City Workshop on Economic Development
The following is a copy of the email that I sent to all city employees about what to expect from the Financial Workshop. To read all the reports and summaries of the first 5 Financial Workshops following the link at the top right titled “City Financial Study”
In the sixth workshop we will focus on the prospective revenue boost possible from economic development projects. Community Development staff have looked at active and anticipated development projects to derive estimates of likely one-time and recurring revenues. We will also try to provide some insight into the cost benefit ratio of different types of development. Lastly, we’ll try to compare city spending for economic development with our peer cities. A couple of our economic development partners, including DKC and KRBA, have also been invited to speak to Council regarding their role in attracting and expanding Kent businesses.
Part of what I will try to emphasize with City Council is that economic development sounds great because it potentially brings in new money, but in reality it is highly speculative (and volatile) so we have to be careful not to hang too much hope on economic development to dig us out of our financial hole. We may think we can get a whole bunch of new business to locate in Kent but those private investment decisions are nearly impossible to forecast with a high enough degree of confidence to actually build them into our budget. Assuming a new project will happen, even one that for all practical purposes seems certain, is still a roll of the dice and projects often get derailed for all kinds of business and personal reasons that we can never anticipate.
That being said, I think there’s plenty of room for the city to improve the odds for success in economic development. Economic development is a competitive industry. Kent competes with over 15,000 other cities for business attraction, retention, and growth. Kent doesn’t have the financial depth to compete head to head on tax incentives, nor do we have a lot of cheap, open land available for new development. In addition, much of the existing building inventory is outdated by current retail and manufacturing standards. But we do have a genuine historic downtown, a terrific river resource to build around, a half dozen successful (and loyal) international firms and most importantly we are home to the second largest state university in Ohio.
When you look at what has happened over the last 10 years to the city’s tax base, it is clear that the city has become increasingly reliant on revenues from the university. The university revenue contributions haven’t grown by leaps and bounds but they have increased by 1 to 1.5% per year at a time when many of our major manufacturers closed up shop or went south to Mexico. As a result, the relative influence of the university on our budget has grown, filling in the gaps left by our former large employers.
From a strategy perspective, it seems that the city’s increasing reliance on the university has happened by default rather than by choice. From my point of view we can’t afford to sit back in default mode any longer, we need to make a commitment to choose to build business activity around the university in order to leverage as much economic value as possible from this significant asset.
When I look at what other cities are doing in collaboration with their universities, I realize that we’ve barely scratched the surface for what’s possible here in Kent. A retiring University President summed up the situation best in the excerpt I’ve copied for you below that is entitled “Universities and Cities Need to Rethink Their Relationships.”
“The negative patterns of town-gown relations are no longer viable. The old impulses toward separation on one hand, or coercion on the other, must be set aside. Once, perhaps, universities could flourish by setting themselves apart from their communities. Over the last four decades, however, it has become evident that city-based universities ignore at their peril the well-being of their communities.
Recently cities have begun to realize that successful universities can promote economic, social, and cultural vitality. The report “Leveraging Colleges and Universities for Urban Economic Revitalization,” concluded that “leveraging academic assets … remains one of the greatest untapped urban revitalization opportunities in the country.”
Both universities and cities need to act on the basis of these new realities. Universities should move from merely coexisting with our communities, or reaching out to them only when we need something, to incorporating regional vitality into our planning for institutional growth. Civic leaders should think less about what they can extract from local universities and more about how they can help those institutions flourish.”
In preparation for tonight’s meeting I compiled numerous examples (Download the Articles) of how other cities that were also struggling economically built new economic strategies around their universities with great success.
The bottom line is this — we all know that having a university here in town is going to create some costs and extra work for us that other cities don’t have to deal with (at least not on the same scale). But likewise, having that university here in town has enormous economic upside if we get serious with our commitment to cultivate that asset – not for some civic good will but for our own economic self interest. That’s just good business sense and we’re too smart not to take advantage of what is sitting right in front of us.
This is our last scheduled informational workshop. We still have a few parking lot issues to try to cover but as we wrap them up next month we will then need to focus on developing our financial strategy. That’s where things get interesting.