Economic Development 101
This is a job that produces goods and/or services for customers that are predominantly outside the community. This creates new “outside” dollars for the community. Once an employer is paid for the products and/or services, he distributes that wealth in the community through wages paid to employees and through suppliers.
There are two main functions that an economic developer performs in order to attract business.
- Provide information and assistance to companies that are interested in the developer’s community for relocation. Economic developers do not create new jobs. They provide information and assistance to companies who create new jobs. A good economic development program strives to have the most comprehensive and current information available on the following:
- Local demographic data
- Quality of life
- Public infrastructure
- Business assistance programs
- Real estate, taxes & regulations
- Market the community to targeted business industries. Like any company, a consumer won’t buy your product if they aren’t familiar with it. To avoid this, an economic developer’s job is to market the community to businesses in “targeted” or specific industries best suited for the community. Marketing activities often include:
- Website development
- Recruitment trips to targeted areas
- Print advertising
- Site selection conferences
- Multimedia presentations
- Public relations
Economic developers work with elected officials and community partners to ensure that a positive environment for business growth exists in the community. The same things that attract new employers will keep existing firms in the community. These factors include:
- Proximity to markets
- Local labor skills and availability
- Quality of life issues
- Proximity to major universities
- Ease of international travel
- Tax and regulatory environment
- Cost of doing business
- Concentration of existing industries
There are a multitude of reasons why companies choose one location over another. It is the role of an economic developer to understand a company’s needs and to portray the area in a positive light. According to Area Development Magazine’s Corporate Survey 2010 of corporate decision makers, the top 10 site selection criteria are:
- Availability of skilled labor
- Labor costs
- Highway accessibility
- Energy availability and costs
- Availability of telecommunications services
- Tax exemptions
- Occupancy or construction costs
- State and local incentives
- Proximity to major markets
- Availability of land
The Role of Economic Development
In the late 1970s, the Texas legislature passed the Development Corporation Act which allowed a municipality to create a non-profit development corporation that could promote the creation of new and expanded industry and manufacturing activity within the city. At the time, development corporations were not legally allowed to receive funding from the state or local governments because of a Texas constitutional prohibition. In 1987, the voters of Texas approved an amendment to the State Constitution that said expenditures for economic development could serve a public purpose. Quickly after, the state approved the funding of these development corporations through sales taxes. The purpose of this economic development corporation was, and still is, to bring primary jobs to Texas.
- A primary job is one that produces goods and/or services for customers that are predominantly outside the community. An example is any good or service being sold and distributed nationally or internationally. Once an employer has paid for the distribution and sale of products and services, the wealth is distributed inside of the community through wages paid to employees and through suppliers. By housing primary jobs within your city, new “outside” dollars contribute to the growth of the community’s economy.
- In partnership with primary jobs, there are secondary jobs. A secondary job is when products or services are sold inside the community. By creating local businesses and selling goods inside the city, money is circulating throughout the community. In order to keep a stable economy, a community needs a balance of both primary and secondary jobs.
- A third important factor of a city’s economy is the overflow of money. This is when citizens take their business elsewhere. This could include online shopping or travel.
A thriving economy benefits the community as a whole for a number of reasons. As “outside” dollars make their way to the pockets of community members, it is then used to purchase goods and services from companies within the city limits. At the end of the day, it affects every citizen by generating tax dollars for the economy and stimulating job growth. When you consider local communities are flush with cash, thanks to their local sales tax allocation earmarked for economic development, projects in business development and community development are going to chase those dollars.
Here in Saginaw, these projects include developments such as The Beltmill, The Square, United Commercial Development (UCD), and Victory Development among many others. It also includes the revitalization (redevelopment) of Saginaw’s older mature sections of town, Economic development does not just involve attracting outside dollars. Most communities also include small business development and business creation in their definition of local economic development as well.
As Saginaw continues to grow through emerging start-ups and recruitment efforts for our great community, the money poured into the economy is used to better the quality of life for its community members. This can include improved infrastructure, the creation of parks and the addition of bike lanes, to name a few.
Along with the two main components of economic development, there are also two main functions: attraction and retention. It is the role of the Saginaw Economic Development Department to provide information and assistance to companies that are interested in the developer’s community for relocation or expansion. This also includes marketing the city to target business industries best suited for the community. Economic developers do not create new jobs, they provide information and assistance to companies who create new jobs.
Economic developers also work with elected officials and community partners to ensure that a positive environment for business growth exists in the community. The same factors that attract new employers will keep existing businesses in the community. These factors include, but are not limited to, proximity to markets, a skilled and ready workforce and quality of life.
While a city invests in its citizens, it simultaneously builds a place where people want to live and businesses want to come. Whether the industry is health care, energy, manufacturing or somewhere in between, our commitment at the City of Saginaw to helping business grow and succeed is unparalleled.
With one of the most highly educated and economically diverse communities in the region, high-quality education and great quality of life, there is no better place to set up shop than Saginaw, Texas.
Here are some common comments that we hear:
- "We have a low unemployment rate."
- "We can't handle the growth we have."
- "We currently have a worker shortage."
- "Faster growth will hurt our quality of life".
What are the answers? How can we respond to those questions?
- Economic base diversification
- Strategic planning
- Infrastructure improvements
- Worker training and upskilling
- Disaster preparedness
- Helping marginalized populations enter the workforce
- Helping businesses tap into diverse labor pools
- Helping entrepreneurs and small businesses start and expand
- Improving educational systems and offerings
Why A Business Retention and Expansion Program Matters
- The main goals of business retention are to provide assistance with issues that could force a company to fail or close, and to prevent companies from relocating to a new community.
- The main goal of business retention is to help businesses grow!
- A successful Business Retention and Expansion (BRE) Program also provides data and intelligence to strategically attract new companies to a community and foster the creation of new businesses.
- Finding land or buildings for future operations
- Securing financing for new equipment or operations
- Finding or training new workers
- Help with permitting, licensing, or infrastructure needs
- Technical assistance for exporting, market development, post-disaster continuity, and other growth opportunities and challenges.
- Businesses benefit from community support to solve problems that would cause them to fail, close or move away.
- People benefit from having local job opportunities (choices among a range of employers, types of jobs and industries) and local access to shopping and services.
- The community benefits from a stable tax base, business civic engagement, vitality and local pride.
- Preserves and increases local jobs
- Preserves and increases local tax revenues
- Maintains or diversifies the local economy
- Maintains or diversifies access to goods and services
Marketing and Business Attraction
Today's businesses can locate anywhere - but they'll only come to your community if they know about it, and if the community has what they need. Marketing and business attraction is about more than just selling business sites, or attracting businesses, it's a means of promoting the community as a viable location for economic activity.
There are likely dozens, if not hundreds, of other communities competing for any one new business investment. To attract new businesses, a community must target its marketing and attraction efforts based on what is available to meet the clients needs.
- Knowing the community's assets and strengths (infrastructure, living costs, tax rates, etc.)
- Knowing what industries are the best prospects for the community.
- Crafting a community's marketing message and providing accurate information to potential investors.
- Communicating an effective message that reaches the target audience (site selection professionals and companies looking to move or expand).
- Undertaking strategic improvements that will make the community a more appealing location for investment.
- Builds and diversifies the local economy with new firms.
- Brings in new investment and revenues, expanding the tax base.
- Increases the number and type of jobs available to residents.
- Spurs investment in community assets, improving the quality of life.
Entrepreneurship and Small Business Development
- Entrepreneurs create wealth in a community, for themselves, for the people they employ, and for the local economy.
- Today's small businesses are the innovators and job generators of tomorrow.
- Nearly all net new jobs are generated by firms that are one to five years old!
- Not only do new businesses create jobs and opportunities, they bring in new tax revenues, lowering the burden on residents.
- Growing businesses are more likely to stay where they launch -- in the community that nurtured their growth and where they are well connected. Small businesses also:
- Participate in civic groups and community initiatives
- Help diversify the local economy
- Enliven and revitalize neighborhoods and downtowns
- Incubators (shared office or lab space) and other supportive facilities to start up and grow.
- Business plan development.
- Guidance and connections for financing, marketing, and product development.
- Assistance with grant and loan applications.
- Hiring, training and managing staff.
- Support for entrepreneurship
- New business formation, survival and growth
- Job creation, economic growth and innovation
Your Economic Development Office Can Help...
- Expedited permitting and licensing
- Technical Assistance
- Community and economic data
- Site Improvements
- Strategic planning
- Advocating for business-friendly policies
- Marketing the community to domestic and international businesses
- Infrastructure improvements
- Tax abatement
- Partnering with businesses and workforce development organizations to design training programs for workers
- Data and insights into local business
- Access to business leaders
- Pre-disaster planning
- Post-disaster recovery
- Long-term resiliency