What If?
Imagine what would happen if we tried these innovative strategies for diversifying our economy. By Kim Cartlidge
What if we earmarked a penny of our bed tax and invested it in capital projects like the Red Sox Stadium?
That’s what Asheville, N.C., did in 2001, and they’ve seen tremendous results. Asheville leaders voted to increase the bed tax by one percent and put that money into a Tourism Product Development Fund devoted entirely to bricks-and-mortar projects. “One cent is spent on capital projects that will put heads in beds,” says Rick Lutovsky, president of the Asheville Area Chamber of Commerce.
Since then the city has spent $9 million to build a soccer complex, a downtown park with performance stages, an art museum, a bonsai garden and a health adventure attraction. Its John B. Lewis Soccer complex adds to the city’s parks infrastructure while attracting tournaments that draw up to 16,000 visitors each.
But a community investment doesn’t have to be targeted only to tourists. Sarasota’s Film Commission has suggested partnering with industry to build a sound stage that could draw more film production business. State Sen. Mike Bennett and Rep. Keith Fitzgerald continue to promote the idea of an alternative energy research center in Sarasota-Manatee that could create and market new products and services, and place Florida “ahead of the curve,” says Fitzgerald.
What if we thought regionally and partnered with the Florida
High Tech Corridor?
Then we might attract those sexy, high-tech entrepreneurs who act like magnets for more of their kind. And get this: Sarasota and Manatee are already members of the 23-county Florida High Tech Corridor. We just haven’t been utilizing its resources.
The corridor stretches across the middle of the state and encompasses three major universities (Florida, Central Florida and South Florida) as well as hundreds of businesses and 140,000 employees. Its mission is to attract and retain high-tech businesses and the skilled workforce they require, but the corridor has also generated nationwide buzz about Florida’s tech sector job growth and innovation.
Companies love the corridor, which gives them access to the state’s brightest minds through its Matching Grants Research program, through which labs at UF, UCF and USF test new products and applications. In its 12-year history, the program has funded more than 800 research projects.
And the marketing dollars are already there. The corridor, along with its Chamber of Commerce and Economic Development Councils, spends $400,000 annually on advertising, trade shows and events, touting the destination to companies around the country. The corridor council also invests in workforce development programs. Locally, it developed the IT Security Associates degree program in partnership with ManateeCommunity College. Plus its career expos introduce the nation’s most talented college students to local companies and promote job opportunities in Florida.
What if we started a business incubator?
Sometimes a company needs a little nurturing before it flies solo. Incubators work with inventors or entrepreneurs to provide management, marketing and financial expertise, low-cost space and administrative help in the initial, vulnerable stages.
Again, the Florida High Tech Corridor plays a role. Randy Berridge, the president of Corridor Council, says the cost of funding an incubator varies, but the council and a university can match the dollars communities raise. Among Central Florida cities and counties the investment has averaged around $300,000. And it’s been paying off: The East Central Florida Regional Planning Council recently counted 868 jobs currently in incubators in Florida
with a reported gross regional product of $85 million.
This hasn’t been lost on Sarasota and Manatee economic development organizations. Both are considering a joint business incubator program to foster innovative businesses start-ups. Their boards met jointly in June to review models of successful tech-driven business incubators along the Florida High Tech Corridor.
What if we took our business and government leaders to see what other cities are doing to diversify?
So maybe your idea of a fun trip doesn’t include trolling for economic development ideas in Pittsburgh this winter with local politicians and local business boosters. But these visits have produced solid results. The Asheville Area Chamber of Commerce has elevated its site tours to an art. Over the past 15 years, Asheville InterCity Visit program travelers have studied Charleston’s downtown mixed-use model, Chattanooga’s riverfront development, Portland’s tax increment financing, Pittsburgh’s workforce training, Providence’s creative economy and more.
What happens after a site visit? Economic development officials, businesspeople and politicians experience what’s worked elsewhere and bring the most promising ideas home. An important side effect is relationship-building. It’s much easier to make a phone call to someone—whether it’s a politician who holds the purse strings or a wealthy business booster—when you’ve spent hours on a bus together.
In Asheville, a local family foundation contributes $800 to $1,600 per person for elected officials to attend. Asheville caps attendance at around 55 so the groups can travel together on one bus. They keep on the move, hitting multiple stops to learn how other communities address Asheville’s long-term challenges, such as riverfront development, arts and tourism, leadership and funding.
The visit to Portland, for example, demonstrated the value of tax increment financing. “We did not have the enabling legislation in North Carolina to use TIF,” says Laura Copeland, vice president of workforce development and public policy for the Asheville chamber. “When we came back, we worked with chambers throughout the state to pass that legislation.”
What if we spent way more money on tourism marketing?
Sure, it might seem like ending at the beginning, since Sarasota and Manatee want to get away from relying on tourism, but economic development pros know that the first experience many smart businesspeople have in our communities is often through a warm and sunny vacation.
Our quality of life is a big draw for entrepreneurs, whether they choose to move large manufacturing operations, or, as is more common, decide to reinvent themselves and create a balanced life of work and play.
Lee County, our neighbor to the south, spends $5.6 million annually on advertising, including $3 million in direct media buys, and draws two million visitors each year. The Lee County Sports Authority spent $697,000 on sports marketing in the last fiscal year, drawing 78,000 sports visitors to athletic events and generating a $65 million economic impact. Sarasota, in comparison, will spend $850,000 on media buys this year with a total marketing budget of $2.9 million.
The Lee County Visitor and Convention Bureau funds marketing with its five percent tourist tax, while both Sarasota and Manatee collect four percent. Of the $23 million LeeCounty collected in 2006-07, 53.6 percent was allocated to advertising and promotion, 13.4 percent to stadium debt service, attractions and sports marketing and 33 percent to beaches and shoreline. “They often come here to visit first and fall in love with the area,” advises communications director Nancy Hamilton.
And finally, what if we paid more attention to our existing companies instead of trying to recruit new ones?
The concept is called economic gardening, and it’s been spreading across the country to different communities. (Our local economic development officials are familiar with it and have already begun to focus more on existing companies.) The concept originated in Littleton, Colo., which had lost 7,000 jobs in the late 1980s when major employer Martin Marietta (now Lockheed Martin) cut back its operations. At the same time, 1 million square feet of commercial space was already vacant, evidence that existing economic development strategies weren’t working. The Littleton City Council (littletongov.org) directed staff to cultivate existing business and locally based jobs, boldly abandoning efforts to recruit new companies to town.
The city’s economic gardening program is based on the research of economist David Birch, who was the first to identify entrepreneurial “gazelles”—the 3 percent to 5 percent of rapid-growth small businesses that create the greatest number of new jobs in any community.
Littleton’s program targets second-stage companies, those led by entrepreneurs who are poised for high growth, and who have the capacity and intention to expand. Generally, a second-stage company has 10 to 99 employees and $1 million to $50 million in revenue. Its leaders require hard market data, access to mentors and business research, and a favorable business climate, says Chris Gibbons, director of business/industry affairs for the city. “The three main thrusts of our program are information, infrastructure and connections. Our connections tend to be the universities, think tanks and trade associations.”
The city spends about $60,000 of its $620,000 economic development budget on a marketing database and offers any company in the city free access to its “competitive intelligence,” which includes industry trends, market reports, legislative research and management training. A GIS system plots psychographic, demographic and consumer expenditure information down to the individual household.
Since changing its emphasis to helping existing companies grow, Littleton has outperformed Colorado and the nation in job creation, posting a 135 percent change in wage and salary employment from 1990-2005, in comparison to the U.S. rate of 21 percent. Meanwhile, the city’s sales tax revenue has tripled, from $6 million to $21 million over the past 20 years, and personal income has risen steadily.
“The [old] policy wasn’t working for us,” says Gibbons. To recruit and compete with job creation offshore, “your standard of living has to keep dropping. We got out of that game. We haven’t recruited a business in 20 years.”
