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Establishing An Effective Local Economic Development Program

The Wall Street Journal:  For Some Manufacturers, There Are Benefits to Keeping Production at Home

Expedited Local Permitting:  Chapter 43D Facts

 

Establishing An Effective Local Economic Development Program
by Robert Bateman

It has been said many times that economic development originates at the local level, in the cities and towns across the Nation. To some extent this is true. The national economy is an aggregation of local, regional and state economies. Of course this is an oversimplification in these times of international business and worldwide economic activity. But for most businesses, entrepreneurs and workers, the localities are where it all happens. Home base is the focal point of their operations and the principal source of their infrastructure support.

Many municipalities have focused on their economic base as an important component of overall community development and well-being. Businesses, imported wealth, jobs and income are recognized as significant sources of support for other business and governmental services because of the cash flow and economic multipliers that they generate. Other cities and towns understand the value of a viable local economy but do not have the mechanism in place to enhance the opportunities for growth and expansion that they may inherently possess.

This paper may prove beneficial to both groups of communities. For those municipalities that do not have organized and established economic development programs, this compilation of information will assist them in getting a start. For those that have active programs, this outline will give them cause to evaluate what they are doing and how they are doing it; and to provide a window through which they may make improvements and adjustments in their respective programs.

This design for local economic development programming is a collection of proven techniques and methods. The focus and organization of this approach is a product of personal experiences in the management of state and municipal development offices.  Let us proceed to construct the plan and approach.

Establishing the Preconditions -- Your Infrastructure for Success

Creating a Point of Contact within the Community and a Market Presence

 Retention vs. Recruitment -- Assessing Your Community's Opportunities

Developing a Database of Available Facilities and Sites

Services, Technical Assistance and Support for Companies

Bringing the Components of Your Program Together

 

The Wall Street Journal
For Some Manufacturers, There Are Benefits to Keeping Production at Home

 

By Mark Whitehouse

January 22, 2007; Page A2

NEW YORK -- It has long been an axiom that U.S.-made consumer goods such as TV sets and kitchen appliances can't compete in a world where cheaper labor can be found elsewhere. Like many axioms, though, it isn't entirely true.

 

Recent data from the Federal Reserve contained some surprises for anyone who thought U.S. companies don't make things for American consumers anymore. In its monthly update on factory output, the Fed reported that U.S. production of audio and video equipment surged about 2% in December and was up 23% for all of 2006.

 

That is a significant change from several years ago, when the numbers were negative as U.S. production moved overseas. Even output of appliances, though down for 2006, popped 5% in December.

 

The shift doesn't necessarily represent a renaissance. More likely, it reflects the fact that much of what can go abroad already has, leaving behind what can and should be made in the U.S. One area of strength: high-end goods like top-of-the-line $6,000 Sony Grand WEGA TV sets and $15,000 Sub-Zero PRO 48 refrigerators, which appeal to the affluent folks who have been driving much of the growth in U.S. consumer spending.

 

"It's the very high-end products," says Daniel Meckstroth, chief economist at Manufacturers Alliance, a trade group. "Manufacturers who have niche markets in high-end products have a very good outlook."

 

Such manufacturers account for only a tiny fraction of U.S. output and employment. Still, the numbers illustrate an important point about the physical and strategic limits of globalization: In just about any possible future, there will always be some business that is better done close to the customer. The obvious examples are home building and services such as restaurants, but the logic also can apply to certain types of manufacturing.

 

"If the thing being sold to the U.S. market is locally customized, delicate, or very large, chances are it'll continue to be produced in the U.S.," says Bruce Greenwald, professor of business and economics at Columbia University in New York. The same, he says, is true "if the manufacturing process itself involves almost no labor, like medical testing or like some very automated electronic-component manufacturing plants, chemical plants and metal-fabricating plants."

 

The dominant trend for the past couple decades, of course, has been the exodus of manufacturing from the U.S. to lower-cost locales such as China. Just about anything that can be mass-produced and shipped is made abroad and imported to the U.S., or soon will be. Imports account for about 90% of all the audio and video equipment sold in the U.S., 44% of household appliances and 38% of computers, according to Mr. Meckstroth, chief economist at Manufacturers Alliance, a trade group.

 

As a result, manufacturing has been declining as a share of the economy. In 2006, manufacturing accounted for about 12% of U.S. gross domestic product, a broad measure of economic activity. That is down from about 20% in 1980. More recently, slumps in the housing and auto sectors have sparked a drop in overall production as companies worked off unsold stockpiles of things such as furniture and auto parts. In the fourth quarter of 2006, U.S. industrial production fell at an annualized rate of 1.4%.

 

Many manufacturers, though, have managed to keep busy. Aside from producers of computers and business equipment, which logged double-digit growth in 2006 as companies made investments aimed at boosting efficiency, the fortunate ones include makers of consumer electronics and appliances that have set up shop in places typically associated with industrial decline.

 

Take, for example, Sony Corp., of Japan, which makes its Grand WEGA high-definition TV sets at a factory near Pittsburgh, a city better known for mothballed steel mills. The TV sets employ cutting-edge technology and tend to be large, with screens ranging from 42 to 70 inches. Their size and the sensitivity of their electronics make proximity to the consumer a meaningful advantage, as does the ability to react quickly to changes in tastes for high-end equipment.

 

"It is important for us to produce these sets close to most of our customers," says Stan Glasgow, president and chief operating officer of Sony Electronics Inc., a Sony unit that also assembles customized VAIO computers in San Diego. Proximity "gives us a distinct advantage with our retail partners across the country, as we have the ability to quickly fill the channel with specific products."

 

Over in Madison, Wis., Sub-Zero Freezer Co. makes a different kind of large and expensive product: High-end refrigerators and Wolf brand stoves. Michele Bedard, vice president of marketing, says the closely held company posted double-digit growth in 2006 despite the slump in the U.S. housing market -- a fact she attributes to people choosing to invest in renovations rather than selling their homes in a soft market. Sub-Zero is in the process of expanding its production space almost 40% to about 1.4 million square feet.

 

Ms. Bedard says Sub-Zero prefers to manufacture locally because it can better manage the process and make changes to models on short notice. "The pros of being in Wisconsin outweigh the pros of moving overseas," she says. "We can be very nimble and just be master of our own destiny."

 

More U.S.-produced TV sets and refrigerators, though, probably won't translate into more jobs in the U.S. Audio and video manufacturing, for example, accounts for only about 31,000 American jobs, and the number hasn't grown along with production. Despite its plans to increase capacity, Sub-Zero isn't planning to add to its 1,700-person work force.

 

Across the manufacturing sector, the picture is similar: To stay competitive, companies are doing everything they can to boost productivity -- that is, make more stuff with fewer people. "Manufacturing in the U.S. is headed toward plants that have no people in them," Prof. Greenwald says.

 

That is bad news for factory workers who must retrain or be cast aside. It could be better for the U.S. economy as a whole. The more the U.S. can produce for each hour worked, the wealthier the average American becomes. If, for example, output per hour rises an annual rate of 3%, the average inflation-adjusted wage will more than triple over 40 years.

 

"Manufacturing is contributing to the welfare of the economy in terms of standard of living, but it's not generating net new jobs," says Mr. Meckstroth. "The electronics sector is one of the areas where that's most visible."

Expedited Local Permitting

Chapter 43D Facts

History

On August 2, 2006, Massachusetts General Law Chapter 43D was signed into law.  This program offers communities a tool for targeted economic development.

What does Chapter 43D do?

What are the benefits of opting-in?

What are the criteria for priority development sites?

What are the obligations of opting into Chapter 43D?

What protections does this program offer for communities?

How do I obtain more information on this program?

Summary of Statute

Section 5 of Chapter 205 of the Acts of 2006

Section 1. Local opt-in provision

Section 2. Definitions

(a) Priority Development sites must be:

i. Commercially or industrially zoned;

ii. Eligible for the construction of a bldg of 50,000 sq ft or more;

iii. Designated by the board.

Section 3. Eligibility & Technical Assistance Grants

(a) To designate a priority development site, the local governing body must file an application with the board including:

i. A detailed description of the property;

ii. Written good faith commitment to comply with 43D;

iii. Written permission of the owner;

iv. A request for a technical assistance grant, if necessary.

(b) Requests for technical assistance must include a detailed description of how the grant will be used to implement the requirements of MGL Ch43D and may be used for such things as professional staffing assistance, local government reorganization, and consulting services.  The grant shall not exceed $150,000.  The Board shall review and determine eligibility for technical assistance monies within 60 days.  In special circumstances, communities may be eligible for additional technical assistance if a specific need can be demonstrated and if approved by the Board and the Secretary of Economic Development.

Section 4. Municipal Responsibilities

Once approved by the Board and awarded a technical assistance grant (if necessary), municipalities must fulfill the following within 120 days:

(a) appoint a single municipal point of contact for streamlined permitting;

(b) amend local rules, regulations, bylaws etc. to comply with 180 day permit timeline;

(c) determine and make available the requirements for each permit;

(d) establish a procedure for identifying necessary permits for a project;

(e) establish a procedure for determining completeness of the required submissions.

Section 5. Review Periods

(a)  Priority Development Site reviews must take place within 180 days beginning the day after notification of completeness.  If submissions are not complete, the governing body has 20 days to inform the applicant.

(b) Resubmission of an application and/or materials shall commence a new 30 day review period;

(c) If an issuing authority determines that additional materials are required, it shall notify the applicant immediately and shall complete action on the previously unidentified permit within 30 days if no hearing or public notice is required.  If public notice or hearing is require, the issuing authority shall complete action on the permit 30 days from the close of the hearing or comment period.

Section 6. Advisory Reviews & Fees 

The governing body:

(a) may establish an informal procedure to allow permit applicants to obtain advisory reviews by a technical team.  The procedure for obtaining advisory reviews may not exceed 30 days and shall not constitute final action on the permit review.  Invocation of the advisory review process shall toll the 180 review period for priority development sites.

(b) may establish additional fees to be assessed on priority development site permit applications to be used by the municipality for implementing chapter 43D.

Section 7. Automatic Grant of Approval

Failure of an issuing authority to take action within 180 days shall be deemed approved. If a permit is deemed approved under this section, the applicant has 14 days to file an affidavit with the city or town clerk.

Section 8. Exceptions to Automatic Grant of Approval

An automatic grant of approval may not apply if:

(a) Governing authority determines that an application is not complete in accordance with this chapter;

(b) The governing body determines that an application contains false or misleading information;

(c) The governing body determines that substantial changes to the project affect the information required to process the applications since the original submission.

Section 9. 180 Day Period Extensions

The 180 day time period may be waived or extended for good cause upon mutual agreement between the governing body and the applicant.  The 180 day review period may be extended for up to 30 days if an additional permit is required in accordance with section 5(c) if the previously unidentified permit is discovered within 150 days after notice of completeness.  The 180 day time period may be extended if:

(1) action by another federal, state or municipal government agency is required before the issuing authority may act;

(2) judicial proceedings affect the ability of the issuing authority to proceed;

(3) enforcement proceedings that could result in revocation of an existing permit have commenced;

When the reason for extension is no longer applicable, the issuing authority shall immediately notify the applicant and shall complete its decision with 180 days beginning the day after the notice is issued.  Lack of time is not an adequate basis for a municipality to deny a permit.

This section also provides extension for referral of permits to the Cape Cod Commission and Martha's Vineyard Commission in compliance with Chapter 716 of the Acts of 1989 and Chapter 831 of the Acts of 1977 respectively.

Section 10. Consolidated and Streamlined Appeals

(a) Appeals of issuing authority decisions or automatic grants of approval must be filed within 20 days of the last permit issued or within 20 days of the 180 day expiration, which ever is later.

(b) All appeals must be consolidated and filed within the Division of Administrative Law Appeals (DALA) within 20 days.  The consolidated appeal does not apply to wetlands.

(c) DALA shall amend their rules or regulations to meet the requirements of this chapter.

(d) DALA shall render appeals decisions within 90 days and aggrieved parties may further appeal to the Land Court within 20 days of the DALA decision.

Section 11. Transfers, Renewals, Permit Modification Requests, Expiration

(a) Permits shall not transfer automatically unless the permit expressly allows transfer without local approval.

(b) Issuing authorities may develop procedures for simplified renewals; otherwise renewals shall be governed by this chapter.

(c) Issuing authorities shall make every reasonable effort to review permit modification requests within as short a period as is feasible to maintain the integrity of the expedited permit process.  An issuing authority shall inform the applicant within 20 business days if the request for modification is approved, denied, determined to be substantial, or additional information is required.  If the modification is determined to be substantial, the original time frames set forth in section 5 shall apply.

(d) Permits issued in accordance with this chapter shall expire 5 years from the date of issuance.

Section 12. Incentives

Priority development sites are eligible for:

(a) priority consideration for PWED and CDAG funding;

(b) priority consideration for other quasi-public financing;

(c) brownfields remediation assistance;

(d) enhanced online marketing;

(e) technical assistance from MassDevelopment or the regional planning council.

Section 13. Technical Assistance Grants

(a) Technical assistance grants are intended to be a one time grant for communities adopting Chapter 43D;

(b) Municipalities may be eligible for a second technical assistance grant, for an amount to be less than the first grant award, if that community has successfully permitted one priority development site.

Section 14. MEPA and historic reviews shall take place concurrently within 120 days.

Section 15. Nothing in this chapter shall be construed to alter the jurisdictional authority of issuing authorities.

Section 16. The Secretary of Economic Development shall issue rules and regulations for this chapter.

Appropriations:

Technical Assistance Grants*$3.0MM
MassDevelopment Permitting Team$500K
Mass Permitting Ombudsman$500K
RPA Technical Assistance Centers$1.85MM
Div of Administrative Law Appeals$250K
Marketing & Online Inventory (MAED)$500K
Total$6.6MM

*Up to $150,000 per grant; funds approximately 20 municipalities.

Additional Notes:

The legislation references a Board (Interagency Permitting Board), as established in Section 5 of Chapter 205 of the Acts of 2006. The Board consists of the Secretaries of Economic Development, Business & Technology, Transportation, Environmental Affairs, and Public Safety, the Chair of the Economic Development Coordinating Council, and the Executive Director of MassDevelopment, or designees.  The Board will meet no less than 8 times per year at the discretion of the Secretary of Economic Development and shall be charged with monitoring priority development sites and expediting projects on priority development sites wherever possible. The Board shall also implement the Chapter 43D municipal grant program.

To view the text of this law, please visit the Massachusetts General Court website at http://mass.gov/legis/laws/seslaw06/sl060205.htm.  The law is currently known as Chapter 205 of the Acts of 2006 and the 43D portion of the bill is found in Section 11 of this document.