The Power of Partnership: Travel and Economic Development September 25, 2012

Transcription

1 The Power of Partnership: Travel and Economic Development September 25, 2012

2 Goals for Session In order to be successful, CVBs and other DMOs must develop strong partnerships within their own community. Economic Development Corporations can be a valuable ally. Understand better: 1. What motivates an ED Director; 2. The laws regulating ED organizations; and 3. Ways to partner with an ED organization.

3 Outline for Session Short presentation on: 1. What is Economic Development? 2. How does Economic Development work in Texas? 3. What types of projects are allowed under the state laws governing the sales tax for Economic Development cities? Interactive discussion on: 1. What other ways are there to partner with an EDC? 2. Lessons learned and success stories in working with an EDC. Feel free to ask questions throughout the session.

4 What is Economic Development? No single definition incorporates all of the different strands of economic development. Most commonly described as the creation of jobs and wealth and the improvement of quality of life. Can be described as a process that influences growth and restructuring of an economy to enhance the economic well-being of a community. In the broadest sense, economic development encompasses three major areas: 1. Policies that government undertakes to meet broad economic objectives including inflation control, high employment and sustainable growth. 2. Policies and programs to provide services including building highways, managing parks and providing medical access to the disadvantaged. 3. Policies and programs explicitly directed at improving the business climate through specific efforts, business finance, marketing, neighborhood development, business retention and expansion, technology transfer, real estate development and others.

5 What is Economic Development? The main goal of economic development is improving the economic well being of a community through efforts that entail job creation, job retention, tax base enhancement and quality of life. As there is no single definition for economic development, there is no single strategy, policy or program for achieving successful economic development. Communities differ in their geographic and political strengths and weaknesses. Each community, therefore, will have a unique set of challenges for economic development.

6 How does Economic Development work in Texas? Bottom Up vs. Top Down Local Control Funding Sources: Investor Membership Utility Funds City Allocation (property tax) Sales Tax Combination Purpose: Industry Recruitment Retail Recruitment Business Retention Workforce Development Operate FTZ Organization Structure: Department of the City Department of the Chamber Stand Alone Organization Type A Corporation Type B Corporation Combination Business Park Development Tourism Development Housing Development Public Infrastructure Combination

7 Sales Tax for Economic Development The sales tax for economic development has been one of the most popular and effective tools used by cities to promote economic development. Texas Attorney General, Economic Development Handbook, 2009 # of Cities that have levied the tax: # of Type A Cities: # of Type B Cities: According to the Texas Comptroller, as of fiscal year 2009 Chapters 501, 504 and 505 of the Local Government Code outline the characteristics of Type A and Type B EDCs, authorize cities to adopt a sales tax to fund the corporations and define projects EDCs are allowed to undertake. Furthermore, the community can also dictate to the EDC the types of projects it is interested in undertaking, so long as they are allowable by law.

8 Type A Corporations Who is eligible? A city is eligible to adopt the Section 4A tax, with voter approval, if the new combined local sales tax rate would not exceed two percent and: The city is located in a county with a population of fewer than 500,000; or The city has a population of fewer than 50,000 and is located within two or more counties, one of which is Bexar, Dallas, El Paso, Harris, Hidalgo, Tarrant or Travis; or The city has a population of less than 50,000 and is within the San Antonio or Dallas Rapid Transit Authority territorial limits, but has not elected to become part of the transit authority.

9 Type A Corporations Primarily intended for manufacturing and industrial development. Type A revenue may be used to fund land, buildings, equipment, facilities expenditures, targeted infrastructure and improvements for projects including: Manufacturing and industrial facilities, recycling facilities, distribution centers and small warehouse facilities; Research and development facilities, regional or national corporate headquarters facilities, primary job training facilities operated by higher education institutions, job training classes, telephone call centers and career centers not located within a junior college taxing district; Certain infrastructure improvements that promote or develop new or expanded business enterprises; Aviation facilities; Commuter rail, light rail or commuter bus operations; Port-related facilities, railports, rail switching facilities, marine ports, inland ports; and Maintenance and operating costs associated with projects.

10 Primary Jobs Requirement The main requirement is that the businesses bring new money into the community. As of 2003, projects are now required to create or retain Primary Jobs. Primary job means A job that is available at a company for which a majority of the products or services of that company are ultimately exported to regional, statewide, national or international markets infusing new dollars into the local economy; AND Included in one of the following sectors of the North American Industry Classification System (NAICS)

11 Primary Jobs Requirement Allowable NAICS Codes , Crop Production Animal Production Forestry & Logging Commercial Fishing Support Activities for Ag & Forestry Mining Utilities Manufacturing Wholesale Trade Transportation & Warehousing Information (excluding motion picture theaters) Securities, Commodity Contracts and other Financial Investments, Insurance Carriers Architectural, Engineering, & Related Services; Scientific Research & Development Management of Companies & Enterprises Telephone Call Centers Correctional Institutions

12 Primary Jobs Requirement NAICS Codes Not Allowed Construction Companies Hotel Management Services Tourism Bureaus Reservation Services and Ticket Agencies Arts, Entertainment and Recreation Accommodation and Food Services Tourism Development Offices, Government Remember: Companies can have multiple NAICS codes depending on their operations.

13 Allowable Costs There are some limitations on how sales tax revenues can be used to fund a project. Eligible expenditures include: Acquisition of land; Machinery and equipment; Construction costs; Planning and professional services related to the project; Financial transactions and reserve funds; and Administrative and other necessary expenditures. No more than 10 percent of the revenues may be spent for promotional purposes.

14 Performance Agreements EDCs cannot simply gift sales tax proceeds to businesses. An EDC must enter into a written performance agreement with any business enterprise that it funds directly or makes expenditures that benefit an eligible project. At a minimum, the performance agreement must contain: A schedule of additional payroll or jobs to be created or retained; The capital investment to be made by the business enterprise; and The terms for repayment of the EDC s investment if the business fails to meet the performance requirements specified in the agreement.

15 Special Use of Type A Tax for Sports Venue Facilities 1997 legislative change allows Type A corporations to do Type B projects with approval of the voters. This includes sports venue facilities (arena, coliseum, stadium, or other type of area or facility) that meets both of the following criteria: The primary use or primary planned use is for one or more professional or amateur sports or athletics events; and A fee for admission to the sports or athletics events is charged or is planned to be charged, except that a fee need not be charged for occasional civic, charitable or promotional events.

16 Type B Corporations Who is eligible? A city may impose the Section 4B tax, with voter approval, if the new combined local sales tax rate would not exceed two percent and if the city fits into one of the following categories: The city would be eligible to adopt a Section 4A sales tax; The city is located in a county with a population of 500,000 or more and the current combined sales tax rate does not exceed 8.25 percent at the time the Section 4B tax is proposed; or The city has a population of 400,000 or more and is located in more than one county, and the combined state and local sales tax rate does not exceed 8.25 percent.

17 Type B Corporations May be used for any project eligible under Type A rules and several other project types, including quality of life improvements. Type B revenue may pay for land, buildings, equipment, facilities, targeted infrastructure and improvements for: Professional and amateur sports and athletic facilities, tourism and entertainment facilities, convention facilities and public parks; Related store, restaurant, concession, parking and transportation facilities; Related street, water and sewer facilities; and Affordable housing. To promote and develop new and expanded business enterprises that create or retain primary jobs, a Type B EDC may fund: Public safety facilities; Recycling facilities; Streets, roads, drainage and related improvements; Demolition of existing structures; General municipally owned improvements; and Maintenance and operating costs associated with projects.

18 Partnering with an EDC Financial For some towns, tourism is the only infusion of outside $ s Some EDCs can help on certain projects related to tourism infrastructure Joint management/admin/marketing personnel saves $ Communications Sometimes have the same audience, but need to send multiple messages Communications to our investors Veterans initiatives Society of Environmental Journalists Football games Cotton Game EDCs can promote conferences open for local businesses to attend Payroll Conference Between entities EDCs can communicate new tourism related building permits DMOs can communicate when corporate meetings take place To our clients DMOs/EDCs want to promote all of the growth taking place when selling the community

19 Partnering with an EDC Workforce development programs Building and training our future workforce Attraction of workforce Development of customer service training programs Surveys EDC wage surveys can help reveal wages in tourism occupations Regional labor market surveys can help tourism entities understand local benefits being offered, how companies recruit and growing occupations Job Location Preference Surveys can give tourism entities information about why people would/would not want to live in the community Guest surveys might reveal EDC related opportunities Long-term and strategic planning of the community Imagine Lubbock Together Initiative started by the Lubbock Chamber with heavy input and assistance from LEDA and Visit Lubbock

20 Contact Information Lubbock Economic Development Alliance 1500 Broadway, 6th Floor Wells Fargo Center Lubbock, Texas Visit Lubbock 1500 Broadway, 6th Floor Wells Fargo Center Lubbock, Texas phone fax toll-free phone fax toll-free

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