A comprehensive economic development strategy to transform underperforming downtown waterfront properties into engines of community prosperity
Economic development is a priority for many municipalities, however the development and implementation of a successful strategy leaves many communities with less-than-optimal results.
A common experience is one where a community recognizes the need for economic development (i.e. a shift in the economic environment has reduced the quantity and/or quality of contribution sources) at the same time when community leaders are under pressure to suppress municipal spending (minimize the shared financial burden related to the redistribution of the budgetary demands on the fewer remaining contribution sources).
A decrease in the quantity and/or quality of contribution sources place an increased burden on the remaining contribution sources. Leaders representing the community face an immediate pressure to minimize tax increases at the very same moment when public investment is most needed to minimize the longer-term impact of fewer contributors.
Economic growth positively impacts the community as a whole!
The largest contributor to the wealth creation for most American families stems from equity gained in their home values over time.
A growing economy attracts contributing members interested in allocating their energy in efforts to growing their own resources.
Poor economic conditions create brain drain, as motivated youth move to locations that offer potential to produce at their expected levels of success.
Economic growth is essential for the overall benefit of all community members, and investment is a required input for producing the desired outcomes.
Individuals and businesses are able to produce projects based on the resources available to them. Available resources reflect ownership of assets (cash, home equity, investment portfolio), which can be sold or liquidated for investment in projects, or used to secure the availability of credit.
Municipalities produce projects (road paving, building a fire station, school system, or upgrading public water systems) based on commitments approved by town residents and funded by tax commitments.
Given the development, production or investment in a project (an input), expectations of economic profit exist (an output). Opportunities to invest today are aimed at creating future financial resources. This attracts both human (labor) and financial capital (money).
The development, production or investment in a project (an input) prioritizes the experience of the outcome (an output) over all expected inputs. A higher value is placed on the accomplishment of the outcome versus the expected cost required to produce the ending result.
The development, production, or investment in a project (an input), places a higher value on the end result or outcome (an output) over economic profit. Philanthropic individuals or entities are often mission-focused and follow guidelines that promote the benefit of others beyond themselves.
Once a thriving community driven by motivated entrepreneurs, Island Falls was—at its prime—a successful town. Sitting at the intersection of beauty and valuable natural resources, the founders harnessed the town's enormous potential. With its landscape in prime location on the Mattawamkeag River, its lakes, forests, and the railway, they built up businesses, families, and a community all supported by the rich offerings of the land.
The starch factory once greatly contributed to the town's success. It still sits on Grade A waterfront today, but what was once in its prime is now in a state of disarray. Because this property is so visible at the entry to town, it negatively impacts the image of Island Falls as a whole, creating an enormous deterrent for development of surrounding properties.
As industries and economies have evolved, Island Falls has struggled to adapt. The downtown is now saddled with properties that were once well-suited for business in the past, but no longer serve the needs and interests of the community today. The cost to redevelop is greater than the project's ending value, creating a gap that private investment alone cannot close.
The starch factory property sits on prime waterfront on the Mattawamkeag River. Its location and visibility make it an Anchor Property, which greatly impacts the resources available to the town and its residents. In its current state, the property contributes negatively to the town's economic activity, producing negative externalities that suppress economic development throughout the downtown.
The gap between cost to develop and ending value eliminates this as a possibility for private investment alone.
The gap is too great to reasonably expect an individual or entity to accept such a loss for the experience.
Given the demographics and the lengthy period of vacancy, the capacity for philanthropic investment at this scale is not realistic.
It is reasonable to expect that any path forward will require a strategic investment by the town to close the gap between the cost to develop and the project's ending value—an investment that will pay for itself many times over through increased tax revenue, property values, and community prosperity.
It's widely accepted among the community that our most valuable natural resource is our beauty. When you add that to our highly accessible location, there's no reason why we can't move our town's status towards the top of the state's economic success list.
By using the waterfront area for lodging (mentioned in the comprehensive plan as a need), we can attract outside dollars, provide more jobs, and improve the health of the town as a whole while fixing the negative equity problem.
Resolving a vacant anchor property increases demand for nearby properties, as the town's identity becomes aligned with an image of success and potential. A vibrant waterfront attracts prospective residents and community members.
This revitalization is a strong competitor for grant funding as it involves cleaning up waterfront and allows for tourist use—a fundamental objective for the State of Maine (Vacationland). Aligning project goals with state priorities (lodging and food services) makes this highly competitive for grants.
Tax Increment Financing and the town's $4M+ surplus can be strategically deployed to compound returns while maintaining fiscal responsibility. The competitive nature of this design could garner matching amounts in grant funds.
In a comparative analysis of its ability to contribute to the tax commitment, this parcel would be very near the top of the list. Where does it sit in the stack ranking today? Very near the bottom. Bringing this parcel to full potential changes that.
A systematic approach to economic development
Step one requires a shared understanding among town leaders that there is opportunity to improve town revenue sources.
Step two requires the implementation of a process for identifying underperforming Parcels of Land.
Step three requires the development of a market analysis specific to the municipality to fully understand the root cause of underperformance.
Step four requires the complete alignment of all municipal leaders on the best path forward.
Step five requires the dissemination of information and details regarding the current state of economic conditions as it relates to the municipality's main revenue source, its Parcels.
Step six requires an official commitment by the town, and showcased by a public vote, to move forward with the economic development strategy.
Step seven: Execute with commitment and persistence.
Go through the details and have everybody agree that this is the reality. A shared understanding of the challenges and opportunities creates the foundation for transformative change.