Merry Christmas and / or Happy Holidays
What is the Beige Book?
The “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” report commonly known as the Beige Book, is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.
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Peoria NEXT is an organization of The Heartland Partnership that aims to facilitate Discovery, Innovation and Commercialization of new technologies through collaboration and creativity for economic development. The organization turned 10 years old on September 11, 2011 and has grown tremendously since its inception. Peoria NEXT named it's new CEO, Grant Brewen, in November 2011 and looks forward to conitnued growth in the technology commercialization arena.
The newly formed Iowa Economic Development Authority (formerly IDED) will use the best aspects of the public and private sectors to create a dynamic, results-driven partnership with programs and incentives that will meet the needs for business growth.
This model marks a new direction in economic development for the state and consists of two arms – the Iowa Economic Development Authority and the Iowa Innovation Corporation.
The authority is a quasi-government agency that replaces the existing Iowa Department of Economic Development and will perform its current duties. The authority will have a more focused set of incentives, providing maximum flexibility to meet the needs of potential employers.
The second entity, the Iowa Innovation Corporation, will serve as the private sector side of the economic development equation and will work to attract investors and investment capital. A non-profit, the IIC will solicit funds for various sources in the private sector to be used for its job creation efforts.
Iowa has set bold economic development goals for the coming years: Create 200,000 private-sector jobs and raise family incomes by 25 percent. This new approach to economic development will focus on innovation and growing high-paying jobs that will support Iowa’s future.
Advanced Manufacturing On The Rise
One key economic cluster that will help the state reach these goals is the advanced manufacturing industry. Newly released numbers by the Battelle Memorial Institute, reveal that advanced manufacturing employs 13 percent of all Iowa private-sector jobs. It also accounts for 33 percent of Iowa’s private-sector economic output and generates 78 percent of its patents. During 2009, advanced manufacturing employed around 156,000 people.
The report also identified biosciences and information technology as key areas for the state.
Included below are some additional data points from the report:
- Iowa's advanced manufacturing sector remains diverse, and not overly dependent on any one sector for its economic fortunes. Containing 18 subsectors, the advanced manufacturing sector in Iowa demonstrates regional specialization in fully 14 of these.
- During the recession, Iowa's advanced manufacturing sector shed 11% of its jobs; somewhat less than the national sector which dropped by nearly 12%.
- Average wages for the state's advanced manufacturing sector and all of its major subsectors are greater than those for the average private sector worker. The average wage is $50,669 which is 40% higher or more than $14,000 greater per year. Among the major subsectors, aerospace has the highest average wages at $71,313 per year.
- The expanding biobased products sector and the need to find biobased alternatives to foreign energy imports is a good subsector in which to leverage strengths and holds promise for future employment growth.
- The "emerging potential" subclusters, that are gaining employment but have not yet reached regionally-specialized levels include "research, engineering and industrial design services" and "human biosciences"—areas that are actually supported by the other Iowa clusters of IT and bioscience.
Thanks and best,
Burson – Marsteller
The following information is a cursory view of Economic Development Incentives that are available to municipalities in the State of Illinois. All incentives are, foremost, at the discretion of the municipality. Municipalities should have policies in place that describe when and under what circumstances they will award incentives. Incentives should always be granted for the public good and should only be granted to make the project work. Communities should assure that, “but for” the incentive the project is not financially possible. Many times this will mean that the community reviews the pro forma of the developer to determine the level of the incentive. The community should evaluate the amount of the incentive in proportion to the financial risk of the developer.
Tax Increment Financing—65ILCS, 5/11-74.4.1 et.seq.
TIF is perhaps the best-known incentive available to communities in Illinois. When a community institutes a TIF district it freezes the existing Equalized Assessed Valuation for all taxing districts for the next twenty-three years or until the TIF dissolved. Any increase in the EAV and its resulting property tax are applied toward development of the district.
Communities can use the increment to support a myriad of economic development activities; the most common is for the development of infrastructure. In addition, TIF can write down the purchase of the land, pay for preparation of the land (including grading for drainage and demolition), and pay for the following and other costs: partial interest costs, rehabilitiaion and lease hold improvement costs, relocation costs, and landscaping, etc.
Business District—65-ILCS 5/11-74.3-1
A Business District can be established for a particular site or series of parcels. The municipality then implements an additional sales or hotel motel tax to a maximum of 1%. The proceeds from this new sales tax are applied to costs of the development of the site. Eligible costs are similar to that of TIF.
Sales Tax Revenue Sharing
Municipalities may enter into agreement to share or rebate any portion of any retailer’s occupation tax that is generated by the development for a finite period of years. The municipality must make findings related to the property and in general the abatement should serve a public purpose as creating development in adjacent areas or creating or retaining jobs, enhancing the tax base of the municipality.
Property Tax Abatement--35ILCS 200/18-165
The community can provide a maximum of $4 million dollars in tax property tax abatement within a ten-year period for commercial and industrial development. The municipality may be joined by other taxing bodies in providing this abatement. Normally there is an agreement based on all or part of the property taxes being rebated over a number of years.
Special Services Area or Special Assessment
An area is created where a special assessment is placed against property to finance certain public improvements or services. This incentive has become popular in recent years to incent the development of housing. In this case the developer requests that public infrastructure (in the past, mostly financed by the developer) be financed by the community. The community publicly finances this infrastructure at a tax-exempt rate and applies an assessment to the property. These bonds incent development by removing the costs of infrastructure.
The Illinois Enterprise Zone Act creates a specific area jointly designated by the State and local government that allows various tax incentives and other benefits to stimulate economic activity and neighborhood revitalization.
The following are among the incentives that are available in an enterprise zone: Investment Tax Credit, construction material sales tax deduction, machinery and equipment sales tax exemption, utility tax exemption, jobs tax credit, tax abatement income tax deduction for financial institutions on loans for development in enterprise zone, corporate contribution deduction.
Revolving Loan Fund
The municipality subsidizes private loans through a revolving loan fund.
General Municipal Assistance
The municipality may provide a number of incentives for economic development in the general course of doing business. They may reduce or eliminate fees that apply toward development. They may work with the developer to minimize the time taken to process development.
Both the State and Urban Counties provide for Community Development Block Grant Funds or the CDAP program for the State. (See the Department of Commerce and Community Affairs Web site)
The Department of Commerce and Economic Opportunity administers the EDGE Tax to reduce the cost of doing business in Illinois when compared with similar costs in other states allowing for tax credits.
The Environmental Protection State has a Brownfield clean up program that offers a variety of incentives.
The Illinois Department of Transportation is administers funds for roads to support economic development.
The Illinois Development Finance Authority provides Industrial Revenue Bonds.
The State of Illinois Web site provides access to all departments and their programs.
Typical Low Interest Loan Programs
Industrial Revenue Bonds
Very large loans (must be greater that $1.5M) for significant manufacturing and industrial projects, used to acquire fixed assets. Can be issued by the City of Peoria. Can finance up to 100% of the total project costs at below-prime rates (fixed or variable terms). Call the City of Peoria's Department of Economic Development at (309) 494-8640 or get more info at www.il-fa.com/products/ind_irb.html
Illinois Department of Commerce and Economic Opportunity
Enterprise Zone Participation Loan
Works much like the IFA's Participation Loan, but is limited to businesses expanding or locating in an Enterprise Zone. Funds can be used for purchase and installation of machinery and equipment, working capital, purchase of land, construction or renovation of buildings. Cannot be used for debt refinancing or contingency. For DCEO's portion of the loan, the interest rate on variable-rate loans is 2% below indexed rate. Fixed and adjustable rates are similar to US Treasury notes, plus 0-1%. Borrower cannot employ more than 500 FTEs. More info:www.illinoisbiz.biz/dceo/Bureaus/Business_Development/Loan+Programs/ezp-plp.htm.
Revolving Line of Credit
Allows businesses to borrow the amount of money needed to meet the demand and to repay the loan from the sales revenues. Line of credit established for between $10K and $750K, but not more that 25% of total project. Attractive interest rates, but all review and terms set by lead lender. Must not employ more than 500 FTEs. Three year maximum term. More info:www.illinoisbiz.biz/dceo/Bureaus/Business_Development/Loan+Programs/rloc.htm .
Manufacturing Modernization Loan
Secondary financing of between $10K and $750K for manufacturers who are retooling, upgrading machinery, or expanding. Must constitute 25% or less of total financing package. Sub-prime rates, maximum term of 10 years. More info:www.illinoisbiz.biz/dceo/Bureaus/Business_Development/Loan+Programs/mmlp.htm
Illinois State Treasurer
State Treasurer's Economic Program
The Treasurer will deposit up to $25K into the business' bank at below market rates for each full-time employee created or retained. That bank, in turn, can lend those funds to the business at below prevailing rates for a term of between 1 and 5 years. More info:www.state.il.us/treas/Programs/step.htm
Economic Recovery Loan Program
Similar to the STEP program directly above, but the limit to be deposited is up to $50K per job created or retained. More info:www.state.il.us/treas/Programs/ER.htm
US Small Business Administration
SBA 504 Loan
Provides businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings, not to exceed 40% of total financing package. Requires 10% equity participation by business. For most businesses, the loan is $50,000 per job created, up to $1.5M. For "small manufacturers", the loan can be $100,000 per job created, up to $4M. Interest rate tied to 5- and 10-year US Treasury issues. Term is 10 or 20 years. More info: www.sba.gov/financing/sbaloan/cdc504.html.
7(a) Loan Loan guaranty for prime lender. All financing is handled through the lender, with partial guaranty by SBA in case of failure to pay. Applicants must meet certain qualification set out by SBA. Maximum loan is $2M (75% guaranty). Terms: maximum of 25 years for real estate and equipment, 7 years for working capital. Interest rates may be fixed or variable and may not exceed the prime rate by a certain number of points (depends on size and term). More info: www.sba.gov/financing/sbaloan/7a.html
Business Development Fund Secondary financing, not to exceed 33% of total financing package. Theremust be at least 10% equity participation from business. City will lend $10,000 per job created and/or retained, not to exceed $150,000. Fixed interest rate 4% below prime (but not lower than 4%). The term mirrors that of the primary lender.
More info: ci.peoria.il.us/services/depts/economicdev/2004%20BDF%20app.pdf
County G.A.P. Loans Secondary financing, not to exceed 40% of total financing package. There must be at least 10% equity participation from business. County will lend $10,000 per job created or retained, not to exceed $150,000. Fixed interest rate 3% below prime (not lower than 3%). Term will be one year for each $15,000 loaned (7 years maximum for loans for inventory and working capital).
Illinois Finance Authority Participation Loan IFA will work with prime lender to purchase up to 50% ($1M max) of a loan for purchase of land or buildings, construction or renovation of buildings, and acquisition of machinery and equipment. Interest rate is 2% below the lender's rate, leading to a blended rate (lender may take up to 1% as servicing fee). 10 year maximum term (if lender term is longer, balloon payment required after 10 years). More info: www.ilfa.com/products/ind_part.html
Beth Ruyle is an Economic Development Consultant.
She can be contacted at
Attraction, Expansion and Retention
Of Businesses in Your Community
Attraction, expansion and retention of businesses for your community is vital. It is also one of the most difficult things for a community to successfully accomplish. It takes hard work, planning, and follow through.
We recommend that a community go through a formal development of their Economic Development Strategy. But most communities want to get started RIGHT NOW! So in the interim you can use the following as your strategy.
Keep the businesses and jobs that you have
Expand the businesses you have
Enhance your community to attract new businesses
Protect and continuously improve your business environment
Keep the businesses and jobs that you have - Retention is actually the first and most important function. “Keep What You Have” is the cardinal rule of any good economic development program. And just how do you do that? Well, here are some simple to remember rules.
1. Run an efficient, honest, and friendly local government.
2. Know your business community.
3. Let your business leaders know that they are appreciated.
4. Keep your businesses informed.
5. Help your business community when you can.
Who Does Your Business Retention?
It works best if you can make business retention a focus of your entire organization. Make your employees and citizens aware of how important it is to retain the businesses you have. Your employees are especially important. Part of their function is regulatory - the police, fire and inspection departments. You need to make sure that they try to do their regulatory jobs with as little negativity as possible. Make sure that they understand that the fiscal health of the community is tied to successful businesses in the community.
If the community has a full time Economic Development professional then retention and attraction are a principle part of his or her duties. But smaller communities cannot afford a full time professional. These duties then fall to an employee or citizen or commission who performs these functions part time.
Part of the decision of who does these functions is an assessment of the individual personality and character of the person the community chooses to lead their retention program. Some employees are born salesmen with a positive mental attitude. Choosing an upbeat can do kind of employee to meet with and answer questions from your business community can work wonders. Some one who naturally networks with people and can cut through red tape to resolve problems can be key to retaining businesses.
Another way for a small community to retain businesses is to task the municipal economic development commission with this responsibility. Many of the Commission members will be local business men or women with a good knowledge of the other businesses in the community. They can network with these businesses and make sure that the business community knows they are appreciated by the municipality. And they can provide a good interface among the Village or City Council, the administration, and the Chamber of Commerce.
One simple way of showing businesses you care about them has been successfully developed by the Village of Tinley Park, Illinois. Each year the Village hosts a business breakfast where all business owners are invited. The Mayor and lead economic development Board Member give a “State of the Village” address where they let the business leaders in the community know what has been accomplished over the past year and what is planned for the future. This simple meeting helps the business community learn about the City and get to know their civic leaders. It goes a long towards keeping the business owners positive about the Village.
The City of Peoria developed a formal program entitled the Peoria Business Initiative (PBI) with the assistance of Executive Pulse. The PBI Program helps foster a business climate that encourages the retention and expansion of existing businesses in Peoria to provide quality jobs, a diverse workforce and an expanded tax base. The Department of Economic Development with other supportive agencies target existing companies and conduct on-site business visits.
Each PBI visit is an opportunity to:
Express appreciation for the company’s contribution to the local economy.
Learn more about the company’s strengths, successes, challenges and opportunities.
Gauge the company’s opinion about the local economy and recommendations for improvement.
Respond to and address any business concerns.
Expand the businesses you have - Expand what you have is the second cardinal rule of a good economic development program. Your existing businesses that are successful will expand. You want them to expand in your community, increasing your tax base and providing jobs.
Your successful retention program will have helped keep your businesses in town. Helping them expand in your community is the next logical step.
So how do you do that? The things that make your community successful will encourage your existing businesses to expand in your community. You can encourage this reinvestment in a number of ways.
You can work with your Chamber of Commerce, your regional economic development agency, consultants, and University supported organizations to conduct seminars on business expansion. And you can help businesses learn about and apply for State and regional programs that will help finance business expansion.
A municipal supported low interest loan program can be effective. Peoria County and the City of Peoria each set up low interest loan programs initially funded with a Federal grant. Money is lent for business expansions at a low interest rate. The business must first obtain private financing for a major part of the expansion proving that the bank views the expansion as credit worthy. The government program is a percentage of the total expansion and is at risk first in the event of a default.
Other very important programs include Tax Increment Financing Districts, Enterprise Zones, and Business Development Districts. These programs vary substantially among different governments, but generally rebate some or all of the new taxes generated by the new development for a set period of time. The Enterprise Zone can waive the sales tax on the material for the building expansion. And the Business Development District can enact a new sales tax which can be rebated back to the business.
And keeping a positive mental attitude about your community is essential. There will always be naysayers about your community. You want to minimize the negativity and maximize the positive.
Click for the City of Peoria Programs
Enhance your community to attract new businesses - Attracting new businesses to your community is actually what many people think is the principle part of the economic development function. As we have indicated, the first rules of economic development are to Keep What You Have and Grow What You Have. Attracting new businesses to your community is very difficult, especially if you are in a slow or no growth area of the State.
A major part of this effort is an ongoing effort to enhance your community. If your main entrance to town is an ugly strip, clean it up. And work to get dilapidated areas renewed. First impressions are vital.
The first thing you must decide is what types of businesses you should try to attract. You can go through a formal targeted industry program approach. Or you can try the more conventional approach, which we call:
Shoot At Anything That Moves And Claim Anything That Falls
This is actually what many programs do. Any time you hear of a possible interest in expansion in your region you contact the company and let them know that you are interested and invite them to visit. And ballyhoo any successes that you have.
A few years ago Mayor Jim Ardis of Peoria learned that the toy company LEGO was considering constructing a major theme park in the midwest. Attracting this theme park would have been a major coup and we went full throttle trying to land them. We invited them to town and gave them the grand tour. We found one site they were interested in and gave them our best shot at incentives. Ultimately they chose not to build in the midwest, which unfortunately happens most of the time with attraction efforts. But it still important to try while recognizing that most of your wins will be much smaller deals.
Some years ago General Motors announced that they were looking for a location for the Saturn Factory. Municipalities all over America went to great effort and expense to put forward proposals to GM. Ultimately they chose one location and the efforts of all those governments did not succeed. And that is the fate of most of these efforts.
But you still have to try. And every once in a while you win. But you have to expect a great deal of rejection, especially if you are not in a high growth area.
So how do you approach your attraction program? First designate who is running your program - is it a full time professional, or the part time effort of a staff member, or the part time effort of a Commission? Then you need to think through what types of businesses you will recruit.
You need a simple brochure. You can spend a lot of money on an expensive marketing piece. Or you can put together a simple one page flyer that says who you are, why you are a good location to locate a business, and a list of the types of incentives available. We recommend that you do both.
You need a good web site that provides information in an attractive and easy to find way. And you want input from the State, your regional economic development agency, and the business community.
Social Marketing has exploded the last few years and is a very low cost way of telling the world about the advantages of your community. There are many different ways to use the internet and social marketing to promote your business and organization. The following is one way.
You try to make your web site or blog interesting to your intended reader. You can just have entries originated by you, but it will be more interesting if you add content from other similar web sites. It takes a little time to figure how to do it, but essentially you are linking other similar web sites, blogs, twitter, facebook, linkedin and other sites to your blog. As they write new content it appears on your site.
First step for you? Create your Blog. For blogging I prefer http://blogger.com which is free and part of google, but there are numerous other free and low cost services. You can get up and blogging in a few minutes, although it will take some time to learn the tricks.
More on Social Marketing for Economic Development at:
Protect and continuously improve your environment - A major effort of any community must be to improve the local environment. Businesses will choose to stay in your community or locate in your community based on their assessment of the community. And if your town looks bad with poor air and water quality and visual appearance then you will only get those types of industries. So keep at it. Make your community better and more attractive.
Following these simple rules can help you KEEP Business in your community. Good luck in your business retention, expansion, and attraction efforts.
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