1. February 10, 2010 Metropolitan Business Planning Initiative Seattle Kick-Off Meeting CONFIDENTIAL – for Internal Team & Partner Discussion ONLY

2. Project Goals

3. IMPLEMENT THE BLUEPRINT: go deeper to model specific, sophisticated development work, develop actionable plans, strengthen partner metro economies and enhance peer learning. ADVOCATE NEW FEDERALISM: identify and reveal the benefits of new partnership approaches and policies that place metros at the center of federal-state-local relations. DISPLAY THE NEW METROPOLITAN LEADERSHIP: demonstrate the existence of strong metropolitan leadership in forging comprehensive, integrated, and sophisticated metropolitan economic strategies. Economic development is metro-led.

4. Why Metropolitan Business Planning? The steps to analyzing and improving a regional economy lend themselves to the proven discipline of business planning. ECONOMIC DEVELOPMENT PLANNINGTRADITIONAL BUSINESS PLANNING Vision for the Regional EconomyBusiness Mission & Vision Status of Economy: Assets, Opportunities, Challenges Market Analysis Goal-Setting & Strategy IdentificationAnalysis of Strategic Alternatives & Risks Identification of Policies, Programs, Products & Interventions Development of Products & Services Operational Planning for ImplementationOperational & Management Planning Identification of Funding Needs and Sources Forecasting & Financial Planning Definition of Outcome Measures & TargetsTarget-Setting & Performance Tracking

5. Elements of the Business Plan MEASURABLE OUTPUTS/IMPACTS Wage Growth, Reduction in Unemployment, Reduction in CO2 Emissions, Neighborhood Revitalization MEASURABLE OUTPUTS/IMPACTS Wage Growth, Reduction in Unemployment, Reduction in CO2 Emissions, Neighborhood Revitalization MISSION/VISION Competitiveness (Wages, GRP, Innovation) Sustainability (VMT, Energy Efficiency) Inclusion (Participation in Employment, Business and Market Growth) MISSION/VISION Competitiveness (Wages, GRP, Innovation) Sustainability (VMT, Energy Efficiency) Inclusion (Participation in Employment, Business and Market Growth) PRODUCTS AND INTERVENTIONS WIRED Program, Regional Inclusionary Zoning, Green Impact Zones, PRODUCTS AND INTERVENTIONS WIRED Program, Regional Inclusionary Zoning, Green Impact Zones, INSTITUTIONAL AND FINANCIAL IMPLICATIONS Regional Information Infrastructure Regional Coordination Specific Institutions/Implementation Capacity Financials Investment Prospectus Tied to Outcome Measures INSTITUTIONAL AND FINANCIAL IMPLICATIONS Regional Information Infrastructure Regional Coordination Specific Institutions/Implementation Capacity Financials Investment Prospectus Tied to Outcome Measures MARKET SCAN Status, Systems, Dynamics (Spatial efficiency, Human capital trends matched to business growth, Business clusters/performance….) MARKET SCAN Status, Systems, Dynamics (Spatial efficiency, Human capital trends matched to business growth, Business clusters/performance….) GOALS/STRATEGIES Transit-Oriented Development Coordinated Workforce and Occupational Clusters Inner-City Retail Development GOALS/STRATEGIES Transit-Oriented Development Coordinated Workforce and Occupational Clusters Inner-City Retail Development

6. MARKET SCAN: Patents, technology transfers, venture capital investments, start-ups,... ILLUSTRATIVE STRATEGY: Increase commercialization of knowledge PRODUCTS/INTERVENTIONS: Innovation funds, business incubators, university partnerships, regional innovation consortia, etc. OUTPUTS/IMPACTS: New products, business starts, increased productivity, employment; … GOAL: Increase innovation rate Example: From Goals to Products

7. Implications for Federal Policy The federal government should strategically invest in regional prosperity as a priority for national economic growth. The federal government should incent and support comprehensive, integrated regional business planning, as it will enable more effective and efficient federal investment. Since regional performance depends upon local, specialized system interactions, the federal response needs to be cross- program, flexible and performance-driven. The federal government should strategically invest in regional prosperity as a priority for national economic growth. The federal government should incent and support comprehensive, integrated regional business planning, as it will enable more effective and efficient federal investment. Since regional performance depends upon local, specialized system interactions, the federal response needs to be cross- program, flexible and performance-driven. Federal policy should be driven ground-up by regional development plans (reversing the current dynamic).

8. Project Outputs MBP, including Overview and DDI Prospectus Cross-site policy implications paper Summit presentations MBP, including Overview and DDI Prospectus Cross-site policy implications paper Summit presentations Demonstrate better ways to invest in metros to strengthen national economy; develop new federal policies and programs.

9. Our Starting Point: the Blueprint Drivers To implement, we need to move from descriptive to explanatory: understand underlying systems/mechanisms, and how to influence their performance. GOOD METROPOLITAN GOVERNANCE Sustainable Growth Inclusive Growth Productive Growth INNOVATIONHUMAN CAPITALINFRASTRUCTUREQUALITY PLACES PROSPERITY

10. Key Systems (Market processes – housing, labor, etc.; production dynamics – clusters, value chains, etc.; innovation dynamics - knowledge creation, networks, commercialization, etc.) Local (Regional) Enabling Environment (Government regulation, tax and public goods, including particularly infrastructure and education; civic institutions; qualities of place, including the natural environment; etc.) Local (Regional) Enabling Environment (Government regulation, tax and public goods, including particularly infrastructure and education; civic institutions; qualities of place, including the natural environment; etc.) Inputs to Production (Human capital; real estate; capital; natural and knowledge resources; etc.) Economic Outputs (Businesses – gross regional product, profits; households – wages, other income, etc.) Macro/Global Context & Trends What Drives Inclusive and Sustainable Economic Growth?

11. Levers / Interventions Strategies & Implementation Prosperity Export-oriented Low-carbon Innovation-driven Opportunity rich Metro-led Fundamental Drivers of Prosperity Innovation Infrastructure Human Capital Quality Places Governance Develop and Deploy Information Resources Develop Innovation- Enabling Infrastructure Create Effective Public & Civic Culture & Institutions Create Effective Public & Civic Culture & Institutions Deploy Human Capital Aligned with Job Pools Enhance Regional Concentrations Increase Spatial Efficiency

12. Metro Development Baseline/Overview (MDBO) Mission/Vision Market Scan/Environmental Analysis Goals Strategies Detailed Development Initiative (DDI) Products, Policies, Programs, Interventions Organizational & Operational Implications Financial Implications Performance Metrics Pilot MBPs Will Lay the Groundwork Future DDI Metropolitan Investment Prospectus Future DDI

13. Metro Development Baseline/Overview (MDBO) Mission/Vision: Sustainable communities…dense nodes…efficiently linked people & businesses Market Scan Results: Emerging specialization in alternative energy businesses and occupations Goals: Increase number of establishments, employment and total payroll in the alternative energy field Strategies: (a) Co-location incentives; (b) Targeted, demand-driven workforce devel.; (c) Links to students Detailed Development Initiative (DDI) Intervention: Cluster-Focused Industrial Park that: Facilitates business co-location Houses on-site training academy that Provides skill devel. for key occs./functions Utilizes demand-driven curriculum Offers internship, co-op & mentorship opportunities to local students Operational Plan Financial Sources & Uses Metrics: new jobs, new cos., $payroll, $GMP, etc. What Might a Pilot MBP Look Like? Metropolitan Investment Prospectus

14. MBP Project Timeline is Aggressive MILESTONETYPE * TARGET DATE Project Kick-Off MeetingMJanuary 25 Metro Partner Site VisitsMFebruary 1 – 19 Brookings scan/spreadsheetDFebruary 19 Initial draft framework and scan narrativeDMarch 19 1 st Draft of MDBODApril 19 Peer Learning Session #1MWeek of May 3 Final MDBODMay 17 1 st Draft of DDI & ProspectusDJune 7 Peer Learning Session #2MWeek of June 21 Final MBP (MDBO + DDI) & ProspectusDSeptember 15 Global SummitMDecember 2010 * M = Meeting | D = Deliverable

15. February 10, 2010 Metropolitan Business Planning Initiative Seattle Kick-Off Meeting CONFIDENTIAL – for Internal Team & Partner Discussion ONLY

16. How Metro Economies Grow Metro economy = total value of goods and services produced in the region Growth is inherently business sector growth (number, size and profitability of firms) Business sector grows through firm growth and location decisions (retention and attraction) Firm growth and location depend upon increases in efficiency and productivity (of firm and system, including product innovation) Metro economy = total value of goods and services produced in the region Growth is inherently business sector growth (number, size and profitability of firms) Business sector grows through firm growth and location decisions (retention and attraction) Firm growth and location depend upon increases in efficiency and productivity (of firm and system, including product innovation) Core Question: What attributes of the region increase efficiency and productivity, leading to business sector growth? Micro-Foundations

17. What is it About Place that Affects Economic Performance? Cities exist to eliminate transport costs for people, goods and ideas (Glaeser) Urbanization and Localization Economies: general and industry-specific benefits of concentration as workers and firms co-locate because of spillovers, synergies, shared labor and job pools, backward and forward linkages among firms, etc. – generating increased efficiency and productivity through flow of ideas and technologies, enhancements to human capital, economies of scale, reduced transaction and transport costs, and so forth. (Marshall, Krugman) New Growth Theory: location is becoming more important, and with different benefits, in the knowledge economy, as metros become increasingly centers of idea creation and transmission (through technology, human capital externalities, intellectual spillovers). Increasing returns to knowledge and imperfect competition lead to metro specialization and divergence. (Romer, Lucas) Institutional Economics: growth, and particularly innovation, take place in the context of an institutional infrastructure – research, professional and learning networks; universities and civic/business organizations; quasi- and governmental organizations and regulation – which can hamper or accelerate all of the other benefits of concentration. (Coase, Atkinson) Cities exist to eliminate transport costs for people, goods and ideas (Glaeser) Urbanization and Localization Economies: general and industry-specific benefits of concentration as workers and firms co-locate because of spillovers, synergies, shared labor and job pools, backward and forward linkages among firms, etc. – generating increased efficiency and productivity through flow of ideas and technologies, enhancements to human capital, economies of scale, reduced transaction and transport costs, and so forth. (Marshall, Krugman) New Growth Theory: location is becoming more important, and with different benefits, in the knowledge economy, as metros become increasingly centers of idea creation and transmission (through technology, human capital externalities, intellectual spillovers). Increasing returns to knowledge and imperfect competition lead to metro specialization and divergence. (Romer, Lucas) Institutional Economics: growth, and particularly innovation, take place in the context of an institutional infrastructure – research, professional and learning networks; universities and civic/business organizations; quasi- and governmental organizations and regulation – which can hamper or accelerate all of the other benefits of concentration. (Coase, Atkinson) Productivity and efficiency depend upon concentrations, interactions and synergies between economic activities Key Q: Where are the leverage points to improve system performance? Productivity and efficiency depend upon concentrations, interactions and synergies between economic activities Key Q: Where are the leverage points to improve system performance?

18. Six Key Leverage Points Take Us from Theory to Practice Enhance Regional Concentrations (and their performance): Industries, Occupations and Functions Deploy High Human Capital Aligned with Job Pools Develop Innovation Enabling Infrastructure Increase Spatial Efficiency Create Effective Public & Civic Culture & Institutions Develop and Deploy Information Resources Enhance Regional Concentrations (and their performance): Industries, Occupations and Functions Deploy High Human Capital Aligned with Job Pools Develop Innovation Enabling Infrastructure Increase Spatial Efficiency Create Effective Public & Civic Culture & Institutions Develop and Deploy Information Resources These overlap, and themselves interact. This is work-in-process! Anticipate expanding and refining, especially in practice.

19. Enhance Regional Concentrations: Industries, Occupations and Functions What is it? This leverage point has to do with clustering, recognizing that what is clustering may be shifting - - toward occupations and functions -- and the whole notion may need to be broadened, brought to ground, and complemented with other production-side strategies. It focuses on the optimal interaction between production components of an economy – the optimal mix and scale of industries, occupations, functions; multiple specializations; etc. Cultivating benefits of concentration requires understanding nuances of what and how specific types of concentrations create efficiencies and enhance productivity in your region. Aspects to consider include: Current concentrations High-growth potential areas Geography of concentrations Optimal mix and scale of industries, occupations, functions What factors (locational, institutional, others) contribute to efficiency/productivity benefits gained from concentration Strategies might include: Provide co-location opportunities (e.g., business parks) Offer co-location incentives Enhance access to capital for targeted concentrations Strengthen institutional and network infrastructure Strengthen inputs to concentration – from training/education to venture capital What is it? This leverage point has to do with clustering, recognizing that what is clustering may be shifting - - toward occupations and functions -- and the whole notion may need to be broadened, brought to ground, and complemented with other production-side strategies. It focuses on the optimal interaction between production components of an economy – the optimal mix and scale of industries, occupations, functions; multiple specializations; etc. Cultivating benefits of concentration requires understanding nuances of what and how specific types of concentrations create efficiencies and enhance productivity in your region. Aspects to consider include: Current concentrations High-growth potential areas Geography of concentrations Optimal mix and scale of industries, occupations, functions What factors (locational, institutional, others) contribute to efficiency/productivity benefits gained from concentration Strategies might include: Provide co-location opportunities (e.g., business parks) Offer co-location incentives Enhance access to capital for targeted concentrations Strengthen institutional and network infrastructure Strengthen inputs to concentration – from training/education to venture capital Leverage Point 1

20. Deploy High Human Capital Aligned with Job Pools What is it? This leverage point addresses human capital in the context of economic performance: the goal is not just human capital, but linked, mutually reinforcing, human capital and job pools. Pools of workers and jobs/firms attract each other. Not just quality, but deployment, are key to productivity and efficiency gains. Entails a two-fold, iterative process: Growing supply of skilled workers to meet employer demands Growing demand for skilled workers by cultivating appropriate jobs Aspects to consider include: Concentrations and growth prospects (both skills and occupations) Existing skills/education levels – obstacles and opportunities Quality of education/training system Attraction/retention record and factors Strategies might include: Increase demand-side focus of workforce development Increase access, reduce transaction costs in labor market Links to occupational concentration strategies (Leverage Point 1) Production, attraction, retention strategies What is it? This leverage point addresses human capital in the context of economic performance: the goal is not just human capital, but linked, mutually reinforcing, human capital and job pools. Pools of workers and jobs/firms attract each other. Not just quality, but deployment, are key to productivity and efficiency gains. Entails a two-fold, iterative process: Growing supply of skilled workers to meet employer demands Growing demand for skilled workers by cultivating appropriate jobs Aspects to consider include: Concentrations and growth prospects (both skills and occupations) Existing skills/education levels – obstacles and opportunities Quality of education/training system Attraction/retention record and factors Strategies might include: Increase demand-side focus of workforce development Increase access, reduce transaction costs in labor market Links to occupational concentration strategies (Leverage Point 1) Production, attraction, retention strategies Leverage Point 2

21. Develop Innovation Enabling Infrastructure What is it?* Innovation inherently drives increasing productivity and efficiency, and is the source of all long-term growth. An infrastructure providing inputs and mechanisms to facilitate interactions and commercialization enhances innovation rates. Aspects to consider include: Cluster formation and dynamics Public sector enablers/constraints Nature of supporting institutions and networks Flow of R&D and early-stage business funding Rate/pattern of commercialization Firm starts, growth, trajectories Strategies might include: Build regional R&D capacity (education, facilities, funding) Foster entrepreneurship & commercialization of knowledge Institutional development: facilitate opportunities for interdisciplinary cross- fertilization Cluster formation, especially high human capital occupational concentrations (Leverage Points 1 and 2) What is it?* Innovation inherently drives increasing productivity and efficiency, and is the source of all long-term growth. An infrastructure providing inputs and mechanisms to facilitate interactions and commercialization enhances innovation rates. Aspects to consider include: Cluster formation and dynamics Public sector enablers/constraints Nature of supporting institutions and networks Flow of R&D and early-stage business funding Rate/pattern of commercialization Firm starts, growth, trajectories Strategies might include: Build regional R&D capacity (education, facilities, funding) Foster entrepreneurship & commercialization of knowledge Institutional development: facilitate opportunities for interdisciplinary cross- fertilization Cluster formation, especially high human capital occupational concentrations (Leverage Points 1 and 2) Leverage Point 3 *…new products, new services, new technologies, new ways of organizing work, and new business models…. (Brookings Metro Policy)

22. Increase Spatial Efficiency What is it? The location of firms and workers, producers, suppliers and consumers within the region determines transportation costs for people and businesses, and influences agglomeration benefits (such as shared inputs and knowledge spillovers). Generally, to increase efficiency and productivity of the metro economy, we want to: Minimize transportation costs Reduce congestion Maximize agglomeration benefits Avoid segregation and concentration of poverty Aspects to consider include: Public policies re: land use/zoning, infrastructure, etc. Degree of housing-jobs mismatch Access to transit Spatial concentrations of firms, occupations, functions, etc. Strategies might include: Transit-oriented and mixed-use/mixed-income development Affordable housing programs (inclusionary zoning, etc.) Fostering business co-location What is it? The location of firms and workers, producers, suppliers and consumers within the region determines transportation costs for people and businesses, and influences agglomeration benefits (such as shared inputs and knowledge spillovers). Generally, to increase efficiency and productivity of the metro economy, we want to: Minimize transportation costs Reduce congestion Maximize agglomeration benefits Avoid segregation and concentration of poverty Aspects to consider include: Public policies re: land use/zoning, infrastructure, etc. Degree of housing-jobs mismatch Access to transit Spatial concentrations of firms, occupations, functions, etc. Strategies might include: Transit-oriented and mixed-use/mixed-income development Affordable housing programs (inclusionary zoning, etc.) Fostering business co-location Leverage Point 4

23. Create Effective Public & Civic Culture & Institutions What is it? Government and civic sector activities hinder or enhance the productivity and efficiency of the economic systems themselves – attracting entrepreneurs, enabling markets, lowering transaction costs, increasing deployment of assets, etc. A culture of trust and collaboration, as well as institutional flexibility and adaptability, are increasingly important (including particularly to leverage points 1 and 3). Aspects to consider include: Degree of horizontal and vertical fragmentation Areas and mechanisms for inter-jurisdictional coordination Transparency, openness, responsiveness Strategic engagement of citizens, private and civic sectors Strategies might include: Consolidation Revenue sharing Civic engagement (program specific) E-government Fast-tracking Special purpose entities Tailored incentives What is it? Government and civic sector activities hinder or enhance the productivity and efficiency of the economic systems themselves – attracting entrepreneurs, enabling markets, lowering transaction costs, increasing deployment of assets, etc. A culture of trust and collaboration, as well as institutional flexibility and adaptability, are increasingly important (including particularly to leverage points 1 and 3). Aspects to consider include: Degree of horizontal and vertical fragmentation Areas and mechanisms for inter-jurisdictional coordination Transparency, openness, responsiveness Strategic engagement of citizens, private and civic sectors Strategies might include: Consolidation Revenue sharing Civic engagement (program specific) E-government Fast-tracking Special purpose entities Tailored incentives Leverage Point 5

24. Develop and Deploy Information Resources What is it? Rich information resources and networks increase market efficiencies by reducing finding, measurement and other transaction costs; facilitate knowledge spillovers and innovation; and enable continued business planning, monitoring and refinement. Aspects to consider include: Collection, accessibility, dissemination of relevant info Development and provision of analytic tools (not just data: answers) Specific market inefficiencies, barriers, opportunities Strategies might include: Data warehouse Market driven planning agency Cluster or strategy specific on-going shared info/analytics What is it? Rich information resources and networks increase market efficiencies by reducing finding, measurement and other transaction costs; facilitate knowledge spillovers and innovation; and enable continued business planning, monitoring and refinement. Aspects to consider include: Collection, accessibility, dissemination of relevant info Development and provision of analytic tools (not just data: answers) Specific market inefficiencies, barriers, opportunities Strategies might include: Data warehouse Market driven planning agency Cluster or strategy specific on-going shared info/analytics Leverage Point 6

25. Current Economys Meta-Drivers Also Shape Strategic Interventions Export-oriented Innovation-led Opportunity-rich Low-carbon Export-oriented Innovation-led Opportunity-rich Low-carbon Huh??? What?!! Eureka!