I had lunch a week or so ago with former executive director of the Mississippi Development Authority J.C. Burns, who is now busy building a new economic development consulting firm with a special focus on helping communities lay the groundwork to grow their economies.
The timing of our lunch was perfect, because the MBJ’s editorial focus this week is economic development — one of the buzz issues of the day, but a topic where the details, and even a definition, can get fuzzy.
Every community wants to improve its economy by bringing in new industry and encouraging existing companies to expand and prosper. How does one go about economic development? Or more to the point, what is economic development?
Every citizen must derive an income from somewhere. By raising income, more funds are available to enhance the quality of life throughout the community. Up goes the tax base and thus more money flows into municipal coffers for improved public services: better schools, roads, fire and police protection. Everybody wins. There are no losers when local economies prosper.
Supporting existing businesses is key to any community’s economic progress. However, most of the discussions around the coffeepot are about bringing in new businesses. Thus, without discounting the importance of helping the industry already in place, our discussion will focus on attracting new companies.
Raising the average per capita income is the goal of all economic development. Raising income means enhancing the value of workers’ efforts. Increasing productivity or replacing lower value jobs with new jobs that command higher pay is the ticket to success.
Most, if not all, communities are vitally interested in attracting new, higher paying jobs. To be successful communities must be proactive in planning for economic development. It is a rarity when a prospect considers an ill-prepared community for a site location. Generally, a substantial amount of planning must occur before prospects are identified. The community must have already invested capital in preparation for economic development. First, then, communities must have a source of economic development capital.
According to J.C., there are three methods of getting the capital for economic development without the benefit of having a prospect in the scope. These funds are segregated and used exclusively for buying industrial park land, installing utilities and other infrastructure. As industrial park lots are sold, the proceeds are added to the economic development capital pool to provide capital for future projects.
1. Conduct a community fund-raising campaign. Communities can solicit money from local businesses and individuals to establish an economic development fund. This is usually the first step in organizing for economic development.
2. Create an EDD — economic development district. Ask the county to pledge up to two mills of tax revenue to the EDD to create the capital fund.
3. Issue general obligation bonds. The proceeds of the bonds become the capital fund. The bonds are redeemed out of general tax revenue so that income generated from selling industrial park lots is recycled into further economic development.
Once a viable prospect is identified, the community may be eligible for a Community Development Block Grant, or CDBG. This program can be very helpful in putting the icing on the cake; however, it cannot supply the basic capital required to get economic development started.
Tools are available for communities that chose to be proactive in their economic development efforts. Commitment and sacrifice is required as it is with anything worth doing. Once the commitment is made and the capital funds raised, the next step is targeting the type of industry the community thinks would be a good fit. And then the soliciting and selling begins.
It all sounds so easy when reduced to paper. We all know that making the plan a reality is much more difficult than merely knowing how do it. However, without a plan the community is continually responding to events rather than proactively preparing for the future. The choices are there and either economic development is high on the priority list or it’s not.
I enjoyed seeing J.C., and the lunch was delicious. His knowledge of economic development principles and his ability to make things happen are impressive. His availability to help Mississippi communities advance their economic development efforts will benefit us all.
A few words of thanks
I am honored and humbled at being named SBA’s Small Business Journalist of the Year for Mississippi. I want to express my thanks to all who have extended congratulations and shared this honor with me. Working with the Mississippi Business Journal is the most rewarding job I have ever had and the recognition from the SBA is tasty icing on the cake. Thanks to all!
Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at firstname.lastname@example.org.