MONTGOMERY COUNTY STRATEGIC ECONOMIC DEVELOPMENT POLICY TASK FORCE

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1 MONTGOMERY COUNTY STRATEGIC ECONOMIC DEVELOPMENT POLICY TASK FORCE A STRATEGIC ECONOMIC DEVELOPMENT POLICY FOR MONTGOMERY COUNTY, PENNSYLVANIA: RECOMMENDATIONS TO COUNTY COMMISSIONERS Report Submitted to: Montgomery County Commissioners One Montgomery Plaza - Suite 800 Norristown, PA Submitted on Behalf of the Montgomery County Strategic Economic Development Policy Task Force by: Econsult Corporation 3600 Market St., 6 th Floor Philadelphia, PA December 2008

2 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners ii The contents of this report have been guided and informed by the contributions and efforts of the Montgomery County Strategic Economic Development Policy Task Force and Montgomery County Economic Development Cabinet and staff. Econsult Corporation would like to thank these individuals for their assistance throughout this process. Task Force Co-Chairs: Morris J. Dean, Blank, Rome LLP; Montgomery County Revitalization Board Charles Tornetta, Tornetta Realty; Montgomery County Planning Commission Task Force Executive Committee: Morris J. Dean, Blank, Rome; Montgomery County Revitalization Board Charles Tornetta, Tornetta Realty; Montgomery County Planning Commission Paul Bartle, Montgomery County Redevelopment Authority; High, Swartz, Roberts & Seidel Robert Butera, Retired PA House of Representatives, Regional Convention Center Authority Jeffrey Heebner, Chairman, Montgomery County Industrial Development Corporation John Rosenthal, Chairman Emeritus, Pennrose Properties (Deceased) Jim Sayre, Chair, Montgomery County Development Corporation Task Force Members: William Caldwell, Norristown Municipality Jane Dellheim, Commissioner, Lower Merion Twp. Bernadette Dougherty, owner, Corner Chocolates, former Main St. Manager, Ambler Jim Ettelson, Thorpe, Reed; former Commissioner Lower Merion Township Kathleen Friel, Chief Financial Officer, Valley Forge Investment Corporation Charles Gallub, Develcom Dave Gannon, Carpenters & Joiners Union Local #1595 Michael Golden, Jenkintown Borough Council Jill Govberg, Former Lower Merion School District Board President Ben Gross, Lansdale Borough Council Bernard Griggs, Montgomery County Building Trades Committee Wendy Klinghoffer, Executive Director, Eastern Montgomery County Chamber of Commerce Dale Mahle, retired Executive Director, Tri-County Chamber of Commerce, Pottstown J.P. Mascaro, J.P. Mascaro and Sons Ross Meyers, American Infrastructure Hugh Moulton, retired Executive Vice-President, Alco Standard Phil Jackson, Univest James C. Phillips, NorCo Auto Group; Lower Pottsgrove Commissioner ECONSULT December 2008 CORPORATION

3 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners iii (Task Force Members Cont d.) Joseph Price, Granor Price Homes; President, BucksMont Homebuilders Association Stephen Prousi, Montgomery Township Board of Supervisors Lawrence Segal, Impact Pennsylvania Strategies Karen Stout, President, Montgomery County Community College Claudia Timbo, President, Corporate Call Center Deb Tustin, Gwynedd Company; Horsham Water & Sewer Authority Bud Wahl, Mayor, Ambler Borough; Ambler Savings Bank Ken Weinstein, 401 Dekalb St. Associates Robert W. White, Abington Bank Jim Williams, ASSETS Montco Montgomery County Economic Development Cabinet Members: Steven Nelson, Director of Policy, Montgomery County Commissioners Office Gerald Birklebach, Director, Department of Economic and Workforce Development John F. Nugent, Director, Redevelopment Authority of Montgomery County Kenneth Hughes, Director, Montgomery County Planning Commission Kathy Phifer, Director, Department of Housing and Community Development ECONSULT December 2008 CORPORATION

4 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners iv TABLE OF CONTENTS Executive Summary vii 1.0 Introduction Background and Framework for Study Case Statement for a County Investment Overview of Report Impacts and Leveraging Potential of Public Investments in Economic Development Leveraging Potential of Public Investments in Economic Development Impacts of Existing County Spending External Examples of Public Investment Impacts Policy Development Process and Approach County Prescribed Tasks and Approach to Assigned Tasks Task Force Formation and Roles Task 1: County Overview and Identification of Priority Economic Development Issues Montgomery County Overview and Economic Climate Identifying Priority Economic Development Issues Task 2: Existing Economic Development Structure and Identification of Gaps and needs Existing Economic Development Structure Overview of County Economic Development Programs and Funding Related to Priority Economic Development Issues Gaps and Needs in Existing Economic Development Structure 32 ECONSULT December 2008 CORPORATION

5 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners v 6.0 Tasks 3 & 4: Proposed Funding and Policy Recommendations Guiding Principles/Incentives for Receiving Funding Policy Recommendations Rationale for Recommended Funding Levels Identifying Potential Funding Sources County Funding Sources for Programs Local Funding Opportunities for Future Exploration Implementation Timeline for Allocation and Rollout of Funding Program Guidelines and Eligibility Requirements Conclusion 69 ECONSULT December 2008 CORPORATION

6 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners vi LIST OF APPENDICES A. County Resolution to Establish a Strategic Economic Development Policy Task Force B. Task Force Meeting Agendas and Summaries C. Guide to County and Regional Economic Development Organizations and County Chambers of Commerce D. Guide to County Programs to Address Priority Economic Development Issues E. Priority Economic Development Issues Feedback Sheet F. County Comparison Analysis G. County-Level Economic Development Program Case Studies H. Documents Consulted During Ongoing County Research I. Commonwealth of Pennsylvania s Keystone Principles for Growth, Investment, and Resource Conservation J. Recommended Program/Funding Matrix K. County Visionary Fund Memo L. White Paper The Role of MCCC in County Economic Development M. The Little Town That Could Ambler Memo N. LERTA Overview and Background O. Pennsylvania Municipal Planning Code Specific Plan Section P. State and Federal Economic Development Programs ECONSULT December 2008 CORPORATION

7 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners vii EXECUTIVE SUMMARY Introduction Montgomery County, on the whole, enjoys a considerable level of prosperity across a wide spectrum of economic indicators, including business activity, housing values, household income, unemployment levels, and others. Together, these factors help to position the County as one of the strongest and most desirable in Pennsylvania, and arguably, the country. Yet, despite the overall strong position of the County, there exist considerable divisions between the County s municipalities, such that some continue to prosper while others have seen a slow and gradual decline through the years while still others now face serious economic challenges in terms of poverty, disinvestment, and a range of other issues. Seeking to address these divisions and ensure the long-term economic health of all of its municipalities, the Montgomery County Board of Commissioners ( Commissioners ) took the proactive step of established the Montgomery County Strategic Economic Development Policy Task Force ( Task Force ) in April of 2008 with the directive to develop a County-wide strategic economic development policy. Helping to motivate this action by the Commissioners was the absence of both an overall economic development policy to drive economic development funding decisions, as well as a clear understanding and agreement within the public about the major economic development issues in the County. The County recognized that increasing competition and limited external funding resources meant that its currently strong economic condition should not be taken for granted and that it was critical to take on a more proactive role in its economic future. This report represents the culmination of the efforts of this Task Force and offers for consideration by the Commissioners a set of targeted strategic economic development policy recommendations established by and with the consensus of the Task Force membership. The Task Force met six times over the six months following its inception and, with technical and research support from consultant Econsult Corporation, reached the conclusions now being presented in this document. Helping to inform these recommendations and conclusions has been feedback and input gathered through ongoing consultation with the County s Economic Development Cabinet, including Directors of the County s Departments of Economic and Workforce Development and Housing and Community Development, the Planning Commission, the Redevelopment Authority, and the Director of Policy for the Commissioners Office, as well with other County staff and economic development professionals. Over the course of the project, the Task Force and Cabinet addressed four central tasks, listed below: Identifying priority economic development issues throughout the County Establishing existing economic development programs and organizations within the County and/or at its disposal Identifying gaps and needs within the existing economic development structure and programming Proposing funding and policy recommendations In undertaking these tasks, the Task Force engaged in considerable discussion and debate, particularly with respect to the types of programs and policies needed in the County, the ultimate funding levels that ECONSULT December 2008 CORPORATION

8 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners viii should accompany new programs, and the need and appropriateness of installing a new Director of Economic Development to guide and oversee any new programs/policies. Implicit to all of these discussions was the underlying assumption that the County has a distinct and critical role to play in guiding and directing economic development activity throughout its constituent municipalities and it was up to the Task Force to help define what that role could be. The final recommendations in this report represent a consensus reached by the entire Task Force which can be summarized with the following conclusions: 1. Task Force members agree that there is a need, throughout the County and in its older communities in particular, for the actions and investments being proposed by the Task Force in response to its identified priority issues and strategies. 2. The Task Force agrees to the specific nature of programs and policies being proposed in the current set of recommendations (irrespective of specific funding levels). 3. The Task Force agrees to the specific funding levels being proposed in the current set of recommendations. Recommendations included in this report represent an opportunity for Montgomery County to advance its economic priorities and goals and demonstrate its readiness to support new investment where it is most needed. At the same time, recommendations support and build upon the success of existing County economic development programs such as the Community Revitalization Program and low-interest loan pools, as well as offer a critical source of leverage to bring additional public funding to bear to address its priority issues and locations. Importantly, funding proposals also stand to complement existing County investments in open space preservation, as well as potential future investments in transportation now being explored by the County. And, by strongly supporting the goals and priorities already outlined in the County s 2005 Comprehensive Economic Development, Land Use, and Vision Plans, the funding now being recommended presents a clear opportunity for the County to bring its resources to bear to give its municipalities a collaborative stake, and to win their cooperation in furthering its priorities and goals. A final point worth noting is the broader economic climate now facing the Country as a whole. The current economic downturn has resulted in increased unemployment across the board, compounded by a national trend of declining property values. The result of these conditions has posed a particular challenge to local and state governments, which are now faced with decreased tax revenues and increased demand for social services. A key proposal of the incoming presidential administration has been to lend support to local and state governments through increased funding for major infrastructure and public works projects. It will be critical for these governments to be ready to move forward when such opportunities arise, and one way to do so is by setting in place plans and funding programs that can best leverage future federal programs. To this end, we note that the recommendations up for consideration represent a timely opportunity for Montgomery County to take this lead and to ultimately set the standard in taking a proactive stance on its own economic future. ECONSULT December 2008 CORPORATION

9 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners ix Priority Economic Development Issues The initial challenge undertaken by the Task Force was to determine a set of priority economic development issues which would be addressed by the policy recommendations now up for consideration. A wide range of issues were raised by Task Force members, with the final set determined based on both the frequency with which each was noted and feedback by County economic development leaders. This set is outlined below, listed in order of priority by the Task Force: I. Economic Challenges Facing Older Communities II. Underutilization of Existing Business Locations III. Restrictive Local Government Regulations and Business Friendliness IV. Workforce Development and Labor Attraction/Retention Notably, an additional issue Access and Transportation was initially identified as the second highest priority issue, but was ultimately excluded from the set of issues to be targeted by the Task Force based on both the determination that policies in this area should be guided by the County s Planning Commission, as well as the County s plans to examine Transportation-related issues and funding. For each of the remaining issues selected by the Task Force, a set of specific policy goals was then established to help further guide the creation of policy recommendations. Rationale Behind and Guiding Principles for Policy Recommendations The recommendations included in this report represent a unique opportunity for the County to position itself as a leader in the region and State in taking progressive action to advance its economic priorities and goals. In particular, the range of new funding proposals will enable the County to demonstrate its readiness to support new investment where it is most needed, as well as offer a critical source of leverage to bring additional public funding to bear to address its priority issues and locations. Such an investment on the part of the County can also help to ensure the feasibility of many large-scale redevelopment projects, for which the availability of gap financing is an essential component. The funding and program recommendations in this report are consistent with and supportive of goals and priorities outlined in the County s existing Economic Development, Land Use, and Vision Comprehensive Plans. Moving forward, the County can further promote these goals and priorities by building them into funding eligibility requirements and establishing incentives for adhering to and promoting them. As a starting off point for such a set of requirements, the following guiding principles identified by the Task Force and Economic Development Cabinet offer a framework within which to establish programs: Programs funded by the County should be aligned with the Keystone Principles and structured to enhance the County s ability to leverage State dollars for funded projects. Projects funded by the County should be guided by broader planning objectives and within the context of a defined vision plan for the overall development area. ECONSULT December 2008 CORPORATION

10 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners x Programs should encourage collaboration among a wide range of relevant stakeholders, Performance measurement systems should be incorporated into new programs in order to ensure efficient and effective use of County dollars and accountability on the part of County agencies deploying County funds. Building off of these initial guidelines, a more specific and targeted set of eligibility criteria, included below, can serve to direct and focus the approval and granting processes: Adherence to "Green" building principles Remediation and Re-Use of Brownfields locations Compliance to the County's comprehensive transportation plan Use of multi-municipal planning as advocated by the County Extent to which multi-municipal planning contemplates revenue sharing from the project with those municipalities participating in the planning process Utilization of existing infrastructure by the proposed project Communities with shared services Projects which utilize funding from all major existing and future County funding programs (ie, Open Spaces and similarly structured programs) Projects which support an anti-sprawl, high-density development Policy Recommendations The recommendations offered in this report fall into three distinct categories: funding, overall coordination, and programming. They respond to and address a range of gaps and needs in the County s existing economic development structure which were identified by the Task Force as part of the policy development process. Notably, they are organized below based upon both the category into which they fall and the specific priority economic development issue which they address (e.g., Recommendation I.1 is listed under the funding category and addresses the first priority issue) Importantly, all programs will be carried out by existing organizations currently in place throughout the County, meaning that the recommending funding and policies do not require the creation of additional levels of bureaucracy or County agencies. Funding Recommendations: The cornerstone of the recommendations now offered is the creation of $105 million in new County-funded economic development programs, which are to be spread out over a 7 year timeframe with $20 million recommended for the initial year of programming. Funding programs and amounts are included below. ECONSULT December 2008 CORPORATION

11 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners xi Recommendation I.1: $12.5 million total increased seed funding in matching grants and low-interest loans to expand the existing Community Revitalization Program activities, including marketing and promotional campaigns for older communities throughout the County. Funding will be directed towards projects that have already reached a certain level and require additional funds to reach fruition. Recommendation I.2: $15 million total in matching grants and low-interest loans to serve as new seed funding through the Main Street Repositioning Fund. Funding will target second stage main street and downtown redevelopment in older boroughs and towns (i.e., Jenkintown, Abington, Lansdale, etc.) for projects focused on parking, rehabilitation of existing buildings, and upgrading retail corridors. Recommendation I.3: $40 million total in matching grants and low interest loans to serve as gap financing for major redevelopment projects through the Economically Challenged Communities Renaissance Fund. Financing is to be directed towards the County s most economically challenged communities, such as Norristown and Pottstown, 1 for large scale, transformational, multi-building commercial, industrial, and residential developments. Recommendation I.4: $9 million total in low-interest loans, in the form of targeted business incentives for locating in the County s most economically challenged communities, such as Norristown, Pottstown, and any others determined to have a similar level of need through the Economically Challenged Communities Business Location Incentive Fund. Funding will be divided among programs targeting small businesses and those directed toward larger scale businesses and employers. Recommendation I.5: $5 million total in matching grants for planning support through the County Visionary Fund. New funding will support the development of the planning process and the formation of planning partnerships necessary to implement large scale development initiatives undertaken within a framework of visionary and comprehensive strategic planning. Plans must be site specific and of a nature similar to master or site plans. Recommendation II.1: $10 million total in low-interest loans through the Commercial/ Industrial Asset Redevelopment and Reinvestment Fund. Funding will be used to encourage reinvestment in and reuse of existing commercial space throughout the County, in particular for older office and industrial parks (built environment only). Recommendation III.1: $6 million total in matching grants, low-interest loans, and operational support for local municipalities through the Local Government Economic Development Enhancement Program. Funding will target various incentives, marketing programs, and other initiatives to be carried out by local municipalities Recommendation IV.1: $7.5 million in matching grants and operational support towards workforce development programs through the Workforce Development Creativity Fund. Funding would target various workforce development-related programs, including contracting 1 Currently, Norristown and Pottstown are the only recipients of this pool of funding additional analysis will be needed to determine eligibility of other municipalities. ECONSULT December 2008 CORPORATION

12 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners xii out Career Link job placement programs and enhancing/expanding training programs available at MCCC and other colleges and universities throughout the County Overall Coordination: In terms of structure, the most significant change recommended is to establish a County Director of Economic Development, who would work with the existing Economic Development Cabinet and serve as a liaison to the County Commissioners with regard to economic development activities, policies, and funding decisions moving forward. In addition, the Director would hold the following responsibilities: External and internal coordination Lead dealmaker for County Lobbying and advocacy; serving as the outside face of County economic development Direct oversight and approval of appropriations made from proposed new funding programs 2 Dealing with business leaders throughout the County Liaison and direct contact to the County Commissioners Chairman of Economic Development Cabinet; working collaboratively with Cabinet officials Programming Recommendations: In addition to these funding and coordination recommendations, the Task Force has compiled a range of other programmatic recommendations, which include the following: Recommendation I.6: Expand the capacity of the Redevelopment Authority with regard to major redevelopment initiatives in targeted areas Recommendation I.7: Adopt Keystone Principles for Growth, Investment, and Resource Conservation as basis for allocating County funding Recommendation I.8: Implement design charrettes to explore visions for downtown areas and other development nodes Recommendation III.2: Promote increased coordination and efficiency of local governments by promoting and pursuing municipal consortiums and joint municipality agreements Recommendation III.3: Serve as a primary and centralized information source for economic development information 2 All funding decisions for new programs will be funneled through the Director, with the exception of expanded funding for the Community Revitalization Program, which will continue to be administered through the Community Revitalization Board. ECONSULT December 2008 CORPORATION

13 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners xiii Recommendation III.4: Assist municipalities in targeting commercial development and attracting new business Recommendation III.5: Institute Business Friendliness Report Card Recommendation III.6: Implement conferences/symposia on different economic development issues for local economic development leaders Recommendation III.7: Promote international trade Recommendation IV.2: Promote industry workforce partnerships and training programs in targeted industries Recommendation IV.3: Actively seek out input and feedback from County-based businesses as to current and future workforce needs, including through surveys and focus groups Additional Policy Areas to Explore: Finally, along with the policy recommendations that have been discussed above, there remain a range of factors impacting these recommendations that warrant additional attention and exploration by County economic development officials. These issues are outlined below and explored in greater depth throughout the body of this paper. International trade Infrastructure development Community development Montgomery County Community College role in downtown anchor development State and federal policy impact on poverty concentration Rationale for Proposed Funding Recommendations The proposed funding allocations recommended in this report ultimately reflect a variety of factors, including the following set of fundamental considerations: The priority placed on each of the four priority economic development issues identified by the Task Force through Task 1 The extent to which these issues are currently addressed through existing funding streams A realistic estimation of the extent of funding that would be necessary to truly achieve the set of policy goals laid out for each of the identified priority issues ECONSULT December 2008 CORPORATION

14 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners xiv The role of these dollars in leveraging other public and private investments An estimation of the extent and scale of major projects that might take place based on the needs and issues that currently affect various municipalities throughout the County In addition to these underlying considerations, feedback from various County economic development professionals has provided a sense of the typical subsidy levels sought out for different program activities to be funded through proposed County programs. It is in large part through this feedback that the various program types and funding levels were determined, and in turn the total figure of $105 million in County investments. Potential Funding Sources County-based funding sources for the proposed funding programs generally fall into four key categories: (1) County General Fund appropriations, (2) County General Obligation Bond proceeds, (3) Industrial Development bonds issued by the County IDA or RDA (with debt service funded by the County), and (4) HUD 108 loans leveraged against the County s Community Development Block Grant allocations. In addition to these County sources, there are a range of non-county funding and program opportunities that the County should encourage and help to facilitate implementation of by municipalities. While some of these programs do not involve direct funding, they are important examples of the types of programs the County should be promoting as it seeks to maximize the use of all existing economic development tools and further leverage any County dollars committed. Some such examples examined in this report include local bond issues and HUD 108 loans, Tax Increment Financing, Local Economic Revitalization Tax Assistance (LERTA) program, Community Development Financing Institutions (CDFIs), Specific Plan programming, Business Improvement Districts and a range of state and federal assistance programs. Implementation Funding Rollout: Given the considerable sum of all recommended programming - $105 million it will ultimately be necessary to fund programs over a multi-year period. The funding rollout schedule presented below provides such a proposed timeline and allocation of new County dollars, with annual allocations based upon conversations with County finance officials regarding the County s dept and capital budget capacities in the coming years. As can be seen in the schedule below, initial investments for FY 2009 total $20 million, with those programs which most directly address the County s top priority issues (I) Challenges facing older communities and (II) Underutilization of existing commercial space targeted for immediate funding. ECONSULT December 2008 CORPORATION

15 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners xv Rollout Time Period and Funding Funding Program FY FY FY FY FY ($MM) ($MM) ($MM) ($MM) ($MM) I.1 Community Revitalization Program I.2 Main Street Repositioning Fund I.3 Economically Challenged Communities Renaissance Fund I.4 Economically Challenged Communities Business Location Incentive Fund I.5 County Visionary Fund II.1 Commercial / Industrial Asset Redevelopment and Reinvestment Fund III.1 Local Government Economic Development Enhancement Program IV.1 Workforce Development Creativity Fund Total Program Guidelines and Eligibility Requirements Eligibility requirements, application guidelines, and selection criteria and processes should be established for each of the recommended programs. Each step of the application process should be easy to understand and transparent, and should be carefully tailored to generate applications for funding that meet the program objectives as closely as possible, and to deter those that would not. However, some latitude or flexibility should be built in to allow for applications requesting funding for projects which that might not meet the exact objectives, but nevertheless would be an excellent candidate for County funding to achieve the general goals. In addition to more general guideline and requirement categories, specific guidelines for each of the recommended funding programs should be established. Some preliminary guidelines are included in Section 8 of this report and reflect input of the Economic Development Cabinet. It is important to note that these are suggestions only, and that the final regulations should be developed by the Economic Development Director in consultation with the Economic Development Cabinet and then receive final approval by the County Commissioners. ECONSULT December 2008 CORPORATION

16 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners xvi Conclusion Ultimately, the policy recommendations being offered for consideration by the County Commissioners represent an important opportunity for Montgomery County to act proactively towards securing the long term economic health of all of its constituent municipalities, and in particular its most at-risk communities. For, while the County as a whole can be counted as one of the most prosperous in the Commonwealth and the Country as a whole, there remain sharp divisions between the County s most prosperous areas and those which are more economically challenged. Given the confluence of the current economic downturn and the strains now facing local and state government s across the US, the tight competition for available economic development funding dollars, and the incoming presidential administration s plans to boost infrastructure investment at the federal level, the actions recommended will allow the County to capitalize on any federal funding opportunities and invest in its own future and overall quality of life. More specifically, the recommended funding programs will serve as a strategic tool that will enable the County to leverage state, federal, and other non-county funding streams, as well as to maximize the benefits of County funding streams already in use and promote the County s existing economic development priorities and goals. The availability of funding from the County makes a clear statement to private investors and public funding sources alike that Montgomery County is ready and able to help move major projects forward and is willing to take on risk of its own in order to do so. At the same time, the Task Force s recommendation to create a County Director of Economic Development will be critical to ensuring that the County is able to manage and successfully implement its new expanded role in the provision of economic development funding and programming. In short, the time is right and the need exists to establish a new County-wide strategic economic development policy. The Task Force, by consensus, offers this report and its corresponding set of policy recommendations for consideration by the County Commissioners. The Task Force believes the potential payoffs for adoption of these recommendations will be substantial and will demonstrate to a range of relevant stakeholders that Montgomery County is progressive and proactive in its approach to the economic wellbeing of its local communities.. ECONSULT December 2008 CORPORATION

17 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners INTRODUCTION Montgomery County undoubtedly enjoys one of the strongest economies in Pennsylvania, with a diverse employment and industry base, excellent access to local and interstate highway systems, lower than average unemployment rates, higher levels of personal income, strong school systems, and a well-trained and educated work force. Moreover, the County Government, along with its many municipal and township governments, currently delivers a wide range of economic development services and resources to businesses, investors, and other public and private entities. Yet, despite a significant network of agencies delivering such services, the County currently lacks a unified, strategic economic development policy to drive economic development funding decisions, nor, until now, has there emerged a dedicated effort among the public and key stakeholder groups to generate such a policy. Responding to these circumstances, the Montgomery County Commissioners established a Strategic Economic Development Policy Task Force and commissioned the present study in order to develop a cohesive and strategic county-wide economic development policy. Included in this section are a brief overview of the conditions which led to this undertaking, as well as a statement outlining the case for the policy recommendations provided in this report as setting the correct course of action at this critical juncture in determining the overall direction of the County s economic affairs. 1.1 Background and Framework for Study With more than 775,000 residents, including a civilian labor force of over 430,000, Montgomery County stands as the third largest county in Pennsylvania and a major player in both the regional and State economies. On the whole, Montgomery County enjoys a diverse economy that is home to a range of major employers in high growth sectors such as the healthcare and pharmaceutical industries, as well as an unemployment rate that that is below both State and national levels. The County is located approximately twenty miles west of Center City Philadelphia and features exceptional highway access, with the County seat in Norristown situated less than a 40 minute drive from a major international airport. In 2007, median household income in the County was $74,000, $25,000 higher than for the State as a whole, while median housing values of approximately $300,000 nearly doubled those for the State as a whole. 3 Moreover, the County s track record of prudent fiscal management and integrity is highlighted by its AAA Bond Rating a distinction shared with less than 30 other counties in the nation. In light of this background, it is fair to conclude that Montgomery County is one of the more prosperous counties in the State, as well as in the U.S. Working to maintain and enhance this strong position are various County level economic development departments, authorities, and other private and public entities. Under the umbrella of County government are the Department of Economic and Workforce Development, the Montgomery County Industrial Development Authority, the Montgomery County Development Corporation, and the Workforce Investment Board, as well as the Community Revitalization Board, County Planning Commission, and Department of Housing and Community Development. Notably, Montgomery County has adopted a unique approach of combining the tasks of economic and workforce development under a single department structure. In addition to these governmental entities, the Montgomery County 3 ECONSULT December 2008 CORPORATION

18 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners 2 Redevelopment Authority and Montgomery County Industrial Development Corporation work alongside the County to promote business attraction, revitalization, workforce development, and a host of other economic development priorities. Together, this network of organizations currently oversees a range of programs and funding mechanisms designed to promote economic development throughout the County. Currently in place is an Economic Development Cabinet formed by the County Commissioners and comprised of the County Policy Director and the directors of various County economic development organizations, including the Department of Economic and Workforce Development, the Planning Commission, the Redevelopment Authority, and the Department of Housing and Community Development. As noted in the County s 2007 Annual Report on economic development, this Cabinet is charged with supporting the County Commissioners in leading a pro-active strategic effort to identify opportunities for economic growth and at the same time remove impediments to capitalizing on such opportunities. Yet, despite the County s generally sound economic position and strong and proactive economic development structure, there remain considerable divisions between the County s municipalities with respect to their overall economic health. Namely, while some areas continue to prosper, others have seen a slow and gradual decline through the years while still others now face serious economic challenges in terms of poverty, disinvestment, and a range of other issues. Moreover, there currently exists no overall economic development policy to drive economic development funding decisions, nor is there a clear understanding and agreement within the public about the major economic development issues in the County. The County recognizes that increasing competition and limited external funding resources mean that its currently strong economic condition should not be taken for granted and it must take a more proactive role in its economic future. As such, the County s Commissioners have identified a need for a more centralized economic development policy to help guide resource allocation and provide a more strategic direction to the range of activities and entities now involved in the area of economic development. To that end, Econsult Corporation ( Econsult ) has been retained by the County to oversee the present study in order to help facilitate a planning process and ultimately offer recommendations for a new strategic policy for the County. Integral to this process has been the work and contributions of the County appointed Strategic Economic Development Policy Task Force, comprised of a diverse set of County leaders representing the public, private, and government sectors, as well as a broad cross section of the County s geography. Over the course of the past several months, Econsult has worked closely with this Task Force to develop a set of targeted policy recommendations which are now being submitted for the consideration of the County Commissioners. The recommendations contained herein were developed through a process of ongoing dialogue with and with the approval of Task Force members and reflect a consensus view shared among them. In commissioning this study, the County identified a series of objectives to help guide the policy development process and ensure that the final recommendations to the County Commissioners would be at once economically justifiable and politically, structurally, and fiscally responsible. These objectives are outlined below and have served as the framework upon which the following study has been built: 1. Identify significant economic development issues in the County 2. Analyze and critique existing programs ECONSULT December 2008 CORPORATION

19 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners 3 3. Recommend a County-wide economic development policy 4. Create and foster public consensus for this policy 5. Work collaboratively and cooperatively with senior County staff and others in the production of all work. 1.2 Case Statement for a County Investment Despite its overall strength, Montgomery County is not without the challenges facing most other localities. These challenges become especially apparent in the County s older and economically challenged communities, most notably in the form of declining older communities, underutilized commercial facilities, fragmented local government policies, and shortages of adequately trained workforce. Their growing divergence in well being separates the challenged communities from those not or much less so and argues strongly for the initiatives that can bridge their differences. One such bridging initiative calls for the County to directly confront and work to overcome the handicap of its challenged communities in competing for economic development resources. But given the scarcity of such resources, it is no less crucial that the County in its overall competition for their funding dollars apply its more general perspective and realize it must continue to play a proactive role in maintaining the County s overall strength. The recommendations included in this report represent a unique opportunity for the County to achieve these goals and position itself as a leader in the region and State in taking progressive action to advance its economic priorities and goals. In particular, the range of new funding proposals will enable the County to demonstrate its readiness to support new investment where it is most needed, as well as offer a critical source of leverage to bring additional public funding to bear to address its priority issues and locations. Such an investment on the part of the County can also help to ensure the feasibility of many large-scale redevelopment projects, for which the availability of gap financing is an essential component. By meeting these needs, funding proposals stand to complement existing County investments in open space preservation, as well as potential future investments in transportation now being explored by the County. In many ways, the economic stagnation found in the urban pockets of the County has contributed directly to suburban sprawl and the resultant loss of the County s open space. Such sprawl and Greenfield development has brought in its wake not only an exodus of urban community investment and a decline in its property values and tax revenues, but also an increase in the congestion of the County s roadways and the burdens placed on its other community and population serving infrastructures. The County has recognized the danger in leaving these outcomes unchecked, and has responded first through its $150 million, multi-year Open Spaces program, and now through commissioning this study to explore a means of complementing its Open Spaces spending with targeted economic development programming and funding. It is also important to note that the recommendations included in this report strongly support the goals and priorities already outlined in the County s 2005 Comprehensive Economic Development, Land Use, and Vision Plans. In the area of economic development, this includes helping to revitalize the County s downtowns and main streets, adaptively reusing vacant and underutilized commercial sites, attracting and retaining businesses, creating a good business climate, retaining a skilled workforce for County businesses, and supporting a readily available workforce. In addition, these recommendations support the ECONSULT December 2008 CORPORATION

20 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners 4 County s visions relating to land use, open spaces, economic development, and housing, as well as its specific land use goals of directing development to designated growth areas, enhancing older developed areas, and encouraging sound land use planning. The funding now being recommended presents a clear opportunity for the County to bring its resources to bear to give its municipalities a collaborative stake, and to win their cooperation in furthering these priorities and goals. These recommendations also support and build upon the success of existing County economic development programs such as the Community Revitalization Program and its low-interest loan pools. Such programs have thus far served as a key resource for economic and community development efforts across older communities and other areas in need of new business activity. Yet, the funding currently available through these programs is simply insufficient to jumpstart the kinds of transformational projects that will be necessary to realize a meaningful change in the County s most economically challenged communities. Thus, the funding proposals now offered for consideration are of a size and scale deemed sufficient to make a real impact on impacted areas, as determined through consultation with County economic development officials and the Task Force membership, as well as through ongoing comparative research. In total, the recommendations in this report offer a strategic approach through which the County can address its most pressing economic development challenges and invest in the future of its most at-risk communities. Such investments in business growth and attraction offer a fresh approach to community development, whereby initial investments by the County can help to spur future private sector investments and in turn help to grow the tax base and increase tax revenues in impacted communities. The recommended programs are designed to generate market-based economic opportunities and the resultant growth within the impacted communities will enable them to improve service provision and thus offer a more attractive location for businesses and residents alike. Thus, rather than seeking to improve communities through direct transfers of funds and provision of services to lower income populations, the approach offered herein helps to grow and strengthen the community as a whole with the assumption that just as a rising tide lifts all boats, so too will a thriving economy and business environment positively impact the residents of a particular community. 1.3 Overview of Report The remainder of this report provides a detailed account of the policy development process undertaken by the Task Force and describes the final policy recommendations offered for consideration by the County Commissioners. More specifically: Section 2 presents the potential impacts and leveraging potential of public investments in economic development, including examples of how funding has been leveraged through programs similar to those now being recommended, as well as the types of impacts and benefits that can result from such activities. Section 3 describes the policy development approach, detailing the specific tasks identified by the County for the Task Force to complete, and explaining the formation and roles of the Task Force throughout the process. ECONSULT December 2008 CORPORATION

21 A Strategic Economic Development Policy for Montgomery County, Pennsylvania: Recommendations to County Commissioners 5 Section 4 offers an overview of the County s current economic climate and identifies and provides background for each of the priority economic development issues which were identified by the Task Force and served as the basis upon which policy recommendations were established. Section 5 continues laying out the framework for the study by describing the County s current economic development structure and outlining the various gaps and needs with respect to the priority economic development issues that were identified by the Task Force. Section 6 presents the final policy recommendations being offered to the Commissioners, including guiding principles behind the recommendations, the recommendations themselves, and the rationale for the specific program funding being recommended. Section 7 identifies potential funding sources to support the proposed funding recommendations, including those at the County level as well as indirect non-county funding and program opportunities that should also be explored by the County. Section 8 offers additional suggestions for the implementation of the policy recommendations, including a proposed rollout schedule and program guidelines and eligibility requirements Section 9 concludes the report by offering summary comments and final conclusions regarding the policy recommendations now being offered. ECONSULT December 2008 CORPORATION