Economic Development Update: So I really wanted to attempt to explain how this whole economic development thing works. Mind you this is going to be long for a FB post and yet its gonna still be the Readers Digest version and very tip of the iceberg of everything that goes into bringing a business to the city, so just keep that in mind. I post this because I want folks to know that it isnt as simple as saying there is a need (and we all know the City of Maricopa has a GREAT NEED for retail services) and therefore the business should just appear. Why cant we get this? I dont what that, I want this.... Ahhh if it were only that easy. But I also want people to know then, what we as a City Govt, and as Elected officials are doing to fulfill our part to help entice those desired businesses to our beautiful city. The process looks something like this: Today we will just focus on Retail as an example. The Applebees, Chliis, Home Depots, Best Buys, etc of the world. This past week I spent several days at what is known as ICSC (International Conference of Shopping Centers). It is held it twice a year. One in the spring and one in the fall. It is where the retail establishments, developers, brokers, builders, financiers, Architects, etc, go to meet up with one another. Our Economic Development team and crew of elected officials go to sell our citys story, meet people as we can, within the time frame and simply get in front of all these folks listed above so that the City of Maricopa is on their radar, when they look to expand/grow/open new locations. WE WANT THEM IN MARICOPA! BUT, WE (the city) are only one piece of the pie, in bringing any business to an area, especially one as new as ours, we have a host of challenges and it is all about timing. I literally like to think of it as setting up dominos. In the outward making of that raw piece of dirt... transforming it into an operating building so that you can frequent it, is literally the very last piece to set up before the grand opening. Let me explain.... So if you have a piece of raw land (this process is slightly different if you have an exiting vacant building there that fits the mold for a given industry that wants to locate there, but you will see the differences) and want to see a Lowes go up there heres an example of what might have to take place first: 1.) We need to see if there is any interest by Lowes in coming to the area? This, in an of itself, has a myriad of challenge factors including one of the things we are going through today...the tightness of financing in a Post Recession World. I cant tell you how many times we heard this phrase uttered this past week from the companies, brokers and financiers themselves! 2.) Once there is interest. We the city start facilitating pro formas (the running of the numbers) to assist the company, their board of directors, their accounting depts to see if is initially worth investigating further. If yes..... 3.) We have to find the right piece of dirt and where?.....location, location, location. Does the land have encumbrances on it...ie restriction of what you can and cant build? If you are going to spend millions to buy land and build, then its gonna have to be in the very best place possible...pletely subjective of course. 4.) What does the land have or need? Infrastructure: Water, sewer, utilities, are they large enough to provide for a commercial uses. Sidewalks, street entrances, light poles, asphalt, enough parking spaces? Is the area zoned properly in the first place, entrances and exits? 5.) Are you dealing with other entities? For example: Businesses along the 347 require you to deal with Arizona Department of Transportation for approval of things which adds an entirely different level of bureaucracy. This alone can add years to the approval process. The County, they overlay a variety of restrictions and permits required depending on the business. 6.) What else exists? Flood Plain mitigation, Air Quality issues, hazardous waste removal, etc, etc....all things that have to be potentially solved before a business ever even decides to sign on the dotted line. It also add cost. So who does this? If its a Lowes they do buying the land and paying for the building then they do. If its strip center, for a sandwich shop, a dry cleaners and card shop, then the developer or builder has to do. Which of course they pass those costs along to the new tenants who are now having to decide whether or not the potential per square foot rent is affordable enough to allow them to be successful. They will of course want to do another set of numbers at this point to decide if it would be worth their while before signing a letter of intent to commit. Or further negotiations with the developer/land owner with commence again before any further commitments are made. 7.) So after all that, they then need to speak with the owner of the land. Do they even want to sell? Who is buying it? The Lowes directly....not usually....so you have a company who wants to buy the land and develop it. But they are wanting to make sure they can either sooner or later develop it for a profit. That land developer is going to want to make sure there are tenants that are even interested in coming if its built....like the Lowes or the sandwich shops or dry cleaners or card shops. Are they truly willing to come and occupy it and commit to the price, IF it is built. --- Are you starting to see the revolving door here...chicken and the egg scenario? Its hard to spend millions and not be sure there is going to be any success. Especially in this post recessionary world. People that represent companies, just arent willing to spend without guarantees. Guarantees that most companies look to the city to provide, but cannot legally in the State of Arizona! (Caveat: There are some minor things that the city can do, but they are pretty minimal to what most people initially think of...Tax Incentives.) 8.) Who is going to finance this operation? Are they self financed? Can they get a loan? Most banks want you simply find an existing space rather than risk being on the hook for building from the ground up, right now. I share that with you based on the fact that some of the largest and even richest people who could self finance these types of operations have have recently gone to get bank loans and been turned down as the banks simply dont want to take all the risk, with their/your money. This does not happen in every case but it is pretty rampant. 9.) Now they have to get permits and work with the Citys Development Services dept to work on permits, what can and cant be done according to existing city code. It goes through P&Z, possibly the Board of Adjustments. Then it comes to City Council for final approval of the site plan and any adjustments that need to be made. 10.) Timing: All of these things are happening in their own timelines. Some overlap and run concurrent, some are dependent on one another. But all of them are required to be set up perfectly if that building and business is going to ever have a grand opening. IF ANY ONE OF THESE GOES AWRY OR CANNOT AGREE TO SOMETHING.....THE WHOLE PROJECT IS SCRAPPED OR WE GO BACK TO THE BEGINNING! Talk about frustrating when you control less than 5% of the actual process. You/we are completely dependent upon others working it out for our city to benefit from the retail establishment. As I said before this is not an exhaustive and fully comprehensive list, but hopefully it gives you a tiny glimpse into a complicated and unknown world that most people just simply dont comprehend when it comes to Economic Development. I hope that it also gives you another understanding why it is so important to create positive, long term, trustworthy relationships and foundations with so many people, brokers, developers, financiers, retail stores, businesses, etc. so that someday.......either tomorrow or 10+ years from now, the multitude of dominos (listed above) will be lined up perfectly and ready to go....to fall together, in what we know as a business Grand Opening! Unfortunately, to the average viewer its not a short or even easy process......but it sure is exciting building those relationships, encouraging those developers and tenants to listen to our story, fixing issues we have influence over.....in short, simply making the 5% we actually control the most business friendly we possibly can! This is the world of Economic Development!
Posted on: Sun, 05 Oct 2014 21:01:42 +0000
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