Fatal Flaws In Local Economic Development Plans

I’ve worked on around a hundred of these directly and read far more both plans and solicitations for plans. It took awhile to notice how by limiting their considerations to the political boundaries of the sponsoring group (usually using state or federal dollars for the study/plan so it’s local myopia makes much less sense) misses most of their local economy in reality.

It’s as though one was studying the human body and instructed to only examine the left arm, the rest being out of town and hence irrelevant to the functioning of the arm.

Studiously ignoring that local consumers and workforce have cars, paved roads, and considerable incentive to make the most of their money and time by traveling beyond the town or county borders is especially bizarre, having been a highly visible (and universal experience of all residents) since the 1890’s.

Most businesses have a regional customer base and workforce.   People within walking distance are the explicit or implicit assumption in the plans.

So much of a plan’s goals (from listening to random citizenry in a methodology market research long ago abandoned but that gives the illusion of participation like most such public hearings where input is severely limited, shallow, and ignored) drift to replicating stores, schools, hospitals, consumer services, etc. found in some other communities (of wildly ranging size with no rhyme or reason other than desirability.)  Often these are businesses that need a half million residents to survive that towns of a few thousand residents want are especially common “wishes” that dominate these “plans”/wish lists.)  Examples would be regional shopping malls, specific major retailers, heavily advertised restaurant chains, many bars with the latest entertainment and an inability to detect underaged patrons, boutiques, entertainment venues from skate parks and concert halls to convention centers and professional sports stadiums (without a team.)   Oddly, actually doable projects like a new water treatment plant or a bigger public library with more adult learning resources rarely come up.   It’s part of the exposure to asking general questions of the general public with a resulting mess of fuzzy thinking.  It’s vastly different answers than people require in getting financing put together or running the results profitably.   Much like househunters who asked what they want before they know their mortgage capacity and what the local market has, routinely describe the house they want at double to triple their mortgage capacity (it’s what makes realtors cry every day.)

Without a sufficient customer base that doesn’t have existing options in nearby communities, few ventures work and trying that is often the sad history underlying many of the empty storefronts and large buildings converted to storage instead of operations. Community listening sessions with dozens of residents present that stubbornly refused to acknowledge a grocery store as they described needing already existing 6-20 miles away on the connecting highway, so 5-15 minutes driving time away instead of a day by horse-drawn buckboard crosscountry, have been the common experience. Bitterness or smugness about being the County Seat lingers to a surprising extent, one of the 19th Century economic development fantasies as having the county government offices brings some middle class jobs in the courthouse, a few lawyers, a title company, and gives the local bank a hefty depositor larger than often any of the businesses, but it’s hardly the constant magnet for countywide consumers imagined.

The biggest gap is ignoring, somehow, whatever city(s) are the center of that region’s economy. Jane Jacobs points this out especially well in her books “Cities & The Wealth of Nations” and “The Economy of Cities” published long ago, but still part of the core canon for many professional planners.  Her point is you can’t understand economies on less than a regional basis, using the ancient city-state model, with the smaller communities and farms intricately tied to the largest city that local transportation networks allow access to.

                As opposed to the stubborn belief that all of the communities are or should be self-sufficient islands, preferably walled with guards to keep local consumers inside, it’s an intricate network.

Looking at where people go for major medical services like surgery, giving birth, end of life care, MRI’s or CT scans, long-term care, etc. tells you where the regional hub and spokes (local clinics, small medical centers, old rural hospitals, nursing homes, pharmacies, visiting nurse services, home health care, etc. that are not only the local services but generally tied to large regional hospitals for everything from referrals to specialist physicians to direct financial support/subsidy.

Indicators of the community that’s the regional trade center is commercial airport service (major airlines fly there), a SuperWalmart store and other big box retailers, old shopping centers, regional or bank chain headquarters, far more business services (lawyers, accountants, insurance, etc.), the dominant newspaper/television stations/radio stations, the broadband services are fastest and most competitive, lots of distribution warehouses both old and current, major transportation networks intersect there, and it’s the place the surrounding residents speak derisively of but go there weekly if not daily.

If it’s a gap in the regional economy, far less common than these plans assume which most often identify as critical gaps as anything that doesn’t currently have an illuminated sign on the main arterial roads in that one town (overlooking ones on side streets is bizarrely common even by lifelong residents who’ve just told you they know the whole town and everything that goes on there…  Gap analysis takes a lot of knowledge of what businesses are currently viable and how those needs are already met, it’s very easy to have gaps identified as businesses or industries in long decline (car dealers, farm implement dealers, convention halls, small hardware stores, small sporting goods stores, small grocery and drug stores, repair shops, gas stations, movie theaters, etc.)    Generally the people recommending them haven’t worked in them, let alone owned them, so an understanding of the specific economics and market trends is missing, fatally for most projects (one of the saddest things I see are delusional communities that spend vast sums on feasibility studies on infeasible projects, ones where literally 10 minutes worth of casual research would have disabused nearly anyone of it’s viability instead of tens or hundreds of thousands of dollars.  Often that’s a cowardly way to shift the blame to outsiders for someone powerful’s pet scheme not standing up to careful consideration, like using the school’s money to pay off the schoolyard bully not to thrash you.

I’ve never met anyone who actually had that encyclopedic knowledge even when their hometown has less than a hundred residents.  So chasing what’s already present or has often failed for inadequate customer base becomes the “action plan” (like sitting and wishing really hard is an action plan.)

The regional hub is the most likely to fill gaps that require a lot of specialized customers or just occasional ones like a restaurant one goes to primarily for special occasions. Ignoring the regional hub’s existence and knowing surprisingly little about what’s there already (the regional hub is rarely mentioned in the planning solicitation or research scope, often it’s announced as off limits to even appear in the plan.)

The real opportunities for economic development in communities lie to relative advantages that too many plans overlook (and thus become dusty, forgotten reports despite considerable cash and time wasted on them.)

Natural resources’ locations and accessibility for extraction and processing are the obvious ones but still bizarrely overlooked by most of the modern plans I see while the foundation of old plans (that far more often worked.)

Locations along major highways with potentially for diverting thousands of drivers are ones that commercial real estate brokers and investors readily grasp but still get left out of most plans or addressed quite vaguely despite being quicker than many projects (and far more likely to be viable than reviving somehow 19th-20th century tiny storefronts on low traffic, poor parking downtowns that relied on the railroad depot (now a museum) to bring through sufficient customers.

Manufacturing is less reliant on a particular site than imagined, it’s supply chains in and out are increasingly worldwide rather than within walking distance of the factory as imagined, manufacturing sites depend far more on where the founder happened to live.

Analyzing the local economy means analyzing the regional economy, so it’s done routinely by company site selectors and commercial real estate appraisers, most bankers consider it as well. Local politicians blind themselves to it, even while acknowledging quite grudgingly the intricate web between local, regional, and national government they function in daily.

We can all do a lot better at this by broadening the geographic scope to fit reality. I know, crazy talk.

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