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HomeMy WebLinkAbout1985-05-21 Info PacketCity of Iowa City MEMORANDUM DAn, May 17, 1985 TO: City Council FROM: City Attorney]>' Rio Beer and Liquor PermiE Suspension/Revocation Policy The Council has decided to defer to the Iowa Beer and Liquor Con- trol Department all suspensions or revocations of beer/liquor permit violations by Iowa City permittees and licensees. I have been directed to incorporate this policy into an appropriate re- solution and to prepare the necessary ordinance amendments. There are two sources of applicable law that upon conviction can give rise to suspensions or revocation. These are contained in Chapter 123 of the Iowa Code and Chapter 5 of the Iowa City Code of Ordinances. For your information I am attaching copies of Sec. 5-35 of the City Code which covers the current law. I call your attention to the language in the first paragraph of Sec. 5-35 which provides that a liquor license or beer permit may be suspended or revoked for "any violation of law, including this Code or other ordinances". This means that power resides in the Council to suspend or revoke for liquor -related offenses and also other offenses such as violations of the electrical, plumbing, zoning codes and the human rights ordinance in discrimination cases. It is my understanding that the Council wishes to retain jurisdiction to suspend or revoke in discrimination cases. In cases involving violations of other ordinances, you are content to let those be handled as ordinary misdemeanor violations' without the additional sanction of suspension or revocation. The proposed ordinance that I have prepared repeals Sections 5- 35, and 5-36. The substituted provisions deal with violations of the human rights ordinance after the Human Rights Commission makes a finding that the permit or license holder has engaged in a discriminatory practice. Chief Miller has prepared a set of procedures to ensure that con- victions will be forwarded to the Liquor Control Department and a copy is attached for your information. I have also prepared a policy resolution setting forth the new policy and repealing Resolution 82-217 which provided for suspen- sion/revocation action by the Council at the next regular meeting after conviction. 77 I 0 15-34 IOWA CITY CODE cant desires the city council to consider the application. The council will normally consider such applications only at regu- larly scheduled formal meetings. The applicant must submit the application form to the police chief, fire chief, county health inspector and lastly to the building inspector.' Each official shall' make an investigation, sign the form and rec- ommend approval or denial of the application. The applicant shall file the completed application with the city clerk at least seven (7) days before the date on which the applicant desires the council to consider the application. The city clerk shall promptly submit the application to the council. (b) Upon application for renewal of a class A private dub license, the applicant shall provide the information regarding the private dub status of his establishment as required by section 6.75. If the information is already on file with the city dark, the applicant shall only provide information regarding changes which would affect private dub status. (Code 1966, 624.10; Ord. No. 2605; Ord. No. 76-2806, § III, 831-76; Ord. No. 76.2809, ¢ III, 9.28-76; Ord. No. 78.2913, 13, 8.8-78) See. 6.35. Suspension and revocation—Generally; grounds b A liquor control license or beer permit may be suspended for a period up to one year, or revoked, for any violation of law, including this Code or'other ordinances, following notice and hearing, and shall be revoked in accordance with the provisions of state law for any of the following causes: (1) Misrepresentation of any material fact in the applica- tion for the license or permit; (2) Violation of any of the provisions of the Iowa Beer and Liquor Control Act; (3) Any change in the ownership or interest in the business operated under a class A, class B or class C liquor control license, or any beer permit. which change was not previously reported to and approved by the city and the department; Hupp. Na 1 379 .C' , 99�z UM ALCOHOLIC 33EVERAGES 4 6.96 (4) Any event which would have resulted in disqualification from receiving the license or permit when originally issued; (6) Any sale, hypothecation or transfer of the license or permit; (6) The failure or refusal on the part of any licensee or permittee to render any report or remit anv taxes to ORDINANCE NO. AN ORDINANCE AMENDING CHAPTER 5 OF THE CODE OF ORDINANCES OF THE CITY OF IOWA CITY, IOWA, BY DELETING THEREFROM SECTIONS 35 and 36 AND SUBSTITUTING THEREFOR NEW SECTIONS 35 AND 36 PERTAINING TO THE SUSPENSION OR REVOCATION OF BEER PERMITS AND LIQUOR LICENSES. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF IOWA CITY, IOWA, THAT: SECTION I. PURPOSE. The purpose of this amendment is to provide for suspensions or revocations of beer permits and liquor licenses where permittee or licensee shall have been found by the Iowa City Human Rights Commission to have engaged in a discriminatory practice pursuant to the provisions of Section 18-43 of the Codeof Ordinances. SECTION II. AMENDMENT. Sections 5-35 and 5- �fthe Code of p nances are hereby, deleted and substituted therefor are thq following new Sections 5-35 and 5-36 as, follows: Section 5-35 Suspension and Revocation. A liquor control license or beer permit suspended for a period up to one year, or revoked, in the event that the permittee or licensee shall have been found to have engaged in a discriminatory practice by the Iowa City Human Rights Commission in accordance with the provisions of Section 18-43 of the Code of Ordinances. SECTION III. REPEALER. All ordinances and parts ofordinances n conflict with the provision of this ordinance are hereby repealed. SECTION IV. SEVERABILITY. If any section, provision or part of the Ordinance shall be adjudged to be invalid or unconstitutional, such adjudication shall not affect the validity of the Ordinance as a whole or any section, provision or part thereof not adjudged invalid or unconstitutional. SECTION V. EFFECTIVE DATE. This Ordinance shall bein effect after its final passage, 9914Z Ordinance No. Page 2 approval and publication as required by law. Passed and approved this MAYOR ATTEST: CITY CLERK It was moved by , and seconded by that the Ordinance as read be adopted and upon roll call there were: AYES: NAYS: - ABSENT: First consideration Vote for passage: Second consideration Vote for passage: Date published W Ambrisco Baker Dickson Erdahl McDonald Strait Zuber 99sz o. TO THE IOWA BEER AND LIQUOR CONTROL DEPARTMENT 300 Fourth Street Des Moines, Iowa 50319 Date 19 IN RE: (Insert the trade name of the ) licensee, trade name and address of ) the establishment) ) NOTICE OF VIOLATION Liquor Control License No. ) AND CONVICTION License No. ) Beer Permit No. )) Notice is hereby given that on at , Iowa, the above-named licensee/permittee did himself, or by his agent, •clerk or employee, violate section of the Code of Iowa, or violate rule no. of the Iowa Beer and Liquor Control Department. TO WIT: (Insert the Code or rule violation and briefly summarize the occurrence that led to the charge.) WHEREFORE, it is requested that the Director of the Iowa Beer and Liquor Control Department suspend/revoke the license/beer permit noted above for a period of days, in accordance with the law and regulation. Requesting Authority, By: Include Address List of Witnesses: (Insert names and addresses of all witnesses.) i 99sz 2 0,11 dt "u~r��Yt/.; 1. The Police Department will monitor all charges of sales to minorsAan� obtain records of pleas or findings of guilty from the Clerk of Court. We will institute a monthly "status" file on each of these cases so that a timely forwarding of guilty pleas and verdicts can be transmitted to the Iowa Beer b Liquor Control Department. 2. A standard transmittal form (draft attached) will be mailed by registered mail to the Iowa Beer and Liquor Control Commission. The transmittal form will contain: a. The type of violation; b. A brief summary of the facts of the charge; c. A list of witnesses;* d. The licensee or permittee affgcted by the suspension request; e. The.name of the clerk, sales person, bartender, etc. charged with the offense; f. Notification of any similar or prior charges as required under Section 123.50 (3a, b, c, d), Code of Iowa. 3. If a hearing is required prior to or subsequent the order for suspension and upon issuance of subpoena from the Director of the Liquor Control Department, officers will attend and testify as requested. 4. If a liquor license or beer permit is suspended or revoked and upon receipt of notice of the action from the Iowa Beer and Liquor Control Department, Iowa City Police officers will obtain the permit from the establishment in question and assume that proper notice of the suspension is affixed to the establishment as required by the State Code. RESOLUTION NO. RESOLUTION ADOPTING POLICY REGARDING DEFERRAL OF MANDATORY SUSPENSION OR REVOCATION OF BEER PERMITS OR LIQUOR LICENSES TO THE IOWA LIQUOR CONTROL DEPARTMENT AND REPEALING RESOLUTION 82-217 j WHEREAS, Section 123.50(3), Code of Iowa, provides for mandatory suspension or revocation penalties to be assessed by the local authority in the event a licensee, beer permittee, or employee of such license or permittee is convicted of a violation of Section 123.49, subsection 2, paragraph "h", or a retail beer permittee is convicted of a violation of paragraph "i" of such subsection, and WHEREAS, the City Council desires to defer all mandatory suspension or revocation of beer permits and liquor license proceedings to the Iowa Liquor Control Department rather than having said penalties assessed by the City Council, and WHEREAS, the City Council desires to retain jurisdiction to impose suspension or revocation penalties in those cases where a licensee or permittee is found by the Iowa City Human Rights Commission to have engaged in a discriminatory practice, and WHEREAS, the City Council'desires to repeal Resolution No. 82-217 which sets forth existing policy. NOW, THEREFORE, BE IT RESOLVED BY THE CITY OF IOWA CITY, IOWA: That the city Council of the City of Iowa City, Iowa, hereby adopts the following policy regarding the deferral of mandatory suspension or revocation of beer permits and liquor licenses to the Iowa Liquor Control Department: In the event any licensee, beer permittee, or employee of such licensee or permittee shall be convicted of a violation of Chapter 123, Code of Iowa, and the provisions contained therein which provide for mandatory suspension or revocation penalties, all of said cases shall be reported to the Iowa Liquor Control Department and that Department shall be requested to assess said penalties and the City shall fully cooperate with said Department in providing witnesses, legal staff assistance, law enforcement personnel and records to the Department. Resolution 82-217 is hereby repealed. i N It was moved by and seconded by the -Resolution be adopted, and upon roll call there were: AYES: NAYS: ABSENT: Ambrisco Baker Dickson Erdahl McDonald Strait Zuber Passed and approved this day of MAYOR ATTEST: CITY CLERK , 1985. 915z 1 RECEIVED MAY 151985 Metcalf & Eddy, Inc. Engineers& Planners May 13, 1985 J-1090 Mr. Neal G. Berlin City Manager City of Iowa City 410 E. Washington Street Iowa City, Iowa 52240 Subject: Wastewater Plan - Alternative Study Dear Mr. Berlin: 65 W Algondwn Road. Swle 500 Aibnglon HeigolS. Iamoms 60005.4422 (312)228.0900 This letter is in response to your correspondence of April 30, 1985 requesting further explanation of the financial analysis conducted as part of the subject project. The financial analysis conducted during the Phase I and Phase II efforts can be divided into three separate issues: selection of a base year; projection of current costs into the future; and the calculation of the present worth of future annual sums. The selection of a base year is necessary since Iowa City may still be several years away from the actual construction of modifications to the wastewater system. The final selection of a recommended plan, coupled with the need to obtain financing and complete any necessary design effort, will require some additional time. It has also been Metcalf & Eddy's experience that contractors typically use the mid -point of construction as the baseline for preparing bid estimates. Consideration of these factors resulted in the selection of the year 1990 as the base year for estimating purposes. Cost estimates are generally based on historical data for comparable projects. Since the year 1990 has been selected as the base year, it is necessary to project the historical cost data forward to the base year. The historical data may represent current costs (1985) or costs from comparable projects in the recent past. Various cost indices have been used in the construction industry to adjust costs forward or backward for various purposes. One of the most popular of these indices is the Engineering News Record Construction Cost Index (ENR -CCI). This index was created in 1921 and represents a weighted aggregate of constant quantities of structural steel, portland cement, lumber and common labor. This hypothetical block of construction, valued at $100 in 1913 prices, has been repriced weekly ever since and was valued at 4,176 as of February 14, 1985. Metcalf & Eddy analyzed the recent trend of this index and projected it forward at an annual rate of 5 percent. This projection resulted in the determination of an ENR -CCI of 5400 in 9o. -on I Ne+ er. Paso Alto , San Bem,ra,na i n+me CAI Cnoe go Houston r Alnma r SmmPrvdie NJ r S -Wer Saonp MD r H000WW qgs Mr. Neal G. Berlin May 13, 1985 the base year 1990. This index was then used to estimate the future cost of various components, such as the cost of constructing an activated sludge system or the annual cost associated with the operation and maintenance of that activated sludge system. For example, a clarifier mechanism that presently has a construction cost of $600,000 was projected to cost $600,000 x 5400/4176, or $775,900 in 1990. Comparison of various alternatives solely on the basis of "how much does it cost to build" runs the risk of trading lower construction costs for increased annual operation and maintenance (0&M) costs. For example, a particular alternative may have a low construction cost as a result of the use of less expensive materials and/or lower quality equipment. This low initial cost may be greatly offset by high annual 0&M expenses associated with keeping the equipment running during the design life of the improvement. For this reason economic analyses of technical alternatives typically include the calculation of the present worth of annual 0&M expenses. The present worth of these expenses represents a theoretical sum of money, invested at an assumed interest rate for the required service life, that would be sufficient to pay the annual 0&M expenses for the life of the project. The sum of the construction cost plus the present worth of 0&M expenses represents the hypothetical total cost of the project with equal consideration given to both construction costs and annual 0&M expenses. As discussed previously in this letter, the annual 0&M expenses for various alternatives were estimated using historical data for comparable facilities. These estimates were then projected forward by use of the ENR -CCI. In order to compute the present worth of these annual o&M expenses it is necessary to assume a "discount" rate, that is, the assumed rate at which interest would accure on a sum of money invested at the start of the operating period (1990) and used to pay the annual 0&M expenses for the 20 year life of the project. This rate was assumed to be 7 percent per year in both the Phase I and II report. The 7 percent value was selected because it approximates the current U.S. Environmental Protection Agency mandated rate for cost analyses conducted as part of grant assisted planning efforts. Metcalf & Eddy has also investigated the "sensitivity" of the assumed rate, i.e., would the financial rankings of the alternatives change if other interest rates were used. This additional cost analysis consisted of computing the present worth values for rates of 5, 10, and 15 precent. The only difference that occurs in the financial rankings is that Alternatives 6 and 8 reverse positions for rates in excess of the assumed 7 percent rate. Since Alternative 6 was eliminated from further consideration due to non -monetary factors, this change in financial rankings does not affect the selection of the recommended plan. 995- Mr. Neal G. Berlin May 13, 1985 3 This letter summarizes the pertinent aspects of the financial analysis conducted as part of Metcalf 6 Eddy's work for the City of Iowa City. We are prepared to meet with representatives of the City to discuss this analysis in greater detail. Please call if we can be of further assistance. Very truly yours, METCALF 6 EDDY INC. 1 T\ r( City of Iowa City MEMORANDUM Date: May 14, 1985 To: City Council From: Patt Cain, Associate Planner P� Re: 1985 Tax Abatement in Iowa City At the request of the City Council to be kept informed of the use of tax abatement within Iowa City, the following table gives the names of the two applicants for 1985 and the amounts of exemption. According to Dan Hudson, Iowa City Assessor, these were the only two applicants and both met the requirements for approval. Applicant ape of Property Amount of Exemption Millard Warehouse Public Warehouse $364,830 2710 Highway 6 East Commercial Property Plumber's Supply Co. Distribution Center $203,020 2020 S. Riverside Commercial Property 1985 TOTAL EXEMPTION $567,850 The amounts shown in the table represent 75% of the actual value added by new construction. This corresponds to the proportion of actual value added which is eligible to be exempt from taxation: For the first year, 75% For the second year, 60% For the third year, 45% For the fourth year, 30% For the fifth year, 15% /sp 996 Date: To: From: Re: City of Iowa City MEMORANDUM May 15, 1985 City Council Patt Cain, Associate Planner P� Analysis of Tax Abatement Literature The attached bibliography lists a variety of articles dealing with the use of tax incentives, in particular the use of tax abatement. Most of this material was supplied to the City by the Planning Advisory Service and was published in the early 1980s. (Articles on tax increment financing, enter- prise zones and special tax districts were also received but these are not included at this time.) My impressions and summaries are given in the bibliography by general category and title. The articles are on file in my office if you would like to read any of them. After having read these articles, I am left with the following generaliza- tions: 1. Tax abatement itself apparently plays a minor role in site selections by business firms. However, the smaller the business, the more capital intensive the business, and the more "footloose" the business, the more important this incentive becomes in location decisions. 2. Tax abatement also seems to have more effect as the pool of sites is narrowed, i.e., if competition is within the same region or as other factors become more equal. Therefore, although tax abatement may not actually cause a firm to locate in a community, it could keep a community from being a iminated from the selection pool and could ultimately be a significant factor. 3. Although tax abatement usually provides only a relatively minor benefit in terms of the total financial picture of a business, there is some evidence that having a tax incentive program gives an important signal that a community desires growth and is willing to work with business. This contributes to a "good business climate," which is an attractive factor mentioned in several studies. 4. There are costs in tax abatement programs, but there is no definitive answer as to whether the benefits outweigh them. This determination will have to be assessed for each locality and each program. Not the least of the problem is determining what development would have occurred, and to what extent, in the absence of abatement. (At least in Iowa, local school districts do not suffer loss of income from tax abatement. The loss to school districts was a major cost cited in some of the examples from other states.) 9W 2 5. For Iowa City, a tax abatement program could be especially beneficial for encouraging start-ups and local business expansions. This would be more valuable if abatement could be extended to research and development firms, to take advantage of the presence of the University of Iowa. Maybe the bottom line is that tax abatement programs will not make a less desirable location desirable, but they are now so common in this region (and state) that a community trying to encourage economic development is at a competitive disadvantage without this tax incentive. bdwl/2 997 3 TAX ABATEMENT BIBLIOGRAPHY Factors Influencing Location Decisions 1. "Push -Me, Pull -Me: Corporate Locational Decisions." Urban Land, February 1985. This article summarizes the results of a survey of firms in the nine - county San Francisco Bay area. "The survey's key finding, perhaps, is that the majority of the factors most influential in locational decisions are not related to market forces, but are shaped by public policy decisions affecting such variables as housing costs, land costs and commutation times and costs." 2. PAS Memo, August 1984 The tables tell the story, i.e., that state and local taxes play an important role in location decisions of high-tech businesses but are not very significant to large corporations and manufacturing firms. 3. "Factors in Corporate Locational Decisions." The Conference Board Information Bulletin, No. 66, 1979 This study was based on an informal survey of top corporate executives seemed both well balanced and informative. As far as tax abatement is concerned (a small portion of the article), the study indicates that it is not a major factor in locational decisions ("would not be the key factor in making a less desirable location more attractive") but admits that may not apply to small businesses where the tax load has a heavier impact upon total costs, profitability and viability. A good discussion of "business climate" is included. Analysis of the Effectiveness and Impacts of Tax Abatements 1. The Impact of Local Tax Policy on Urban Economic Development." Urban Consortium Information Bulletin, September 1980 This is a scholarly overview --broad in scope and balanced in approach. The article points out the difficulty in assessing the costs and benefits of tax incentives and whether they make a difference in location deci- sions. 2. "Tax Incentives for Industry in South Carolina." Public Affairs Bulle- tin - Bureau of Governmental Research and Service, No. 12, May 1981 The article presents a good discussion of tax incentives, their role in attracting development and their advantages and disadvantages. It is less scholarly than the previous article but is probably more to the point (and only about one page is devoted to South Carolina). The major conclusions were the need for more data on the effectiveness of tax incentives and the possible function of a tax incentive as a signal to a firm that an area is pro -growth or pro-business. There's also a reveal- ing regional comparison of tax incentives and laws related to industrial development. IM i 4 3. "The Great State Robbery." Working Papers, Spring 1976 This article attempts to show that not only are tax incentive ineffec- tive, they represent a misplaced appy ach to economic tax incentivesnt. The result authors conclude that the present app ly articlefislnotoastbalanced uasnthe other ess and rtwo but �islininequitable. in interesting reading. 4. "The Nature of Property Tax Abatement Awards." Journal of the American Planning Association, 49, Winter 1983 it This is an excellent article specifically how abatement conabatement. targeted. brief historyof the policy and suggests There is a good discussion of the popularity and operation of abatement programs at the local political level. 5. "Tax -Related Development Strategies for Local Government." Real Estate Law Journal, 13, 1984 This is basically a law review and not particularly helpful for policy inalysis with the plthe anninarticlessdid stress the integration of tax 6. "Tax Incentives for Commercial Development: Should Planners Be Con- cerned?" (No source or date given.) The answer to the question is "yes," but there was not much in this article that was not covered better in the other readings. One interest- ing note is that the Cook County Assessor rules on abatement awards, which the authors indicate might lead to more objective decisions than those of political bodies. Also, note that this article concentrates on incentives for commercial development. Experiences, Perceptions and Opinions from Other States Economic Incentive or Tax 1. "North Dakota's New Industry Tax Exemption: Giveaway?" January 1980 This article examines the effect of the state's industrial tax exemption program in 1) encouraging out-of-state firms to locate in the state, 2) creating jobs, and 3) causing tax base shifts in local governments. This is an interesting study but the conclusions are somewhat predictable (e.g., although the overate role of tax exemption in location decisions was minor, it was a ma3or factor for one firm which now employs 530 people and has a significant influence on job opportunities in the local community; the cost to most local governments was not substantial in relation to total tax base and did not cause an appreciable shift in the tax base toward or away from residential property). ment: Missouri's erience 2 1969-1976u" Governmental es and n Affairomic sNewsletterxpletter (University of Missouri -Columbia), February Several informative tables (which include Iowa) are provided in this article. The major message is the same one, however -- taxes play a minor role in industrial location but may be important if other factors 997 3. 4 3 6. 5 are roughly equal. And this role may be increased by the fierce competi- tion between states in the same region for retention or attraction of in- dustry. "Do Local Development Incentives Pay Off?" Cities and Villages, vol. XXX, August 1982 A pay-off matrix for evaluation of the fiscal impacts of tax abatement is presented. It is based on Ohio laws and also depends on the economist's knowledge of whether a firm will locate only if granted an abatement. Tax Abatement Articles from the Michigan Planner, Winter 1982 Michigan's laws for tax abatement (which have more flexibility than Iowa's) are explained and discussed pro and con. These four articles do not really add anything new but do give differing perceptions and interpretations by the actors involved. "Why Oregon Suddenly Looks Good to High -Tech Companies." Business Week, November 5, 1984 This article is informative about the Oregon situation but seems to contain little of direct value to Iowa. "Tax Breaks Aimed at Luring Firms Increasingly Attacked as a Giveaway." Wall Street Journal, November 2, 1981 This describes examples of tax incentive controversies throughout the U.S. and the proliferation of the uses of these incentives. j97 City of Iowa City MEMORANDUM Date: May 10, 1985 To: City Council and City Manager From: Chuck Schmadeke 6,/ i' Re: 100 Block of East Church Street On May 10, 1985, I walked the 100 block of East Church Street and viewed three asphalt patches and three concrete patches in the north half of the street. There are no patches in the south half of the street. It should be noted the brick repairs performed this spring and last summer were confined to the south half of the street. The patches are quite old and appear to have been installed prior to the adoption of the excavation ordinance. bj5/12 i City of Iowa City MEMORANDUM Date: May 9, 1985 To: Charles Schmadeke, Director of Public Works From: James Brachtel, Traffic Engineer Re: City Council Request for NO DUMPING Signs in the Area of Mesquakie Park The City Council has requested that NO DUMPING signs be placed in the area of Mesquakie Park. This memorandum is to report that two signs were put in place on May 9, 1985. Should you or the Council require additional signage or information, please don't hesitate to contact me. bj4/7 wl City of Iowa City MEMORANDUM Date: May 10, 1985 To: Heal G. Berlin, City Manager From: Joe Fowler, Parking Systems Supervisor All � - Re: Height Restrictions - Capitol Street Ramp The entrance to the Capitol Street parking ramp is posted with 7' clearance signs. There is a bar set 7' from the pavement at each entrance. his bar has a rubber protective strip on the bottom edge that hangs down approximate- ly 1 1/2 inches below the 7' bar. The protective strip is to prevent damage to the top of tall vehicles. s are toe pivot interior withithe ns vtrafficin hflowt infrom the1 to event lthat theyThese are nstruckhbyea vehicle. All vehicular crossovers in the ramp are at least 711/2" tall with the tallest being 7'4". The crossover from the south to the middle bay on level B is the shortest one in the ramp. This crossover is signed with a series of signs, the first stating "Exit" with an arrow pointing to the left, the second states "Out - Cars Only", then as the vehicle turns, the third sign states "6'6" Clearance" and the top of the crossover is painted yellow. This was done to prevent marginal vehicles from attempting to use this crossover. The coactually than 7 s you are vehicle with alongwheelbsathe floor raiseapproximately I" for three feet on each side of the crossover. We have had in the ast and become trapped inside.y vehicles the vehicles have ranged from ma p school of bus to pickup trucks with livestock racks. Many times we have stopped oversized vehicles at the entrance only to have the driver insist they have been in before and had no problems. We have received no complaints from vehicle owners that they bv ih vthe ramp with a ehicle 7' tall or less and then had problems circulating through the ramp. bj5/7 cc: Rosemary Vitosh /pOo Please reserve dinners for the May 22 meeting of the Southeast Iowa Municipal League. Signed Reservations may also be called to Ms. Saeger at 319-356-5010. /DD/ LMUOUTHFASTIOWANICPALSOUTHEAST IOWA MUNICIPAL LEAGUE G 0 == P.O. Box 850 Fairfield. IA 52556 •PRESIDENT• ATTENTION - ALL SOUTHEAST IOWA MUNICIPAL :EACUE RORER L. RASMUSSEN MEMBERS AND NON-MEMBERS MAYOR OF FAIRFIELD • VICE PRESIDENT• Re: May meeting of the organization will be held C.A. WILLIAMS, JR. MAYOR OF NEW LONDON Wednesday, May 22, 1985 A DIREcroR M ICHAEL IIA=HEE Downtown Holiday Inn (Lower Level Ballroom) MAYOR OF CORALVILLE Iowa City, Iowa GERALD POWELL COUNCILMAN, MUSCATINE Social Hour: 5:30 P.M. PHIL PALMER COUNCILMAN, GRINNELL SHELLY CRAWFORD Dinner: 6:30 P.M. COUNCILWOMAN. LONE TRE • IMMEDLATE PAST PRESIDLNTR Program highlights for this meeting will be a discussion of MAC LAW 1985-86 Policies and Priorities for the next legislative session. ' MAYOR OFREON[ John Lemon, Ankeny Councilmember, and Vice President of the TREAS R SLCOHN VW League of Iowa Municipalities will chair the meeting. Everyone is JDxxF. BRowN FAIRI[LD FINANC[OFFIRR urged to attend and suggest or propose changes to present lay. A review of the 1985 legislative session will also be on the agenda along with some specific remarks on the ramifications and workings of the local option tax law and the Fair Labor Standards Act. It can be a very rewarding and worthwhile meeting. Too, you will have a chance to view one of Holiday Inn's premier facilities along with the remarkable reconstruction and renovation of the entire downtown Iowa City area. Come early and walk around. Note the new library, the converted office into a senior citizens center, the Old Capitol mall, recreation center, and general facelifting of many buildings. John McDonald, Iowa City Mayor, will serve as your host for the meeting. There will be free parking for you in the lot directly to the east of the Holiday Inn. Bring several members - of your Council with you. •**,taA*,t+n+*,tsA,te*,t********>kA****,to*n**+e�*A,En*n+**,t****n**�*,A ' Please respond to: Lorraine Saeger Mayor's Office Iowa City, Iowa 52240 Please reserve dinners for the May 22 meeting of the Southeast Iowa Municipal League. Signed Reservations may also be called to Ms. Saeger at 319-356-5010. /DD/ LOM EAST IOWA NICIPAL SOUTHEAST IOWA MUNICIPAL LEAGUE G VF - P.O. Box 850 Fairfield. IA 52556 •PELHOENT• FROM: Bob Rasmussen, President ROBERT L. RASMUSSEN MAYOR Of FAIROELD • VICE PRESIDENT• SUBJECT: Location of meetings of the Southeast Iowa League C.A. WILLIAM5. IR. MAYOR Of NEW LONDON • Duacro L MICHAELKATYCHEE At the last meeting of the Southeast Iowa Municipal MAYOR OiPOWELL 1LLE GERALD POWELLeague, there was some discussion on the location of each COUNCILMAN. MVH:ATINE of our monthly meetings. PHILPALMER COUNCILMAN. GRINNELL At issue is whether the meetings should be held at one SHELLY CRAWFORD or two central locations in the Southeast Iowa quadrant or COUNCILWOMAN. LONE =99 • IMMEDIATE PAST PRESIDENT • should we continue the policy of cities hosting meetings MAC LAW throughout entire area. MAYOR OF EEORDE • SECEErARY'TREASuart • Would you take just a minute and indicate your pre - JOHN F. BRo" ference so the officers and board members can respond FAIRFIELD FINANCE OFTIM to the poll in setting policy for future meetings. Either mail it in with your reservation or bring it with you at the Iowa City meeting. 1. I would prefer the meetings be held in a central location in the 20 -county area to eliminate some cities from traveling extraordinarily long miles to attend. 2. I would prefer to continue to attend meetings in cities throughout the area with the understanding that I would obviously have to travel much further distances to attend some meetings during the year. If you are unable to attend - send to: ?favor Bob Rasmussen Citv Hall P. 0. Box 850 Fairfield, IA 52556 a P. TR E__-� C4411 INA E.XT ERIENC BAY }SPECIAL.IINVI{TAATTIO�N. {,OF HEBEI PROVINCE SHIAJIAZHUANC CITY To visit HEBEI, Iowa's Sister Province (State) and SHIJIAZHUANG, Des Moines' 1 Sister City in China...also, Chengde, , �. •�� and Banding of Hebei /Jinan/Taishanf Qufu/Beijing (Peking)/ Shanghai/etc. • Departing San Francisco to Beijing, SEPT. 23, 1985 and Maturning San Francisco from Hong Kong Oct. 11, 1985 for approximately $ 2,890.00 0 1 Specially arranged and conducted by JEAN KAUrT of Des Moines, hostess, escort, translator for visiting Chinese dignitaries, a member of the Executive Board of the Iowa Sister State Committee, the Iowa Hebei Friendship Committee and Chairman of China Programs of the Des Moines Friendhsip and Sister City'Commission,who will 1 visiting China for the 4th time since 1972. "You can't go farther than China. _ -Chinese ProvVh •n b.� Z Being there is is u f:.T N.:: wnewb.tlw YN'w•i4u r. AurIWINni Y n,mvre W14M ;I dna Q0 OrIvits PEKING is the capital of the People's Republic of China. Here, you will gain a sense of history—"The Long Wall of Ten Thousand Li", the Ming Tombs, me Imperial Palace and its treasures, the Museum of History. the Summer Palace, and much more. (eking is also an agricultural and industrial center which gently brings you to the present. T,emnmen !:r.aare is very much a part of New China. SHANGHAI is the largest city in China, and, possibly, in the world. It is a major seaport, and a walk along the 'Bund" is both exciting and colorful. Shop the Frs•rdsh,P Sture for antiques or souvenirs. There are don, a programs, operas, films, and even a circus. The Shanghai Industrial Exhibit, the Children's P.:vice, the tomb of Lu Hsun, the People's Pari.. enormous food markets. and ex• gmsoe gardar " may be an your sightseeing TAISHAN — Fitest among the sacred mountains in China. Sunset at Taishan is considered as one of the most spectacular viers of China The sceneries and impressive vistas have been celebrated since the Tang Dynasty poets. Temple of Taishan (Tai Miao) where the emper- or of China worshiped prior to the annual clic of the sacred mountain. You climb to the Soutl gate of Heaven by the -Broadway to Heaven...• QUFC, capital of ancient state. -df Lu, is the birthplace of Confucius (551-476 BC). High= lighter Apricot Altar, where Confucious taugh built by Duke of Lu (476 BC); Temple of Confucius,.one of the three typical palace constructions of ancient China, the other two being the Ming and Qing Palaces and the Tai Temple of Taishan. _ HEBEI PROVINCE - "' "He" means river, "bei" mesas north. Hebei is north of the Yellow River, the cradle of ancient Chinese civilization. Hebei province (state) completely surrounds the capital city (national) of Beijing (Peking) and faces the Yellow Sea and the Pacific in the West and Inner Mongolia and Manchuria in the north Area: 180,000 sl. kil. Pop: 54 billions. Many historical sites and tombs of royalty are situated here. The governor of Hebei lead a delegation of officials to Iowa in 1983 and sign a sister state agreement with Iowa. Many officials have come to Iowa from Hebei as a result of this agreement. Our Friendship Tour in September will serve to strengthen the relationship between Iowa and Hebei and between Des Moines and its sister city, Shijiazhuang'. SHIJIAZHUNG, capital city of Hebei Province - IIowa's sister -state) is Des Moines' new sister city in China. A communication and industrial center producing wheat, cotton and famous pears, its famous sites include Long xing Temple (586 AD), Jia Tan Temple (15th & 18th Century), the Zhuanlunzang Pavilion (10th Century) the Anji bridge and the Cang- yan Eountain set against misty scener}. .. . _..... _.._ t. - 6HEN3DE, China's largest imperial garden and summer resort IM of Beijing in Hebei Provincr built by Qing Emperors in the 18th Century, used as a summer capital and for receiving foreign diplomats. More than 100 buildings and 8 monastaries with constructions, picturr and sculptures represented Mongolian, Tibetlt and other national minorities, highlighted b: the Great Potala copied after the one In Llassa, Tibet. /to 0-7- GENERAL INFORMATION ITINERARY: ! 21 days Sister State, Sister City Friendship tour of China with com- prehensive sight seeing in Beijing (Peking) Shijiazhuang Chengde/Jinn/ Talshan qufu/Baodingyetc./Hong Kong. ' T011R FEAr.IRES INCLILOE: • Round trip airfare from San Francis- co to China via 747 jet scheduled flight. *+' • All necessary baggage handling (1 pience inside China) and transfers. • All visa fees and processings. 1st class hotel accomodations. (double room assignments) • Three meals daily in China. • No tipping in China. • All admission fees to day and evening activities. • Shopping opportunities in all cities. • All transportation in China via let class rail, buts, boat, and air. • Fully escorted from city to city with local guides assisting in each city. • First class hotel in Hong Kong, a mini vacation with enormous shopping oppor- tunities and relaxation and sightseeing. Farewell dinner in Hong Kong included. TRAVEL DOCUMENTSs • A valid passport is required. Have ready 3 small photos (approx 1}/2") for visas with photocopies.of first 3 pages of your passport to.be sent to CITS by your Tour Leader. Consult your doctor on personal preferences and requirements. No shote required by China MONEY: • Official currency in China ... Reminbi (People money). 1 Yuan a about 400 US. • No limit on amount of currency or travelers checks you may bring in to China. • Limited acceptance of major credit cards. CLOTHING, " In general, Chinese people wear sudue clothing. You may wear whatever you choose. Be conservative. Take along'eomfortable shot Raincoat and layer dressing•recomaedded. Be prepared for a wide range of climate. late Sept. & early Oct., however, is the best.. part of the year to -travel In China. ** Airline will be determined very soon. •r*►r+arrr►tr�,i�**r►r*rrrrrrrrr FOR FURTHER INFORMATION, CONTACT: JEAN KAUNG, Tour Organiser & Leader 3213 Patricia Drive, Des Moines, IA 50322 Telephones Homes 515/276-4532 Business:. 515/223-4222 RESERVATION (S) FOR SISTER STATE & SISTER CITY TOUR. SEPT. 23-OCT.11 1985 Please reserve space(a). Resume attached. One per person, with: Date & place of births occupation (a), past.&•present position, time, place of employment, step education, degree(s), indicate school(s), special trainingl community activities & offices holds reasons for Visiting China. Send with $100.00 deposit: JEAN KAUNG 3213 Patricia Drive., Des Moines, IA 50322 NAME NAME ADDRESS CITY STATE ZIP' PRONE you wish to be on the mailing list, please write or call JEAN KAUNC. Please note this is not a commercial tour, but a group of friends wishing, to travel together and share the adventure of a unique learning and cultural experinece in the world's most ancient and colorful civilization and to visit our Sister State and Sister City in China and to pay our respects to officials who have visited Iowa in recent years. 100.2_ COMPETITIVE ADVANTAGE Framing a Strategy to Support High -Growth Firms By Alan S. Gregerman The excitement over attracting high-tech firms has distracted many communities from developing realistic strategies to support existing local firms and entrepreneurs. A careful assessment of local competitive advantage, coupled with an inventory of business activity, can help identity high-growth business prospects among established local firms and new enterprises. While some of these companies will be high-tech, many will be low-tech or no -tech service sector firms. Everyeommunity is looking fora new, creative and workable economic Bevel. opment strategy. Many communion are willing to try almost anything. A ase in point is the recent high-tech fad. Attracting high-tech kms has become the holiest topic in economic develop. writ. Large and small cities alike have drafted high-umbi strategies. and each dreams of becoming the next Silicon Valley. In the troubled Midwest where echedtdiet of steel. attunamd other bait industries has dealt a crushing blow. many regard hieli-tech as a panc— f s the regions ecoumnic ills. The hope is that abandoned pians will soon bustle. producing robots and mrietoehipa and providing high salaried. highly skilled jobs in companies that pay taxes. don't pollute and require limited public set- vices. ervices. In the Sunbelt. whale the eco- noetic boom has slowed, politicians and as the only way to sustain A prominent indutnal development consultant estimates that or the coup. try's 7.5Worganizatiom responsible for bringing jobs and increased tax reve. etas to their jurisdictions, 7,000 are focusing on high-tech finis. At the state and local levels, hundreds of specially commissioned studies identify target industries and justify the expensive chase. Unfortunately. the excitement over high-tech has distracted many commu. rides from developing a realistic stmt. egy based on local needs and mources. AI the same lime, massy communities have forgotten the most appropriate tar- gct for their stTcction—high-growth toms. These are the Arms in atmost any sector that can crate a large number of good job. Recent research by McKinsey d Company and Inc. magazine point out the diversity of high-growth farms. While 18 Summer 1984 they are the Apple Computers and MCI Communications, they are also the Dunkin Donuts and Safety-Kleen Col. porations. The latterdeveloped a simple machine that cleans greasy pans and tools. In the put five years it has been one of America's fastest growing com. pasties. Experts predict that high-tech Arms will crate no more than three million new jobs in the i,ext 10 years. During thatpeeiod the U.S.cconomywill have to crate IS million new jobs to meet the demand. However. new technology will drive the mature industriesand many of the service sector aetivitkn that remain competitive. This article summarizes research by the National Council for Urban Eco- nomie Development on local comped. live advantage and strategies for sup. poning high-growth industries. Itis based on a detailed practitioncr s guidebook that will be published in July. Competinve Advantage. Every com. munity has a distinct economic func- tion. Some places ase diversified man- ufacturing centers. Othen are company towns dominated by a single large employer. Still others ase government and financial centers serving a state •r region, or market centers for surround- ing ramal alas. Before successfully cm. ating jobs, supporting private invest- ment or expanding the local tax base, development practitioners must under stand their community's mason for being and its realistic prospects for growth. Competitive advantage is a function of a set of location characteristics (e.g.. geographic location, labor force, natu. ral resources. transportation, business climate and qualiryoflife). someo(which an be changed by local initiative, and a art of outside factors that are beyond local control (e.g.. macroeconomic con. ditions, global competition). Comped. live advantage changes over time. One of the most influential factors is the rapid pace of technological change. Assessing the Local Economy To determine competitive advantage, one needs to undcnwW the local ecoto omy's structure and the location char acteriuies on which the economy is based. Understanding the Structure of lie Iweal Eaneq. Every local economy has an inherent structure. Mom cow munitin team about their economic structure the hard way by watching the ripple effects of decline when a major employer closes. Why did two machine shops close so quickly? Why has the Wrest appliance dealer been put up for sale? Why has the supermarket laid off halt its workers and reduced is hours? As tax revenues start falling off, other ripple elfeca appear, such as the increased demand for public services and reduced maintenance of roads and other local facilities. Two existing analytic methods—eco- noetic base analysis and shift -share analysis—can be used fairly easily to examine the workings of the economy. Deailea guidance on each is available in economic development literature. Briery, the theory behind economic bun analysis is that exporting activities am the driving force in the local economy. Le., the economic base. Exports to other cities, regions and countries bring out. side dollars into the local economy, cm. stingjobs and income foram residents. A multiplier effect occurs when this income is spent inside the community Alun S. Gregenw, is director of research far the National Council for Urban Economic Development. This article is based an a forthcoming Council guidebook entitled ComprtitivrAdrantagr: Framing a Stroup to Support Nlth-Growh Firmr. 1pp3 on locally produced goods and services. The remainder of the local economy is classified as non -basic, or non -export. ing activities, which can range from the local supermarket to property mainte. nonce and shipping services. The level of these activities is determined by the level of basic economic activity. Stated simply, acommunity provides a competitive advantage to the basic firms that are successfully operating there. When doing an analysis. one should address these questions: Which indusmcs and firms make up Inc eco- nomic o.se? Is the tocol economy dependent on a few industries or even a few large firms'? Is there a diversified base that often economic development powbdities'. Also. looking at data over a three- to five-year period can uncover changes in the economic base. Shift -share analysis is a technique for comparing the local economy's employ- ment changes to those in the national economy. This tool can help indicate the changing competitive position (or share) of selected local industries. Our research suggests that the best way to understand changes occurring in the local economy is through a well. planned business inventory. In addition to providing information on growth and decline in the community's basic Indus. lsies, the inventory can serve as an early warning system forpotential changes in the local economy that might be reme. died by public support. It can also help improve the local business climate by letting local firms know that the public sector is interested in reducing barriers to successful operation. Every local economy has an Inherent structure. Most communities team about their economic structure the hard way by watching the ripple effects of decline when a mayor employer closes. Lead•& Char•cleristl0 on whkb the Economy b Based. A community's loca. tioa characteristics establish its relative competitive position in the regional and national economic environment. These characteristics determine the types of economic activity that can operate prof. itably and comfortably in the commu. nity. Try to view the community as pri. vate businesses do. To do this, one must understand how the community stands with respect to 10 types of location characteristics: 1. Local labor market 2. Access to customer and supplier markets 2. Availability of development sites, facilities and infrastructure 1. Transportation service and net. works S. Education and training opponuni- ties 6. Quality of life 7. Business climate g. Access to R&D facilities 9. Capital availability 10. Taxes and regulations Each factor's importance varies depending or. Inc type of firm and indus. try being examined. In addition, some factors may have several components. For example, three attributes of the local labor market are important to bust- nesscs: composition. cost and reliabil- ity. Figure I provides a framework for evaluating a community's location auri- butes. Each factor and its components should be ranked on whether it is a loca- tion strength (major or limited). neutral to development prospects, or a liability that can or cannot be canceled. Location Strengths. There are two types: • Major asses are a community's qualities that form the basis of its com- petitive advantage. Because these fac- tor support the comnuni(y's most suc. cessful firms. they do not need to be changed. However, local and outside firms must be made aware of these aun- butes. EXAMPLE: Access to custom- rrs gives you a key competitive edge for firms manufacturing and selling con- sumergoods to a regional market. Local response—identify, these firms and assist them (if possiblelnecessary) to increase regional market share. • Limited&sets are potential strengths that may require a relatively low public investment level to establish a compet- itive advantage. EXAMPLE: Availabil. ity, of savant land in prime locations. Local response—make the sites "development ready." Location Liabilities. There are two types: • Those that an be connected. These factors can be addressed by publielpri. vale action in the short to mid-term li.e.. three to five year). EXAMPLE: Poor business climate due to a lack of con. cern and responsiveness by a previous administration. Local response—build cooperation between government and business, especially by establishing a track record of handling requests promptly and carefully. • Those that cannot be corrected. These factors cannot be addressed by public-private action in the foreseeable future. EXAMPLE: It is difficult to change a community's quality of life. This is one of the most intractable prob- lems for highly distressed places. Neutral factors are neither strengths nor liabilities in local economic devel. opment. EXAMPLE: Offering apanic. ular las incentive that most eommuni. ties offer. When completed, Figure I will pro. vice a useful summary of location Opportunities and constraints. This material is vital to strategy development effons. A review of c.ch row can give a general sense of what a community is good at, what it needs work on. and what its major drawbacks arc. This information can be used to do an initial test of local competitive advantage for specific high-growth activities. \ow, the task is to evaluate the types of growing business situations that make sense for a community. A Note on Outside Forces Influencing Development. The setting m which local economic development occurs is far more dynamic and turbulent than it was 20 years ago, Today, regional. national and international forces combine to shape local development problems and possi. bilities much more forcefully than in the put. While few of these forces can be dealt with at the local level. practition. en must be aware of them in designing strategies. hey forces include: • Macroeconomic problems • Increased global competition • The shift to a service sector -based economy • The shift from an en of major eco nomic expansion to one of little or no economic growth • Demographic trends • The rapid pace of technological change It is a useful exercise to have the key local decision -makers le.g.. the board of the local EDC) brainstorm the mie that each of the key factors is playing in restructuring the local economy, and the most appropriate local response to these factors. Framing a Growth Firm Strategy Figures 2-4 identify the location fu- ton that influence the investment deci. sions of growth -oriented firms. Note the variations between local firms planning an expansion. entrepreneurs contem. plating the start of a business, and major coproraions planning to open a new facility. Most of the literature on competitive advantage is based on the locution deci. sions of large corporations. We are most interested in stimulating investments by local Arms and entrepreneurs. Research indicates that approximately 90 percent of the new jobs generated in a typical local economy come from existing com- panies and newcompany start-ups, with only 10 percent coming from attracting outside firms. In healthy economies. business investment occurs with lisle or no assn. tance from the public sector. Sponta- neous economic activity results in the creation of new firms, the expansion of some existing firms, the contraction or death of others, and the movement of Commentary 19 /003 FIGURE 1 Evaluating Location Characteristics some outside firms into the area. This is a dynamic process in which more than enough new activity occurs to replace outdated businesses. As pan of the pro- cess, many new firths sun and then die— some experts feel this is critical to job generation. In distressed economies, the number of business contractions and deaths generally outnumber expansions and births. The community has lost is cam. petitive edge for many of the firms that once prospered there. Other firms become outdated. The business decision to invest (or disinvest) is based on three sets of fu- ton: I. Characteristics of the farm and its product or Uri ire. Does the company have a marketable product? Is there suf- ficient demand to justify added capac. ity? 2. Characteristics of the community in which the firm operates or pians to operate. Is this the best place to do bush nese? 3. Big picture concerns. is this the right time to make this investment/ expand operations? Business investment is based on innovation. Innovation is the process of successfully taking an idea to the mar. ketplace. This can be a new product or service. new uses for an existing prod. uct or service, a new process that results in improved cost or quality, or identi- fying new markets. FIGURE Investment Factors for Business Expansion I INVESTMENT DECISION I I Burl"" climate I Lator force composition, Cost and reuabllity Development VIOL ucilibes and Infrastructure Cast and availability of Capital for expansion Supportive public Improvement EduCation andtraining opportunities Supporting gassiness Retensba and Explosion. Figure 2 identifies the key factors influencing the investment deci- sions of local firms with expansion potential. For business expansions. the most important factors appear to be the local business climate, the availability of good development sites, access to reasonably priced capital, supportive public improvements, the labor market, and tailored education and training opportunities. An overlooked element of the business climate is the involve. menu o(private sector executives in local economic development. A relatively small percentage of local firms are likely to be high-growth can. didates. Most fines are small due to the =lure of their business: others remain small because of the owner's desires. But there are some businesses that could grow significantly if they had more romp, additional Capital, or technical assis- tance on upping export markets. Arca residents start most local firms. These residents are likely to remain in the community as tong as they can oper- ate successfully. It is important to peri- odically assess their perceptions about the Community. Are public services acceptable? Have local taxes increased too much? Can the IoW government do anything to make it easier for a business to operate? The city of Kokomo. Indiana, pro. vides an excellent example of an input. trial city that has developed a promising business retention and expansion pro- gram. During the last 30 years. the fate of Kokomo. a heavily unionized city of 48.000 people, has been tied closely to the ups and downs of the auto industry. In 1979, afer'a long period of eco. nomic prosperity. Kokomo*s fortunes changed. Unemployment reached 24 percent—the highest in the nation. Through hard work and strong public. Private cooperation, the city's four major firms made a commitment to remain and modcmize. These four companies— Delco Electronics. Chrysler, Continen. tal Steel and Cabot Corporation—are all in declining industries and account for 30 percent of the city's jobs 117,0001. A total of over S300 million in new prie vate investment will incorporate advanced technologies into each facil- ky. In addition. four rclamd technology based firms have either started or located in the city during the last 18 months. Supporting Nest Enterprise Develop. mmt. Figure 3 identifies the key loca• tion futon influencing the decision to become an entrepreneur. It is important to note that the decision is often a very personal one. An individual may be sti. fled working for someone else or unable to get a new idea going in the firm where hushe works. In any event, from a development program perspective. the key is to create an entrepreneurial envl- FIGURE 3 Investment Factors for New Enterprises I INVESTMENT DECISION I supportive fiscal, regulatory and political climate Supportive business Community, including a pool of Successful entrepreneurs I Skilled local labor force I Strong network of tachmpl and profesalonal "Nice$ I Oalltge l and uni•ersrtles I Major corporation and government resesrcrr and development centers Access to capital: venture capital and Commercial banks experienced In lending to non-traditional Nmt comment. This means establishing the resources, networks and attitudes to help people with good ideas take the neves. sary risks to start firms. Resourrer can mean the development of an incubator facility that provides low rent. research and testing facilities, pooled administrative and clerical ser. vices, and management and technical support. Start-up firms also need a sup• Pon network of knowledgeable lawyers. accountants and bankers. Conferences and meetings, such u regular venture forums, can help strengthen local net. works. Educating and involving com- munity leaden are also key steps in shaping arrirudes to support entrepre. neurship. Any design of effective small bull• nesslentrepreneur development pro. grams should begin by asking: What new businesses are currently staning in the community? Why are they starting? What gaps in the local economy can be filled by new enterprises? The early development of most new ventures is Commentary 21 /003 based on an•ing a local market niche— for example. as service bureaus based on manufactunng firms. Once success. ful. these firms often expand to serve broader market areas. In many communities. colleges and universities are emerging as catolysts for new enterprise development. In addition coeducation and training. their research and development anivrbes can provide the technology base for new ventures. Some universities have initi. ated incubator facilities and science parks. while others provide direct tech. nical and management assistance to entrepreneurs and investon. Assuming there is a viable product or service. the success of most small busi- nesses is determined by the manage. ment team's expertise. Research indi. rates that nine out of 10 business fail. ures result primarily from poor manage. ment. A successful new and small business development program will rec. ognize that firms need a range of tech. nical assistance. Someone with a great idea is not necessarily an entrepreneur. Needed assistance can include help in preparing business and market plans. FIGURE 4 Location Factors for Large Corporations LOCATION DECISION Labor lora composition. cost and rstiabitt Access to customer and supplier markets Daralopmanl silo. lacilibtl and Inlfatnuctura Intercity and lout transportation Education and training opportunities OuHlry of lila Businm cllmaI'. FIncluding tarn and requisite ns Capital availability 72 Summer 1984 analyzing and securing private financ- ing, hiring stall, scheduling shipping• inventory planning and contracting with suppliers. St. Paul. Minnesota, is developing a model small and new business des•el• opment program that combines many of the desirable components. After decades as a manufactunng center. St. Paul is now a diversified city or 270.000 people dominated by white collar service sec• for employment. Under the mayor's direction, entrepreneurship is the cen. terpiece of a new strategy to achieve economic self-reliance. The "Homegrown Economy" proj• ccs combines effons to increase local entrepreneurship and ownership. diver. sify the local economy and foster import substitution that will keep dollars in the economy. The city provides personal attention to small businesses. carefully meshing financial and technical assis- tance. A new small business incubator is also being developed. In the pro- gram's first six months. eight new busi. ness have started, creating 180jobs. Business Attraction. Figure 4 idenii. fies the principal factors that influence the location decisions of major corpo. rations. Unlike netention/expansion and entrepreneurship programs, attraction is not for every community. There is a trot deal of competition for a limited number of new facilities. Before a community considers investing resources in an attraction effort, iI should take a hard look at itself. How does it stack up against the competi. tion? The business attraction program of Fairfax County, Virginia. provides a good example of what it takes to play the game well. This suburban county is the epitome of what is meant by "qual. ity of life." It offers outside businesses a highly educated and productive work force. beautiful neighborhoods and Parks. excellent schools. and proximity to the nation's capital and the federal govemment. Since 1977, over 800 new companies have moved to Fairfax County. The community's only major financing incentive is industrial revenue bonds. Its principal development activities are an extensive print advertising cam. paign, site location assistance. market - int information, a streamlined review and approval process for major devel. opment projects, a business ombuds. man service and a small business capon assistance program. The county recently established a 507 development com. aTheny concept of targeting is essential to industrial attraction strategies. The term suggests a systematic approach based on understanding a community's location attributes and matching them to the needs of particular types of tions. A community should identify a limited number of industries that are highly compatible with its location strengths. Targeting efforts should begin by look. ing at a region's fastest growing firms. These firms are most likely to build a new plans in the region. Looking at these new firms and indusines is more toss effective than scouring SIC codes. Stale governments and she private sector can be valuable allies in success. ful attraction programs. State govem. ments have an important role to play in establishing a good business climate and are also spending large amounts of money to market themselves. Pnvalc firms that have located successfully in the com. munity are the best possible advocates in talking to outside firms. Strategic Elements There are six broad strategic ele. ments that should frame a local program 'targeted to high-growth firms: I. Understand the Community Knowing the community is the essen- tial precondition for acting. There is no substitute for local decision -makers dealing directly with the hard questions of economic change and development prospects. These people have the big. gest stake in the community's future. and they have an understanding Ifrom their own perspective) of what has taken place. Balance their judgment with the best possible data collection and anal. ysis (tiven local financial and staff resources). Take a close look at what others have done, teaming from their successes and failures. There is no strong theoretical underpinning to the practice of local economic development. As a result, it is important to develop a strategy, tit. evaluate and refine at regular intervals as new information and opportunities appear. L Build on Caul Strengths Successful communities build on their strengths while addressing local liabili. ties. Communities should identify the pans of the economy that are doing well and build an them. Three aspects should be considered at the outset: major local employers, new businesses that have recently started up and unique attri. butes of the community. Stan the building process by finding some winners—major firms with expan. sion and/or spinoff business opponuni. ties—to spur new shon-term invest. ment. These firms can,provide a solid focus for local efforts, and also serve as an effective tool for changing any lin- gering perceptions about the eommu. nity's image. Build an the community's unique attributes. These can include cultural institutions, universities, medical een. tem. etc. Each has a number of roles 1003 The business attraction program of Fudaa County. Virgmus includes an eatemrw pint advertising campaign promoting me county's armour&$ to outside businesses. In 1979. me county began contracting with a Virginia-based awenning agency to develop spread and full -011941 ads, sucn u m1 one above, for plaeelnem in leading bpainees 13UDIiCa11ohs. Befdre investing in an artrill effort. a community should see how it Compares to such tress as Fairfax County. which re0rnMn the 110110111111 0f what rs Team by "euenry, of Ida" Unlike retentoNexpansion and entrepreneursnip programs. attraction is hol for every community. that it can play in support of local devel. opment. Build on new firms that have suc. cessfully opened. Not only are they the best clue to local competitive advan- tage, they arc also resources in idirmi. lying other entrepreneurs. New entre. preneurs are role models who }encrally want to help ofhen get staned. J. Create a Realistic VWon of the Future The unifying force in a successful local development strategy is a shared vision of a better future for the community. Identify an achievable future that builds on local strengths and responds to eom. munity liabilities. Use this vision to build consensus for public and private action. A realistic vision will force public investments to be evaluated for their potential lung -term benefits. It will also be a signal to the private sector that efforts to improve the community are heading in the right direction—i.e.. that complex problems are, being addressed through systematic action. Develop community awareness of this future vision. making clear the compel- ling reasons why the community should back it. What is the cost to do in' What is the price if it is not done? What are the benefits for participants if success- ful? A. Diversification Based an Strong Markel Nkhn Diversifying the economic base helps communities cope with overall changes in outside influences. Healthy econo- mies contain a balanced mix of differ. ent-sized businesses in different sec- tors. A development strategy should also be diversified. including retention/ expansion, enterprise development and attraction elements—tailored to meet local needs and circumstances. Examine the successful sectors of the local economy to determine which mar. ket niches to build on. Has the earn - munity built a competitive advantage to certain sectors or industries'! Are there new niches that can be seized as well? Can new businesses be created through import substitution? S. Business Climate Rather Than Business Incrntfyes Don't be confused by the lure of local business incentives. A company's first concern should be whether or not it can operate profitably and comfortably in a given setting. A community should be primarily concerned with creating a healthy business climate where all types of firms can prosper. A community should focus on and strengthen its location attributes that support businesses. All else being equal. businesses want the best possible finan- cial deal. But a strong and growing firm still has to succeed in the location it chooses long after most incentives are gone. It is important to emphasize a community's value, as a place to do busi- ness. 6. Bias Toward Action Successful local development pro- grams get things done. They are focused on implementation and action rather than the art of planning. After a plan ofaction is approved. responsibility for carrying out that plan should be assigned to key public and private sector actors who are held accountable for their pan. The guiding principle in forging strong pub. lic-private pannenhips is shared risk and shared reward. Conclusion Economic development is not magic. The aum of high technology convinced many practitioners that prosperity was around the comer. lust clear a field. pave an access road and put up a legible sign announcing that the best high-tech park in the country was open for busi. ness. Many communities have learned the hard way—there are plenty of empty industrial parks to show for all of this misplaced enthusiasm. The community's healthiest major employee and promising new ventures form the basis of a growth firm strategy. These two groups provide the best indi. eatfun of current competitive advan. tage. It is important to build on them while examining the prospects for shor- ing up declining sectors that can be made competitive again. Be open-minded about the range of high-growth firms that could prosper in a local economy. Some, may be high. tech manufacturing firms: but others will be low-tech or no -tech service sector Arms. There arc firms and entrepre. neurs in the community with potential to grow given the right kind of support. The development practitioner's task is to find them and match them with the right resources. Commentary 73 /003