Placemaking and Business Retention and Expansion

The following is the second installment of a four-part series entitled, “Re-defining the Three-Legged Stool: Placemaking as a Component of Economic Development.” 

The previous installment explored placemaking’s role in business attraction as it improves the quality of life of a community and the marketability of a place. This installment considers how placemaking influences business attraction and retention.

Defining Business Retention and Expansion

Business retention and expansion (BRE) is different than business attraction because it focuses on helping existing businesses already in the community to prosper and grow. Typically, the main tool of BRE is a yearly survey of businesses that economic developers send out to (or make appointments to work through in-person with) businesses in their communities. In cases where businesses are seeking to expand, economic developers can provide access to financing, in the form of revolving loan funds, grants, and other loans, or by providing access to municipal or state resources.

Mixed Uses Contribute to Improved Usability

But, even if they aren’t aware of it, economic developers are also likely engaged in business retention and expansion activities that overlap with placemaking. For example, businesses that are multi-use, such as breweries with attached tasting rooms or small-scale food manufacturers with attached kitchens, often do not fit into one zoning category — though their mix of uses is what makes them unique, and contributes to a lively neighborhood. This can make expansion difficult, and lead to cumbersome zoning negotiations, causing businesses to lose both time and money. If economic developers work with city planning staff to assist business owners in these cases, then they are helping to create more vibrant places with improved usability.

New Uses for Older Properties

As real estate tides change, economic developers will need to be creative about new uses for old properties. Retail outlets and office spaces are being repurposed for apartments, maker spaces and incubators or are being converted into space for existing businesses to expand. The success of these new uses depends on a vibrant, transit-linked, pedestrian friendly environment to attract the kind of young talent that populate these spaces.

Innovation Districts

Creating nodes of activity in centrally located, pedestrian, and transit-accessible areas can also assist with regional business retention. As shown by the Brookings Institution’s research shows, more and more companies are choosing to move from suburban corporate campuses to areas where economic, networking, and physical assets are more accessible, contributing to a rise in what has been termed “Innovation Districts.” These districts combine small businesses, bars, and restaurants with startups, institutions such as banks and universities, and large companies. The diverse mix of tenants leads to more collaboration and an attractive environment for knowledge workers.

Attracting a Quality Workforce

From assisting businesses with zoning issues to encouraging innovation districts, business retention and expansion efforts are improved when viewed through a lens of placemaking. However, the most important determinant for keeping businesses in a community and helping them to expand is a talented and plentiful workforce. Creating a place with a higher quality of life attracts more people to communities and engenders a strong bond that helps retain populations. Smart companies understand this and locate themselves where their workforce wants to live. Placemaking is part of a larger business retention and expansion effort, and offers an advantage that should be used by economic developers.

Re-defining the Three-Legged Stool: Placemaking as a Component of Economic Development

The three-legged stool of economic development is made up of business retention and expansion, business attraction, and entrepreneurship and small business development. In recent years, it has become apparent that the strength of a community’s workforce undergirds this framework. Thus, in the diagram below, workforce development has been added as a foundation for each of these activities.

Placemaking, according to Wikipedia, is a multi-faceted approach to the planning, design and management of public spaces. Placemaking capitalizes on a local community’s assets, inspiration, and potential, with the intention of creating public spaces that promote people’s health, happiness, and well-being. While the process is heavily based in design, placemaking results in more choice of housing, transportation options, and retail options, which improves people’s lives across the economic spectrum.

Placemaking enhances economic development efforts in each of the three legs of the stool, as well as through impacting workforce development. Beginning with this installment, a new series of articles in the Fourth Economy newsletter will delve into the role that placemaking has in economic development as the economy continue to transition towards the knowledge and service economies. Competition is increasing because talent and companies are tied more and more to places that support knowledge economies rather than natural resources or commodities. As the playing field levels, the competition for jobs and talent is tied to quality of place.

Often, when discussing economic development, business attraction comes to mind first. Business attraction is the process of marketing your community to firms that fit well with its already-existing advantages. Marketing can happen through an internet presence, as well as through traditional means, such as brochures or advertisements in magazines. Another tool that is used to entice business are incentives in the form of lowered taxes, financial grants, or providing infrastructure.

There are a few disadvantages to these methods. Advertisements are designed to catch the eye of site selection consultants and corporate location specialists; however, these populations likely already have access to scores of data about your community through public data bases such as the Census Bureau and private databases available via subscription services. If the story that this data tells about your community does not correspond to their needs, then no matter how much is invested in advertising, there won’t be much interest.

Incentives in the form of lowered taxes, grants, or infrastructure improvements can be an effective way to bring new businesses into a community. However, offering tax incentives can lead to a “race to the bottom” with communities attempting to outbid each other. Furthermore, offering these types of incentives can cut into school budgets, and divert funds from other priorities.

Placemaking can therefore play an important part in business attraction because it improves the quality of life of a community. Quality of life is the top reason why company executives chose to locate in a place where they themselves have to live. Improving this factor can improve the impact of advertising and decrease the need for tax incentives by providing intrinsic value for employees living in the town. While all aspects of business attraction are important, placemaking improves the product being sold, which, in turn creates a better lifestyle for both employees of new firms and existing residents.

What is the Economic Cost–or Benefit—of Sanctuary Cities?

In the past election cycle, the term “sanctuary cities” was used quite a bit, often without defining it or providing an objective view of the advantages or disadvantages of adopting these policies. Cities considering adopting these policies should consider both their values and the economic costs or benefits of implementing sanctuary policies and what is entailed in enforcing immigration policy on a local level.

In 2008, Immigration and Customs Enforcement (ICE), an arm of the Department of Homeland Security, began a program called Secure Communities, which encouraged local law enforcement organizations to send arrested persons’ fingerprints to ICE to check for a record of illegal immigration. If there is a match, ICE issues a detainer against the jailed individual, so that they can be held in jail, even if they are not found to have committed a crime, while ICE decides if they should be deported. Continue reading “What is the Economic Cost–or Benefit—of Sanctuary Cities?”