be used to rehabilitate the building. 5- Does the company have any other outstanding tax-exempt bonds? The IRS code limits the total amount of tax-exempt debt outstanding at any time for a private company to $40 million.

Examples of communities that have been successful in elevating their recognition in specific clusters include:

1- Grand Rapids, Michigan: Office manufacturers, specifically steel case office equipment; 2- Greenville, Alabama: Automotive plants; 3- State of Maine: Telecommunication call center cluster.

Other factors that determine eligibility and rates for bonds:

1- Large, diversified districts are preferred. Insurers may require a minimum number of acres (such as 500 acres) and a good mix of residential and nonresidential properties. They also want a diversity of taxpayers; meaning no more than 50 percent of the area's taxes should be generated by the top 10 taxpayers. Finally, insurers want the project area to be at least 50 percent developed . 2-Leverage is important as well Bond insurers want at least 50 percent of the total assessed value to be in the increment. This allows a district to withstand declines in assessed value . 3-Bond insurers are also concerned with debt coverage, assessment and tax ratios, tax appeals and tax sharing between jurisdictions. The previous-year TIP revenue should cover the bond debt service by a factor of 1.25 4- Political stability is especially important for tax collections. If a city dramatically reduces taxes, the tax increment is in jeopardy. Bond insurers will review a jurisdiction's 10-year tax history to see if assessment and tax ratios are stable. If not, coverage ratios will be adjusted to account for historical fluctuations.

List 5 local and state financing tools

1-direct lending 2-bond financing 3-indirect financing 4-designated development districts 5-other financing tools

What are 4 causes of the US restructuring its traditional heavy manufacturing industries?

1-environmental regulations 2-changing markets 3-international competition 4-innovative production technology

Identify the 2 most important players in brownfields redevelopment efforts

1-envoironmental community (to protect open spaces from suburban sprawl & citizens from hazardous substances) 2-economic development community (to improve socioeconomic status of cities)

Industrial Development Bonds (IDBs)

1-only available for manufacturing or processing 2-limited to $10M 3-public benefit such as increased employment 4-if used to buy existing building, at least 15% must be used to rehab it 5-total amount of tax-exempt debt outstanding limited to $40M

List other limitations on use of IDBs

1-project volume limitations: no more than $1M per project, but up to $10 M for total capital expenditures 2-capital expenditures: 3-company volume limitation: $40M aggregate limit 4-volume cap: = the greater of $225M or $75 per capita 5-arbitrage restrictions: cannot re-invest proceeds at higher yield 6-public involvement in approval process

List 9 benefits of reusing brownfields

1-protects human health & environment 2-increases tax base in local area 3-restores or replaces dilapidated buildings & facilities 4-strengthens central economic centers 5-creates jobs 6-utilizes existing infrastructure 7-encourages inner city development 8-reduces suburban sprawl 9-prevents the spread of contaminants

List Private Activity bonds (PABs)

1-qualified redevelopment bonds 2-qualified exempt small issues (IDBs & farmers) 3-enterprise zone bonds 4-exempt facility bonds (airports, docks, public utilities) 5-qualified nonprofit bonds (hospitals, housing, museum) 6-qualified mortgage bond 7-qualified student loans 8-industrial development bonds (IDBs)

List 8 types of businesses that create brownfields

1-railroads 2-gas stations 3-dry cleaners 4-oil refineries 5-truck terminals 6-wood treatment facilities 7-liquid/chemical storage facilities 8-steel & heavy manufacturing plants

List 4 general categories of contaminants

1-solvents (paint thinner dry cleaning fluid, parts degreaser) 2-heavy metals (lead, chromium, cadmium, arsenic, mercury) 3-petroleum (gasoline, diesel, motor oil) 4-pesticides/herbicides (DDT, 4-D)

What factors are the register of dangerous materials based on for National Priorities List (NPL) sites (prioritized by Agency for Toxic Substances and Disease Registry (ATSDR))?

1-toxicity 2-frequency of occurrence 3-potential for human exposure

List 5 activities excluded from tax-exempt financing

1-working capital 2-inventory 3-moving expenditures 4-conventional debt & mortgage refinancing 5-rent payments or purchase prior to issuance

Volunteers should receive the following materials as they arrive at the training session:

1. A blank copy of the survey form. 2. A copy of the "Interviewing Tips" section of this manual (which immediately follows this section), or a similar document prepared by the BRE program. 3. Copies of brochures or other documents that will be provided to businesses to explain the various forms of assistance available through the BRE program.

There are various scenarios for negotiated purchase and condemnation.

1. A public agency acquires the property through negotiated purchase with no threat of condemnation. 2. An agency acquires the property through negotiated purchase with a threat of condemnation. 3. The agency acquires the property through condemnation. 4. An agency acquires the property with funding from the developer. 5. The developer acquires the property with public agency condemnation as a lever.

(private activity bond) The following is example of a bond rating system:

1. AAA - Highest Quality Bond with a Small Investment Risk 2. AA - Quality Bonds and Considered High-grade 3. A - Considered Favorable Investments and Rated High to Medium in Investment Risk 4. BAA -Evaluated as a Somewhat Medium-grade Bond 5. BA - Speculative 6. B - Highly Speculative 7. CAA - Poor Standing 8. NR - Not Rated

The resulting strategy should reflect both the goals and the community. Factor that should be considered are:

1. Area History: a. What is the culture and history of the area in which the project is located? b. Have there been other attempts at development? c. What kind of attitude does the community have toward change? 2. Community Leadership and Vision: a. Who are the leaders in the, community? b. Are there community leaders who may not be part of a formal organization? c. Does the leadership change often? 3. Affected Parties: a. Who are the stakeholders in the community? b. Are the stakeholders represented by organizations? c. What are the characteristics of those organizations? 4. Project Funding: How is the project being funded? 5. Project Size and Complexity: a. How large is the project or proposed redevelopment area? b. How many neighborhoods does it affect? c. Who or what entity is driving the process? d. What motives are driving the process? e. Who has power to stop the project or plan? 6. Existing Plans and Studies: a. If a project, is the site included in an existing plan (e.g., neighborhood plan, revitalization plan)? b. If a redevelopment plan, has there been a previous planning effort? c. What was the result? d. Are there ideas for the site from previous plans or efforts? 7. Staffing: What is the institutional capacity to undertake the proposed project?

3 Main Aspects of a Balance Sheet

1. Assets 2. Liabilities 3. Equity

5 C's of Credit (Used in Underwriting)

1. Cash flow 2. Character 3. Capacity 4. Collateral 5. Conditions

Key Factors of Underwriting- Underwriting is often based on the following 5 C's of Credit:

1. Cash flow - Can the company's operating cash flow repay the loan? Cash flow greater than debt service is a positive indicator. 2. Character - Does the potential borrower have the capability, maturity, character and will to repay the loan? A check of the personal and corporate credit history gives an idea of the business owner's willingness to fulfill financial obligations. 3. Capacity - Does the company's past records demonstrate the capacity to manage debt service and loan repayment? It is important to know the existing repayment priorities and debts of the company. 4. Collateral- Does the borrower have adequate collateral to secure the loan? For startup businesses, the personal assets of entrepreneurs may be enlisted as collateral. 5. Conditions· How does the external economic environment and trends in a particular industry influence the level of risk associated with a particular business loan or investment?

MEETINGS Most community involvement processes involve meetings. Although the type of meeting will vary according to the strategy, some aspects should remain constant. For instance, the EDO (or other convener) should:

1. Choose a convenient location for all participants, preferably transit and handicapped accessible. 2. Promote the meeting as targeted as possible. 3. Provide written material and graphics (if appropriate) to participants before the meeting. 4. Take notes and ensure that notes taken during small group activities are collected at the end of the meeting. 5. Provide food and refreshments. 6. Attend the meeting. 7. Support staff should attend the meeting. 8. Build Consensus. 9. Follow up. 10. Publicize and promote success

In regards to SETTING THE BORROWER'S QUALIFICATIONS, the lender may want to target the loan program at specific groups such as minority- owned small businesses or specific projects such as investments in a certain neighborhood. In this case, the lender will have to establish applicant qualifications or the basic credentials necessary to apply for a loan. The lender should consider the following::

1. Clarify eligibility early; 2. Eligibility must be confirmed before proceeding to detailed credit analysis. Criteria for program eligibility should be based on: a. Background of the business b. Nature of the proposed project c. Amount and type of assistance requested d. Private assistance: type and level 3. A formal application process further helps to clarify eligibility and requirements. In addition a loan or program application establishes the commitment of the borrower.

Private Debt sources include:

1. Commercial banks 2. Savings and loans 3. Credit unions 4. Mortgage companies 5. Insurance companies 6. Pension funds 7. Industrial revenue bonds

3 Ways Bonds are Sold

1. Competitive Sale (underwriter with lowest true interest cost) 2. Negotiated Sale (underwriter selected prior to sale) 3. Private Placement (sold directly to investor, usu. insurance companies)

4. On-line Data Sources :

1. DIALOG 2. Lexis/Nexis 3. SECEDGAR

When done properly, a business continuity plan can help a business address several of its core functions. The plan will help to:

1. Determine and document which staff, materials, procedures, and equipment are absolutely necessary to keep the business operating, 2. Identify and document suppliers, shippers, and resources, 3. Define and document crisis management procedures and individual responsibilities in advance, 4. Plan for the building, plant, or store being inaccessible, 5. Plan for payroll continuity, 6. Share contact information and business continuity plans with other businesses in the building or industrial complex, 7. Keep copies of important records such as site maps, building plans, insurance policies, employee contact and identification information, bank account records, supplier and shipping contact lists, and computer in multiple secure locations, 8. Include co-workers from all levels in planning and as active members of the emergency management team, and 9. Review your emergency plans semi-annually.

Contracts Among Private Participants:

1. Developers & Businesses 2. Joint Venture Agreements 3. Land Acquisition Contracts 4. Lender Commitments & Contracts 5. Architects 6. Engineers 7. Contractors 8. Environmental Engineers 9. Historic Preservation Consultants 10. Real Estate Attorneys 11. Lease/Sale Contracts

Strengths of tax credit:

1. Direct incentive for recruiting new development. 2. For business owners, the credit may provide the needed cash flow to make the project successful. 3. If the building is empty, certain taxes are not being paid so the local government is not giving up existing revenue.

3. National Sources:

1. Directory of Technology Businesses 2. Dun & Bradstreet 3. Hoover's Handbook of American Business 4. Moody's Investor Service 5. Standard and Poor's Register 6. Thomas Register 7. Ward's Business Directory 8. Value Line

Overview:

1. Economic development aims to expand the economies of states, regions, cities, and localities by building businesses and new industries to create and retain jobs, enhance the tax base, and improve the overall quality of life for area residents. 2. One of the primary tools for the economic developer is financing. 3. Economic development is a means to stimulate growth and development by increasing access to capital for both ventures and projects that may not take place if left to market forces but would provide economic benefits.

List 4 steps in Design-Bid/Award-Build (D-B/A-B) approach to construction

1. Engage prime design professional for architectural/engineering design, plan & specification documentation, bidding & construction admin 2. Construction bidding based on plan specifications outlining construction cost commitments 3. Construction contract for winning bid established by fixed price (lump sum), cost-Plus, or guaranteed max price 4. Winning contractor assumes responsibility for completing construction to a schedule & subcontracting

Analyzed results can be used by inside and outside parries to:

1. Ensure accountability and confidentiality, both of the program and the partners that comprise the program; 2. Inform decisions on the allocation of resources; 3. Provide information for further program planning and revision; 4. Compile data and testimonials that can be used to market the program to the business community, to funders and as part of business attraction literature.

(Real estate and Re use) How to start a revolving loan fund?

1. Evaluate overall existing conditions - blighted or vacant land, community and private financial resources, etc. 2. Establish goals and objectives for the RLF. 3. Present the RLF concept to public and private officials. 4. Investigate local and state statutes applicable to revolving loan activities. 5. Investigate funding sources available to capitalize the loan pool. 6. Determine method and type of activities to be funded by RLFs. 7. Establish loan terms and conditions. 8. Determine staff requirements and organizational vehicles through which the RLF will function (e.g. a city agency or economic development corporation). 9. Limit amount of loan pool funds that may be committed at any one time. 10. Formulate loan review and approval processes. 11. Decide how loans will be executed. 12. Determine how RLF policy development and the continuing revisions to the RLF will be handled.

What are the sources of funds for direct lending?

1. Federal or state grants 2. Local revenue appropriations 3. Investment portfolios. 4. Private sector investments such as pension funds

5 Elements of Structuring the Loan

1. Fees (admin costs) 2. Interest Rates (fixed or variable) 3. Security (collateral) 4. Maturity (short-, medium-, long-term) 5. Repayment Conditions

Technical assistance generally focuses on the following: *

1. Financial Administration-Technical assistance on basic accounting concepts, how to produce financial statements necessary for loan applications, how to manage cash flows, and plan and manage budgets. 2. Business or Strategic Planning- Training in drafting a "blueprint" for the business including goals, strategies, action plan, and setting benchmarks to measure success. 3. Management Assistance-Training includes negotiations, taxation, inventory management, production and management systems, and employee issues. 4. Marketing/Selling Strategies- Includes training on how to conduct market research such as defining the market in terms of demographics, geographic location, pricing and other factors; selecting sales techniques appropriate for their market; and preparing marker literature. 5. Product Design and Development- Assistance on creating prototypes, improving product performance, lowering product costs, and customizing product. Product development experts are generally required for this type of assistance.

Financing Options:

1. Financing Options: • Venture Capital • State Venture Capital Programs • Pension Fund Set-Asides • Angel Networks • Capital Networks

Financing Process (Phase IV):

1. Financing from the Developer's Prospective 2. Methods for Structuring the Deal 3. Gap Financing

The underwriting process needs to be structured to achieve some key objectives:

1. First, it must provide a thorough assessment of whether the proposed firm or project is viable in the marketplace and has the ability to repay the requested loan (or provide a return for an equity investment). 2. Second, the applicant's business and financial risks need to be evaluated in order to secure, if appropriate, technical and management assistance. 3. The third objective is to produce a financing plan that addresses the applicant's needs while meeting the financial objectives of the finance entity, 4. The fourth objective is to establish checks and balances to minimize errors. 5. Finally, the process should document all decisions, giving all parties a clear understanding of their obligations and legal rights.

3 Risks Inherent to Start-Up and Young Businesses

1. Four out of Five new businesses fail within the first five years of existence, mostly attributed to management and financial problems 2. it is also typical to overestimate demand and underestimate capital resource needs 3. Commercial lenders consider start-ups a high risk

Private sources of equity include:

1. Friends, associates, and relatives 2. Angel Investors 3. Seed capital 4. Limited partnerships 5. Mezzanine financing 6. Venture capital companies 7. Grants 8. Private or corporate investors 9. Common or preferred stock issue

RFP Outline A successful developer RFP should be well put together and easy to understand. The average RFP includes the following components:

1. Front Material; 2. Introduction; 3. Setting and Site; 4. Public Agency Development Program; 5. Public Agency Project Objectives; 6. Proposal Requirements; 7. Selection Process; 8. Supplemental Items.

List main components of an RFP:

1. Front material (cover, intro letter, RFP summary, TOC) 2. Intro (objectives, background, site overview) 3. Setting & site (regional/local/site with maps & demographics) 4. Public agency development program (origin & hx, general goals/obj, other project info, disposition) 5. Public agency project objectives (requirements, preferences, terms, resources/support) 6. Proposal requirements (developer credentials, project proposal: what? when? how much?, terms, responsibilities) 7. Selection process 8. Supplemental items (contacts, restrictions, certifications, confidentiality)

There are a number of resources available to help fund public infrastructure development, including:

1. General obligation bonds 2. Special assessment districts 3. Tax increment financing 4. U.S. Department of Housing and Urban Development Community 5. Development Block Grants and Section 108 guarantees 6. U.S. Economic Development Administration Tide IX grants, Public 7. Works grants, and Development Facility Assistance

The steps to Organize and Implement a Technical Assistance Program:

1. Identify Technical Assistance Partners and their roles a. Identify local resources that could serve as partners in a BRE program. b. Meet with technical assistance partners as a group or individually. 2. Set Program Policies a. Determine policies for operation of the program. b. Determine the criteria for businesses to participate in the program. c. Determine the cost structure for technical assistance services. 3. Provide Technical Assistance a. Define the scope of services to be provided. b. Define the time period of service provision. c. Define the expected role of the business being helped. d. Define the expected outcomes. 4. Follow up and Evaluate: a. Was the technical assistance useful? If not, why? b. Were the goals and objectives of the program met? c. Are the businesses interested in additional services? d. Is the EDO or the technical assistance provider responsible for follow-up?

Weaknesses of TIF:

1. In areas where property tax rates are very low, the impact of an increase in an assessment may be marginal, generating little revenue for the redevelopment agency. 2. TIF is complex and costly to administer. 3. The project might fail or surrounding property values might not increase. 4. TIF effectively freezes the tax base for agencies required to provide services to the area. This means that tax revenues necessary for meeting increased service demands, such as education, police, public transportation, etc., may not be available until the project has been completed and the indebtedness repaid. 5. Political fallout from school districts.

Sale/lease backs:

1. In sale/lease backs, the public sector purchases an asset from a developer or other party and then leases it back to the developer. 2. The lease is typically a net lease, that is, the lessee not only pays the rent for occupancy, but also pays maintenance and operating expenses such as taxes, utilities, and insurance. 3. The cash secured by the developer from the sale of the property to the public sector can be used for redevelopment purposes. 4. The lease payments serve to amortize the debt incurred by the public sector to purchase the property, extending until the debt is recovered. 5. The city retains control of the land until the end of the leasing period. After the lease period, the lessee can purchase the building or release the building if both parties agree. 6. Alternatively, the public sector can sell the building or lease it to another party.

(Leases) Leasing provides several financial advantages to the developer:

1. In the case of the public-sector lessor, the public sector does not pay taxes on its lease income. 2. By leasing land to a private developer, the public sector can permit the developer to avoid a major cash outlay while using the property. 3. It also lowers the developer's tax liability because lease payments are a deductible expense (from gross income) for tax purposes. 4. The lease appears as an indirect liability on the developer's balance sheet, whereas a mortgage appears as a direct liability on the balance sheet and can adversely affect the developer's ability to obtain future financing by increasing the debt ratio of the firm. 5. Leasehold improvements, the improvements to a leased property made by the lessee, are generally tax depreciable by the lessee. It is important to note that the terms of the lease can have a significant impact on the ability to finance a project.

Other Department of Labor workforce development programs include:

1. Indian and Native American Program; 2. Migrant and Seasonal Farm Workers Program; 3. H-lB Technical Skills Training Grants; 4. Senior Community Service Employment Program; 5. Laid-off Workers Program; 6. Apprenticeship Training; 7. Welfare-to-Work. term-569

BRE programs play a critical role in encouraging local businesses to remain in the community and continue to grow. The retention and expansion of local businesses can:

1. Keep or increase local jobs; 2. Preserve or increase the local tax base; 3. Increase local property values; 4. Enhance community image/increase confidence; 5. Maintain or diversify the economic base.

Strengths and Weaknesses A community can affect changes to its strengths and weaknesses over time. To analyze the factors that contribute to a community's strengths and weaknesses, they should be rated on a numeric scale and by level of priority. Key factors to include in this analysis:

1. Labor Force 2. Access to markets 3. Transportation 4. Educational Infrastructure 5. Site Availability 6. Business Climate 7. Utility Costs and Availability 8. Quality of Life 9. Resources

What Other Incentives?

1. Land write downs 2. Seller financing 3. Revolving Loan Funds 4. Public sector purchase or lease of space in project 5. Special Improvement Districts (BIDs, CIDs, etc.) 6. Street vacation 7. Sandwich lease 8. Public agency leases then subleases to noncredit tenant (farmers market) 9. Planned action ordinance 10. Vancouver, WA ordinance will prevent project from getting blocked by spurious citizen complaints

Sources of Information on Firms Targeted for Interviews:

1. Local Sources 2. State Sources 3. National Sources 4. On-line Data Sources

Ground leases:

1. Long-term ground leases are a financing tool in which the lessee, such as a developer or business, obtains use of a parcel of land from a lessor, such as a municipality, in return' for periodic rent payments. 2. If there is an improvement on the property, the lease is generally based on that portion of value attributable to land. 3. At the end of the lease, the land and improvements revert to the landowner. 4. Ground leases allow EDOs to maintain more control than they do for a transfer of title, and this is important if the project fails. 5. While the period of the ground lease varies, it is generally long enough to let the developer recover the costs of improvements and a return on his or her investment. 6. Ground leases reduce the cost of capital by eliminating the need to purchase land. 7. The lease also should lower the fixed costs of operation as lease constants are usually lower than debt service constants. For the developer to obtain financing to construct improvements, the land owner may have to subordinate the ground lease payments to the debt obligation.

7 Typical Public Sector Financing Goals and Programs

1. Lower Cost of Borrowing (subsidizes diff between market & discounted rate reducing interest rates) Examples: Direct Financing: Low interests loans, Linked deposit programs, and Small issue tax-exempt Industrial Development Bonds. 2. Lower the Risk (guarantees a % of private sector loan against default) 3. Offer Different Investment Programs (special needs of undeserved) 4. Loan Packaging (acts as conduit facilitating & coordinating loan process) 5. Direct Lending or Investing 6. Technical Assistance (teaches entrepreneurs fundamentals of business & financial management) 7. Economically Targeted Investments (direct funds to opportunities that earn competitive (market rate) financial returns while producing ED benefits)

There are five primary ways in which an economic developer can conduct a business survey:

1. Mail; 2. In-person surveys administered by volunteers; 3. In-person surveys administered by full-time economic development staff; 4. Combined mail and in-person surveys; 5. Email or web-based surveys.

These firms rate governments according to the following key factors:

1. Managerial and Decision-Making Capacity: How Is the Community Managed? 2. Stability and Continuity of Managers and Legislative or Elected Officials: Can You Depend on the Continuity of Policies? 3. Capital/Long-Range Planning Methods: Does the Community Have a Capital Improvement Planning Process? 4. Debt Management Capabilities: Is the Community Able to Handle Complex Debt Structures? 5. Cash Management Capabilities 6. Budget Process and Control 7. Intra- and Intergovernmental Relations 8. Tax and Billing Collections Systems 9. Institutional Systems and Methods of Operation. 10. Risk and Asset Management Programs

7 Types of Businesses

1. Manufacturing Firms 2. Wholesale Firms 3. Retail Firms 4. Service Firms 5. General Construction Firms 6. Special Trade Construction 7. Procurement Contractors

Financing Steady Growth- Small businesses face a gap in private financing markets when trying to obtain long-term financing of fixed assets. There are several reasons for this:

1. Many commercial banks do not provide loans for less than $100,000 and even fewer banks consider loan applications for less than $50,000. Microloans, typically loans of $25,000 or less, are very scarce in the commercial market. 2. Commercial banks are short to medium-term lenders and prefer not to lend for periods of more than 10 years and often for no longer than 7 years. A commercial loan for a new plant that must be repaid over a 7 to IO-year period requires prohibitively large principal and interest payments. 3. Long-term mortgages that run 25 to 30 years more closely parallel the useful life of the structure, and reduce the monthly principal and interest payments to a manageable amount for the business. Insurance companies are long-term lenders. However, they tend to limit their investments to commercial and industrial projects of more than $1 million.

(Overview) In addition to knowledge on how to link finance programs to broader economic and community development goals, development finance professionals also need diverse management skills that include:

1. Market analysis 2. Program design, 3. Overseeing investment transactions, 4. Building partnerships to advance development outcomes, 5. Managing assets, and 6. The ability to raise new capital.

(Overview) The lending screening process involves four major functions:

1. Marketing 2. Screening 3. Underwriting or approving (denying) a loan application, and structuring the loan including setting fees and interest rates, securitization, and repayment terms 4. Loan documentation and servicing; activities required until all possible payments have been collected.

LENDING PROCESS:

1. Marketing 2. Screening a. Set Borrower Qualifications b. Process of Screening Borrowers 3. Underwriting a. Working with Lenders b. Loan Review Process c. Key Factors of Underwriting (The 5 C's) 4. Structuring the Loan a. Fees b. Interest Rates c. Security d. Maturity (Short-term<1yr., Medium-term>1yr. <or=5yrs, Long-term >5yrs.) e. Repayment Conditions: i. Payable on demand. ii. Lump sum (balloon) iii. Uniform repayment iv. Periodic unequal payments v. Extended amortization schedule with balloon payment vi. Sinking fund. vii. Other terms (Guarantees, Prepayment Penalties, Variable Interest Rates, Compensating Balances, Leverage Requirements, Extended Amortization Schedule, Sinking Fund, Convertibility, Warrants) 5. Loan Documentation and Servicing a. Loan Documentation b. Loan Servicing c. Loan Closeout 6. Evaluation Techniques for Lenders and Economic Development Practitioners

Public agencies can acquire land by the following:

1. Negotiated purchase with a willing seller 2. Eminent domain or condemnation 3. Tax foreclosures 4. Escheat (property not claimed by heirs to an estate) 5. Land swaps 6. Surplus city or county property (or other public holdings such as from school districts or public universities) 7. Foreclosure on demolition liens

7 Elements of the Income Statement

1. Net Sales 2. Revenues 3. Costs of Goods Sold 4. Gross Profit 5. Other Income 6. Sales and General Administrative Expenses 7. Net Income

What are some other early warning signals that a company may be at risk?

1. Obsolete facility, product lines, or technology 2. Location in problem neighborhood 3. Contentious labor relations 4. Lack of export/international focus 5. No succession plan (particularly with family owned businesses) 6. Gradual corporate downsizing 7. Relocation of top management to another location 8. Loss of supplier/customer contracts

The usual sequence of events in organizing a volunteer program is as follows:

1. Obtain the support of the mayor, county executive or board chair, or other chief elected official in the community. The program will lack credibility without visible support at the highest levels; at the same time, the BRE manager must secure the elected official's commitment to follow up on all legitimate issues uncovered by the survey. 2. Appoint a Business Retention and Expansion Task Force chaired by a prominent individual from the private sector. The chair should be expected to use his or her contacts to assist in volunteer recruitment. 3. Identify firms to be surveyed. Please refer to the SWOT analysis discussion in the previous chapter. The SWOT analysis will help the BRE program manager identify clusters, sectors and specific firms to be surveyed or interviewed. 4. Send a letter of introduction from the chief elected official to the target firms three weeks before the kick-off event. The letter of introduction should tell the CEO(s) he should expect a call from the volunteer(s) assigned to the firm to set up a convenient time for an interview. A copy of the survey should be enclosed, and the letter of introduction should encourage the CEO or plant manager to take a few moments to review the survey prior to the interview. 5. Hold a training session for the volunteers. The session should be opened by the chief elected official, who thanks the volunteers for their time and effort and stresses the jurisdiction's commitment to address all legitimate issues raised by survey respondents. The volunteers are then trained by staff of the economic development organization in techniques for administering the survey, including the proper way to record responses, methods of probing further when a respondent offers a vague answer, and techniques for dealing with especially difficult interviewees. The training session should last approximately two hours. 6. The surveying process usually begins with a kick-off event featuring speeches from the chief elected official and task force chair. Such an event, if properly promoted, should generate media coverage and heighten awareness of the BRE program in the business community.

The usual sequence of events in organizing a program with full-time economic development staff is as follows:

1. Obtain the support of the mayor, county executive or board chair, or other chief elected official in the community. Unlike the volunteer based model, the chief elected officer does not take an active role in the program. However, his or her visible support is still necessary to ensure that agencies and departments outside the economic development organization (e.g., planning and zoning, public works) respond in a timely and meaningful fashion to issues raised in the interviews. 2. Identify firms to be surveyed. Please refer to the SWOT analysis discussion in the previous chapter. The SWOT analysis will help the BRE program manager identify clusters, sectors and specific firms to be surveyed or interviewed. 3. Establish a schedule for conducting blocks of interviews. Usually, it is easiest to divide the businesses to be surveyed into geographic regions and focus efforts on one region at a time, so that travel time between interviews is minimized. 4. Send a letter of introduction from the chief elected official to the target firms in a given region two weeks before you are scheduled to begin your interviews. Follow up with a phone call one week later to arrange the interview. A copy of the survey should be enclosed, and the letter of introduction should encourage the CEO or plant manager to take a few moments to review the survey prior to the interview.

(Overview) There are two components to economic development finance.:

1. One involves providing financial assistance to business ventures and programs. 2. The other involves providing financial assistance for projects such as the construction of a parking garage in the city center. Both components help to promote economic development goals.

There are several approaches to marketing that will help find and match best deals.

1. One-on-one meetings with lenders and realtors 2. Meeting other service providers, such as accountants and architects 3. Presentations to business groups 4. Mass mailings to potential eligible borrowers 5. Advertising and media relations to generate positive press coverage, making public announcements of new programs, and distributing brochures Of the various marketing strategies, one· on-one meetings yield the best results. It is important to meet lenders and real estate brokers personally.

3 Elements of the Statement of Cash Flows

1. Operating Activities 2. Investing Activities 3. Financing Activities

Role of the Economic Developer in regards to BRE- The economic development practitioner has several roles and responsibilities in a business retention and expansion program. These include:

1. Organize BRE activities in the community by bringing together the partners needed for success. 2. Provide resources directly to the firm, when warranted - e.g., in the case of a public economic development agency with financial and technical assistance programs. 3. Act as a broker between the sources of assistance and the company needling them, and package several forms of assistance when available from different sources to assist the company. 4. Advocate for the business community's concerns, especially as they relate to the policies and procedures of local and state government. 5. Maintain a comprehensive database of local firm attributes, market knowledge, trends, business activity, expectations, performance indicators and business climate satisfaction. 6. Organize and maintain a database of available buildings and sites. 7. Work with existing businesses to identify trends and ways to improve the business climate. 8. Develop and implement programs to address needs of existing businesses. 9. Maintain regular contact with existing businesses, through one-on-one visits, group meetings, e-newsletters, attendance and networking events and other means. 10. Work with partner organizations to respond to firm issues. 11. Analyze BRE data to identify key business issues and opportunities. 12. Communicate the value proposition of the area to local firms. 13. Create networking opportunities for businesses to connect with local suppliers and customers.

Technical Assistance and BRE via:

1. Organizing and Implement a Technical Assistance Program; 2. Identifying and creating clusters and Industry-Focused programs; 3. Address a difficult business Climate (permits and regulations regarding retention and expansion); 4. Creating Site Opportunities and; 5. Providing Infrastructure.

Occupancy Permit:

A final inspection is conducted onsite and includes all electrical, fire, grading, mechanical and plumbing systems. After inspectors find the building in compliance with approved construction documents, the city's building official can issue a certificate of occupancy.

2. Land Use Plans:

A comprehensive plan is a land use plan that describes the desirable ways in which a community should develop over a 10 to 20 year period. It includes a set of written development goals and policies, supplemented by maps. It may be advisory or legally binding depending on state enabling status. A sector plan or small area plan is a land use plan that focuses on a manageable area (a section of a community) and considers the land use, transportation, environmental, and infrastructure needs unique to that portion of the community. It avoids the generalities of a comprehensive plan and also avoids a single-issue, narrow outlook of planning.

Once the community's strengths and weaknesses have been identified, match these up against major business and industries in order to determine the opportunities and threats that will be confronted as part of the BRE program. Important questions include the following:

1. Outlook: • Are the key industries young and growing, or old and mature? • Axe there clusters present in the region? Are they growing or declining? • Axe businesses in the community innovative and driven by offering new products or processes? • Does the community embrace the knowledge economy? 2. Technology: • How will technological advances impact local industries? • Axe local industries innovating and applying for patents? • Is there a technology-based economic development plan for the community or region? • Is there a technology council that serves regional businesses? • Is broadband infrastructure available in the community? 3. Legal and Regulatory Changes: • Are there state or national policy actions on the horizon that will benefit or harm key industries (e.g., new environmental regulations, significant deregulation of an industry)? 4. Large Employers: • Axe any large, local employers which headquartered elsewhere expected to go through significant downsizing? • Is the community dependent on a single or small number of employer(s) or industry for jobs or tax revenues? • Where is the supply chain located for large employers? 5. Economic Trends: • How will the overall economic outlook for the state, region, and the nation impact key local industries? Will rapid growth or recession in international markets affect key industries? • Will a financial crisis affect your region more than others? • Are local companies seeking consumers in global markets? • Are federal government contracts a large part of your employers' work? 6. Competitors: • To what extent are other regions or nations attracting key local industries? • Is a knowledge workforce readily available in neighboring regions? • How does your community compare to benchmarked competitors? 7. Other Factors: • Include any other areas of opportunities or threats relevant to the health of important industries. These could include such things as industry consolidation (m commercial banking, for example), or a change in political leadership at the state or national level.

The lease terms can be designed to fit the needs of the development or of the developer. Lease term options include:

1. Percentage lease with low minimum- A lease can require a minimum monthly amount with additional payments based on income production. 2. Unequal lease payments- Similar to loan payments, lease payments can be structured to start out low in the early years of a project and increase when operating performance typically stabilizes. The lease payments should reflect the risk of the lessee and balance with the community's redevelopment objectives. In addition, the buy-back price must be at a fair market value at the time of sale. Otherwise, the lease payments are disallowed by the IRS and the income tax benefits of the agreement are nullified.

The real estate development process has eight distinct phases:

1. Phase I: Predevelopment 2. Phase II: Market, Financial, and Political Feasibility 3. Phase Ill: Site and Engineering Analysis 4. Phase IV: Financing (Debt Capital, Equity Capital) 5. Phase V: Contractor Negotiations & Public Approvals 6. Phase VI: Construction 7. Phase VII: Marketing 8. Phase VIII: Building Occupancy and Management

RFPs: Steps to Finding a Developer:

1. Project Concept & Objective 2. Solicitation Document. 3. Marketing the Solicitation Document 4. RFP Outline 5. Evaluation & Selection 6. Developer Negotiations 7. Disposition & Development Agreement

Strengths of TIF:

1. Property owners pay the normal tax burden, no more. 2. The property tax increment is eventually returned to the tax rolls. 3. TIF bonds are not typically counted against a jurisdiction's debt caps. 4. Public funds are not required. 5. Incremental tax revenues are reinvested back into the targeted redevelopment areas. 6. TIF can stimulate private development in redevelopment areas. 7. Tax increment areas can also be used as a performance based benefit if the developer is returned the amount of the increment. 8. TIF is a reliable local source of funds as federal and state grants become increasingly sparse.

Private Activity Bonds

1. Qualified redevelopment bonds (Infrastructure projects) 2. Qualified exempt small issues (Industrial Bond) 3. Enterprise zone bonds (enterprise communities or empowerment zones) 4. Exempt facility bonds (Tax Exempt Facilities, Airports, docks, water treatment) 5. Qualified nonprofit bonds (Hospital, Housing and Museums) 6. Qualified mortgage bond (First time Home Buyers) 7. Qualified student loans ( Undergraduate Students programs of the U.S. Department of Education) 7. Industrial Development Bonds

Facts about RLF:

1. RLFs can be administered by a city agency or other entity, typically a nonprofit organization. 2. RLFs can be either wholly or partially capitalized with state and federal funds. 3. This money provides a source of business assistance that otherwise would not be available because most states prohibit the use of local general revenues for private business assistance. 4. Because the goal of the RLF is to provide gap financing, RLFs can finance activities that are unattractive to conventional lenders. 5. RLFs provide more favorable lending conditions such as lower interest rates and longer terms and can take subordinated positions. 6. RLFs can also be used to guarantee portions of loans made by conventional lenders. 7. Through their lending function, RLFs can support redevelopment of blighted land and vacant facilities, as well as small business development and job retention. However, they are typically geared toward job creation or small business development.

What are the weaknesses of RLFs:

1. RLFs must sometimes stop lending because they are out of funds. 2. A relatively large amount of capital is necessary to establish the fund. 3. Sophisticated administrative staff is required. 4. There are restrictions if federal funds are used.

4 Types of Debt Financing (Loans)

1. Recourse Loans 2. Nonrecourse Loans 3. Secured Loans 4. Unsecured Loans

There are four main ways in which the EDO can help facilitate redevelopment.:

1. Reducing the development cost lowers a developer's front-end costs and reduces the amount that has to be financed. 2. Reducing mortgage-financing costs lowers the debt service of a project. 3. Reducing operating costs improves the cash flow of a project 4. Facilitating the process of redevelopment through programs and policies. Economic development organizations can help make a project feasible by providing a variety of local funding tools for developers and businesses. These incentives include loans, loan guarantees, tax abatement, and grants. The decision to offer developers public financing options often depends on the costs incurred by the community for each.

Industries that small businesses dominate include:

1. Restaurants and other food services 2. Computer and data processing services 3. Business and other consulting services 4. Nursing, personnel, outpatient, and residential care 5. Trucking and other delivery services 6. Machinery, equipment, and supplies 7. Mailing, reproduction, and stenographic services 8. Small physician offices 9. Small retail entities

7 Elements of Equity Instruments

1. Seed Capital (pre-production phase) 2. Grants (direct transfer of public or private funds to private enterprises) 3. Limited Partnerships 4. Venture Capital (equity investment with expected high rate of return) 5. Mezzanine Financing (expansion) 6. Common Stock Purchase (does not promise future dividends) 7. Preferred Stock Purchase (fixed annual dividend)

6 Business Classifications

1. Sole Proprietorship 2. General Partnership 3. Limited Partnership 4. Corporation 5. Limited Liability Company 6. Subchapter S Corporation

Consultants can be selected through several processes:

1. Sole-source 2. Pre-qualified Candidate List 3. Request for Proposal (RFP)

Creating Site Opportunities via:

1. Special Manufacturing/ Industrial Zones 2. Industrial Parks 3. Eminent Domain Creating new site opportunities is a critical technical assistance element in most retention and expansion strategies. These opportunities may serve individual businesses looking for space to relocate or build an expansion facility; a group of businesses that may benefit from being closer to one another; or businesses that need to move from their current locations but that the community wants to retain.

While the methodologies may vary, there are five key components to any quality market study:

1. Subject Site Analysis - Where is the project located, and how do its physical characteristics, including planning, zoning, access, adjacency, topography, etc. impact its overall feasibility? 2. Economic and Demographic Analysis - What is the regional forecast for jobs and household growth, and how much of that growth may impact the market conditions for the project? 3. Competitive Supply Analysis - What other projects will compete with this project for market share, and how competitive will this project be visa-a-vis those projects in terms of quality of execution, price, timing, positioning, etc.? 4. Demand Analysis - How deep is the overall pool of customer (residents, tenants, etc.) for this project in the marketplace? Is the demand growing or shrinking? Are the needs of the market changing over time? 5. Development Recommendations - How do the above factors play against each other and inform recommendations as to product program, timing/phasing, implementation strategy, prices/rents, and product types?

Whats the Keys to TIF Financing?

1. TIF revenue can be directed toward improvements in the redevelopment district or to finance bond debt that does not require a referendum. 2. TIF activities may only be allocated to projects that support the official redevelopment plan. These include infrastructure improvements, both on-site and off, including new traffic signals, upgrades in parks adjacent to development, road replacement, new parking facilities or site remediation. 3. TIF funding can also be used to provide matching grants for redevelopment projects, partial financing of private development ventures, funding for acquisition of real property and site preparation. 4. Projects supported by the TIF may be financed through bonds at the beginning of the project or when the increment becomes available. The second alternative involves reimbursing the developer for expenses agreed to be supported through the TIF. No bonds are necessary. 5. TIF programs may be set up on a district basis, where the increment from a defined area of a community is used to fund projects in the district. 6. TIF programs may also be defined by a specific project. In this case, only the increment from the project is used to fund that project.

Designing Survey Questionnaires:

1. The Mail Survey Questionnaire 2. The Site Visit Questionnaire 3. Confidentiality Issues 4. Testing the Questionnaire 5. Basic Information on a BRE Survey 6. Specific Focus Areas for the Questionnaire

Credit Analysis To avoid regular defaults and delinquencies, and the consequences associated with bad loan performance, you must be aware of the risks each proposal entails. This requires a credit analysis of all deals. Credit analysis considers four factors:

1. The debt coverage ratio 2. The loan to value ratios (collateral) 3. The validity of guarantees 4. The personal integrity of the borrower

Strengths of leases:

1. The developer can more easily avoid large cash outlays. 2. There are tax advantages for the developer. 3. Public and private sectors can share the risk. 4. EDO can maintain more control than in a transfer of tide.

Weaknesses of leases:

1. The developer may default. 2. The expense incurred by the public sector can be high. 3. Some lenders are reluctant to lend on improvements with a ground lease.

Evaluation Techniques for Lenders and Economic Development Practitioners- Economic practitioners should have the ability to understand the following:

1. The goal of commercial lenders and economic development practitioners; 2. The benefits of financial analysis; 3. The limitations of financial analysis; 4. Relevancy of financial ratios to and financial statements; 5. How to enhance financial analysis; 6. The significance in meeting with the business owner;

The process of establishing the district size and shape requires the community to address a number of issues:

1. The mix of existing land uses 2. The mix of desired land uses 3. Whether to include some less blighted property that has high development potential 4. How much, if any, vacant land to include 5. Property characteristics: a few large properties or many small properties 6. The total amount of city land allowed for TIF State and local laws typically address many of these issues. Consideration should also be given to the concerns of lenders and bond counsel. These institutions have very specific requirements for providing debt to a TIF district.

To enhance financial analysis, an sound lender evaluate:

1. The status and prospects of the industry in general; 2. The character, skills, and track record of the entrepreneur or management team; 3. The quality and reliability of the product produced or services rendered by the entity; 4. Physical condition and usefulness of the plant and equipment; 5. Likely future demand for the product; 6. Quality and liquidation value of assets; 7. Sensitivity of the entity to cyclical downturns.

Other benefits to testing a draft version of the survey include:

1. The wording of some questions may be confusing to the interviewer, interviewee, or both. These questions can be rewritten to be less confusing. 2. Some questions may be too open-ended, resulting in a range of responses that is too varied to be of use. For example, the question "How do you plan to grow your business in the future?" could be more effective as "What specific strategies will you pursue over the next five years in order to expand your core business?" 3. Some questions may yield little usable information or provoke objections from business owners (e.g., questions concerning a firm's banking relationships). Such questions should be eliminated from the survey. Be certain to test the draft survey with executives from firms that are representative of other firms to be surveyed. For instance, it is not helpful to test a manufacturing-focused survey on the CEO of a local retail chain. Turn to the business retention and expansion task force, chamber of commerce members, and local government advisory boards to identify business leaders for survey testing. Economic developers also can ask college or university professors to review the survey. Or, if available, practitioners can enroll in a survey design course to improve their knowledge of survey methods and analysis.

Weaknesses of tax abatements:

1. There may be a tendency to provide tax abatement to any eligible project, rather than basing decisions on project feasibility and financial necessity. 2. Once abatements are given, businesses may depend on them and it can be difficult to phase them out 3. As abatements become more widespread, property owners begin to capitalize the value of abatement into the sales price of the property. 4. Tax abatement in many jurisdictions has become highly controversial.

General Obligation (GO) Bonds

1. These are bonds backed by the full faith and credit of the government entity. 2. GO bonds may be repaid with general revenue or from borrowing or taxing proceeds connected by the issuer. 3. Local jurisdictions use GO bonds to fund uses that do not have a revenue source (i.e. government offices, roads, and schools). 4. In some states, with authorizing legislation, bonds may be used for land acquisition, blight elimination, and for write-downs on land sold to developers for redevelopment. However, many municipalities limit the use of GO bonds to needed public uses such as roads and schools. 5. The use of GO bonds is limited by debt caps and much of the debt is predetermined in planned, long-term capital budgets. 6. Some GO bonds may require approval by a public referendum.

Public Use Revenue Bonds:

1. These are bonds that are payable solely from the earnings of a particular project or facility acquired or constructed with the issued bonds. For example, a parking facility may be constructed through the use of revenue bonds that will be repaid from the parking structure's income. 2. As part of the agreement to issue revenue bonds, underwriters may require more than the promise of revenues from the project. Revenues from the project may have to be backed with a "debt service reserve fund" which is usually prefunded with a bond issue. 3. Public use revenue bonds are less likely to require a public referendum for approval than GO bonds.

What are the strengths of RLFs?

1. They offer flexible loan eligibility criteria, assistance, and repayment. Each city or other development agency establishes its own guidelines. 2. They can provide capital to businesses in support of local development goals and provide eligibility and lending criteria in concert with other development programs. 3. They can offer favorable interest rates and loan terms. 4. RLFs reduce the risk of a loan by guaranteeing a specific percentage of that loan

Strengths of tax abatement:

1. They provide a very direct incentive for recruiting new development. 2. They are easy to implement. 3. They are the most direct way to counter urban tax disadvantages relative to suburban communities. 4. If the building is empty, certain taxes are not being paid, so the local government is not giving up existing revenue.

Such changes may include:

1. Training of Regulatory Staff- Customers service and improved service delivery); 2. Case Management- One staff person from the regulatory agency assist in the navigation of the process. 3. Ombudsman- Local jurisdictions can appoint an ombudsman as an advocate for permit and license applicants. 4. Restructuring Redevelopment Codes- making it easier for developers, businesses and non-profit organizations to rehabilitate older properties and buildings; 5. One-Stop Permitting Centers- These centers provide: • A single, convenient location to issue the permits and licenses that a business needs to begin or expand operations; • A single point of contact where staff assists the applicant (across several different agencies, if necessary) with the application process for all permits and licenses that will be needed. • Can be referral sources, providing businesses with lists of all the necessary permits and licenses along with the names and phone numbers of agency personnel.

3 types/levels of design-build

1. Turnkey: provides financing and/or land acquisition/development, turned over to owner when construction complete 2. Build-Leaseback: retains ownership of project, leasing it back to client who commissioned the project initially 3. Build-Operate-Transfer: retains ownership of project, operates it according to client's requirements, & receives fees from client during ownership & transfers ownership to client at specific future date

The primary OBJECTIVES of business retention and expansion programs are to:

1. Understand the needs of specific local firms, especially those firms that are at risk of closing or relocating elsewhere; 2. Respond to those needs using a wide variety of services, such as technical assistance, workforce development, financing, and building new markets; 3. Address local issues that detract from a healthy business climate in which local businesses can prosper and grow.

Real Estate Development and Reuses Objectives:

1. Understanding of the development process; 2. A familiarity with the policies and programs that state, local, and public private economic development organizations and agencies can use to encourage and help finance development; 3. An understanding of how to analyze cash flow and income statements, and how to assess project feasibility; 4. Knowledge of site analysis and land assembly; 5. A familiarity with current environmental rules and regulations; 6. An understanding of regulatory constraints and incentives; 7. An understanding of the process to solicit and select a developer.

Common types of public use revenue bonds include the following:

1. Utilities (water, sewer, electric, solid waste disposal, gas, and telephone) 2. Transportation (toll roads, parking facilities, rapid transit, ports, and airports) 3. Higher Education (colleges, universities, and student loans) 4. Non-essential Public Items (recreational facilities) 5. Tax Increment Bonds (may be tax exempt or taxable) 6. Special Tax Bonds

Clusters are concentrations of firms that are related through various business activities. Cluster can be linked:

1. Vertically in the case of buyers and suppliers 2. Horizontally in the case of competitors or that share resources, workforce, common technology

Training Session Agenda A possible agenda for the training session follows:

1. Welcome and Introduction 2. Overview of the BRE Program and Importance of Confidentiality 3. Overview of Survey Form 4. Interviewing Tips 5. Role-Play Involving Volunteers 6. Ethics and Confidentiality 7. Conclusion

Economic Development Finance Objectives:

1. Who the players in development finance are 2. Why development finance is necessary 3. How to read and analyze financial statements 4. What criteria banks use to evaluate companies 5. What local, state and federal financing programs are available to support development finance projects 6. How to manage a development finance program

Reasons Businesses Need Financing

1. Working Capital Needs, 2. Fixed Asset Needs 3. Capital for New Businesses 4. Financing Growth Needs 5. Financing Disruptive phases of a business 6. Financing Mature Firms.

4 Activity Ratios

1. accounts receivable turnover 2. days receivable 3. inventory turnover ratio 4. average days inventory

Construction Management

1. addresses questions of constructability, costs, & schedule during design/engineering phase 2. developer breaks construction contracts into multiple specialty contractors 3. reduces overall project time schedule

Low Income Housing Tax Credits (LIHTC) / Section 42 Credits

1. administered by IRS providing dollar-for-dollar credit against federal income tax based on the amount of $$ invested in LMI rental units 2. must maintain LMI rental restriction for at least 15 years 3. typically claimed over a 10-yr period which typically breaks down to about 9%/yr for a 70% credit

Non Current Assets

1. assets with a life longer than one year; important to secure long-term loans (land, buildings, equipment) a. long-term liabilities b. contingencies (conditional - warranties/lawsuits) c. deferred liabilities (deferred taxes, unfunded pension)

5 ways to mitigate risks

1. background/experience check 2. professional licensing 3. well-documented scope, design/engineering, construction documents, project budgets, & schedules 4. professional liability & general liability insurance required 5. periodic monitoring of public development progress

Debt Coverage Ratios (DCR)

1. compares the cash flow income of a business to the cost of the loan 2. can be used to determine the largest loan that a borrower could afford given a particular income 3. The higher the DCR, the better, avoiding DCRs less than 1 4. DCR = Net Operating Income or Cash Flow/Total Debt Service

Working Capital

1. current assets minus current liabilities 2. measures how much in liquid assets a company has available to build business 3. Can be generated in three ways: a. Profits b. Long-term borrowing including new equity c. Reduction in long-term assets (through depreciation or sale)

3 Parts of Credit Analysis

1. debt coverage ratio (DCR) 2. loan to value ratio 3. intangibles

3 Zoning Incentives

1. density bonus (used to alter height & bulk regulations) 2. overlay zoning (relaxes or modifies land use provisions for particular land tracts) 3. mixed-use zoning (multi-purpose use permitting)

Loan to Value Ratio

1. establishes the ability of a lender to recapture a loan given the value of collateral put up by the borrower 2. Should not be greater than 1 3. LVR = Loan Amount/Money Value of Collateral Assets

Working Capital Ratio

1. gives some indication of the turnover of working capital 2. WCR = net sales / working capital 3. translate into days = 360 / WCR

Debt as a Risk Factor

1. how the company has financed its operations is important to understand how much of a risk the business might be 2. if a company has a great deal of debt capital, then it is "highly leveraged," which is a red flag

4 factors determining eligibility for bonds in a TIF district

1. large, diversified partially developed districts 2. leverage of at least 50% of total assessed value 3. debt coverage (1.25), assessment & tax ratios, tax appeals & tax sharing between jurisdictions. 4. political stability

Special Improvement Districts (SIDs), Business Improvement Districts (BIDs), Business Improvement Zones (BIZ)

1. limited geographical area designated to receive enhanced services to improve local business climate 2. supplements services provided by public sector 3. efforts include marketing & promotion, maintenance & cleaning, security, policy advocacy, & small scale capital improvements

4 Criteria Used by Banks in Credit Analysis

1. management ability 2. repayment ability 3. collateral 4. equity in business (based on debt-to-equity ratio of 2 to 1 or less)

7 ways public agencies can initiate development thru land assembly

1. negotiated purchase with willing seller 2. eminent domain or condemnation 3. tax foreclosures 4. escheat (property not claimed by heirs) 5. land swaps 6. surplus public holdings 7. foreclosure on demolition liens

List 3 types of trade credit

1. open account (set # of days to pay invoice after receiving goods) 2. notes payable (written evidence of liability with specific date for payment) 3. trade acceptances (seller draws a draft directly on purchaser's bank)

4 Profitability Ratios

1. operating margin 2. return on sales (ROS) 3. return on assets 4. return on equity (ROE)

List 8 typical risks of a development project

1. project scope changes 2. completion schedule overruns 3. design & engineering errors & omissions 4. licensing & permitting delays/denials 5. general contractor or subcontractor default 6. construction cost overruns 7. off-site public infrastructure development delays 8. finding unknown contamination

4 P's of marketing

1. promotion 2. price 3. product 4. place

Design/Build (D/B)

1. provides "single point" of responsibility for both design & construction with a single contract 2. avoids coordinating the activities of architects/engineers/contractors 3. most appropriate in situations where owner is in a good position to specify requirements, is reasonably sure of marketplace, & has confidence in single D/B entity

3 steps in bond process

1. research 2. professional consultation 3. approval

6 Elements of the Income Statement Forecast

1. sales projections 2. cost of goods sold 3. operating expenses 4. interest and other expense 5. income tax expense 6. analysis

10 steps in developing marketing strategy

1. specific need identified 2. market analysis & feasibility study 3. management of marketing strategy 4. gain an understanding of strengths & weaknesses of product, location, & pricing to determine best avenue for promotion 5. blueprint/method(s) (on-site sales office, targeted media advertising, press releases) 6. budget based on blueprint 7. timetable with goals & objectives 8. implement educational/training component 9. Evaluate marketing efforts 10. adjust for continuous improvement

3 primary categories of merchandising

1. tangible materials 2. product (physical amenities) 3. sales conduits

Seed Capital

1. the money that young high-growth firms need long before they can access traditional sources of funding 2. demand is high, and supply is limited 3. investment is smaller and risk is higher

Whats Land Assembly?

1.) Acquiring land 2.) Eminent Domain 3.) Land Banking

What are two major reasons a public entity will borrow money?

1.) Bonds help communities spread the cost of a project over its expected life span. 2.) Communities rarely have the cash on hand to cover large-scale capital projects.

What Local Public Sector Development Tools, Resources, and Practices are common?

1.) Financing Methods 2.) Land assembly 3.) Other Incentive

What are 2 common forms of public use bonds:

1.) General Obligation (GO) Bonds 2.) Public Use Revenue Bonds

At the state level, the following are common forms of tax credit programs:

1.Business facility- Provides credit for new jobs and new investment within a specific type of industry. 2. Capital investment- Provides credit for investment in small businesses in distressed communities. 3. Community bank- Provides credits for investment in a community bank. 4. Enterprise zone- Provides credit for developments that will provide new jobs and new investment within the zone. 5. Historic- Provides credits for reuse of historic structures. (see Chapter 12) 6. New Market Tax Credits- Spurs revitalization efforts of low-income and impoverished communities 7. Distressed community- Provides credit for individuals and businesses within a defined "distressed community". 8. Low income housing- Provides credit for development and leasing of units at below market rents.

Political Feasibility (Phase II) INENTIFY AND INVOLVE KEY PLAYERS AND STAKEHOLDERS:

: It is imperative to identify and involve key players and stakeholders in the politically feasibility study early as needed. While the public sector players are entities that will police or approve the subject site or development plans, stakeholders are anyone who's effect by the project. Stakeholders might include citizens, community associations, neighborhood groups, state and local government, landowners, developers, business owners, major employers, chambers of commerce, faith institutions, financial institutions, educational institutions, and utility companies. Within the contexts of identifying stakeholders, an EDO or Developer should look for capable community leaders who can make a time commitment. They should become leaders and representatives for the plan. EDO should be able to assess political support, involve the community, and promote the project's value to stakeholders.

Strengths of feasibility study provision

: • Determines the feasibility of the project before any major investment is made. • Gives the agency more knowledge to shape the project prior to private participation

Human Capital:

A BRE program must have the appropriate personnel to manage the program, conduct outreach, resolve problems, and provide technical assistance. While human capital is the key to any BRE program, many smaller communities do not have the resources to support a full-time BRE program. In this situation, volunteers from the business community and service provider partners play a critical role in implementing the program effectively.

Designing a Program:

A RLF targeting small businesses should be designed for either access or inducement to funds. Access RLF programs are designed to increase the availability of capital for businesses that potentially could fulfill community development objectives but do not qualify for loans from traditional lenders. Access RLFs can either provide primary loans directly to the business or can serve as a secondary source of funds that fills financing gaps by providing subordinated debts, guaranty to other loans, or other forms of assistance. Inducement programs provide "incentive financing". These loans may offer below market interest rates, extended loan terms, payment deferments or other attractive loan terms to the small business owner or investor in order to stimulate economic activity.

Revolving Loan Funds (RLF):

A Revolving Loan Fund (RLF) is a pool of public and private sector funds in which money is recycled to make successive loans. These loans could go to a variety of borrowers depending on the purpose of the RLF. Collected loans from the fund and any accrued interest from the loans are returned to the lending pool for new loans, increasing the fund with each generation of borrowers. Consequently, once originated, a revolving loan fund is not likely to either extinguish itself or be subject to external funding reductions. In economically distressed areas, RLFs are critically important to revitalization and growth, as they are designed to alleviate the high cost and short supply of capital by providing flexible loan terms to entrepreneurs and business owners. RLFs make capital accessible to those unable to obtain financing from banks or other financial institutions, filling a credit gap for many small businesses. The RLF board tries to make the loans as affordable as possible by providing below market interest rates and longer loan terms.

Contracting with the Engineer:

A contract with a structural engineer covers issues similar to those involved in dealing with an architect. However, engineers usually subcontract with the architect rather than the developer.

Loan Guarantees

A loan guarantee is a legally binding agreement under which the guarantor agrees to pay any, or all, of the amount due on a loan instrument in the event of nonpayment by the borrower. In simple terms, one person assumes responsibility for paying another's debts or fulfilling another's responsibilities. Loan guarantees are typically reserved for higher risk investments.

Market Feasibility Basics (Phase II):

A market feasibility study determines the depth and condition of a particular real estate market and its ability to support a particular development. The market study provides a basis for identifying business development opportunities and forming realistic development plans. In cases where preconceived ideas about development exist, the market study provides a basis for evaluating those ideas and development alternatives. In cases where there is no clear development plan, the market study is a starting point for identifying opportunities and limitations. Finally, market feasibility helps to determine if the project will satisfy lenders enough to provide a loan. In addition to this, market feasibility helps to determine if the project will satisfy lenders enough to provide a loan. Much of the market analysis must evaluate the project and project area in the same fashion that potential occupants of the project will.

Define "business networks"

A network of similar firms within industrial segments, firms with contractual relationships, or firms located in certain neighborhoods or industrial areas having mutual interests which compels them to engage in such interaction. Economic development organizations can support local businesses by organizing networks of similar firms within industry segments, firms with contractual relationships, or firms located in certain neighborhoods or industrial areas.

(gap financing) Funding tools:

A number of local funding tools exist for economic developers in gap financing. These are: Tax Increment Financing (TIF), General Obligation (GO) Bonds, Revenue Bonds, Industrial Revenue Bonds, Tax Abatements, Loan Guarantees, Federal Grants & Loans for Local Development, as well as others.

Management and Follow-Up

A program manager is critical to ensuring that a BRE program is operating as effectively as possible. Responsibilities of the program manager include: identifying and training personnel to conduct BRE visits; maintaining and building the team of service providers; managing all aspects of the program, including data collection, analysis and reporting; resolving program-related issues; and coordinating media and public relations activities.

A subject site analysis:

A subject site analysis assesses a project location, and how do the physical characteristics, including planning, zoning, access, adjacency, topography, etc. impact its overall feasibility. A good market analysis takes into account the site within the context of its neighboring land uses, patterns of regional growth, planning/zoning considerations, and role within the regional economy. Specifically, the analysis should address the, size, topography, layout & constraints, surrounding land uses, proximity to employment and services, an area prestige/ reputation, access, visibility couple with the frontage and any planned infrastructure improvements

Network hub:

A support organization or "network hub" usually will take the lead in forming the network, and then serve as a facilitator to help the network achieve its goals. The hub can be housed in a local or regional economic development organization, a private entity, or an academic institution. The hub organization can also play a valuable role by drawing on its relationships with other organizations, such as financial institutions, educational institutions, government agencies, world trade centers, labor organizations, and major employers, in support of the network and its member companies. It is very important to remember that networks are creatures of the companies that form them. Staff of the hub organization must keep in mind that their role is to be a facilitator who assists the member companies in formulating and achieving their goals, as opposed to a director who imposes his or her own agenda. Other functions that are typically fulfilled by staff of the hub organization include helping smaller firms set up collaborations and joint ventures.

Survey Follow-Up:

A well-coordinated follow-up effort is as important as the survey itself. Without it, businesses' expectations will have been raised, only to be let down when the issues raised during the interviews are not addressed. In fact, a community that fails to follow up its business retention and expansion survey in a meaningful way may end up worse off than a community that fails to initiate a BRE program in the first place. The program's follow-up methods will depend to a large degree on the type of survey program used. Communities that use mail and volunteer surveys will need to have systems in place to process a large number of completed surveys within a short period of time (usually two or three weeks). By contrast, in communities that use full-time staff to administer the surveys, the volume of survey processing is dictated by the pace at which the interviews are conducted.

Debt-to-Equity Ratio

A. Determines the long-term relationship between debt and equity B. DtER = total liabilities-sub. debt / equity + sub debt C. 1:1 for Fortune 500, small business should not exceed 3:1

Debt Ratio

A. Evaluates how safe a loan is by assessing the ability of the lender to recoup its investment if the business becomes insolvent B. DR = total liabilities / total assets C. The lower the debt ratio, the better the risk (generally 60% or lower)

Operating Cycle

A. The period of time elapsing between the acquisition of goods and services involved in the manufacturing process, and the final cash realization resulting from sales and subsequent collections B. The longer the cycle, the more problems it creates for a company C. Cash → Inventory → Sales → Accounts Receivable → Cash

Cost of Goods Sold

A. costs that vary directly with sales - production related expenses B. COGS = beginning inventory + purchases - ending inventory

U.S. Department of Labor Programs:

Adult Training Program Carl D. Perkins Career and Technical Education Act of 2006 The Tech-Prep Model

BRE Infrastructure:

An effective BRE program must have the appropriate human capital, budget and technology. As mentioned previously, confidentiality and ethics are also a large part of BRE infrastructure. The BRE program itself must be secure, because business actions can be easily disrupted if misinformation is published. BRE data should be used in an ethical manner. For example, the results of a BRE survey should never be shared with competing employers in the community.

The similarities between BRE and economic development marketing and attraction programs:

An effective business retention and expansion program also benefits business recruitment efforts because existing businesses are the most credible sources for determining whether a locality or region is a good place to operate. A community's reputation as a place to do business is greatly enhanced when it operates an effective BRE program that helps existing companies stay, grow and prosper in the community. This positive message about the community's commitment to assist local companies can be used to attract new businesses. In pursuing a BRE strategy, an economic development organization will use many of the same tools and techniques used in business recruitment and new business development programs. Tools used in business retention and expansion activities are similar to those used to attract new businesses to a community. These Tools and techniques include: 1. Marketing; 2. Assistance with land and buildings; 3. Infrastructure; 4. Financial assistance, including linking companies with available sources of capital; 5. Development of a competent workforce through training and retraining; 6. Technical assistance and assessments; 7. Availability of technology resources; 8. Export assistance; 9. Assistance with ways to reduce energy costs and comply with environmental laws and regulations; 10. Assistance with permitting and licensing; 11. Various forms of tax and non-tax incentives. As in business attraction, a SWOT analysis should also be used in conjunction with a benchmarking study of competing communities to determine competitive advantages. What basis of comparison should the community use? Does it compete primarily with communities in the immediate region, or more often with communities in other states? Or, perhaps the community's competition is global in nature. As in business attraction, a key role for economic development organizations is to maintain a database of available real estate, developed and undeveloped. Information can be gathered from tax records and from real estate brokers. BRE program partners are very similar to the partners that are used in an attraction program. Team partners can play one or many roles in BRE, such as promoting the program, providing services and overseeing the policies of the program. Service providers are organizations that provide business assistance in areas such as financing, management and technological assessments, workforce training and retraining, and finding new markets. A successful BRE program provides the data and intelligence to strategically attract new companies to a community and foster the creation of new businesses. Compile data and testimonials that can be used to market the program to the business community, to funders and as part of business attraction literature. While some communities focus economic development dollars more heavily on attraction and recruitment campaigns, dollars spent on existing businesses can have a better rate of return. It simply is easier to retain an existing company and help it expand than to attract a new one. According to the Blane Canada Economic Development Newsletter, communities should consider the following a rule of thumb in business marketing:' *70 percent of all business comes from repeat clients; *15 percent comes from referrals; *15 percent comes from new business development. However, attraction efforts tend to receive more public attention as an economic development "win" for the community due to the announcement of new jobs and dollars to be invested by a new company.

Marketing:

An effective marketing program is essential to a successful public sector finance program. The marketing program is designed to target two sets of audiences, 1) the potential borrowers and 2) the potential lenders. For businesses, the purpose of marketing is to inform them of available services and loan programs. For lenders, the message should emphasis the opportunity to cross market loan programs and the economic potential of collaborating on the loan deals.

The public approval process:

An important part of the property development project involves gaining necessary approvals from various governmental bodies. This includes building permits, zoning approvals, and business licensing. Obtaining the various required permits can be a time-consuming and often frustrating process. Any delays in the approval process may become "deal-kiIIers" because it is expensive for developers to wait. Communities are developing various techniques to facilitate this process and ensure that the approval process does not inhibit the development. Two examples are a one·stop business assistance center and a facilitated approval process.

Technology:

Advances in information technology have made it easier to deploy robust, user friendly software systems for BRE programs. These systems are typically used to store data collected during outreach, analyze data for trends and opportunities, and monitor assistance provided to each company. How data are collected and analyzed varies from state to state and community to community. EDOs should have a back-up data storage component that ensures data access in case of an emergency. A variety of BRE software programs are available for data collection and analysis. Some communities buy BRE programs off the shelf; others use custom-made programs. Some BRE software programs can be customized to meet specific data-gathering requirements. In some states, communities choose and manage their software programs independently. However, this can be cost-prohibitive for smaller communities. A more advanced approach is for a sponsoring organization to purchase a license from a software vendor or developer and then make the system available to partner communities for a small fee. This aggregates information from various communities into one database that can be used at the regional or state level. Data can be used for benchmarking among communities that share software. The most effective software systems are Internet-based, requiring only a computer with an Internet connection. The proliferation of wireless communications and mobile devices such as smart phones and notebook computers makes it easier than ever to conduct BRE programs. EDOs should work with their regional and state counterparts to ensure software access and compatibility.

State Incentives:

After a disaster, the most vital incentives are the ones that help businesses renovate and upgrade facilities and equipment, retool for new markets, train employees with needed skills, and conduct other recovery activities. Most of the time, existing incentives can serve these functions, but new incentives can also be created to serve long-term recovery efforts.

Research is needed to learn more about the targeted company and the industry:

After identifying the target companies, research is needed to learn more about the company and the industry. The individual or team that conducts the interview must have background information on the business (and even the individual) that they are visiting. If a representative of the BRE program walks into a CEO's office unfamiliar with the goods or services that the company provides, it would harm the program's credibility and probably extinguish the CEO's interest in the program.

Accessibility Codes:

Almost all buildings, including most historic buildings that are open to the public, must comply with the Americans with Disabilities Act (ADA). Three federal laws, the Architectural Barriers Act of 1968, the Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990, in addition to the Americans with Disabilities Act Accessibility Guide1ines, outline federal accessibility requirements. Localities and states usually have accessibility codes that also apply ADA principles, and often are more stringent.

Lender Commitments & Contracts:

Although a construction loan is usually not approved until permanent financing is secure, developers usually negotiate agreements on both loans simultaneously. Many of their requirements will be the same. Once agreement is reached, lenders issue loan commitment letters that indicate that they have assessed the project and agreed to provide financing, stating an official intent to offer a loan at stipulated interest rates and terms. However, these rates are contingent on the negotiation of final loan documents. Commitment letters allow the borrower to start organizing a development ream and negotiating contracts and leases. Final lender agreements conclude with promissory notes, deeds of trust and other miscellaneous documents. Promissory notes are personal guarantees that the loan will be repaid with or without recourse. Lenders often provide conditional commitments, meaning that they will provide the loan if certain conditions are met. They will likely require that a certain percentage of the building be pre-leased prior to construction. Lenders often want a completion guarantee from the developer and contractors, which commits the parties to completing construction. If the building will be sold to a business upon construction completion, then the purchase agreement acts as the permanent financing for the construction loan. The business will arrange its own permanenr financing if it doesn't use corporate equity. The four most commonly used types of loan commitments are the following:

Deliver Business Recovery Workshops:

An EDO can hold workshops to address both common and unique recovery issues to local businesses. Workshop speakers should include representatives from local, state and federal agencies and organizations such as the SBA, IRS, USDA (Rural Business Program), SBDC, SCORE, the local permitting office, and other local professional service advisers such as tax preparers and lawyers

Easements, Rights-of-Way & Utility Agreements:

An easement is the legal right to use the land of another for a specific purpose. other than the right to possess that land. A right-of-way is one such right that can be granted/acquired through an easement, which essentially implies that the owner through the easement gives another the right to pass over the land in question or put and maintain a transport route such as needed for utilities and railroads. Easements may involve payment by the utility for use of the property in question. Existing easements can limit flexibility in the redesign of the building and site plan. Sometimes developers pay the utility company to have the utility relocated to accommodate redevelopment. Even without the need for utility relocation, developers have to negotiate agreements with utility companies for connection to utilities.

Media and Public Relations:

An economic developer can involve local newspapers, radio and television stations in reporting on activities of the BRE program. The first step is to educate local media about the importance of BRE efforts. Many reporters and editors probably are not aware, for example, that the majority of new jobs in a community are created by existing firms. One idea is to arrange a media event at one or more local companies assisted by the BRE program. This type of media coverage educates the public about the value of economic development efforts to assist existing small and mid-sized companies. In setting up such an event, select businesses where the owner or manager can effectively describe the positive impact that the BRE program has had on the business. If possible, select businesses where owners or managers have some experience working with the media and will be able to handle potentially difficult questions calmly.

Underwriting overview:

An economic development professional should be knowledgeable of multiple public programs and local private lender practices to best match the business with sources of funds.

Days Payable

-measures avg length of time between purchase of goods & payment for them DP = AP / COGS x 360

Impact fees typically cover:

., Roads; ., Parks; ., Storm drainage; ., Schools; ., Public Safety; ., Water & sewer; High utility connection fees mayor may not be impact fees.

State Venture Capital Programs:

Approximately three-fourths of the nation's private venture capital is invested in the Northeast and Pacific regions of the United States, with California annually garnering 40-50 percent of the national total. Many states have attempted to address this disparity by creating their own venture capital pools with public money. Participation in these programs is typically limited to small, in-state businesses operating in high-technology industries that exhibit strong potential for future growth.

Contracting with the Architect:

Architects are consulted early in the development process to draw preliminary plans on a fee-for-service basis. However, before final plans can be completed, it is necessary to draw up a formal contract with an architect. This contract is often negotiated directly with the developer/building owner.

Architects:

Architects are so vital to the process that most lenders will not lend unless there is a designated architect. Contracts with architects often include responsibility for the structural components of the project. Once design is complete, the architect is sometimes retained to oversee the work of the general contractor (construction manager). If not, the architect is typically involved representing the developer in dealing with the general contractor.

Financing Growth Needs:

As a firm grows, it needs additional working capital and fixed assets to accommodate the higher volume of demand. Permanent additions to working capital are needed to increase inventory levels and to cover increases in accounts receivables. Additional investment in new or expanded facilities and equipment may be necessary to increase capacity, or to replace obsolete or worn out fixed assets. To meet this increase in demand, growth firms' need for long-term financing increases.

Who are the loan Packagers and what service they provide?

As a loan packager, the economic development practitioner helps entities to obtain financing. The economic development organization acts as a conduit: facilitating and coordinating the loan process. Main responsibilities are identifying and screening loan applicants for their eligibility, and promoting private sector participation in the lending process. Most government loan programs target specific industries or market segments, have income maximum and equity requirements, and require private sector capital and/or involvement.

Weaknesses of tax credit:

As credits continue, property owners begin to capitalize the value of credit into the cost of the property.

EDOs should conduct seminars and one-on-one counseling on Pre-Disaster Planning using expert planners:

As part of its retention program, the economic development agency should discuss disaster and business continuity plans with local businesses. Seminars led by local experts can inform businesses (particularly small businesses) how to develop a plan and what should be included. One-on-one counseling, through the use of expert planners paid for with technical assistance funding, also can be made available to businesses that cannot afford their own consultant.

Establish Remote Server to Back up BRE Database:

As part of the organization's business continuity plan, an EDO should plan for a backup office location to use in the case of an emergency as well as remote data backup for its computer network. If a BRE database is only stored at the office, the EDO may lose the ability to access emergency contact information or they may even lose the data permanently depending on damage to their facility. More and more businesses and public agencies are backing up data in remote locations, and EDOs should do so as well.

Summary to Community Involvement and Strategy:

As state earlier, EDOs should plan for community involvement for each development project or plan. Community involvement is integral to the success or failure of a project. Because of community opposition, areas or parcels slated for development often remain undeveloped or are developed only after costly delays. Although the idea of development may be welcomed, the specifics might be challenged. Before the community involvement process is implemented, a strategy must be adopted. Both are predicated on the nature, size, culture and the task needed for a development or plan. In a community with citizens actively involved in developments and strong astute organizational leadership, an organized public dialogue may be deemed necessary. The greater the change, the more opportunity the community will have to review and comment on development plans and the more important it will be to implement a well-organized public participation process. Conversely, communities were citizens are less engage with identifiable effective leadership, a small group meeting should be appropriate.

Political Feasibility (Phase II) IMPORTANCE:

As stated above, a community involvement process is important for a number of reasons. First, public input can generate development ideas, concepts, and issues not identified by EDOs or developers alone. This inclusive process will help to galvanize support for or lessen opposition to the project. Once community members become engaged in the process and its outcome, they are more likely to accept or support it. Conversely, if community members are not involved in the process, they may become suspicious and confrontational and work to stop the project. Third, if public funding is used, community members might insist that information be provided and that they have a voice in the decision-making process. The community involvement process increases public sector accountability and responsiveness. Finally, involving the community in the development process helps to build capacity for ongoing participation. Once this is done, a process and a constituency are in place to facilitate the redevelopment of other sites.

Methods for Structuring a Deal:

As stated earlier, the transaction structure can dictates the level of risk in a publicly supported development project, more than the tool used in the financing. There are four general classes of transaction structures for a publicly supported development, front-end assistance without an off-setting guarantee, front-end assistance with a guarantee, performance-oriented assistance with initial explicit denomination, and performance-oriented assistance without formal denomination. The most common type of assistance for a front-end assistance without an off-setting guarantee is a land write down. Other forms can be infrastructure funds, direct initial operating subsidies, planning assistance, land clearance, and remediation. Funding for such activities typically comes from federal and state grants and tax increments. Due to tighter money, fewer communities are able to provide this type of front-end assistance. Conversely, there is a commitment to repay all or part of the financial assistance provided if a front-end assistance with a guarantee is in place. The commitment to repay is not the same thing as a subsidy recovery. The commitment to repay may involve higher taxes or the providing of certain amenities. An example of this type of transaction is low interest loans, which represent a front end subsidy with some potential recovery.

Growth Management Restrictions:

As states and local jurisdictions have struggled to fund and build capital improvements to accommodate rapid growth, they have enacted laws that slow growth. While these laws generally target greenfield development, they can and do impact redevelopment. Sometimes there are restrictions on development until adequate public facilities are funded or constructed. Many jurisdictions levy impact fees and exactions (see below) to pay for public facilities and infrastructure. There are environmental restrictions, such as federal restrictions on air quality or restrictions on construction near rivers and lakes to limit non-point sources of water pollution caused by runoff. Growth management requirements may include an incentive, such as transfer development rights, as well. Transfer development rights limit density in one area or parcel of land but allow owners there to sell density rights to someone in another designated area or land parcel where greater density can be accommodated or is desired.

Monitoring and Evaluation

As with any other economic development program, the impact of a BRE program must be monitored and evaluated on a regular basis. Evaluating results should not be seen as an exercise simply to appease funders. Rather, it is valuable in helping the BRE team understand what is and what is not working, and why. Consideration must be given to the length of time that a program must be operating before evaluation data can be collected. This may be a six month period or a two-year period. Specific benchmarks set the goals of the program and serve as milestones against which it can be monitored.

Assisting existing businesses is a multi-faceted endeavor:

Assisting existing businesses is a multi-faceted endeavor and typically involves partnerships of public, business and community leadership. A BRE program continuously assesses the existing industrial base and the physical, financial, technological, and human resource needs of individual companies. This is usually accomplished using periodic surveys and interviews with business owners and branch managers, at the company facilities, conducted by economic development agencies and members of the business community. Based on these relationships and the data gathered, economic development organizations can offer customized strategies to assist specific businesses or improve the business climate as a whole.

BRE program partners are very similar to the partners that are used in an attraction program, and can include:

BRE program partners are very similar to the partners that are used in an attraction program, and can include: • Economic development organizations; • Workforce organizations; • Local government; • County government; • Chamber of commerce; • Other local business associations; • Utility companies; • Educational institutions; • Individual business leaders

Step 5: Prepare Preliminary Feasibility Analysis:

Based on previous findings, prepare a preliminary estimate for the cost of remediation. This "back of the envelope" financial analysis will help determine whether or not the project is feasible. Various contamination-related factors should be considered in determining the project's feasibility: 1) Environmental consultants and tests 2) Environmental related legal costs 3) Remediation costs and greater time for site preparation 4) Higher required loan-to-value or debt coverage ratios 5) Environmental monitoring costs If the project is moving forward, the next step is to consider how site assessment and remediation expenses will be funded. The site assessment is usually paid for by the developer. Remediation can sometimes be funded partially by the public sector. Public funds for remediation are commonly found through state, local and federal grants and loans. The decisions regarding funding for remediation should be considered along with decisions regarding long-term financing. Based on the final use of the property, are there any possible conditions in the long-term financing that could terminate the project?

Developer Negotiations

Because of the complexity of large public-private deals and the need for greater flexibility during development, the selection of the developer is more likely to establish a broad framework. Typically, the selected developer is designated the preferred developer, subject to satisfactory negotiations. If the negotiations with the preferred developer are not successful, the developer of the second-best proposal is offered a chance to close a deal. Negotiations often take a two stage process. In the first stage, the development agency and developer draft a memorandum of understanding (MOU). The purpose of the MOU is to clarify early on both parties' intentions. Since it is non-binding, it can be negotiated relatively quickly. The MOU would clearly define the project's performance and schedule, obligations, and the responsibilities of various parties, including who will secure financing. It would set performance guarantees, option payments, and specify termination provisions. The MOU would be mutually executed as a non-binding document, establishing firm principles for binding negotiations.

Land Acquisition Contracts:

Because of the uncertainty involved in development, the process to acquire land typically extends for three to nine months with multiple agreements. All property acquisitions require a letter of intent or option, which is the right to buy the property at an agreed upon price within a specified timeline. The letter of intent or option contract precedes the land contract. For the letter of intent, the buyer provides a deposit to take the property off the market and initiate due diligence or the process of evaluating the investment. The letter of intent usually specifies the sale price, length and nature of the study period, schedule for negotiating the land contract and contingencies such as zoning changes and financing. The letter of intent may be partially binding. A deposit is placed in escrow but may be fully refundable for a set amount of time after which part or all of it becomes nonrefundable. During the option period, negotiations begin on the land contract. The land contract, which covers the above items in greater detail, is legally binding.

Create a Bank Consortium:

Before a disaster, EDOs or chambers can bring local banks to the table to discuss how they can make business loans available to disaster-impacted businesses for recovery purposes. Although federal grants and loans are important resources, these resources take time to be distributed and come with a unique set of federal requirements. Local lending programs can more flexibly meet the needs of businesses that need loans for working capital or gap financing after a disaster damages or destroys their inventory, equipment, and/or facility.

Step 2:

Before a public agency may claim title to the land, "just compensation" for the property owners, based on an appraisal, must be determined. The agency will have to secure one or more independent appraisals of the fair market value of the property.

STRATEGY AND FACTORS TO CONSIDER:

Before strategy is developed, an EDO or Developer should consider several relevant goals of the community involvement process and the evaluation of the community.

Key Factors of Underwriting

Beyond formal standards and due diligence procedures, proactive management of the underwriting process is crucial to achieving positive outcomes. Practitioners should provide leadership in financial packaging, visualizing a plan that can meet all stakeholder objectives, and negotiating and coordinating the details of the financial plan.

Approval

Bond issues must be approved by the legislative body of the public entity which is issuing them. Some bonds, usually public use GO bonds, require a voter referendum.

Building, Fire & Special Codes:

Both building and fire codes are related primarily to issues of safety. Developers who undertake property reuse must be aware of these safety requirements because most older and historic buildings are not compliant." Fire safety codes specify the width of hallways, stairwells and doorways to facilitate evacuation in the case of emergency. Many older buildings simply do not have enough or large enough exits to meet code compliance.

Building & Occupancy Permits:

Building permits must be issued by the city before construction begins. Occupancy permits are issued after construction is completed and the site has been inspected. Most often, a city is responsible for regulating construction, use, and occupancy of buildings through three primary functions: Plan review, permit issuance, and on-site inspections.

Business Retention and Expansion and Economic Development:

Business retention and expansion (BRE) is a core program of any economic development plan. These programs are designed to 1) retain or keep existing businesses in a community; and 2) provide assistance for businesses to expand. Retention and expansion programs can be implemented at the local, regional and state/provincial levels in a variety of ways. Some programs might focus on central business districts in downtown areas or on the commercial and industrial areas where many small and medium-sized firms comprise a large portion of the employment base. Others may focus on allocating resources to support a specific industry or channeling resources to support economic diversification strategies.

Formula for Cash Conversion Cycle

CCC = days accounts receivable + days inventory - days accounts payable

CREATING AND MANAGING A BUSINESS RETENTION AND EXPANSION PROGRAM:

CREATING AND MANAGING A BUSINESS RETENTION AND EXPANSION PROGRAM 1. Conduct a SWOT Analysis a. Identify Strengths and Weaknesses b. Identify opportunities and Threats c. Develop an action Plan d. Set priorities and establish objectives and goals e. Taking Action f. Monitoring and Evaluation 2. Determined were to house the program a. Government-led b. Private Organizations c. Public-Private Partnership Organizations 3. Identify and make provision for the Program's infrastructure. a. Human Capital b. Budget c. Technology 4. Marketing the BRE Program a. Media and Public Relations b. Partnerships c. Trade Shows 5. Engage in Pre-Disaster BRE Planning

Corporation

Can be owned by one or more shareholders and is a separate legal entity incorporated by the state that must be organized by State requirements

New Enterprises that face Challenges:

Challenges for New Enterprises 1. New Firms in Distressed Communities- Weak markets, often called distressed communities, are those that do not support growth due to poor sales volume and unusually high costs of doing business. In these markets, incomes are low, crime is high, and services such as insurance and crime prevention are costly and expected to cut heavily into the thin profit margins. 2. New Minority Finns- Minority-owned firms often have difficulty in securing financing due to redlining by traditional financial institutions, an unawareness of available lending programs, and insufficient assets with which to secure their borrowing. Additionally, because minorities often live in distressed communities, they also face the same challenges as new firms in weak markets. 3. New High Technology Enterprises- Capital for new and unproven technology is difficult to attain because of the high risks involved. To compound me problem, high technology startups typically need significant capital funding in the early stages of product development. This pre-production capital, called seed capital, is needed to finance research and development, feasibility analysis, and prototype development.

Cluster and Industry Focused BRE:

Cluster-based technical assistance builds upon existing concentrations of competing, complementary, and interdependent firms. If a region is home to several companies in the same industry or cluster, a cluster approach is an effective way to target the growth of specific businesses and maximize available resources. In BRE, a cluster-based approach is used to improve the competitive advantage of a region by enhancing a cluster and address the concerns of businesses in a single cluster that have similar needs.

Site Plan Review:

Commercial and industrial zones usually require site plan review. This entails a more qualitative review of site features such as interior circulation and street access, parking, building location, drainage, and landscaping. Site plan review may be conducted by the planning department, planning commission, and, depending on the building, the parks department, public works, transportation, police, fire, public health departments, transit agencies, or special districts. For site plan review, neighboring property owners are sometimes notified, depending upon local ordinances or state laws.

The Steps in Financing Property:

Commercial real estate finance boils down to three "main events": money, property, and transactions in which money gets turned into property or property gets turned into money. Financing, including the acquisition, development, redevelopment, and construction of a site, is typically accomplished through securing temporary and permanent financing through commercial lending institutions. The typical, a developer obtains or contracts to purchase or lease a parcel of land and then prepares a development plan. The developer is expected to provide equity for a certain percentage of the project costs. Usually, a developer secures a letter of intent from an anchor tenant promising to locate in the building when the construction is completed. The letter of intent is then used to secure a long-term, fixed-interest rate mortgage from a long-term lender or institutional investor, such as an insurance company. With a long-term lending commitment in place, the developer will go to a commercial bank to obtain a short-term loan for construction or operating capital. Construction loans are drawn down as construction proceeds. Once construction is complete, long-term capital is used to pay off the construction loan. A developer may prearrange a budget for the project once it is completed and operating in a stable manner.

Community Development Block Grants (CDBGs) in the scheme of gap financing:

Community Development Block Grants (CDBGs) are another example of public support. These funds are available to communities of over 50,000 and can be used for land acquisition, land preparation, infrastructure development, and historic renovations. This scheme ties in with the HUD Section 108 loan scheme. A HUD Section 108 loan can be borrowed to a value five times greater than the annual value of a community's CDBG. The loan can have a payback period up to 20 years; the loans are backed by HUD. The HUD Brownfield Economic Development Initiative is a grant component of this scheme, which is designed for use in the same ways as the CDBG but must be dedicated to the development of brown fields.

Identifying the target companies:

Companies may be targeted by size, industry, cluster, geography, ownership, growth- rate and/or risk level. Advanced software programs such as GIS and ESRI's Business Analyst Online can help practitioners locate businesses in the community. Also, the county clerk's office or property tax records may provide useful information regarding what businesses are located in the community and where.

EDOs should develop or obtain an online registration system to gather information prior to a disaster occurring:

Another useful tool is an online registration system for businesses in disaster prone areas, such as the Gulf Coast for hurricanes and California for earthquakes. In such a system, businesses register online prior to a disaster and provide basic company information and alternative contact information. Online registration systems can be coordinated with BRE software programs for added effectiveness. If the area is hit by a disaster, this information allows economic developers to contact local businesses, identify the impacts of the disaster and the most immediate needs of businesses. Federal agencies that provide funds after a disaster deploy resources based on business data. In many cases, devastated communities are unable to provide the federal government with reliable data on their businesses and their primary needs. Having business information in a database prior to a disaster - and then being able to contact businesses post-disaster - will increase the chances that a community receives the federal support it seeks to restore the local economy. A website linked to the database can also serve as an effective way to communicate with dislocated business owners about local disaster recovery efforts.

If the proposed project does not conform:

If the proposed project does not conform to current zoning, then a zoning permit or change is required. A permit, such as a special use permit, variance, or modification to a nonconforming use (see text box), usually takes less time than a zoning change. Depending on the nature of the request, the permit will be reviewed and approved by city staff, the planning commission, city councilor any combination of the three. These steps mayor may not require public notification and review depending on the request There may also be local review committees such as historic or design review boards that are inserted into this process. Alternatively, review board approval may be required of all projects regardless of whether a zoning permit is required.

Training Business Visitors:

If volunteers will be administering the survey, they must participate in training. The training session should last approximately two hours and be held at a time that is convenient for a majority of volunteers to attend. It may help to offer two training sessions at different times of the day and week (e.g., one week night and one weekend day session) in order to ensure that all volunteers receive proper training. Once a volunteer has gone through the training session, it may be wise for the volunteer to shadow a trained BRE survey administrator for one or more interviews to see how they should be conducted. The training session(s) should be held the week before the BRE kickoff event so that the training will be fresh in volunteers' minds when the surveying program begins

Workforce Investment Act:

In 1998, the federal government passed the Workforce Investment Act (WIA) to respond to workforce training challenges. The act provides a framework for a national workforce preparation and employment system designed to meet the needs of the nation's businesses, job seekers and those who want to further their careers.

Dealing with a private activity bond:

In other instances, when dealing with a private activity bond, which will not be secured by the full faith and credit of the public, the bond interest rate will be determined by the rating of the bank or other security provider.

Potential Problems for RLF:

In practice, RLFs need to occasionally replenish their capital base. Inflation can eat away at the value of the loan pool especially if the pool does not grow at a rate above inflation. In addition, a series of defaults and/ or bad loans could deplete the capital stock of a RLF. Some RLFs are fortunate to have regular scheduled recapitalization from the capital source. HUD annually recapitalizes some of its RLFs, while others may be recapitalized by Urban Development Action Grants (UDAG), or regular payment from a local government.

Government-led:

In some cases, local, county and state governments are the most logical place in which to house the business retention and expansion program. An existing economic development department or agency may be able to undertake a BRE initiative simply by redeploying existing staff that already have some familiarity with the local business community. This approach may be particularly appropriate for communities experiencing long-term economic decline, in which the public sector may be the only entity with sufficient financial resources to fund the BRE program.

BRE manager and the economic developer's role in creating site opportunities:

In the case of an individual business, the BRE manager, with assistance from BRE partners, can be instrumental in ensuring that a community has adequate sites for expansion and remains in the community. The economic developer should be able to assist with identifying all potential sites for purchase or lease, negotiating prices with property owners, ensuring the right utilities are available, securing plant maps, and conducting soil analyses.

In the case where the economic development practitioner does not exist, or is unable to visit all the businesses:

In the case where the economic development practitioner does not exist, or is unable to visit all the businesses, there are some options for engaging volunteers. Some communities enlist elected officials to conduct on-site visits at the larger, more prominent companies in the community. Staff or volunteers can conduct phone or mail interviews with smaller firms in the community.

Engineers:

In the initial stages of development, structural engineers can serve as consultants to evaluate a building's structural soundness. They check to see that the foundation is solid and that its load-bearing beams and walls are sound. This analysis can help a developer decide whether a development is viable. Civil, environmental, and geotechnical engineers also evaluate the site opportunities and constraints for soil characteristics, contamination, utility easements, drainage and topography. Once conceptual site/building plans have been drafted, engineers work with architects to ensure that the plans are structurally sound.

Competitive Supply Analysis:

Competitive Supply Analysis should answer the question what other projects will compete with this project for market share, and how competitive will the subject project be visa-a-vis those projects in terms of quality of execution, price, timing, positioning, etc. Understanding existing real estate project performance is perhaps the most critical element in feasibility testing. Knowing whether and why projects have succeeded or not can yield keys to success or suggest that there are unforeseeable market challenges. It can also inform strategy planning and suggest competitive positioning, market niches, and inform feasible timing/ phasing. Supply analysis should address relevant information regarding current and future supply conditions, performance of existing projects, relevant projects, price/rent trends, historical sales/absorption rates, the nature of buyers/ renters/ tenants, future development pipeline, current market segmentation, dominant consumer preferences, location, quality, product trade-offs in the marketplace and, identification of niche market opportunities. The supply analysis will also determine the Primary Market Area - the area from which 80% of the demand at the subject site is likely to emanate, and the Competitive Market Area - the area in which the subject site will most actively compete for market share. There is no way to determine these factors without conducting first-person supply-side analyses. Note that for each land use - retail, residential, hospitality, office, and industrial - the PMA and CMA determination will be different and calculated differently.

Building plan review:

Concentrates on processing permits and reviewing code compliance for structural, mechanical, electrical, plumbing, grading, and fire safety. The fire department typically reviews for fire safety.

Professional consultation:

Consult with key professionals who will be needed for the bond issue. First, the bond issue will need an attorney, referred to as bond counsel. The major role of the bond counsel is to draft the documents and opinion letter. However, skilled bond counselors can provide advice and guidance. Larger communities may also use internal staff or other financial consultants to provide assistance. A second crucial member of the team is the underwriter. Underwriters provide a link between the issuer and the potential buyers. They will judge the feasibility of the issue, its amount, and potential interest rates .

Consultants are identified:

Consultants are identified from personal referrals, professional association directories, trade magazines that feature directories and advertisements, literature mailed to agencies, and on websites, such as WWW.iedconline.org. Most valuable is the professional contacts that one makes with other professionals in various activities. Many times it helps to ask other colleagues who they used and their level of satisfaction with a certain consultant.

Pre-qualified Candidate List:

Consultants are sometimes selected from a list of pre-qualified candidates. Many agencies maintain a list of consultants that are pre-qualified to perform certain functions. The agency chooses several to submit a statement on how they would approach the problem, interviews them, and selects the best qualified candidate. The request for qualifications (RFQ) is similar to selecting from a pre-qualified list, except that there is an official announcement and often a more rigorous selection procedure. The announcement, say in trade publications, would help the agency add to its existing pool of candidates. It is useful to have a stable of pre-qualified consultants who can move quickly. Again, time is money. EDOs should seek to review qualifications annually.

Contracts with Contractors:

Contractors are often retained on a consulting basis during the predevelopment stage to review design plans and provide cost estimates to determine feasibility. Once the architect has completed final design and specifications, there is enough information to request contractor bids. Developers can enlist contractors through competitive bid or sole-source (negotiated contract).

Contractors:

Contractors are subdivided into two groups, prime contractors (or general contractors) and subcontractors. For specialized work, such as installing electrical systems or setting concrete foundations, general contractors usually hire subcontractors, but may provide their own crews. To prepare a construction bid, the general contractor gathers estimates from the various subcontractors, along with in-house estimates, and prepares one aggregate bid. In addition, architects and engineers review the bids for the owner/developer to help determine if the costs are reasonable or if they can be reduced through "value engineering", which is creative redesign intended to lower costs.

Public sector contract Approvals

Contracts and approvals with the public sector can range from simple to highly complex. For a single-family home, a single building permit may suffice. In large commercial projects, a number of permits and approvals may need to be signed before construction begins. These approvals vary by community, location of the property within the community, zoning overlays, and the extent of redevelopment relative to regulations. For example, a property that must be rezoned and subdivided will require more approvals than one that does not. Additional approvals take longer and increase uncertainty because there are more opportunities for the public sector and citizens to review and request development changes during the approval process.

Limited Partnership

Involves at least one general partner and one limited partner. The general partner controls business and accepts liability and the limited partner forfeits rights and liability

Developers & Businesses:

Development is often initiated by a developer or business needing space. Developers can respond to an agency-issued RFP, competing for the opportunity to redevelop a property. A business may retain a developer or hire an architect and contractor directly. For larger, complex projects, the business may want a developer to put the team together and oversee the process. While the discussion below refers to developers, it is equally applicable to businesses that redevelop property for their own use. Developers are the ringleaders of a development project. They are charged with managing the entire project, from initial feasibility to design, leasing space, finding financing, and hiring contractors. As such, they are responsible for signing contracts for services with each member of the development team. Although some of these team members may come from the developer's in-house staff, they are often contracted out from other firms. There are a number of ways in which a developer can enlist members of the team. The developer may put out a bid to a number of professionals in the area or approach relevant professionals directly to form part of the development team.

Role-Play Involving Volunteers:

Divide the volunteers into groups of two or three to practice interviewing each other, with one volunteer playing the role of the business owner. Alternatively, a staged role-play can be presented in which several volunteers are recruited to take part in a scripted interview that illustrates both good and bad interviewing techniques.

Environmental Engineers:

During predevelopment, environmental engineers can verify and assess environmental risk through a Phase I environmental analysis. This involves research of the building, site, and the previous uses, including a review of relevant government documents that might indicate the presence of contaminants in either the building or the soil. A Phase I report is typically required to protect the buyers as part of their due diligence and to meet financing requirements.

EDOs Role in facilitating developments:

EDOs play a major role in facilitating development by addressing regulatory issues that potential developers must meet. By streamlining these processes and offering directed incentives, the development of a site can be achieved more quickly and with fewer obstacles.

RLF Loan Process:

Each applicant should be assessed on the following information: the debt coverage, payment ability, the 5 Cs (Character, Capacity, Conditions, Capital and Collateral), and the underwriting and credit analysis criteria. The loan package itself must be complete and include all required and requested information necessary to make a prudent loan decision. Occasionally, staff members may be tempted to expedite the process and allow the application to move forward while the applicant is still assembling the documentation. There are eight basic steps required for any RLF applicant

BRE survey methods:

Each of these survey approaches to surveying has merits and drawbacks. It is extremely important to choose the model that best matches the resources available in the community. The approach will depend on available financial and human resources as well as the strategic objectives of the BRE program.

The relevant information the lender needs to know:

Economic Feasibility: • Nature of the product or service • Production capacity • Labor market • Size of the market • Competitors • Ability to distribute Financial Statistics: • Debt to equity ratio • Current ratio • Debt service coverage Management-The management must be capable of operating the venture for the life of the loan. Factors to examine include: • Past experience • Skill base • Understanding of critical issues of the business • How gaps in management experience are filled (e.g. contracting an accountant)

Grant Funding:

Economic developers should be aware of potential funding opportunities available from foundations. Even though the physical presence of foundations may not build the community's tax base, foundations have other resources to invest for the benefit of the community. For example, a good portion of the funding for Pittsburgh's commercialization intermediaries (e.g., business incubators and accelerators) has come from foundations. The R.K. Mellon Foundation and others invested $35 million into the life sciences sector and over $7 million in computer sciences to help build the industries' critical mass in the region.

Prepare Media Messages and Communication Channels:

Economic development organizations can devise a communications strategy ahead of time to anticipate problems. EDOs should update their staff contact information and identify a system for communicating with staff after a disaster as part of their business continuity planning effort.

When the market for a particular project seems weak:

Economic development organizations may conduct feasibility studies and make them available to the developer or perspective developers. If conducted by the public sector, feasibility studies can help determine the most efficient use of public funds and help shape a project's direction before the private sector gets involved. This also save developers up-front costs. However, developers often conduct their own studies to assist them in the financing process as well as to shape development programs and trajectories.

3. Confidentiality Issues:

It is important to guarantee a substantial degree of confidentiality to firms that participate in BRE surveys. Without it, few firms will be willing to supply information for fear of adverse publicity or a competitor learning of the firm's business strategy. At the same time, the program's promise of confidentiality should not be so strict as to prevent the identities of at-risk firms from being revealed to appropriate assistance providers. There are numerous methods of satisfying both objectives. One option is to offer a blanket guarantee of confidentiality, then include a separate section in the survey where firms have the opportunity to request specific assistance (with the understanding that the assistance request will be provided to the appropriate agencies). Another approach is to pledge that firms' specific responses will be held internal to the economic development organization. This approach allows economic development staff to match at-risk firms with resources available through the BRE program.

Introduction to gap financing:

It is not uncommon to have a gap that tends to fall between the equity contributed by the real estate development company or business and the amount of debt financing raised by the company. Financing gaps tend to occur in new developments if the current value of the project is worth less than the final value. What's even more pressing, there has been a trend in recent years towards leased development and speculative development projects requiring a larger portion of gap funding. When this occur, extra financing is needed to cover the cost of completing the project. At times, economic developers step in to explore less conventional methods to fill the gap.

A BRE program needs to be marketed to the business community and the community at large.

It will be easier for the BRE team to proactively reach out to local businesses if business owners are aware of the program's existence and purpose. If the program is not well known within the business community, businesses may be reluctant to participate, not trusting how their information might be used. It is also important for the community at large to know that elected officials and the economic development team are serious about helping local businesses stay and grow. The BRE program manager should promote the program to business owners and the community. Service providers on the BRE team also should actively promote the program to their clients, conveying a consistent message about the program and its benefits to local companies.

(Small Business Financing) RLF Management Characteristics:

Economic development practitioners need to be engaged in RLF management, whether they are the principal manager or a supporting member. Either way, practitioners should be aware of the following RLF guiding principles when considering the economic development growth strategy. 1. Technical proficiency-RLF managers should be proficient with credit analysis and underwriting techniques for evaluating small business applications. 2. Diversification- The portfolio should be diverse, to avoid geographic or sector concentration. 3. Flexibility- Market changes and demands should not threaten the RLF. Regulations and policies that do not protect the assets of the fund, benefit small business concerns, or facilitate economic development should be avoided. 4. Monitoring- A specific loan monitoring process should be devised, including when to contact the borrower about late payments, how to collect late payments, and how to handle default loans. 5. Sharing Risk- RLFs should be designed to attract other sources of capital in order to share the risk. 6. Speed up the revolving aspect of the fund- Loans should be designed to optimize interest rates and terms, and should avoid staying in projects too long. A large portfolio with staggered rates of repayment will generate reliable program income and lendable funds. 7. Holistic post-loan servicing- Collections, portfolio monitoring, timely reports, consistent provision management, and technical assistance will lower the portfolio risk.

Working with Lenders:

Economic development professionals often play one of the three roles: • Direct lender • Subordinate or participating primary lender, or provider of loan guarantees • Support to business seeking third party loan (Advocating, loan packaging or bird-dogging)

Land Contamination:

Land can be contaminated from a number of uses. The types of businesses that may leave behind hazardous substances include railroads, gas stations, dry cleaners, oil refineries, truck terminals, wood treatment facilities, liquid/chemical storage facilities, and steel and heavy manufacturing plants. Below are descriptions of common land contaminants.

Businesses: *

Economic development professionals use a wide array of finance tools both to expand capital availability for economic development and to fund specific projects or programs. The expansion of economic development finance programs requires specialized knowledge from economic development professionals to staff and manage those programs, understanding key areas of public policy and how municipal finance relates to economic development. In addition to knowledge in how to link finance programs to broader economic and community development goals, development finance professionals also need diverse management skills that include market analysis and program design, overseeing investment transactions, building partnerships to advance development outcomes, managing assets, and raising new capital.

What are Economically Targeted Investments (ETls)

Economically targeted investments direct funds to opportunities that earn competitive financial returns while producing economic development benefits. Pension funds for state and city governments are sometimes partially designated for ETIs. For example, pension funds may be invested in loan programs for small businesses or to modernize facilities. In recent years, pension fund ETIs have expanded from housing and real estate projects to small and minority-sized businesses, community development financial institutions, revolving loan funds, and even infrastructure projects. However, ETIs require economic development projects to generate market rates of return. Commonly, pension funds will underwrite small and minority-owned businesses by providing direct loans, purchasing the loans from private sector lenders, or investing directly in the businesses.

Step 1: It must be determined that the redevelopment serves a greater public purpose. A public purpose must be determined in cases involving the transfer of land for private development. There are three generally recognized public purposes that a public body may cite to acquire land for private development:

Elimination of blight-. The assessment of blight is the most common form of invoking eminent domain. However, the finding of blight is unnecessary for public projects such as roads, parks, or sewers. Condemnation for blight elimination is allowed in most states. Housing-The creation of housing, often for low- and middle-income residents, is often considered as a legitimate use of eminent domain. Acquisition for housing is allowed in most states. Economic Development- Job creation is generally recognized as a legitimate public purpose for land assembly, but condemnation for economic development is allowed in only a limited number of states.

Major economic factors to consider in an Economic and Demographic Analysis include:

Employment growth, location of employment hubs, major employers, major industries, Industries that are growing/ declining and economic development initiatives. Major demographic factors to consider include: household and population growth, income distribution, household age by income, household size and types, ownership and renter propensity, annual retail expenditures.

EDOs should implement Pre-Disaster BRE Planning:

Every area of the globe is vulnerable to some form of natural disaster, such as earthquakes, floods, hurricanes, tornadoes, and tsunamis, to name a few. Failure to plan for business continuity could mean the decline or loss of individual businesses or an entire industry in the wake of a disaster. Economic development organizations can help mitigate a disaster's impact on the business community by providing disaster planning resources. By encouraging businesses to develop post-disaster survival plans, economic developers build a stronger relationship with local firms and also facilitate their ability to return to the area and survive.

Exactions:

Exactions may take the form of mandatory dedications of land for roads, schools, or parks as a condition of plan approval, fees in lieu of mandatory dedication, water or sewer connection fees, and development impact fees. Impact fees are levied on building permits In help fund capital improvements that are not financed by subdivision exactions. An impact fee is a kind of exaction intended In compensate the municipality for off·site improvements made necessary by a development project like improvements In major roads, water, sewer and sometimes schools. Since impact fees are not levied for subdivision approval, they can be levied against redevelopment projects that do not require subdivision.

Introduction to Development Finance:

Financial capital is the means by which new businesses start up and existing businesses expand and stay competitive. It also plays a critical role in translating sound business ideas into products and services that create jobs and wealth in a community. As with most economic development endeavors, the provision of financing for an economic development project is a team effort that involves, in most cases, the active participation of entrepreneurs, the business community, and local, state, and federal governments. For example, many local governments set up business empowerment zones with the assistance of the federal government. As another example, developmental venture firms are often capitalized through investments from private sector lending institutions, state employee pension funds, other state funded institutions, and private individuals. Throughout its life cycle, it is not unusual for a business to receive technical assistance or capital investment from different financial institutions and development assistance entities.

Financing a new industrial park:

Financing a new industrial park will almost certainly require public funds, since many financial institutions are reluctant to finance speculative real estate activities. Public financing may come from a variety of different sources, including: • Industrial revenue bonds; • Enterprise zone incentives; • Tax increment financing; • Property tax abatements, and • Environmental clean-up assistance. Funding for environmental assessments and remediation is important, since frequently the best sites for urban industrial parks are large parcels such as old rail yards and manufacturing operations (e.g., steel mills or auto assembly plants). Such sites will almost always require an environmental assessment, and often require remediation before being converted to use as an industrial park. In addition, new infrastructure (streets, utility lines, etc.) may need to be installed.

Type of Commitment:

Firm Commitment- A definite offer to make a loan at stated terms and conditions. The borrower need only accept the offer. Conditional Commitment- An offer subject to certain limitations or provisions, such as the completion of construction. Take-out Commitment- An agreement by one lender to buy or "take out" a loan, typically a construction loan, from the original lender. Standby Commitment- Under this commitment, the initial lender states their option to sell the loan to a potential buyer.

Step 3: Identify other Interested Parties Successful redevelopment of contaminated sites depends on the collaboration among buyers, sellers, technical experts, professionals, government agencies, and local citizens.

First, identify what individuals and organizations should be involved in the Brownfield redevelopment project: 1) Direct parties- Buyers, sellers, previous owners, and other potentially responsible parties, lenders, environmental consultants, contractors, insurance providers, and developers 2) Indirect parties- Local citizens individuals and organizations), local government, zoning authorities, state/ federal government 3) Environmental regulators-Besides the state, identify other regulatory agencies. If it is not on any federal list, start with the state, and then determine if local and federal regulations apply. Environmental engineers should help determine who regulates your site.

Each institution needs to customize marketing activities within its own framework. However, several practices are central to effective marketing:

First, organizations need a marketing strategy and annual plan that is endorsed by the institutions chief executive and senior management. Second, maintaining a strong referral network should be central to the strategy. Personal outreach is critical. Third, practitioners should be active in their communities, fostering awareness among key stakeholders. Lastly, programs should track where new clients learn of their services, which sources generate new customers, and what methods have been successful in order to evaluate and improve marketing strategies.

There are two approaches to address business climate issues:

First, the economic developer can educate local businesses on different government processes and laws and work with the businesses to meet these requirements. Such assistance could include a checklist of the permits and licenses required for a typical business expansion, suggestions for avoiding problems commonly encountered in the permitting and licensing process, or a document that answers frequently asked questions. Second, the economic developer, armed with data from business surveys and interviews, can educate policy makers on what is helping and hurting the local business climate and advocate for policy changes.

Conflict Resolution:

Land use decisions can be emotionally charged for a community. Regardless of the level of a community's involvement, the redevelopment process has the potential to get stalled by disagreements and ongoing debates. If this happens, EDOs or some other interested party may wish to facilitate a process that assists stakeholders reach consensus. Often referred to as conflict resolution or alternative dispute resolution, these structured processes can provide viable alternatives to long, expensive court battles. The three main types of conflict resolution techniques are facilitation, mediation, and arbitration.

Subdivision Approval:

Laws related to the divisional of land (when property is subdivided into two or more parcels) for sale are in the subdivision ordinance. In many parts of the country, the subdivision process is referred to as "platting" and the subdivision plan is called a "plat" or "plat map". Laws may allow a developer to avoid the more rigorous process required for subdivision approval. Sometimes lots are split and the deeds are recorded. However, because there is no formal review process, if one or more of the resulting lots are illegal (illegal size or shape for the zoning code) or lacks access, building permits may be denied. For subdivision, two or more parcels are created from one. The regulations for subdivision are similar to the development standards of the zoning code; they specify dimensions such as lot shape and infrastructure requirements. As with zoning, variances can be requested to the subdivision code. However, the procedures and criteria for approval are usually different from those for zoning permits. To eliminate the confusion between zoning and subdivision, many areas have combined the two into a development code that has consistent criteria, review, and approval procedures. Subdivision approval is more often a hurdle for suburban or green fields development, but it can present challenges to redevelopment when single-use urban buildings are divided and sold for mixed-use development. Subdivision can emerge as an issue in the reuse of military bases or the redevelopment of other large tracts.

Overview of Survey Form:

Lead the volunteers through the survey form, explaining the proper way to complete the form and highlighting areas where the volunteers should be especially careful in recording responses. If possible, illustrate the proper way of filling out the form by using a projector. The volunteers should be encouraged to ask questions and seek clarification where necessary. If volunteers complete the survey form incorrectly during the interview process, the interview may need to be repeated.

(gap financing) New Markets Tax Credits in the scheme of gap financing:

For example, New Markets Tax Credits represent a major opportunity for development progress because there is a 39% tax credit over seven years against equity investments made in designated Community Development Entities (CDEs). By effectively reducing the cash outlay of investors over the life of the tax credits, they are more willing to either invest more or to invest in a project that would otherwise be considered too financially risky. All of the qualified equity investments must in tum be used by the CDE to provide loans or investments to businesses, commercial real estate projects, and other entities in low-income communities. For more information, see Chapter 12 on federal redevelopment tools.

The solicitation is the best opportunity to maximize the agency's influence in its relationship with the developer.

For example, the agency should require that all respondents complete a standard form so that proposals can be easily compared with others. The agency may require that the respondents commit to or comment on specific sensitive issues that will have to be resolved in negotiations. For example, if the subsidy depends on the public maintaining land ownership, state it in the RFP and request that developers comment. Prospective developers' willingness to adhere to the submission requirements and format will depend on the attractiveness of the development opportunity. For a very appealing opportunity, the agency should expect strict adherence. For less appealing opportunities, the agency may be lucky to get multiple responses. It should be noted that a development team may spend upwards of $100,000 to prepare a development proposal for a larger-scale urban project. Therefore, the public agency must be very sensitive to the cost and time commitment required to respond to an RFP.

Public agencies also can acquire properties through tax, utility, and demolition liens.

For tax liens, agencies typically negotiate a cooperative agreement with the taxing jurisdiction that forecloses on the properties. The agreement details the process by which the agency can take properties with tax liens. Without such an agreement, the foreclosure can drag on for years, making it uneconomical for redevelopment agencies to participate. Successful agreements and processes have led to redevelopment and the relatively quick return of the properties to the tax rolls.

Sole-source:

For the sole-source scenario, a consultant is selected without a formal competitive process. Sole sourcing mayor may not be legal, depending on local and state statutes. Some statutes specify a dollar amount over which the consulting assignment must be competitively bid. If federal funds are used, there must be a documented selection process. The advantage of sole sourcing is that the consultant can be retained quickly. For legal and political reasons, any agency retaining sole-source consultants should carefully document their reasons for doing so.

Process- (Format) Formal citizen committees and advisory groups:

Formal citizen committees and advisory groups are authorized and organized by local governments. These committees should represent a diversity of constituencies including the private sector and citizens. The primary responsibilities of these groups are to advise elected and appointed local officials on development issues and to provide practical recommendations. They do this by identifying the interests of stakeholders and residents; making the different points of view known to local decision-makers; and ensuring local concerns are considered in the planning and implementation processes.

Red-Flag Any At-Risk Finns for Rapid Response:

Frequently, BRE surveys will reveal at least one local firm that is in imminent danger of either relocating or closing. Any such firm should be brought to the immediate attention of the highest-ranking economic development official in the community for rapid response.

There are several steps to take to develop a capital network:

Get to Know Your Venture Capital Providers- Personally meet with both public and private sources of venture capital in your region. Learn what types of investment opportunities they are looking for across several dimensions, including industry(s), preferred size of investment, and degree of control desired (is the venture capitalist a fairly passive investor, or will be or she want to have substantive input in the new firm or product line?). It also may be necessary to network with venture capitalists nationally, especially if certain VC companies specialize in your specific economic clusters or if there is not adequate venture capital available in your state. Develop a Mechanism for Identifying Possible Business Start-Ups and New Products- Within the context of a business retention and expansion strategy, the best way of doing this is through a business network. In this way, entrepreneurs can be linked both with public and private venture capitalists and also with larger businesses in the network that may be interested in taking an equity stake in a new product that would complement their existing product line. Remember That It Is the Entrepreneur Who Must Close the Deal in the End No amount of technical assistance or persuasion is going to convince a seasoned venture capitalist to invest in a product for which he or she doesn't see market potential. Keep in mind that it is the entrepreneur who u1rimately must defend the business plan before the venture capitalist.

What is the Contractor Negotiations & Public Approvals?

Getting all of the necessary pieces in place requires elaborate and often prolonged negotiations. Good intentions do not build real estate. Until there are legally binding commitments which specify who does what when, who owns what, and who pays whom, the project cannot go forward. Real estate development is always a lawyer intensive game.

Bond Insurance issue in regards to TIF's:

Given the risks associated with tax increment-supported debt, bond ratings are often low. Bond insurance can provide security to issue bonds with an AAA rating. A TIF district is eligible for insurance only if it is currently in existence and has some history of revenue.

Historic Preservation Consultants:

Historic preservation officials and consultants can help to secure historic designation status allowing the building to qualify for historic rehabilitation tax credits, and they can assess building characteristics that influence project feasibility. These individuals also have knowledge of local building codes that pertain to older buildings. This can be critical in finding local regulations that are flexible and can be modified. They can also be hired to help secure historic designations and decide which architectural features should be retained in the redevelopment process.

Methods to assist in opening new markets:

I. Procurement Opportunities • Federal Procurement Opportunities II. Networking III. Technology Transfer • Technology Deployment • Federal Programs • NIST's Manufacturing Extension Partnership (MEP} • Utilizing MEP in BRE Programs • State Programs IV. Exporting V. Defense Diversification Resources

The IRS distinguishes between the following two types of debt:

I. public-use bonds: 1.) General Obligation (GO) Bonds 2.) Public Use Revenue Bonds II. private activity bonds (PAB) 1. Qualified redevelopment bonds 2. Qualified exempt small issues 3. Enterprise zone bonds 4. Exempt facility bonds 5. Qualified nonprofit bonds 6. Qualified mortgage bonds 7. Qualified student loans 8. Industrial Development Bonds

The interest rate of a bond is based on the rating of the issuer. (use general obligation bond)

If the bond is going to be a public-use general obligation bond, secured by the full faith and credit of the public, then the issue's rating is based on the government's financial strength. A municipality is rated according to research by one of a few rating agencies in the country.

Phase II: Market, Financial, and Political Feasibility:

If the initial project evaluation is favorable and site control is complete, the developer begins the more costly feasibility analysis process.

Trade Shows

Local trade shows are an excellent way of highlighting the goods, products and services available in the community and provide good networking opportunities for local businesses. They can also link service providers directly to businesses requiring assistance, bringing together the various BRE program partners such as the local utility, educational institutions, financial institutions, sources of technical assistance, and if possible, government regulatory agencies (e.g., planning and zoning departments, environmental agencies). At one event, local businesses can learn about the array of services available to help them succeed and immediately meet with service representatives. It is also a way for business owners to learn more about other businesses in the community and form working partnerships.

Mail Surveys:

Mail surveys are most appropriate when the prime objective is to gauge the overall health of local businesses and gain a general sense of their level of satisfaction with the community as a place to do business. Mail surveys can also be used to follow up on in-person survey efforts and gauge the business community's satisfaction with the BRE program (e.g., were issues raised during the initial interview adequately addressed by the economic development organization or other responsible entity?). In very small communities with one person economic development offices, a mail survey may be the only practical course of action. Given that the organization that houses the BRE program may not be well known in the community, sending a cover letter from the jurisdiction's chief elected officer (e.g., mayor, county executive or county board chair) with the survey conveys credibility and importance. Providing the option to return the survey via fax or e-mail should help speed responses and may increase the response rate. Putting the survey online may also facilitate response

3. Medium Term-Within four weeks after the conclusion of the survey effort:

Make Sure that Agencies Have Responded to All Requests for Services- All firms that requested business assistance services should be re-contacted to ensure that they have received a meaningful response from the relevant agency or department. This may be done by phone or by a short mail survey. Local government offices or officials should be contacted to ensure that they are aware of any problems. For example, the city manager should be provided with a list of issues identified through the survey so that if code enforcement is an issue, for example, the city manager can act appropriately. In cases where an agency is slow to respond or provide assistance, it is the responsibility of the BRE program manager to follow up with the appropriate party, identify the reason for the delay, and hold that party accountable to its obligations.

Public-Private Partnership Organizations:

Many business retention and expansion programs have been structured as public-private partnership organizations. When properly administered, these programs can enjoy the "best of both worlds" - i.e., acting as a strong voice for the interests of local businesses while also possessing access to the highest levels of local government. In addition, these organizations can frequency "piggyback" some administrative functions (e.g., employees' medical and retirement benefits) &om the local government at little or no cost without being subject to civil service requirements. Finally, the fact that the organization's funding is provided by both local government and the private sector maintains both parties' commitment to the BRE program.

Linking Entrepreneurs to Sources of Capital

Many businesses assisted through retention and expansion programs will have been in operation for several years, and will have established relationships with bankers and other financing sources. However, there will from rime to rime be entrepreneurial start-up businesses that have a promising new product or service; such firms may turn into significant generators of both jobs and income for your community or region over time. Devoting some degree of effort toward these entrepreneurial efforts may be particularly worthwhile if you have developed a business network as part of your retention and expansion program. The network can be an important resource to help small start-up firms to develop supplier relationships with larger, more experienced firms operating in the network.

Pension Fund Set-Asides:

Many states have earmarked a small portion of their public employee pension fund portfolios for venture investments. State funds, supplied from sources such as tax revenues, bond proceeds, lottery receipts, federal grants, or royalties, sometimes are invested as equity in a business or product with high growth potential by either a state agency or private agent or partner.

An example project using PAB:

$100 million warehousing and distribution center: 1-$35 million private loan from bank (first position) 2-$65 million IDB bond (second position) 3-Public bond is backed by a letter of credit from the bank in the amount of the bond. Letter of credit is backed by revenue produced, mortgage, and other securities.

Process- (Format) Formal citizen committees and advisory groups typically come in four types:

(1) Standing committees based on geography (often referred to as community planning organizations); (2) Standing committees based on function (e.g. a parks committee); (3) Temporary committees based on geography (e.g., an ad hoc committee on revitalizing a downtown area); and (4) Temporary committees based on function (e.g. a task force to oversee redevelopment of a particular site).

Structuring the Loan

Loan structures are the conditions of the loan including fees and interest rates charged, security, maturity, repayment terms, and other conditions. The conditions affect the risk of the loan, and the likelihood of repayment. Structures include: Structuring the Loan: 1. Fees 2. Interest Rates 3. Security 4. Maturity (Short-term<1yr., Medium-term>1yr. <or=5yrs, Long-term >5yrs.) 5. Repayment Conditions: a. Payable on demand. b. Lump sum (balloon) c. Uniform repayment d. Periodic unequal payments e. Extended amortization schedule with balloon payment f. Sinking fund. g. Other terms (Guarantees, Prepayment Penalties, Variable Interest Rates, Compensating Balances, Leverage Requirements, Extended Amortization Schedule, Sinking Fund, Convertibility, Warrants)

Unsecured Loans

Loans that are not backed by collateral; similar to a promissory note; usually short term; includes trade credit, lines of credit, or commercial paper

Provision of Public Infrastructure:

Local jurisdictions often provide infrastructure improvements including streetscaping, road construction, and other access improvements as part of redevelopment projects. This type of infrastructure may be required by the zoning code. Parking is a common form of public infrastructure provided for redevelopment projects. In most local jurisdictions, parking is required for all forms of development. The local jurisdiction may operate the parking, allowing it to serve needs outside that of the redevelopment project. Revenues from operating the parking can be used to retire debt service on the capital costs.

Red Flags/Responding to Needs

Once data and information have been collected from targeted businesses through outreach, the information must be analyzed and understood. The immediate task of the BRE team is to respond to red-flag issues facing individual companies. Service provider partners from the stakeholder team can be used to develop customized solutions to each company's issues. The goal is to assist firms in solving problems that may cause them to relocate or close, and address opportunities for business growth. On a larger scale, outreach provides important information that can be used long-term to develop programs, policies and strategies that address concerns of the business community and create a more business-friendly environment.

Site Control (Phase I)

Once the developer is convinced that the project warrants serious due diligence, he or she takes steps to gain site control. Typically, a developer will secure an option contract on the property or have a purchased sale agreement with an adequate inspection period. The property owner agrees, for a fee, to reserve the property for the developer for a fixed amount of time while the developer conducts an in-depth feasibility analysis. This agreement is based on a stipulated sales price. If the feasibility studies indicate a viable project, the developer purchases the property.

Step 3:

Once the government agency has determined the amount of just compensation, it will submit a written offer to the property owner. The government agency can then negotiate with the property owner, or with each person who holds a separate ownership interest. If the parties do not reach an agreement, in some cases (depending on state law) the government agency may take the property and settle the compensation through the courts afterwards. This is commonly called a quick-take condemnation process. If the state does not allow quick take, then the government agency must work through the courts to settle the compensation amount prior to taking the property.

Step 4: Can Brownfield be Easily Remediated or Excluded?

Once the initial site assessment regulatory analysis has been completed, consider whether the project could be completed without including the contaminated area. Can this project succeed by reconfiguring a site to exclude the contaminated area? Can a barrier such as a parking lot cap the contaminated part of the site? Is the contamination very limited, allowing for quick, low-cost cleanup?

Step 9: Monitoring Contamination and Preserving CNTSINFA

Once the project is complete, it is crucial to maintain the integrity of any covenant not to sue (CNTS) or no further action (NFA) letter received from the state. This may involve continual monitoring.

4. Testing the Questionnaire

Once the survey method is chosen, the questionnaire must be thoroughly tested before the actual surveying process begins. In the case of site visit surveys, testing can determine if the survey can be administered in the amount of time that CEOs and plant managers are generally willing to commit (45 minutes to one hour).

BUSINESS VISITATION AND Surveying

Once the team members have been identified and the resources for a BRE program have been secured, the main component of a BRE program centers around visiting and surveying local businesses. Visitations are one-on-one meetings with the CEO or decision-maker of a company. Surveying is the process of getting information from the business to guide the direction of the services needed. The visitation and surveying of local businesses serve many purposes, which include the following: 1. Creates benchmark data for future survey and visitation program adjustments and analyses; 2. Establishes an ongoing relationship and communication system with local businesses; 3. Uncovers business needs, local factors, or trends that might lead a company to shut down or relocate; 4. Identifies at-risk companies that could close or move from the community; 5. Provides data and intelligence useful in developing more effective economic development strategies.

2. The Site Visit Questionnaire:

One of the advantages of a site visit survey is that it is not limited to questions that fit on a single sheet of paper. Rather, site visit surveys may be much more extensive, seeking information across a range of different subjects. Still, it is important that the interviewer be able to administer the survey in a reasonable amount of time. If the cover letter indicates that the interview will take a long time to complete (say two hours), many CEOs and plant managers will refuse to participate. Experience in communities that currently use site visit questionnaires suggests that a 45-minute to one-hour interview will allow enough information to be gathered without overly burdening the busy schedules of most CEOs and plant managers.

There are many opportunities for community colleges to play a role in business retention and expansion efforts:

Marketing Partnerships- Most community colleges have staff responsible for marketing the College's continuing education and training programs. These staff can be enlisted as partners in your business retention and expansion efforts by providing up-to- date information on business training needs. At the same time, the availability of cost-effective workforce training through a local community College can be highlighted in BRE marketing efforts (e.g., including a section on the community Colleges in resource materials for businesses). Linkage with Technical Assistance Programs- Community Colleges can play a key role in technical assistance programs for businesses. First, technical Colleges can be a good source of affordable consulting expertise. Second, in many cases, audits conducted through technical assistance programs will recommend that a firm upgrade the skills of its production workers, and the necessary training can be provided through the local community College. It is important to ensure that the local community college is committed to supporting business retention and expansion in your community. In recent years, many community colleges have been mandated to expand their missions to include support of economic development, which should help create an environment conducive to new partnerships with economic development organizations.

The significance in meeting with the business owner:

Meeting with the owner or manager can be as important as looking at financial statements. Personal interviews with the entity can help in determining the adaptability and stability of its management as well as provide insight to its strategy and experience in managing its operations and preparing for future growth. In fact, many lending institutions that make loans to entrepreneurs will not make a loan without personally interviewing the applicant.

What are the most common public financing methods?

Methods Financing: 1. Bond financing 2. Loan guarantees 3. Revolving loan fund 4. Tax credits 5. Tax increment financing 6. Sale leasebacks 7. Tax abatements 8. Grants 9. Special Improvement districts 10. Innovative redevelopment financing techniques

How communities typically prioritize financing for real estate development:

Methods of Public Financing -Least Costly to Most Costly: 1. Bond Financing 2. Loan Guarantees 3. Revolving Loan Funds 4. Tax Credits 5. Tax Increment Financing 6. Sale Leasebacks 7. Tax Abatement 8. Grants

Who Else?

Money is not just available from banks and regular financial institutions. Many states, communities, corporations, utilities, and CDCs have created revolving loan funds to provide a permanent money pool for community economic development. These loan funds are like regular bank loans but are for smaller amounts and are usually directed to small and growing businesses.

Variances and Appeals:

Most codes and ordinances provide opportunities for relief from requirements and conflicts through variances, exceptions and appeals. Most variances and appeals are handled as administrative, not judicial, processes to Boards, Commissions, or Councils. While codes and ordinances are written in precise terms, interpretations vary. The local planning department or official is often given some latitude and empowered to interpret the codes and ordinances. This allows opportunity for discussion and negotiation.

Medium and Long-Term Secured Loans

Most common type of loan issued by EDOs; usually 3-7 years for medium term; used to fund assets; includes term loans, construction loans & real estate mortgage loans

Fixed Asset Needs

Most fixed asset investments are used to expand or improve an entity's production capacity or efficiency, or to replace worn out or obsolete equipment. Fixed assets are costly and do not necessarily result in an immediate increase in sales sufficient to cover their costs. In this case, entities use longer-tenn loans (more than one year) or equity to finance these assets.

Negotiated Purchases:

Most land is assembled through negotiated purchase. Here, the public agency acquires the property under an arms-length market transaction. Many property owners, especially in older industrial areas, are anxious to sell, and willing to dispose of their property at market prices. However, many negotiated purchases have taken place because there is a threat of condemnation should the seller not wish to negotiate. If there is no condemnation threat, it may be more difficult to persuade owners to dispose of their property at or close to market value. Owners may be speculating, have unrealistic expectations of their property's value, or simply hope to secure the tax advantages of a "friendly" condemnation. Because owners often expect and demand a higher price from public agencies, negotiated purchases are sometimes conducted through straw brokers

Negotiated Purchases & Condemnation:

Negotiated purchases and condemnation must be executed for a recognized public purpose as permitted or authorized by state law. When a public agency intends to sell or lease the acquired property for private development, recognized public purposes are often specified by law. Most states accept purposes for the elimination of blight, economic development (e.g., job creation), and housing. Recognized public purposes may be further limited when property is acquired through condemnation, or eminent domain. While most states support condemnation for reasons of blight elimination, fewer states permit it for economic development where no blight is involved. Furthermore, many local jurisdictions with legal authority to condemn choose not to do so because of the political fallout it creates. Condemnation is the taking of a property upon paying a fair price for the property including relocation costs. Local laws usually require that the agency attempt a negotiated purchase prior to initiating condemnation. If negotiation is unsuccessful, then - depending on laws - condemnation may be initiated. Since condemnation is financially and politically costly as well as time-consuming, it is best avoided unless there is no other way to acquire property. Time can be saved if the state allows for quick-take condemnation. Quick-take condemnation enables the agency to take possession of property while the purchase price is under litigation. Land assembly, including condemnation, can be conducted by various entities. Powers may be granted to cities, development authorities or nonprofit EDOs. Even when a nonprofit lacks legal authority to condemn property, they often exercise these powers by retaining the city or another agency to conduct such activities on their behalf. Hence, for this discussion, the term pllblic agency refers to any entity that is authorized to assemble land.

Neighborhood characteristics:

Neighborhood characteristics, such as the relative safety and the level of blight in an area, contribute to the potential success of a property. Distressed neighborhoods may be eligible for public funding targeted at eliminating blight. Therefore, a developer should consider public incentives for development that may be available due to a neighborhood's socioeconomic characteristics.

Equity

Net Worth - amount of claim the owners or stakeholders have to the business

Angel Networks:

North Carolina, Pennsylvania and Virginia all have attempted to establish angel networks, which are groups of wealthy individuals who personally invest in companies (particularly start-up high-tech or industrial companies) for periods of three to five years. Identifying angels can be very difficult, which is why some states have struggled with their attempts to create such networks. Business angel networks are most highly developed in Europe.

Consultants can provide a number of services and are often retained to complete feasibility analyses.

Not only do they bring a further measure of objectivity, but they can lend additional expertise that gives the analysis further credibility. The type of consultant chosen should reflect the problem that needs to be addressed. For example, if the EDO requires detailed architectural consultation or wants to know if a project is market feasible, it is wise to select architects and market feasibility consultants, respectively, who have strong private sector experience and are currently serving developers and investors. If on the other hand an EDO desires more of a policy approach to problem solving, then a consultant that specializes in economic development policy may be the right choice.

Industrial Development Bonds:

Obtaining tax-exempt financing can be a complicated and time-consuming undertaking. Many safeguards have been built into the process over the past decade to ensure that the subsidy provided by federal tax exemption is not squandered on projects that are not economically viable. Some large economic development agencies have finance specialists on staff that can walk a local manufacturer through all aspects of a tax-exempt financing. Many small agencies do not have this luxury, but economic developers with other specialties can still play an important role in the process. • Get to Know the Staff at Your Issuing Authority- This is particularly important if your issuing authority operates on a statewide or regional basis. Will the authority's staff assist firms in preparing their applications and in other phases of the process, or are firms on their own? Does the authority have any specific industrial sectors that have been identified as priorities for assistance? • Use the Other Elements of Your Business Retention and Expansion- Program to Identify Candidates for IDB Financing At-risk firms are obvious candidates for IDB financing; also, firms that have participated in a technical assistance program may have identified capital improvements that will enhance their operations. • Include Information about the Availability of IDB Financing in Your Retention and Expansion Marketing Materials - Many small to medium-sized manufacturers are unaware of the availability of small-issue IDB financing. This option should be highlighted in your marketing materials. • Provide Assistance with the IDB Application Process- Many small to medium-sized manufacturers, particularly family-owned operations, may find the application process to be confusing and intimidating. The business retention and expansion program can provide financial consultants to assist such firms with the application process; in some cases, you may be able to obtain this assistance on a volunteer basis from local bankers or financial advisory firms.

Permit issuance:

Occurs once plans have been reviewed and permits have been processed. Common permits include building, electrical, elevator and plumbing. Additional permits differ by municipality and type of development. Prince Georges County, Maryland, for example, requires permits for flood hazard use; residential/agricultural and erosion control; grading and site preparation; water and sewer installation; underground utility lines; and right of entry, obtained to allow construction on or passage over county-owned property.

When working with a Consultant and Developer an EDO will enroll a selection panel:

Often in conducting a search for a consultant or a developer, an EDO will enroll a selection panel representing various stakeholders to review candidate qualifications, analyze project proposals, and recommend a preferred consultant. These selection panels come in all sizes and configurations. Members of the board of the EDO may perform this function, community leaders may sit on selection panels, or sometimes there is a panel with a host of diverse perspectives represented. In some cases the city council or town board becomes the selection panel. The critical issue in forming the selection panel is avoiding a lopsided panel in favor of the project and representative of only a narrow and limiting perspective. Homework needs to be done in providing in-depth education about the project, clear guidelines about the process, and decision making procedures. Selection panels need staff - that is, some person who can serve as staff to the panel: coordinating, arranging, communicating, etc. This requires a great deal of work .

Develop an Action Plan:

Once a SWOT analysis has been completed, there should be a clear picture of the competitive position of the community. Now the economic development organization must develop an action plan to target limited resources to those areas where they will have the greatest impact.

SWOT Analysis

Once a community has made the commitment to develop its BRE program and identified the appropriate BRE team members, the next step is to conduct an analysis of the community's strengths, weaknesses, opportunities and threats (SWOT). This SWOT analysis should aim to provide a clear picture of community assets that are important to local businesses, as well as community weaknesses that need to be addressed The analysis also should identify which industries are the most successful in the community and why. Successful communities build on their strengths while addressing weaknesses and pursuing opportunities. As in business attraction, a SWOT analysis should also be used in conjunction with a benchmarking study of competing communities to determine competitive advantages. What basis of comparison should the community use? Does it compete primarily with communities in the immediate region, or more often with communities in other states? Or, perhaps the community's competition is global in nature.

Disposition & Development Agreement

Once an MOU is developed and approved by the board, a more detailed binding agreement, known as the disposition and development agreement, is drafted. This agreement refines previous agreements, and defines and establishes a schedule for subsequent contracts required for development. It should require a developer deposit that is forfeited if they are unable to obtain financing. A real estate attorney should assist in preparing this document.

Partnerships

One of the most effective ways to spread the word about a BRE program is to leverage marketing efforts already in place by BRE program partners. For example, utilities and educational institutions often have existing marketing programs that systematically reach out to local businesses. Utilities and educational institutions can also supply customer lists and databases; share strategic information and studies concerning key local employers and industries; and help implement an account management system for customer retention with your economic development organization. Utilities constantly market services to local businesses such as energy audits or financing for energy efficiency improvements. Some utilities use account managers to contact customers directly to market services. Local educational institutions, particularly community colleges, market their continuing education, training and certification programs to local businesses. While some institutions may assign staff to make sales calls to individual businesses, others may conduct mass mail or media campaigns to generate enrollment in these programs. Partnerships with utilities and educational institutions can enable the economic developer to: • Include marketing information in the promotional materials prepared by the utility or educational institution to detail services available through the BRE program. • Share information gathered through sales calls and other interactions with local businesses: an economic developer can refer a business struggling with a certain issue to the utility; educational institutions can refer businesses coming to them for help to the BRE program.

Early Warning System I

One of the primary benefits of a business retention and expansion survey program is the development of an early warning system that can identify companies in danger of relocating or closing. Experience in communities with established BRE programs has proven that early intervention with at-risk firms is always best; by the time news of the relocation or closure has reached the local news media, it is almost always too late for the BRE team and community to intervene successfully. A well-designed BRE survey will provide a profile of each firm surveyed; this profile can then be matched against early warning signals to identify at-risk firms.

One-Stop Assistance Center & Facilitated Approval Process:

One-Stop Business Assistance Center Often housed in an economic development department, a "one-stop shop" centralizes requirements and regulations so all of the information is in one place. This "one-stop-shop" may include staff or be set up as a resource center. Facilitated Approval Process Instead of bringing all of the information into one place, an economic development department may provide staff assistance to facilitate a developer through the process. This staff assistance will often serve as an advocate to ensure that the necessary approvals in various departments are

Opportunities and Threats:

Opportunities and threats are external to the community and hence uncontrollable. Opportunities are conditions external to the community that make it possible to develop competitive advantages. This includes structural changes in the economy, technological changes in specific industries, and changes in market demand for specific products. Threats are unfavorable trends or external developments that could lead to a decline in a community's competitive advantage or overall economy.

Private Organizations:

Other communities house their business retention and expansion programs in private organizations, usually the local chamber of commerce. Such an arrangement may make sense in communities where the chamber is dominated by local service businesses (e.g., banks, law firms, and accounting firms) that have a vested interest in maintaining a vibrant business community, and in communities where the chamber, rather than local government, has taken the lead in economic development activities.

Outcomes verses outputs- Careful attention must be given to ensure that program outcomes are measured, as opposed to program outputs.

Outputs refer to how many people participated in a program. Outcomes are what resulted from those people participating in the program. Outcomes are a much clearer measure of the impact of a program and provide more information to evaluate and improve a program. Outcomes can be both qualitative and quantitative, but definitely require detailed feedback from participating businesses. Moreover, as the community moves along the learning curve with its BRE program, it will become evident which aspects of the BRE program are working well and which aspects could be improved. The action plan should be updated annually to reflect these changes.

Lending is risky:

Over the past decade, commercial lenders on average have had lending loss rates of about one to two percent and average loan overdue rates of three to five percent. The SBA 7 (a) program has had a historic loss rate of about 5 percent

Performance-oriented Assistance Structured a Deals:

Performance-oriented Assistance with Initial Explicit Denomination and without Formal Denomination are performance subsidies meaning that a developer is able to receive public funds only to the extent that he or she generates them. The most common form of performance-oriented assistance is tax increment financing (TIF). A common mechanism used to structure performance-oriented assistance with initial explicit denomination transaction is to use a note to denominate the amount to be paid by the public agency to the developer. Payment of the note is contingent on, and limited to, some portion of the amount of revenue generated by the project. Performance-oriented Assistance without Formal Denomination transaction structure is similar to performance-oriented assistance with initial explicit denomination, with the exception that there are no formal denominations as part of the contract between the developer and the public sector. There is a growing movement toward performance-based partnerships between the public sector and the developer.

Site (Phase I)

Physical conditions, access, visibility, utilities, and parking are among a developer's first considerations when embarking on property development. In general, the more accessible a site is, the greater its market potential.

Provision of Pre-Development Feasibility Studies:

Predevelopment is a critical stage in the real estate development process, and a very important stage for economic development organization involvement. Activities in this stage determine the feasibility of a project . its costs, risks, and benefits. Predevelopment feasibility studies are done for all land development projects, whether first time developments or redevelopments. These studies help developers, investors, and economic development staff to decide whether a particular development project is a "go" or "no go". Almost all lenders and investors require market and investment feasibility studies on any project before they will invest.

How does the use of these bonds benefit the community?

Public debt, in the form of municipal bonds, provides a community with the ability to build now and repay debt later with future income.

(gap financing) Constraints on gap financing options:

Public gap financing options are often specific to the type of development offered. Historic Tax Credits, for instance, are only available to developments involving historically significant sites. Public financing is often used in situations involving low income or minority communities, distressed economies, designated redevelopment areas, brownfields, and in projects where the goal is to diversify or strengthen the job base.

Public Sector Involvement:

Public sector' financing exists to bridge capital gaps in the private sector financing market. For many borrowers, the cost of capital is not nearly as critical as access to capital. Public sector solutions are meant to leverage private lenders and investors to ensure that access to capital is extended to entities that are credit-worthy, but are not considered good risks in traditional commercial terms. While public sector clients may not meet the requirements of the sources of business financing mentioned above, they should have at least a viable business concept, the skills to execute it, and a strong commitment both to operating a business and to repaying their debts.

Public Use Revenue Bonds

Public use bonds are only tax exempt if they meet the public use tests. If there are multiple sources of revenue, or the revenue stream is questioned by the market, a Certificate of Participation (COP) may be used instead of a Revenue Bond. A COP requires a hard asset to be pledged to support the debt, such as a parking deck or convention center.

Public - Private Contracts:

Public-Private Development Agreements Easements, Rights-of-Way & Utility Agreements

Step 7: Making the Deal to Purchase/Sell Contaminated Property:

Reaching a deal to purchase a property with contamination issues is like any other real estate transaction, but more complex. For that reason, most Brownfield deals are facilitated by a lawyer or environmental expert trained in legal, environmental, and real estate matters. The deal structure will include one of two options: 1) Acquiring an option to purchase the site 2) Entering a contract to purchase the site

Real Estate Attorneys:

Real estate development is subject to many legal challenges. There are zoning laws and regulations, building and safety codes, property taxes, and legal opposition by groups opposed to development. When zoning changes are required, developers usually hire zoning counsel. Public-private development agreements and equity partnerships usually require significant attorney involvement. For projects involving tax credits, an attorney familiar with the structuring of tax credit partnerships is of particular importance.

(gap financing) Pros and cons of real estate development Projects:

Real estate development projects can induce strong opinions in various segments of the community. Projects involving gap financing, increased vehicular traffic or noise, added lights or pollution, and similar changes, while adding to economic vitality, will nevertheless prompt public scrutiny, debate, and sometimes rancor. The economic developer's role as a mediator and facilitator in gap financing situations increases in fiscally tight economic conditions. Community involve lent in a project can influence how willing the community will be to financially support projects and can ultimately affect the success of the project. Community funding sources will require information on the use of funds and the benefit to the local community. Communities will try to ensure that their funds go towards increasing jobs and quality of life in the community, and that fund usage fits into the respective community's economic development strategic goals.

Location (Phase I)

Regional characteristics are an important consideration in the formal market analysis. Regional transportation systems and spending patterns can be discerned through field observations, discussions with local business owners, and a cursory analysis of the area before a formal feasibility study.

Payment of relocation costs are those in addition to compensation for property.

Relocation costs are based on either actual or reasonable moving expenses, or a fixed moving-cost schedule, whichever the displaced persons or a business decides. If there is federal assistance, relocation efforts are subject to the Federal Uniform Relocation Act and also can require environmental assessments.

Net Sales

Revenues and sales minus any minor deductions, such as sales returns

1. Immediate-Within two days of receiving a completed survey:

Review Surveys for Assistance Requests- Volunteers who conduct surveys should meet with the BRE staff member to brief staff on the interview, especially when there may be red flags. Once the survey has been reviewed and the needs of a business have been identified, the EDO staff member can forward the firm's identity and the nature of the request to the relevant agency. It is important that the EDO staff member be familiar with the various business assistance programs available in the jurisdiction (e.g., training programs, SBA financing, etc.). Some economic development organizations complete a pre-designed request form and forward it to the relevant agency or department. Some BRE software programs include features to electronically send and monitor requests for assistance to service provider organizations on the BRE team.

Interviewing Tips:

Review the interviewing tips listed below and use examples from your own interviewing experiences to illustrate methods for conducting a successful interview. Volunteers should be told to conduct research on the company and its representative if they are not provided with this information in advance. Volunteers should be given as much information as possible before entering a CEO's office. This may include business statistics and some of the company's positive contributions to the community over the years. This recognition will begin the interview on a positive note.

Overview of the BRE Program and Importance of Confidentiality:

Review the program's goals and objectives and detail the range of services that are available to local businesses. Review the survey's confidentiality provisions and illustrate what these provisions mean with examples. Stress to the volunteers that they are expected to abide by these provisions at all times.

Loan Servicing:

SERVICING a loan entails monitoring compliance, and sending payment or past due notices. The lender may want to periodically review the borrower's financial statements to assess the stability of the business and its ability to meet its debt obligation.

2. Short Term-Within two weeks of receiving the completed survey:

Send a Brief Thank-You Letter- The letter should thank the firm for participating in the survey and note the agencies and departments (along with contact names) that the firm's requests for assistance have been provided to. If applicable, the letter should state the date when the results of the entire survey will be released to the public, and note who the firm should contact to obtain a copy of the survey report. The letter may be sent by either the chief elected official (to reinforce the local government's commitment) or by the task force chairman or director of economic development (to provide a high-level point of contact). Tabulate the Completed Survey- Even if you do not intend to disclose the results of the survey publicly, it is imperative to tabulate the data in a computer spreadsheet so that it can be used for your organization's and the community's strategic planning processes. Some BRE software programs provide both system-generated and user-defined reporting capabilities. Create a File for Each Company Surveyed- Most economic development organizations should now have the capability to enter survey information into a computer database (e.g., Access, Dbase), rather than maintaining it in a paper file. The database record for each surveyed firm should include, at a minimum, the basic information gathered in the first pan of the survey, along with separate fields for noting and tracking responses to each assistance request made by the firm.

Limited Liability Company (LLC)

Separate legal entity like a corporation, but treated like a partnership where members are shielded from personal liability

Step 1: Site Assessment and Reuse Options:

Site assessment is the process of determining if a property is contaminated, and if so, with what. Site assessment lays the foundation for how remediation will be carried out, what technologies should be used, and what level of cleanup is required. This is an extremely important process because most banks require some kind of environmental assessment before making a loan.

Following are some of the criteria that should be used to develop a list of target companies. This list is not exhaustive; if appropriate, develop additional criteria that reflect the unique circumstances of your community:

Size- The most obvious criterion is number of employees; also consider using annual sales or revenues. • Industrial Segment or Category- Firms can be selected at either the two- or three-digit NAICS code level. Exercise care when selecting firms with multiple NAICS codes, as some of the codes listed may represent minor or ancillary product lines that are outside the firm's core business. • Geography- Some BRE programs focus their efforts on a particular geographic region in the community (e.g., an older industrial district or the downtown area). The simplest way to do this is to draw boundaries that match zip codes, since many list providers can sort by zip code. • Ownership- Some BRE programs limit their efforts to locally owned firms.

Combined Mail and Site Visit Surveys:

Some programs have had success combining mail and site visit surveys. These programs typically mail a one-page survey to local businesses that includes basic data about the firm (address, contact name and telephone number, etc.), as well as a series of questions designed to gauge whether the firm is in danger of failing or relocating. Volunteers or economic development staff then follows up with at-risk firms by scheduling a meeting with the firm's CEO or plant manager to administer a more in-depth survey to discover why the firm is at risk. The volunteers and staff also start the process of linking the at-risk firm with sources of assistance available through the BRE program. In other BRE programs, site visit surveys are limited to the largest employers in the community, while smaller firms receive a shorter mail survey. This is especially effective in communities that have limited economic development staff or a small pool of volunteers. This strategy allows the BRE program to gain an in-depth understanding of the concerns of its largest employers while also getting a general sense of the issues affecting smaller firms and identifying those that may be at-risk.

Capital Networks:

Some states and cities have established capital networks, which provide brokering services that match entrepreneurs to investors for a fee. Kansas has done this successfully, but local initiatives also provide useful models; Austin, Texas's capital network grew from a local group to an international presence. Economic developers can best provide assistance by acting in a brokerage role, matching entrepreneurs with both public and private sources of venture capital.

Zoning Permits:

Special uses: Uses allowed by zoning subject to special use permit: churches, theaters, etc. If limited in number, these uses are appropriate for a given zoning classification. Special exceptions: Uses that require special review, e.g. an electric-utility transformer in a residential neighborhood. Typically these are reviewed by a zoning board. Variances: Modifications In development standards (part of zoning ordinance that deals with measurable requirements for development - height limits, setbacks, seating capacity, etc.). Typically these are used In address unique situations related In lot size, shape or topography. Modification to a legal nonconforming use: A nonconforming use is a lot or improvement that was present prior to adoption of the zoning ordinance but doesn't conform In that ordinance. Modifications may be allowed if the modification doesn't impose any greater negative impact than it already does.m

Define CAPCO:

Started in Louisiana, insurance companies receive tax credits of 100-120% in certified capital companies which provide venture capital investments

4 steps to forming a TIF district

Step 1: An agency proposes a district to be redeveloped using the criteria established by the state (usually for blighted areas). Step 2: The agency develops and approves an area redevelopment plan addressing potential projects, estimated project costs and tax impact, and termination date of the TIF. The creation of the redevelopment plan should include a public participation component. States may limit the number of years a TIF district may exist. TIF districts are typically designated to last for 20-25 years, although they are often able to retire their bonds sooner. Step 3: The agency may hold a public hearing before securing city council approval for the TIF, the redevelopment area and the possible sale of bonds. The municipality then enacts an ordinance that authorizes the use of the TIP. Step 4: Once the use of TIF is authorized, the current tax base and revenue streams of the area are appraised to determine the original assessed value of the district. Tax revenues exceeding this amount during the life of the TIF district will be distributed to the redevelopment agency. These revenues can then be used to pay for redevelopment or to repay bonds to finance the improvements.

Establish Communication and Outreach:

Step 1: Establish a Business Recovery Hotline Step 2: Develop Online Web Portal Step 3: Establish an Outreach Campaign for Priority Businesses

The steps for establishing a BRC:

Step 1: Gather resources for financial and technical assistance. Step 2: Select a physical location. Step 3: Staff up. Step 4: Set up a hotline for Business Recovery. Step 5: Start marketing your BRC. Step 6: Prepare the paperwork. Step 7: Train staff. Step 8: Plan for the long term

Three steps to land assembly

Step 1: determine that redevelopment serves a greater public purpose (elimination of blight, housing, economic development) Step 2: determine "just compensation" at fair market value Step 3: submit written offer to property owner

What are the Steps to Brownfield Site Cleanup?

Steps to Brownfield Site Cleanup Step 1: Site Assessment and Reuse Options Step 2: Know about your state VCP Step 3: Identify other Interested Parties Step 4: Can Brownfield be Easily Remediated or Excluded? Step 5: Prepare Preliminary Feasibility Analysis Step 6: Negotiate and Structure the Deal Step 7: Making the Deal to Purchase/Sell Contaminated Property Step 8: Cleanup Step 9: Monitoring Contamination and Preserving CNTSINF A A majority of brownfield sites are older industrial and commercial properties. However, not all old industrial or commercial sites are contaminated. This depends on past land uses and housekeeping practices. Brownfield contamination may also be the result of illegal dumping after an operation has ceased.

Housing the Program

Successful business retention and expansion programs have been housed in three different areas: local government, private organizations (e.g., the local chamber of commerce), and public-private partnership organizations. The administration and responsibilities of a BRE program may also be located at the state or provincial level. In some states or provinces, there is a top-down approach in which the state or province identifies specific partners and works with them to locally to run the program. In other instances, systems are less formal and local communities are not guided by the state or province.

TIf Characteristics and Variations

TIF are typically administered by a city or county department or a nonprofit redevelopment agency. Sometimes the redevelopment agencies are governed by the city council. In others, they are governed by a private or combined public/private-sector board or commission. Some of these variations are outlined in the table below.

TIF and Redevelopment Areas:

TIF district follows or parallels the designation of a redevelopment area. Therefore, the establishment of a redevelopment area provides the framework for TIF. The redevelopment plan typically designates the agency to manage the plan and its powers, a financial plan with sources and uses of funds, and a land use and property acquisition strategy. For districts, TIF supports comprehensive area redevelopment. The potential tax increment is much greater for a district containing a number of properties than for an individual property.

Tax Credits

Tax Credits are a form of tax incentive that allows the recipient to reduce their tax obligations by the amount of the credits. Tax credits may be offered at the federal, state or local levels.

The Tech-Prep Model:

Tech-Prep is an important catalyst for secondary school reform and postsecondary education improvement efforts. The Tech-Prep (or "two plus two'') approach to training students targets students not bound for a four-year college. As "two plus two" implies, the student spends the last two years of high school pursuing a specialized training curriculum, followed by two years at a local community college. An integral part of the Tech-Prep model is an apprenticeship with a local fumes) operating in the student's area of specialization. Upon completing the program, the student should have adequate preparation to achieve professional certification if it exists) in his or her area of specialization. Tech-Prep can be a valuable part of a BRE program, as it provides participating businesses with a steady supply of potential new hires with current skills. At the same time, many participating students are motivated by the fact that part of their training takes place with potential employers, increasing the possibility that they may gain permanent employment after successful completion of the program.

What is Technical Assistance:

Technical assistance is the deployment of experts with the specific skills and knowledge required to address business needs. Technical assistance is an interactive, hands-on process that engages businesses in solving problems.

Conclusion:

Thank the volunteers again. Remind volunteers that it is important for them to complete all of their assigned interviews during the allotted time (usually two weeks). Give the volunteers their interview assignments and several additional blank survey forms.

Budget:

The BRE program team must determine the appropriate size of the program budget and what costs will be included. Again, in a smaller community, the different partners may be able to provide in-kind amenities or services. Partners must also identify funding for the program in its initial years and then determine how the program will be sustained in the long term. It must also be determined who actually has authority and control of the budget.

Set the priorities and establish goals and objectives for the program:

The BRE team, community and business leaders should set the priorities and establish goals and objectives for the program. The strategy defines what needs to be done to assist local businesses, such as identifying creative solutions to challenges facing a business, building a network between resources and the business, or fostering partnerships between a business and service providers.

Email or Web-based Surveys:

The Internet is an excellent way to keep in touch with business retention and expansion team partners. It is also an efficient organizing tool for creating and maintaining networks that can enhance business retention and expansion efforts. Some economic development organizations have begun to use email or web-based surveys to communicate with their local businesses. Some organizations use short, highly focused email or web-based surveys to qualify a business for a formal business retention visit These surveys often are available through a link on the organization's website, enabling the firm to access and complete the survey at any time. In other cases, email or web-based surveys are sent to a business owner after a face-to-face visit to measure customer satisfaction with the visit or with the delivery of services. Email or web-based surveys are best used to gather initial information about a firm; pre-qualify a company before a formal retention visit; or measure satisfaction with the visit or service delivery. Email or web-based surveys should complement a formal retention visit, not replace it, because the goal is to build relationships with businesses. The Internet should not be viewed as a substitute for the human interaction needed to build relationships.

Dealing with Environmental Contamination:

The U.s. Environmental Protection Agency defines brownfield as "real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant." Over the last decade, however, changes and new initiatives at the local, state, and federal level have reformed the process and made the reuse of brownfield sites a more common part of redevelopment projects across the country. Most building contamination comes from asbestos and lead paint, although PCBs, radon gas, and other substances can be problems.

Step 6: Negotiate and Structure the Deal:

The deal may include assignments of responsibility for the cleanup; guarantees for future safety and integrity of the site; financial incentives, and allocation of liability incentives. Responsibility for cleanup and liability assurance An important part of structuring the deal is determining who will be responsible for the cleanup and assurances for future liability. The party responsible for remediation generally will want to ensure that the cleanup meets applicable standards. In addition, parties will want to have some control of potential liability issues, whether for additional cleanup, newly created standards, harm to others, or future use/misuse of the site. While agreements cannot deal with all potential issues, such as the possibility of third party lawsuits, private contractual mechanisms are the most common tool for handling cleanup and liability assurances.

What Does direct lending involves?

The economic development organization acts as the direct, subordinate, or primary lender, using its own funds or funds controlled by the organization.

5. Basic Information on a BRE Survey

The economic development organization should already have most of the following basic information: 1. Firm name; 2. Name of corporation of which the firm is a division or subsidiary (If applicable); 3. Address; 4. Telephone, fax and e-mail; 5. CEO or plant manager name; 6. Firm's principal contact for purposes of seeking assistance through BRE program; 7. Primary NAICS code or firm's primary product or service; 8. Secondary NAICS codes or firm's secondary products or services; 9. Length of time at this location; 10. Current number of employees at this location, plus employment level at some point(s) in the past (e.g., five years ago, at time of last BRE survey, or every other year for the past six years); 11. Own or lease facility. The CEO's time can be saved for more important matters by completing this section of the survey in advance and simply confirming the information at the beginning of the visit If the BRE visitation program is just beginning, manufacturers' directories typically include most of the information above. Manufacturers' directories may be found in most public libraries' reference sections.

The benefits of a BRE program can extend beyond the direct assistance provided to an individual business facing closure or considering relocation.

The attention directed to local businesses through the program gives them the sense that the community values and appreciates their presence. "Early warning systems" identify at-risk companies so action can be taken to help them overcome economic difficulties that otherwise could lead to layoffs and shutdowns, or relocation to another area or state.

(Financing from the Developer's Prospective) Financing Process-Introduction:

The availability of financing is one of the most critical factors in real estate development affecting what gets built, where, when, and by whom. Typically, the financing options available to developers are limited only by the economics of the project, which incorporates the attractiveness of the financing package to investors. The financial structure that the developer chooses can have a significant impact on the profitability of a project. Developers will try to secure financing that will maximize his or her expected rate of return on the project. In addition to injecting equity in a project, a developers must raise funds via loan obligations that will be repaid during the course of the project or at completion. The methods for structuring a publicly supported deal dictates the level of risk commonly more than the tools used. Quite often in publicly supported projects, gap financing is required when the financial resources necessary to complete a real estate development project do not fully cover the cost of undertaking the project. However, gap financing using public resources should take place only for deserving projects that have clear public value.

Tabular format that lists the most salient points:

The action plan should be compiled in both a tabular format that lists the most salient points for each objective, and in a narrative format that provides the -specific details for each objective. The summary version of the action plan will prove valuable both as an easy-to-reference source and as a quick means of communicating the key elements of the plan to stakeholders who may not have read the more detailed version.

Agencies sometimes collaborate with developers to assemble land.

The agency may negotiate a contract that requires the developer to assume the agency's acquisition costs. Many communities will not acquire land unless there is a committed end user (a developer or business). Alternatively, the agency may agree to condemn property that the developer is unable to acquire through a negotiated purchase. Land assembly with the power of condemnation has a number of strengths and weaknesses.

Monitoring and evaluating a BRE program requires follow-up surveying of businesses that have participated in the program.

The initial surveyor interview provides a baseline of information on the business. Follow-up contact with businesses should collect both the impact of the services received and customer feedback on the overall BRE process. If a business has been identified for long-term technical assistance, it may make sense to survey the business several times during that period to monitor the effectiveness of the services provided.

Step 8: Cleanup:

The major goals for brownfield remediation are to minimize costs subject to state approval, win market acceptance, and provide for bankers' comfort To reach these goals, risk-based corrective action or a comparable site and use oriented approach to remediation should be part of the plan. The key to deciding how to go about the cleanup is usually the environmental firm. The ideal firm should be the one experienced in the type of remediation problems found at the site. The firm should understand the regulations and have connections to those making decisions. It is also helpful to find a firm that can integrate site preparation with the environmental cleanup process. In many instances, a mixed approach involving several remediation technologies is the most effective. Regardless of which remediation process is chosen, it is important to consider how the process will affect the neighborhood. Although methods may be cost-effective and efficient, like incinetation, they may raise issues with the surrounding neighborhood.

Delivering services through a Case Management Approach:

The method entails dispersing recovery staff to individual businesses. Case managers are trained to assess damages, gather documentation, identify helpful federal, state, and local resources, and develop a disaster recovery plan with the business.

The key benefit of an EDO-sponsored feasibility analysis:

The key benefit of an EDO-sponsored feasibility analysis is in analyzing an opportunity that the development community might not analyze on their own, most likely because the asset may be in public hands, is in distressed private hands, or is in a location that is untested or considered risky.

The key to successful public-private partnerships :

The key to successful public-private partnerships is having a project that is mutually beneficial. In other words, for every incentive the public sector or redevelopment agency provides, the development must provide some benefit to the public sector or to the redevelopment agency. In some cases, practitioners have tied the level of assistance provided to the developer to the amount of benefits they provide to the community. Performance or recovery-based approaches to redevelopment assistance will not work with all redevelopment projects. There may be cases where front-end without guarantee assistance is the only meaningful assistance. An example is affordable housing projects, which are not income generating projects. In most cases, however, a guarantee or obligation of repayment from the developer to the agency can be structured into the partnership agreement.

Welcome and Introduction:

The leader of the local BRE task force should welcome the volunteers and thank them for donating their time to the BRE effort. Consider asking the chief elected official of your community to stop by and say a few words. (It is not essential that he or she appear at the training session; if the official's schedule is very crowded, it is much more important that he or she appear at the kick-off event.)

Capital for New Businesses:

The financial problem most startup and new businesses face is that cash outflows are greater than cash inflows. All need capital to purchase equipment and inventories as well as cover expenses incurred in the normal operation of the business until the entity can generate its own income. Some entities such as technology firms, need funds for prototype development and market testing before full scale production is undertaken. The financing needs for new businesses are largely in the form of equity.

Team Building:

The first step is to build a BRE team with economic, community and workforce development organizations and departments of local government that provide programs, resources or services to the business community. All service provider stakeholders should be invited to be part of the BRE team. To participate, each must understand and acknowledge the purpose of the BRE program. A common level of commitment builds trust among program partners and ultimately a cohesive, responsive team of service. Additionally, each team member needs to fully understand businesses' concerns for confidentiality. BRE survey responses should always remained confidential; any results shared among BDOs and community stakeholders should never put a company at risk.

Process:

The following aspects of the community involvement process will vary according to the strategy developed. 1. Publicity and Public Participation 2. Involvement of Key Leaders 3. Format

6. Specific Focus Areas for the Questionnaire

The following categories include information typically sought in BRE surveys. 1. Firm background (suppliers, customers, revenue, growth potential, product lines, employment) Business climate (location, rating of community) 2. Labor & training needs (skill levels required, average wages, education levels, unions, residency, turnover, absenteeism, employment pool) 3. Marketing & trade (sales in various jurisdictions, exports, domestic sales, government sales/contracts) 4. Financing needs (problems securing capital, areas additional capital needed, sources of capital/credit) 5. Regulatory issues (relationships with agencies, business friendly regulatory climate, complexities, costs, time, guidance) 6. Barriers to growth (size & condition of facility, location, workforce, regulations, taxes, labor costs, transportation, crime, energy costs) 7. Satisfaction with public services & facilities (schools, higher ed, parks, culture, police & fire protection, water quality, sewage, solid waste) 8. Local business assistance (utilization & satisfaction with services) 9. Past Utilization of and Satisfaction with Local Business Assistance Programs

Funding source for gap financing

The funding required to fill the gap can be sourced in a number of different ways. For example, private investors or philanthropists or public organizations can contribute equity, tax credit schemes can be utilized, and government grants can provide funding. Different funding methods tend to have different restrictions on the usage of the acquired funds. Economic developers need to know if there will be conflicting requirements for funding bodies or if the requirements will restrict the project uses. A large number of funding sources may also make structuring a deal more time consuming and difficult to coordinate. Therefor, care must be taken to avoid conflicting requirements in loans. These requirements may hinder the progression of a real estate development project. The economic developer also needs to be able to coordinate the various funding sources because the various levels of government may want to occupy the same preference position on the gap mortgage or loan.

The goal of commercial lenders and economic development practitioners:

The goal for commercial lenders is profitability. Economic development practitioners look at economic and financial factors when providing loans or financial support to business ventures. They weigh economic development goals such as employment creation against sound investment practice. While the goals of economic development practitioners place a value on issues such as job creation, prudential lending practices are also crucial. Through careful financial statement analysis and sound lending decisions, economic development practitioners can meet both objectives.

The goal of marketing a public sector finance program is to:

The goal is to show lenders that the financing program is a good deal for them and their clients. Marketing should also be managed to accomplish broader strategic benefits. Having other organizations understand one's program allows for partnerships and enhances the ability to achieve long-term objectives. It also generates valuable information on target market trends and client needs.

(Process) Involvement of Key Leaders:

The identification of participants should not be underestimated. Involving the right people in the process is instrumental in the success of a project..

Industrial Development Bond taxable or non-taxables:

The most common form of qualified private activity bonds. They can qualify for tax exemption under the Small Issues Exception for manufacturers of an eligible project size that provides public benefit (like job creation/retention, cleaning up blighted area, etc.) If the project cannot meet the eligibility criteria, they would have to be taxable IDBs. The specific qualifications for an IDB are both complex and company specific.

1. The Mail Survey Questionnaire:

The most important factor in constructing a mail survey is brevity. Ideally, a mail survey should fit on the front side of a single 8 '/2 x 11 sheet of paper, with the reverse side available for the respondent to write additional comments. Given the limited amount of space available on a survey form, it is imperative that the survey focus on issues that are most important to the objectives of the BRE program. Realistically, this means that after basic information has been gathered (firm name and address, number of employees, etc.); there will probably be space to focus on just two or three specific areas. These areas of focus should match the strategic objectives of your BRE program and the services available through it In the case of a mail survey that follows up on an earlier in-person survey, include only questions designed to determine if a firm has become at risk in the period since the in-person survey was completed.

(Overview)

The provision of economic development finance programs requires specialized knowledge from economic development professionals to staff that manage those programs, as well as understanding key areas of public policy and how municipal finance relates to economic development.

Land Assembly:

The public sector can initiate development by facilitating land assembly. Land assembly is important because the market for larger, assembled properties is much greater than for the small. fragmented properties typically found in older urban areas. By combining smaller sites into larger parcels, a public agency is much more likely to attract private investment.

What are the Different Type of investment Programs?

The public sector establishes lending programs that address the special needs of under-served groups. Different investment products include startup loans, small working capital loans, microloans, seed and venture capital, export loans, and Small Business Investment Companies. Most of these types of lending programs are complemented by effective packaging organizations. For example, Community Development Corporations locate financing sources, technical assistance, and training. Many programs couple loans with technical assistance.

Public sector role in real estate development:

The public sector is always a partner, as all built structures are subject to building and zoning codes, and therefore public-sector involvement is needed. The government entity or economic development organization can also play a role in helping the developer obtain relevant government approvals and construction clearances. In addition, the public sector can serve as a link to citizens and neighborhoods impacted by development. Neighborhood acceptance has become a critical component of the public process.

Step 2: Know about your state VCP:

The redevelopment of contaminated properties will involve various federal, state, and local cleanup programs. It is especially important to familiarize yourself with state cleanup laws. All states have created voluntary cleanup programs (VCPs) to promote the redevelopment of properties that for decades have been limited by issues of liability and cost. Check with your state environmental agencies for the specifics of how your state program works.

The subject site analysis should consider the different needs of different land uses.

The subject site analysis should consider the different needs of different land uses. For example, single family housing may be more appealing to certain demographics if it is relatively secluded and certainly not proximate to major freeways or interstate highways due to noise and pollution concerns. However, big box retailers often prefer locations that are immediately adjacent to highway interchanges and want to be able to raise their signs above their properties high enough for drivers on the highway to see. Finally, the subject site analysis should seek to quantify the evaluation of relevant characteristics if at all possible, either by using readily-available data (such as traffic counts, distances to job centers, etc.) or qualitative rankings that are the product of professional judgment. This will allow the study to arrive at a quantitative SWOT analysis of the subject site and its development/redevelopment potential for different land uses.

Eminent Domain in for economic development that benefits the public interest:

• Sometimes a firm will need a parcel of land adjacent to its present location in order to expand. Land requirements can range from needing to control an adjacent alley to facilitate access to a new loading dock to facility expansions that are several acres in size, requiring separate parcels to be assembled. In dilapidated urban areas, the jurisdiction may already have title to some of the needed parcels, which will assist in this process. • Sometimes, local government can use eminent domain to obtain property for a business; however, the U.S. Supreme Court's 2005 decision in Kelo VS. New London changed the way eminent domain would be viewed for economic development purposes. The 5-4 decision recognized that the Constitution prohibits the taking of private property for the sole purpose of transferring it to another private entity. However, the ruling affirmed eminent domain's use for economic development if it provides a public benefit. The court did not preempt additional state action. • As a result, many states began to review their policies and regulations for eminent domain and adopted laws strengthening property rights. • At the federal level, Congress passed legislation in November 2005 prohibiting states from using certain federal funds for economic development projects in which private entities would be the primary beneficiary. As in most states, the federal legislation excluded mass transit, railroad, airport, seaport, and highway projects, plus energy, communication, water, wastewater, public utility and brownfield projects that serve the general public.

2. State Sources:

• State Industrial Directories- Manufacturers' News Inc. publishes industrial directories for each state. In some states, this information may be available directly through the state department of commerce. Website: www.manufacturersnews.com State Workforce Investment Agencies • The state department or agency responsible for helping unemployed and dislocated workers find jobs will have a wealth of information that goes beyond the skills available in different geographic areas. • State Chambers of Commerce- Most state chambers publish a membership directory that is updated annually.

There are several resources for developing such a survey:

• Synchronist created an emergency response form in cooperation with Louisiana Department of Development's BRE group and later made it free to any existing user on the Synchronist system (see below fur form). The form is designed to assess a disaster's impacts on businesses' facilities, workforce, utilities, and transportation, and it helps economic developers identify businesses' most critical needs. • E-Pulse can also create customized modules for pre- and post-disaster assessment of businesses in the community. • The University of Wisconsin compiled a survey to assess the impacts of the 2008 floods in Milwaukee on area businesses (http://restoreyoureconomy.org). • Polk County, Florida, also created an outreach survey as part of its disaster recovery plan (http:/ / cfdc.org).

There are a number of options for EDOs to successfully involve the community. Here is a short list of outlets that will help generate community support and involvement:

• Task forces, ''blue ribbon" panels, citizen advisory committees; • Institutions with community tradition acceptance; • Churches, CDCS, neighborhood associations; • Chambers of commerce and other business groups; • Cable access television; • Community newsletters and magazines; • Community meetings; • Charities;

Components of a BRE Program:

• Team Building • Relationship Building • Responding to Needs • Management and Follow-Up

Carl D. Perkins Career and Technical Education Act of 2006:

• The Carl D. Perkins Career and Technical Education Improvement Act of 2006 (Perkins IV) was a six-year reauthorization of the original Carl D. Perkins Act of 1998. The act established a new vision of vocational and technical education for the 21" century. The central goals included improving student achievement and preparing students for postsecondary education, further learning, and careers. • The act promotes reform, innovation, and continuous improvement in career guidance and technical education to ensure that students acquire the skills and knowledge they need to meet challenging state academic standards and industry recognized skill standards. It also seeks to ensure that students are prepared for postsecondary education, further learning, and a wide range of opportunities in high-skill, high-wage careers.

There are two main ways that an EDO can provide these services: through the EDO itself or by engaging partners and/or consultants. Both have their advantages and disadvantages:

• The EDO provides the services- The economic development organization could hire staff to provide the consulting services, or set up a separate organization for consulting services. Some organizations have great success in bringing former executives of local companies out of retirement to do so; such individuals can be a valuable resource if they are motivated out of concern for the economic health of the region. • The EDO engages partners- The economic development organization might contract with local organizations, individuals or firms to provide services. If there is a fee associated with the service, negotiate a discounted rate from the consulting firms. Keep in mind that the difference between the consultant's normal rate and the discounted rate may be tax-deductible as an in-kind contribution of services. In addition to a potential tax deduction, the consultant may also benefit from full-price repeat customers.

workforce and BRE:

• The Role of the School System • The Role of Community Colleges • The Role of Colleges and Universities

Many challenges have the potential to overwhelm the management of small and medium-sized firms, such as:

• The changing nature of supplier relationships; • Corporate outsourcing of services and products; • The increasing need to look abroad in search of new customers and markets; • The need to seek financing from institutions that are headquartered in distant cities (as opposed to locally owned banks).

A successful BRE program provides the data and intelligence to strategically attract new companies to a community and foster the creation of new businesses. Business retention and expansion programs also supply the community with up-to-date data on the local economy, such as:

• The competitive strengths and weaknesses of the local area as a business location. • The relative strength of the local economy (e.g., number of business expansions, new investments, etc.). • Areas of interest and concern that can be used to formulate public policy, enhance development efforts, or improve the local business climate (e.g., workforce availability and quality, regulatory issues, access to capital, speculative building, or industrial park development). • An understanding of the current workforce and the workforce needs of the business community.

Two components comprise an initial assessment of development potential:

• The first is the site itself: its physical characteristics, access, and basic infrastructure. The other component is the location. This refers to the site's relative spatial position within the local context, including the convenience to customers, goods and services, transportation thoroughfares, and mass transit. • Site and location are particularly important in real estate because they are unique assets. A building is fixed in its location, and therefore its value is subject to its surroundings. For example, a building well-suited for retail conversion may be located in an area with poor transportation access.

Process- In regards to the Format:

• The format should be predicated on the strategy selected for the community involvement process. It might include large structured public dialogues, small-targeted meetings, or formal citizen advisory committees. The participants should reflect the culture of the community as well as the task. • A large public meeting can be made more manageable by breaking into small work groups during the meeting. One way to organize this type of meeting is to divide it into three parts: o Plenary session with a welcome, general overview of project, and a description of the task(s) for the meeting; o Break-out sessions where participants work on a specific task in small groups, often with a facilitator; o Plenary session where the break-out groups report their results to the full group. It may be useful to use impartial facilitators for the break-out and final plenary sessions. Facilitators can help manage the process, leaving those involved to concentrate on the issues at hand. • Small, targeted meetings would be appropriate for communities with strong representative organizations. Representatives from all key organizations in the community should be personally invited to attend. Ideally, attendees should have the authority to speak for their organizations. An impartial facilitator might be used at this type of meeting; however, it may be more effective for a well-respected community leader to act as facilitator. Again, this depends on the community and the goals for the process.

Loan Review Process:

• The loan review process involves evaluating the loan application and various financial statements. The main purpose of this review is to assess the ability of the loan applicant to repay its debt. Criteria that are considered include the economic feasibility, financial statistics, and management background and history. • Loan committees composed of a loan officer, supervisor, and a credit specialist typically review loan applications. • THE LOAN APPLICATION provides information on the dollar amount requested and how that money will be put to use. • THE CURRENT AND PRO FORMA FINANCIAL STATEMENTS show the expected future income and expenses of the entity, and cash availability to meet the debt payments. • SUPPORTING DOCUMENTS such as the business plan, lease obligations and marketing and product literature provides additional information on the business. Information on management's capacity includes their business background and experience, whether they have direct operational experience in the particular business.

The Role of the School System:

• The local K-12 schools are the root structure of any functional workforce system. The K-12 educational system provides the critical foundation from which students are able to build and excel to more advanced levels of education. If the K-12 system is not nurtured and engaged appropriately, the overall future of the workforce and economy of that city or region may be in jeopardy. • To produce a highly flexible workforce, it has become clear that local school systems must be better geared to producing workers and that many jobs will require education or special training beyond high school. As a result, a new set of skills has been recognized by the U.S. Department of Labor and the American Society for Training and Development. • Moreover, strengthening the emerging worker pipeline requires a closer look at the K-12 education system and current curricula. Common problems include lack of student preparedness within science, technology, engineering and mathematics (STEM) disciplines. It may be useful for economic developers to meet with the local school board to better understand what curriculum is in place and how it may be changed to better address employer needs.

Phase I: PREDEVELOPMENT (Site, Location, and Site Control):

• The outline of the real property development process bears a strong resemblance to that of a business plan; in essence, it is a business plan for an endeavor, which has the potential to be very profitable or very costly. • Most developers go through the planning process twice for a project. The first pass is a broad-brush attempt to find major problems with the project; if found, the project is likely to be scrapped. • During predevelopment, the developer or business considers possible sites. Alternately, they have a site and they are considering possible building sizes and uses. In discussions with prospective tenants, owners, lenders, partners, consultants, and government staff, the developer does a "quick and dirty" analysis of the project to conceptualize potential fatal flaws. If a project looks favorable, the developer will (if they have not already done so) secure site control.

Political Feasibility (Phase II) INTRODUCTION/OVERVIEW:

• The purpose of political feasibility is to determine if the public sector will approve a viable project in a reasonable amount of time which is the benchmark of potential support or opposition. For each development project or plan, EDOs should plan for community involvement because it is an important part of the development process for various reasons. • While a proposed project may meet market and financial tests, it is not truly feasible unless it has political and community support. Consequently, a community involvement process should include the stakeholders, public regulators, and key elected and appointed officials. • Prior to embarking on a community involvement Process, an economic development organization should develop a community involvement strategy that takes into consideration the goals of the process and a valuation of the community. • Ultimately, the process will vary according to the community involvement strategy developed. In developing a strategy, there are several key factors to consider germane to the process and community. Most community involvement processes include meetings. • The type of meeting will deviate according to the strategy while some aspects remain constant. The project or plan will help define the goals, form, participants, and process of the involvement.

There are disadvantages of special manufacturing/industrial zones as well:

• The real estate community, property owners within the proposed zone, and residents of surrounding neighborhoods will frequently oppose creation of the zone. Thus, high profile support may be needed from the tenant manufacturers, as well as business and political leaders, in order to win approval of the zone. • In the long run, the jurisdiction may forgo additional property tax revenue that would be generated by converting the land to residential or commercial use. • The special zoning designation may not be enough to retain manufacturers, as many older manufacturing areas also have significant infrastructure problems that will be costly to correct.

Small Business Loans

• The relationship between small to medium-sized firms and the commercial banking community has changed drastically as local banks have been acquired by large regional or national banks. • As a result, owners of small and medium sized firms, who were accustomed to dealing directly with senior executives of a hometown bank, now often must work with mid-level loan officers whose superiors are located hundreds of miles away. • These loan officers typically have little individual discretion in making decisions to extend credit. For example, they are frequently unable to offer flexibility on the bank's standard collateral requirements regardless of how sound the remainder of a firm's loan application is. • There are several loan programs available through the U.S. Small Business Administration (SBA) that can be used to help firms that are unable to obtain some or all of their financing through conventional sources. • Additionally, many states and regions have set up programs such as revolving loan funds that can be tapped to provide firms with low-cost financing. Other options include 504 lending entities and community development corporations (CDCs).

For this phase, they address three feasibility concerns:

• There must be a sufficient market demand; that is, market feasibility. • It must provide a sufficient return on investment; that is, financial feasibility. • It must be approved by the public sector; that is, political feasibility.

Disadvantages of industrial parks include:

• They may require heavy public subsidies, thereby provoking criticism that the jurisdiction is abandoning its investment in existing manufacturing districts. • Several well financed, growing manufacturers need to exist in order for the park to be feasible.

Many communities have established a tiered system to give the following reentry priority:

• Tier 1: The first tier is commonly reserved exclusively for reentry of agencies/groups involved in emergency response. This tier includes search and rescue personnel, emergency healthcare staff, utilities and infrastructure repair personnel, damage assessment teams, and predestinated government staff. In the case of Jefferson Parish (near New Orleans), credentialed businesses and industries whose facilities pose a public safety concern, environmental threat, or other substantial danger are also allowed access. • Tier 2: The second tier is limited reentry for other important groups that can include: relief workers, healthcare agencies and suppliers, insurance agents, business operators such as important food and building material retailers, fuel distributors and stations, debris management, financial institutions, and select businesses with unique circumstances (fragile inventory, hazardous waste, large workforce, global distribution, etc.) • Tier 3: The third tier allows open access for all remaining residents and business operators (not allowed under tier 2) that can prove they live, own, rent, or lease in the restricted area. This tier also includes licensed contractors, other repair service providers, and family and friends who re-enter with an eligible resident. This tiered reentry system will facilitate timely reentry of critical businesses to assist in the community's recovery effort. Without a reentry plan, the local economic recovery engine will be severely hampered at a time when the community needs this engine to be available. Preparing a tiered reentry system also assists community stakeholders in administering recovery efforts in a more timely and organized manner. This tiered reentry system will facilitate timely reentry of critical businesses to assist in the community's recovery effort.

Title I of the legislation is based on the following elements:

• Training and employment programs must be designed and managed at the local level, where the needs of businesses and individuals are best understood. • Customers must be able to conveniently access the employment, education, training, and information services they need at a single, nearby location. • Customers should have control over their own career development. They should be able to choose the training programs that best fit their needs and the organizations that will provide that service. • Customers have a right to information about how well training providers succeed in preparing people for jobs. Training providers will provide information on their success rates. • Businesses will provide information, leadership, and play an active role in ensuring that the system prepares people for current and future jobs.

Selection criteria include the consultant's:

• Understanding of the project; • Approach to the project; • Experience with similar assignments; • Staff qualifications for the project; • Clarity of proposal; • References and contacts from prior project engagements.

The significance in communities making provisions for new infrastructure:

• Up-to-date, well-maintained infrastructure is important to most businesses. They may be unable to thrive without access to good transportation systems for shipping in raw materials from suppliers and shipping out finished goods to customers. • Some manufacturing operations must be able to dispose of wastewater generated by their operations, either by treating it at an on-site treatment facility or by connecting to the local sewage system. Telecommunications infrastructure (e.g., fiber optic telephone cabling, etc.) has become extremely critical in recent years, as high-speed data transmission capabilities are becoming necessary across a wide range of industries. • A community must be prepared to make changes to the existing infrastructure as local business needs change. If a business EXPANDS or DIVERSIFIES, or as TECHNOLOGY NEEDS CHANGE, so must the physical environment that serves the business.

An analysis of the neighborhood should include the following questions:

• What is the perception versus actual crime levels in the area? Have they gone up or down in the recent past? • Has the neighborhood implemented crime-prevention tactics, such as better lighting, a neighborhood watch, and increased police patrolling? • Does it look like there might be an emerging residential community? • What is the average income level and general spending habits of the residents? Is there a healthy consumer base and labor supply? • What is the character of adjacent properties? Are there many vacant buildings in the area? Have they been purchased recently? Are buildings being renovated or have rehabilitation potential? • How are the aesthetics? Is the area clean? • What other businesses are in the neighborhood? • How are existing neighborhood businesses performing? • What types of units are available for rent and at what cost? Is there an unmet demand for a particular type of rental space?

The following are questions to consider when looking at the site:

• What is the topography and shape? How well will the site accommodate development or reuse? • How does the site "read" from the road? Is it easily visible from important high-traffic corridors? How does it look from the primary approach route? • Do nearby roads allow for easy access to the site? • How accessible is the site for private vehicles? Pedestrians? Mass transit? Truck and rail service? • What is the lot size? Is it adequate to support parking? If not, is affordable parking available? • Are utilities and public services (police, fire, etc.) affordable and adequate?

While a thorough market analysis is use-specific, there are some general questions that guide a brief analysis of regional characteristics:

• What kinds of businesses seem to be doing well in the neighborhood? Do they have plans for expansion? • What income brackets characterize local neighborhoods? • What is the regional transportation infrastructure system like? Does it provide ready access to the site and thereby increase access to a larger market? • What are the commercial traffic patterns among principal and supporting activities? • Is there access to mass transit? What is the level of usage by day, week, and hour? • What are private vehicular traffic patterns like? Where are the major thoroughfares? Are there any planned improvements or new routes? • Is there heavy-truck or rail service? What kind of uses could this site serve? • What is the size and location of the nearest airport? • How is transportation access to relevant support services, suppliers and labor? How long does it take to travel to the site from their locations?

Ultimately the market study should provides a basis for determining the highest and best use of the development site. In the end, a market analysis on the subject site should address the following questions:

• What products are appropriate for this market? • What will tomorrow's customer demand? • What is the appropriate timing and phasing for this project? • What is the appropriate quantity and mix of uses for this project given the market? • Are there financial considerations that the market alone will not bear? • How can this project be best-positioned in the competitive marketplace?

Collect Critical Emergency Contact Info from Local Businesses:

• When a major disaster strikes, communication channels are commonly disrupted at a time when the community needs them most. EDOs should prepare to have several different ways of contacting local businesses. Disasters can knock out electricity, which means that internet and email are inaccessible. • Cell phones can also be down for a period of time, but their text functions may still work in an emergency situation. Therefore, EDOs should make sure to collect the cell phone numbers of key executives in the business community ahead of time. • An online registration system is a useful tool for collecting this information. Businesses can register online and provide basic company information and alternative contacts prior to a disaster. If the area is hit by a disaster, this information allows economic developers to contact local businesses, identify the impacts of the disaster, and determine the business community's most immediate needs. Online registration systems can also be streamlined with existing BRE software programs.

List & describe the US Dept of Labor Programs supporting workforce development:

1) Adult Training Program (increases employment retention, earnings, & increases occupational skill attainment to improve quality of workforce, reduce welfare, & enhance the economy) 2) School-to-Work (enacted in 1994 to establish a system helping students transition into workforce thru skills training) 3) Perkins Vocational-Technical Education Act (1998-established to improve Vo-Tech student achievement & prepare students for further education and careers. Perkins III promotes reform, innovation, & continuous improvement in vo-tech education to meet industry skill standards) 4) Tech-Prep Model (2+2 - students spend the last 2 years of high school pursuing specialized training curriculum followed by 2 years at community college and local apprenticeship) 5) Certificates of Initial Mastery(to be attained by high school students by age 16, it guarantees basic reading, writing, & computation skills)

List common performance-based management tools:

1) Clawbacks (sanction applied against a company that fails to achieve performance goals in incentive agreement) 2) Calibrations (tool for fine-tuning terms of an incentive package at some future point thru variable interest rates on loans, conversion of loan assistance to grants, or sliding scale repayment terms) 3) Balancing accountability with a pro-business climate

The National Disaster Recovery Framework (NDRF) has six Recovery Support Functions:

1) Community planning and capacity building, DHS and FEMA 2) Economic, EDA 3) Health and social services, HHS 4) Housing, HUD 5) Infrastructure systems, Army Corps. of Engineers 6) Natural and cultural resources, DoI

List the Top 10 "red flags" for an at-risk firm:

1) Declining sales/employment 2) Larger non-local corporate ownership 3) Recent ownership change 4) Expiring leases 5) Competition in same service/product field 6) Negative community attitudes 7) Unbearable regulatory burdens 8) Union contract expiration 9) Expanding employment/sales 10) Facility/site expansion plans

List and explain various export assistance resources:

1) District Export Councils (members appointed by Dept of Commerce from a cross-section of public & private sector users & providers of export assistance services, focusing on trade financing, counseling, outreach & education) 2) Export-Import Bank of the US (City/State program assists SMEs guaranteeing working capital loans & providing short-term credit insurance covering 95% commercial and 100% political risks for exporters 3) World Trade Centers (offer research & info on trade opportunities, world markets, govt regulations, tariffs & taxation along with seminars, training & language instruction) 4) Defense Diversification Resources (for communities affected by Base Closure & Realignment Commission to reposition manufacturers for non-defense production) 5) Office of Economic Adjustment Planning Assistance (thru Dept of Defense, a source of planning funds & technical assistance for defense conversion activities in communities with a direct & significant impact from a base closure) 6) Defense Conversion Assistance Programs (thru EDA's Title I Public Works, Title IX Economic Adjustment Assistance, & Title II Technical Assistance providing revolving loan funds, infrastructure improvements, manufacturing networks, technical assistance, and grants)

I Disaster Preparedness:

1) Engaging Business Community in Disaster Preparation: 2) Educate Local Businesses on Business Continuity Planning: 3) Collect Critical Emergency Contact Info from Local Businesses: 4) Establish Remote Server to Back up BRE Database: 5) Establish a Tiered System of Business Re-entry: 6) Create a Bank Consortium: 7) Prepare Media Messages and Communication Channels:

Strategies for Retaining Businesses after a Disaster:

1) Establishing a Business Recovery Center 2) Delivering Services through a Case Management Approach 3) Communication and Outreach 4) Deliver Business Recovery Workshops 5) Providing Financial Services in Short- and Long-term 6) Effective Use of Incentives

List and describe 3 structures of business networks:

1) Formal networks-offer a mechanism to aggregate and project the voice of the cluster, provide insight into an industry's needs; 2) Horizontal structure network-cross-sectoral (common customers, technology, distribution) ; 3) Vertical structure network-single sector, interrelated for specific purposes;

Explain the various stages of survey follow-up:

1) Immediate (within 2 days, determine red flags) 2) Short-term (2 weeks, thank you, compile results, create files) 3) Medium-term (4 weeks, internal & external responses to requests) 4) Long-term (3 to 4 months, update firms on progress dealing with issues)

The benefits of financial analysis:

Financial analysis helps the lender and economic developer decide whether a loan should be made and under what conditions. It determines to a reasonable extent, the ability of an entity to service its debts. Financial analysis involves a systematic examination and interpretation of a venture's past and current financial performance for the purpose of predicting its future viability and ability to repay its debts. Analysis of financial statements can also help to identify factors, operating or financial, that may affect the success or failure of a venture. It can also help economic development practitioners diagnose business problems for which public assistance may be of use.

The limitations of financial analysis:

Financial analysis is not an exact science nor is it an end in and of itself. It focuses on a company's past and current financial performance and uses generic benchmarks or indicators of financial stability. It also depends heavily on the reliability of the information presented. Many factors in the statements are subject to varying interpretations, which can greatly impact analysis.

Screening the borrowers entails setting borrowers qualifications and the process of screening :

Project screening constitutes the initial conversation with potential customers on issues concerning how their plans fit with the program's economic development goals, and the availability of services that fit their needs.

Two Main Forms of Capital

Debt Financing, Equity Financing

Current Liabilities

Debts that come due within the same time period as current assets

Demand Analysis:

Demand Analysis determine how deep is the overall pool of customer (residents, tenants, etc.) for the subject project in the marketplace. It also addresses whether the market demand is growing or shrinking as well as if the needs of the market changing over time. Demand modeling addresses the issue of overall level of potential market support. It provides a quantitative, forward-looking context to the competitive market analysis and identifies underserved markets where pent-up demand may exist. It quantifies the total pool of potential consumers for a particular real estate asset (shopping center customers, office tenants, apartment renters, homebuyers, etc.) and determines the likely amount, type, and pace of market capture that a particular real estate project is likely to experience. Demand modeling varies by the type of land use. Residential demand modeling may take into account existing and potential future households and their housing preferences. Office demand modeling may be subject to accurate employment growth forecasts. Retail demand modeling often depends on not only household spending, but the extent to which retailers themselves are changing and growing and whether they could justify a new store location. In general, demand models attribute a majority of demand potential to the Primary Market Area and a subset of demand potential to a Secondary Market Area. Delineating these market areas is a function of primary research and market knowledge, and is the result of integrated analysis of all of the above factors. Demand analysis often includes "capture rates", which are often the art that drives significant portions of the analysis. However, capture rates are often subject to discussion and the result of some level of professional judgment.

Joint Venture Agreements:

Developers often enter into joint venture agreements with equity partners. Such partnerships are used to raise equity capital and spread risk among a number of investors. Equity partners are often brought in once the initial feasibility studies have been completed and the project has demonstrated a solid profitability potential. Equity investors are sometimes brought in upon project completion, allowing them to avoid the development risk but reap lower expected returns than they would, had they invested earlier. The partnership could be comprised of individual or institutional/cultural partners sharing in decision-making, equity investment and liability risk. Alternatively, the partnership could comprise genetal and limited partners.

Indications That a Firm May Be At-risk:

Developing a profile of an at-risk firm can be difficult at the start of your BRE program, since you may have limited information concerning your local business community. As you and your organization gain experience, you will develop a much better sense of general indicators of an at-risk firm (e.g., declining sales or employment), as well as indicators specific to your community or region (e.g., the decline or restructuring of a key local export industry). One of the more successful business retention programs in the U.S. was operated by the Oakland (Calif.) Commerce Corporation for nearly 20 years, starting in 1989. Using a one-page mail survey for initial company assessment, OCC officials developed a list of ten early warning signals or "red flags" that

Development Recommendations:

Development Recommendations assesses how do the above factors play against each other and inform recommendations as to product program, timing/phasing, implementation strategy, prices/rents, and product types. The development recommendations may be strategic in nature and outline a business plan, or may be static in nature and outline conditions that must be met before a project becomes viable. Recommendations may be geared towards the developer or the EDO, and often inform an understanding of the level of involvement required by the public sector or the expected outcome of a particular real estate development venture.

The structured Processes:

Facilitation: Facilitation is a "voluntary, informal, and flexible process of communication guided by a neutral professional. In addition to mediating conflicts, facilitators can identify stakeholders and issues, clarify roles and responsibilities guide parties to a common understanding, and build a partnership among groups and diverse interests. Facilitation aims to reduce conflict, ensure all stakeholders are heard, and formalize a community involvement process, and keep the project on track. Mediation: The next level of intensity in alternative dispute resolution is mediation. ''Mediation uses a neutral third party, typically with no decision-making authority to aid in negotiations that are stalled or particularly problematic. It is a voluntary process in which mediators can assume a variety of roles from facilitative, that is, assisting parties to develop their own solutions, to evaluative, meaning providing recommended settlement terms. In particular, mediation could be useful when parties are at an impasse or a resolution is needed in a short amount of time. Mediation is also appropriate when facilitation has proven to be unproductive or if the parties will need to work together after the dispute resolution process. Arbitration: When facilitation and mediation will not work, arbitration may be the best alternative. Arbitration can be binding or non-binding and involves a neutral third party who renders a decision at the end of the process. Binding arbitration is less formal than litigation, but decisions can be enforceable by law. Non-binding arbitration follows the same process as binding arbitration, but the arbitrator's decision is advisory. In both types of arbitration, the parties develop rules and procedures for the process and each side is obligated to follow them

A successful BRE program includes the folowing characteristics.

Industry Knowledge- Develop a clear understanding of the industries comprising the local economic base. This includes the industry trends influencing the competitiveness of local firms. Remember that growing firms exist in declining industries and declining firms exist in growing industries. Primary Knowledge of Firm Needs and Priorities- Know what local and external issues confront the firms in your community. Give priority to community factors that are most important to local companies and also those over which you have some control. Professional, Customized Service- Use high-quality, individual business services customized for a companies' changing needs. Be seen as a professional account executive that educates companies about new opportunities and continuously introduces the company to useful new services and resources. Outcome-Oriented- Adopt an outcome or result orientation in service delivery. Work with the company to define expectations and impact. Assess immediate customer satisfaction with the service provided and evaluate longer-term impacts. Favorable Business Climate Focus- Encourage a favorable business climate overall. Seek efficient, leveraged and systematic approaches to solving business retention and expansion problems. Gain community leaders' policy support to undertake broader improvements that may help firms. Coordinate Services- Employ a coordinated service-team approach to assist companies that require services from multiple agencies or programs.

There are various methods to achieve positive media coverage:

Press Releases Press releases are generally the best vehicle for reminding the news media that your BRE program is actively working to keep jobs and businesses in the community. Events that are typically publicized through press releases include loans made to retain or create jobs; expanded incentives and assistance available through your program; and periodic updates (quarterly or semi-annually) of your program's benchmarks (e.g., number of firms assisted, number of jobs created and retained, and dollars of private investment leveraged through your program's assistance). Press Release Tips: • Lead off with Who, What, Why, Where, When, and How . • Use first name, middle initial, last name, and tide the first time you mention a person . • Send the release directly to the editor's attention. • Type release instruction in the upper right hand-comer. Be as specific as possible. For example: FOR IMMEDIATE RELEASE or FOR RELEASE AFTER JUNE 10. • If the release is more than one page, number each page and type "continued" on the bottom of each page. • Type the source of the release in the upper left-hand column. Op-Ed Pieces/Letters to the Editor Opinion pieces and letters to the editor promote the importance of business retention and expansion as a key part of your community's economic development strategy. Meet Directly with Editors or Producers Regular meetings with the editorial boards of local media can build and maintain support for BRE efforts, and also alert you to potential criticisms and problems. Social Media Social media such as Twitter, Facebook and LinkedIn give economic developers the opportunity to share the results of a BRE program firsthand. Many journalists, business owners, residents and other community stakeholders use these media, through which a smart practitioner can convey a consistent, positive BRE message.

Preparing for the Visit:

Prior to beginning outreach, the BRE program must determine which subsets of the business community it will target. It will not be possible, nor should it be the responsibility of the program to reach out to every single business in the community.

Under the law, bonds may qualify for tax exemption as a public use general obligation or revenue bond if they adhere to all of the following tests:

Private Business Use Test- no more than 10% of the proceeds are used directly or indirectly in the business of a person other than a state or local government unit Private security test- No more than 10% of the principal and interest on the bonds may be secured by either an interest in the property used by a private business or by direct payments from property used by a private business. Related use test- Although up to 10% of a bond's proceeds may be used for private business purposes, no more than 5% of the proceeds may be used to private purposes unrelated to the project being financed. Private loan test- If more than 5% or 5 million, whichever is less of bond proceeds are loaned directly to someone other than a governmental entity, the bonds will fail the test and be considered private activity bonds. Given these tests, most stadiums and many other economic development projects, do not qualify for tax-exempt status. The same goes for TIF bonds. Depending on the use of the bond proceeds, they may or may not be tax exempt.

A cluster-focused BRE program begins with surveying businesses in the targeted cluster:

Questions should address both a business's satisfaction with local amenities and the importance of those amenities to business success. After identifying the gaps between the factors that are important for business development and the satisfaction ratings for each, respondents can participate in a cluster-based focus group to identify specific needs. This information is then passed on to BRE team members to respond accordingly.

Long-term economic growth strategies must include methods to replenish funds that have been dispersed for business development:

RLF self replenishing money pool meets this economic development need. Since most states prohibit the use of local revenues for private business assistance, public financing of private economic development traditionally has been capitalized and recapitalized with federal and state monies. However with RLFs, federal funds can be used to leverage further private investments, sometimes producing loan pools with five or six private dollars to each public dollar. Because of their involvement in RLFs, private investors often influence how RLF loans are made.

Request for Proposal (RFP):

The most rigorous selection process is the RFP. It is recommended that the issuing agency distribute the RFP to as many groups or entities as possible. The consultant must submit a full proposal to be considered. The RFP typically is advertised, mailed to a list of possible consultants, and posted on the website. The RFP clearly explains the project specifications, discussed previously, that the agency prepares before retaining a consultant. In addition, there should be a description of the project and services required. The description of required services is very important because consultants will base their response to the proposal on that description. It should be clearly written and consistent with other parts of the RFP. In describing the proposed tasks, the RFP should provide enough detail, including the number of required meetings with agency officials, for the consultant to make realistic cost estimates. The RFP not only conveys information but also acts as a marketing tool. A good RFP should be well organized and written so that it encourages the consultant to invest time and money into a thoughtful response. The RFP should include instructions for submission. Such instructions should include the time, date, and location of submission, as well as submission requirements such as a cost proposal, and an outline of what should be provided in the consultant proposal. Agencies may wish to include budget information or set a budget. Alternatively, they may ask the consultant to propose a budget and make the consultant's cost one of the selection criteria. By excluding the budget, the agency encourages the consultant to price their response competitively. However, it is difficult to compare responses with wide variations in budget. Therefore, agencies may wish to provide a budget range or have a target budget in mind.

Understanding the Objectives

The objective of a BRE program is to identify and address local businesses' needs in order to retain the businesses or help them expand. The extent of the program will depend on the community, the budget of the EDO, additional efforts conducted by other local organizations and the concentration of businesses in the area.

The overview of contracts Among Private Participants:

The size and depth of the development team depends on the complexity of the project. For larger projects, development teams have a number of players. The team may include members with specialized expertise from different firms. Smaller projects, where profits are often smaller, sometimes make do with individuals who have proven experience and expertise in a number of fields, such as architects with knowledge of structural or civil engineering.

Example of online registration systems:

The state of Florida offers a good example of an online registration system. Elsewhere along the Gulf Coast, Louisiana has developed the nation's only Business Emergency Operations Center at Louisiana State University to assist businesses in times of disaster. Economic development organizations (EDOs) that provide disaster preparedness and continuity planning further build relationships with business owners and maximize the potential to retain businesses after a disaster strikes. Businesses will regard the EDO as truly concerned about !heir ability to survive and remain profitable in the community. The ability to communicate with businesses immediately following a disaster also can help prevent poaching by other states.

Follow-up surveys and interviews should evaluate the following:

• Impact on the business: Were there any changes in the following: sales; sales per employee; business profitability; competitiveness of products/ services; new product capacity; changes in purchases from suppliers; exports; quality; or availability and productivity of labor? • Effectiveness of assistance to targeted businesses: To what extent did the program provide services to the targeted businesses? Were the services appropriate, or is there a need to develop more specific programs for targeted businesses? • Jobs created and retained: Although difficult to assess from the outside, discussions with business owners and managers can create an accurate picture of the number of jobs that were retained or created because of the services provided. This is the most commonly measured impact of a BRE program. Economic development practitioners need to be aware of any jobs created in their region that was simply transferred from another part of the region. In this case, the actual net job growth was zero. Counting these jobs would paint an inaccurate picture of job growth. • Effectiveness of leveraged resources: Because there are so many potential partners involved in a BRE program, it is important to measure the use of these various resources. Which resources were best leveraged and why? Which resources were not used as frequency as expected, and why? • Impact on community: The impact on the community may take longer to realize given the time it takes to see changes in tax cycles. After two years, an assessment should be made of the increased revenues to the community and state through increased income and taxes. Other factors to consider include a decrease in unemployment rates, reduction in public assistance payments and an increase in the repayment of loans.

STRATEGY AND FACTORS TO CONSIDER (Continue) :

• In active communities with a solid organizational infrastructure, it is important to involve the community from the beginning and include representation from all of the stakeholder groups in an inclusive and ongoing process. For other communities, it may be sufficient to work with a few key strategic organizations for a limited time (Area History & Culture). • The nature of the development and the extent of regulatory changes affect the amount of necessary community involvement. The reuse of a small building in a commercial strip may require little community input. In contrast, new construction of a large commercial space near a residential neighborhood may require a long, intense process (Project size). • Again, after identifying stakeholders, look for capable community leaders who can make a time commitment. They should become leaders and representatives for the plan (Leadership). • The process for plan adoption is also a factor. Occasionally, there is soft approval where the city council or a board approves a plan without legal implications. However, potential contentious changes such as the formation of a tax-increment financing (TIF) districts, blight declarations, re-zoning and variances have a greater impact on the community and may require more public involvement in the process (Complexity).

The Role of Colleges and Universities:

• In many ways, colleges and universities are the quintessential anchor institution, in that their physical infrastructure, employment base and even brand are the fabric of the community where they are located. The college or university has a substantial investment in its physical plant and facilities; it cannot simply relocate if it becomes disenchanted with its host community. • Finally, a university may be the best institution to encourage partnerships among local governments and organizations for a regional BRE effort. For example, the university's business school could beta-test the BRE survey, apply advanced statistical methods to the quantitative results, and even supply an intern-based workforce to meet with businesses in the community on a regular basis.

(Process) In regards to Publicity and Public Participation:

• In regards to publicity and public participation, the process could be open to the general public or limited to an invited group of representatives from key organizations. The participants should reflect the culture of the community as well as the task. • For instance, in a community that requires broad participation before decisions are made, the process should be open to the general public and widely advertised using posters, e-mail, web sites, newspapers, civic organizations, churches, and newsletters. • In a community that relies on organizations or public officials to represent their interests, less publicity might be appropriate. In this type of community, officials and representatives from key organizations should be identified and invited to participate. Involvement of key leaders is significant.

Incentives for BRE:

• Incentives are usually related in the public mind to attracting and recruiting companies, but incentives are also an important tool in BRE programs. This is especially the case when other communities are seeking to persuade firms to relocate. The rationale behind BRE incentives is that it is much easier to keep jobs in the community than to create new ones, and companies that invest are more likely to stay. There are many kinds of tax incentives, including tax exemptions, abatements and credits. • Unlike recruitment incentives, retention or expansion incentives may not be tied directly to job creation, and may reward businesses for improving operational efficiencies that can even mean a loss of jobs. Or, incentives can be linked to significant new investment dollars for equipment and machinery. Texas was one of the first states to develop a tax code specifically to permit incentives for the retooling of a manufacturing facility. • There are myriad ways that a community or a state can adopt new incentives to attract and retain jobs. However, those incentives should be crafted in a way that works both regionally (i.e., incentives should not be designed to attract jobs from neighboring communities) and in the local and state environments.

Effective Use of Incentives:

• Incentives can also be used in times of disaster to provide a boost to the most viable businesses. Typically, incentives are focused on reducing the cost of doing business, increasing the flow of capital for business recovery and growth, persuading businesses to reinvest, and prompting real estate investors to further invest in impacted areas. Local and state tax incentives related to property, equipment or investment can also be used as financing mechanisms to reduce the chance of firms relocating or closing permanently. • There are many types of incentives serving different purposes, and EDOs should develop a strategy to ensure the right mix of incentives is available. EDOs can examine how other communities and states have developed or advocated for incentives to encourage redevelopment and reinvestment in disaster-impacted areas.

Selecting a Developer:

• When an EDO wants to develop a piece of property for the private market, it usually contracts for those services with a private-sector developer. This process of solicitation and selecting a developer is often initiated through a request for qualifications (RFQ) or request for proposals (RFP). • An EDO may first issue an RFQ, followed by a RFP. RFQs are used to do an initial evaluation to create a smaller pool of potential developers to respond to an RFP. • Submission requirements are usually limited to a letter stating developer's expression of interests, corporate qualifications, examples of past projects, references, and resumes. • After developer make it past the first cut, the short-list developers are more likely to provide a serious response to the more costly, time-consuming RFP. • The RFP requires the developer to submit a detailed response on how they will finance, develop and operate the project, and the roles and responsibilities of the public and private sector parties. • In some cases, an EDO may sole-source (no bidding) development. • Often, RFPs are issued for publicly owned property. However, in some cases, an RFP is created for privately owned property. The EDO may request development proposals without having ownership of all of the necessary parcels. In these situations, if accepted, issues related to property acquisition should be addressed prior to issuing the RFP. Sometimes an RFP is issued for unspecified properties. Here, the agency specifies the subsidy and desired development, opening competition to multiple sites within a target area. • Developer RFPs are a means of introducing competition in a development project. Ideally, competition ensures that the developer who is eventually chosen has the skills and expertise necessary to bring a project to fruition. Competition also allows a municipality to maintain some control over the project while leveraging public investment. • An agency should never issue an RFP without first gaining community consensus on the project's broad concept and objectives. The creation of the RFP solicitation document often helps clarify issues and build consensus. • An agency should also be aware of state-competitive bidding laws. Laws may require that certain aspects of the RFP process, such as land conveyance, be competitively bid. The RFP may be structured to satisfy the bid requirements. Alternatively, the agency could set legitimate conditions upon which the selected developer wins the competitive bid. • An RFP is a marketing tool and should be prepared as such. It introduces the site concept and opens the opportunity to the development community. It should clearly describe the development opportunity, define development parameters, and describe the development agency's objectives.

In addition, it is important to go beyond merely reporting data and to instead understand the big picture and connections between the data points. Questions to consider include:

• Where are we located in the economic cycle? • How does the local economic cycle compare with the national economic cycle? • Is current growth supported by solid fundamentals? • How are demographics shifting nationally and locally? • Where is growth occurring? • Where is the geographical path of growth in this region? Economics and demographics will ultimately make or break a project's future. Therefore, a forward-looking approach is critical to an accurate analysis of economic and demographic factors. Being able to project forward trends in economics and demographics is far more important to the real estate project than simply examining historical data. For instance, changing consumer preferences for communities that are walkable or transit-oriented may mean that tomorrow's demand may be different from yesterday's demand.

Whats required to work with a lender:

• Whether playing the role of a subordinate lender or one that helps a business obtain a loan, economic development professionals need to work with other lenders. The economic development practitioner must understand the lender and the borrower and be an advocate of the borrower to the lender. • The economic development practitioner must build effective working relationships with the lenders, including negotiating and mediating, if the need arises. This includes investing time in personally meeting the lender one-on-one along with the borrower. Meeting lenders one-on-one also can generate other deals so it is an important marketing strategy. • The practitioner needs to be ready and responsive to the lenders questions and promptly provide details and documents when required. Obtaining approval of the lenders requires good people skills, relationship building, and constant follow-up.

Taking Action- Once a community has established a set of realistic and actionable goals for the BRE program, the next step is to create an action plan that lists each objective, along with details concerning how the goal or objective will be achieved:

• Which persons or groups are responsible for achieving the objective? • What specific programs and initiatives will be used to help achieve the objective? • What is the budget for achieving the objective? • What is the target date for achieving the objective?

Determining the approach to take (access or induced) depends on the mission and objectives of the fund. Questions that practitioners should ask public and private stakeholders before developing a RLF:

• Will it preserve and expand services and products available to targeted areas by small businesses? • Will it preserve and create employment for low- and moderate-income individuals in small business? • Is a RLF the best possible way to diversify the business base though the creation of minority and women-owned business? • Will a RLF revitalize commercial districts or corridors?

Establishing a Business Recovery Center:

• Within the first couple of weeks after a disaster a community should establish a business recovery center to meet pressing needs in the business community. A business recovery center (BRC is a one-stop shop set up to provide local, state, and federal resources to businesses after a catastrophic event. • The BRC can also carry out a number of communications and outreach strategies (see later section titled "Communication & Outreach',). Because a BRC's services are tailored to address business needs, it is typically established separately from FEMA disaster recovery centers to avoid confusing individuals who need social services. • An EDO often takes responsibility for establishing the center and engages the participation of community stakeholders. Most disaster-impacted communities should have the BRC up and running within two weeks of the disaster.

Federal Programs:

• Workforce Investment Act (WIA) • U.S. Department of Labor Programs 1. Adult Training Program 2. Carl D. Perkins Career and Technical Education Act of 2006 3. The Tech-Prep Model

(Loan Documentation) Once a loan has been approved, the lender must:

• Write up a letter of commitment that outlines the terms and conditions of the loan • Qualify the security and liens of a loan. This step may require written agreements with other lenders to clarify the security position.