Economic Development Blog

As municipalities scramble to find ways of financing the development or redevelopment of retail and commercial corridors, the State of Illinois designed the Business District Development and Redevelopment Sales Tax back in 2005. (Legal citation is 65 ILCS 5/22-74.3-5). The municipality may impose this tax if it has plans to develop or redevelop an area that may directly benefit from the proposed plan. Examples may be shopping corridors that have been abandoned by major retailers, an older industrial park or a blighted area. The BDD, as it is known, is easier to implement than a Tax Increment Finance District and still generates a substantial amount of revenue. An added advantage: a BDD does not require voter approval. The BDD tax rate may be imposed in 0.25% increments and cannot exceed 1%.

For the commercial developer, a BDD can be an attractive incentive, particularly for redevelopment financing. The major disadvantage is that the sales tax is higher within the district than surrounding areas.

To find out more about BDDs, here are some links to the Illinois Department of Revenue and other websites:

http://www.revenue.state.il.us/LocalGovernment/Overview/HowDisbursed/1002-20.pdf
Statutes: www.ilga.gov/legislation/ilcs
Public Acts: www.ilga.gov/legislation/publicacts
Illinois Department of Commerce and Economic Opportunity (DCEO):
www.illinoisbiz.biz

Chris Manheim

Are rising energy costs returning the worldwide economy to a smattering of local economies?  Perhaps, according to at least one economist. 

At the recent CoreNet Summit in Las Vegas, economist Jeff Rubin, the keynote speaker, made a fascinating case for why our current global economic model no longer works. He sees the paradigm shifting to more locally based economies. Why? energy costs! Continually rising energy costs will eventually make shipping both raw materials and finished goods half-way around the world too costly. China, for example, will serve other asian nations. The fuel costs, though, will force it to limit exporting to the U.S. market. These expenditures will far outweigh any wage differential. LIkewise, energy costs will lead to a renaissance in agricultural requiring localities to grow more food for their own markets. Back in the ’60s as a child, I recall grocery advertising that read “seasonal vegetables.” Those signs may very likely be making a comeback.

Another response to higher energy costs will be the impact upon land use planning. Suburban sprawl will become uneconomic. More land will be needed for agricultural. People and jobs will relocate near each other. Mother nature will eventually reclaim overbuilt land.

As a community economic developer, I find Jeff’s new paradigm a bit simplistic, but his main points are borne out in regional land use planning scenarios across the nation.

For information about Chicago Metro Area 2040 economic and land planning, visit http://www.goto2040.org/.

Chris j Manheim, President
Manheim Solutions.com

Chicago Chapter CoreNet Global Chairman, Economic Development Committee

Stimulus funding - and finding access to it - remains unclear to many corporate real estate-related companies and municipalities.  So I want to point you today to a great ARRA (American Recovery and Reinvestment Act) article by a firm that is a supporter of CoreNet Global.

One of the many financial firms exhibiting at last months CoreNet Global Summit was Ehlers, a public finance consulting firm I have had the privilege to work with over the years. In its Fall 2009 newsletter (available at http://www.ehlers-inc.com/newsletter.php), Ehlers gives a concise and easy to understand description of the American Recovery and Reinvestment Act for Local Governments.

To the commercial real estate professional, this article will provide you with an overview of how these incentives work, particularly The Build America Bonds Program, which is being offered for two years and provides a permanent federal subsidy of 35 percent of the interest expense of qualifying bond issues. These bonds are being used for a wide-variety of public infrastructure improvements: from road projects to school construction bonds. The newsletter also have a good article about the “Return of Development” from the perspective of municipal governments.

For more information, visit www.ehlers-inc.com.

Economic Development Organizations are delivering more value than ever before to corporate real estate executives - as a direct result of training and focus on results.

Managing an EDO (economic development organization) isn’t easy, and, in today’s economy, financing one is even more difficult. Recently, Chris Manheim, President of Manheim Solutions, Inc. and CoreNet Global-Chicago Chapter’s Economic Development Committee Chairman, was an instructor for the International Economic Development Council’s (IEDC) “Managing Economic Development Organizations” in Lousiville, Ky. Chris joined Dr. David Kolzow, President of Team Kolzow, Inc., headquartered in Franklin, TN.

Chris and David first worked together in Chicago back about 1983. At the time, David was working as an management consultant with PHH Fantus and Chris just completed post-graduate studies in Public Policy Analysis at UIC.

One of the training’s main points:  every real estate professional or service provider should be aware of what an Economic Development Organization can do for them. Most of the Chicago Metro counties have an EDO, typically, a public-private partnership. You should consider becoming an investor in these EDOs, your budget permitting. The information and networking will make it more than worth your while.

Here are five things corporate real estate executives should know about how Economic Development Organizations can  assist in accomplishing corporate real estate objectives.

How CREs can use EDOs:

1. Site Information.  Readily available community information on the EDO’s website, including buildings and sites that you may not be aware of.
2. Contacts.  An ‘insider’s’ network of contacts to community officials and leaders.
3. Approvals.  An EDO may be able to ‘fast-track’ municipal approvals for your project, if it produces quality jobs or other bottom-line criteria the EDO is seeking.
4. Financing.  The EDOs typically have revolving loan funds and access to TIF and SSA financing.  (TIF = Tax Increment Financing; SSA = Special Service Area)
5. Government Resources.  The EDO works in partnership with state and federal agencies.

For more information about EDOs, contact Chris Manheim at chris@manheimsolutions.com. Or call 847.691.0008.

This piece was originally published on the AlterNow blog.

By:  Matt Ward, The Alter Group

To sweeten the pot after luring brewing giant MillerCoors LLC to the Windy City (http://www.chicagobusiness.com/cgi-bin/news.pl?id=33268 ), the City of Chicago has agreed to create a $6 million tax-increment financing deal for the firm’s new corporate headquarters at 250 South Wacker Drive.  Even with a budget shortfall nudging $500 million, the City is kicking in significant funds to bring home more than 300 new jobs.  This deal is also heartening affirmation that the frozen capital markets are starting to flow once again.

The City’s subsidy, approved by the Community Development Commission (http://archives.chicagotribune.com/2008/oct/16/local/chi-daley-budgetoct16 ) , provides 27.5 percent of the $21.8 million that MillerCoors needs to renovate its 129,122 SF headquarters on nine floors of the 14-story building.  During 2006, 250 South Wacker Drive was renovated to replace or update all infrastructure systems (http://250southwacker.com/about.html ).  The structure now boasts an energy-efficient “Chill Beam” HVAC system and low-e glass, and qualifies as a next-generation green building.

Last July, MillerCoors - a joint venture of Molson Coors Brewing Co. and SABMiller PLC - chose Chicago as the headquarters of its merged operations that previously had headquarters in Milwaukee and Denver.  The agreement requires MillerCoors to employ at least 325 employees at its headquarters within five years.

“Just-in-Time Learning” Needed for the Re-invention of Education in the U.S.

I just had the opportunity to attend a most interesting fundraising breakfast sponsored by Choose DuPage EDC and the DuPage Workforce Board. In addition to the usual great networking, the guest speaker definitely knew how to keep us all awake at such an early hour.

Mr. Tony Wagner is the Co-Director of the Change Leadership Group at Harvard Graduate School of Education. He is the author of a number of books about what we must do to change our education system for the better: better workers for our businesses, better citizens and better team players.

Tony sums up his extensive research into what he calls “Just-in-Time” Learning; or, “How to ask the right questions to solve the problem.” This method uses Core Competencies in “connecting, critical thinking and collaborating.” Traditional American education, (including No Child Left Behind) is “timeless learning,” relying upon multiple choice testing. Our traditional system teaches the test. That is, “What gets tested is what gets taught.” The result: people that know how to get good grades, but are not very useful in the work place or life.

But, when young people are left to their own devices, they are literally connected: connected online; connected in creating, multitasking and developing relationships. This is the kind of learning succeeding in the rest of the world, but hasn’t truly arrived, yet, in the U.S.

Think about how we work in business today. We collaborate. We respond to each other’s ideas through blogs, email and other media. We learn how to put ideas and solutions together to solve our business problems. We learn how to ask the ‘question.’

For more information, visit Tony’s Change Leadership Group website at http://www.gse.harvard.edu/~clg/; or google Education 2.0 and Education 3.0.

Chris Manheim, CEcD
Chicago Chapter of CoreNet Global
Economic Development Chairman

This post is a reprint of a post written for the Alter Group Blog.

Corporate real estate executives can look to their economic development partners to help fund projects where traditional sources of financing are falling short thanks to the credit crunch.  Economic development organizations are stepping in to help plug the credit hole.  We all know what the economy is like today, and it is unlikely that the industrial and commercial real estate markets will soon turn around. As an economic developer, I see another side of the economy where both communities and businesses are seeking opportunities and looking at alternatives ways to secure capital.

Aside from the federal stimulus incentives, municipal, state governments and educational institutions offer a variety of incentives…To read this entire post and for specific examples of incentive programs that can be used to fund corporate real estate projects, please see the Alter Group Blog:  http://www.altergroup.com/blog/index.php/general/economic-development-packaging-a-loan-in-todays-market/

As the U.S. economy continues to struggle, we have seen increased activity among bargain-hunting foreign entrepreneurs seizing an opportunity to invest in the United States. The EB-5 program was established in the 1990s to encourage foreign investment and has been a significant driver of this activity. Congress created the EB-5 visa category for the foreign investor seeking to enter the country to engage in a commercial enterprise that will benefit the U.S. economy and create jobs. All EB-5 qualified business opportunities require a capital investment of $1 million unless the investment is in a Targeted Employment Area (TEA) or a Rural Areas, then the capital investment is reduced to $500,000/.
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For more information, contact Elisabeth Corey, at Foley & Lardner LLP real estate practice at ecorey@foley.com.

Rockford Area Economic Development Council recently attracted a new solar-panel manufacturing plant that will create 200 green-tech jobs. Wanxiang America Corporation plans to break ground this month for its first solar-panel pant in the U.S. in Rockford’s Global TradePark. Phase 1 will be a 40,000 SF buildings and 20 high-tech  green collar jobs per shift on three shifts. Eventually, 160,000 SF will be built employing more than 200.
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For more information, contact Eric Voyles, RAEDC vice president of national business development at evoyles@rockfordil.com.