Integrated Development Budget LGIF Feasibility Study Concept Feasibility in Butler County, Ohio Presentation by Don Iannone, Center for Public Innovation (Formerly Sourcing Office) and Mike Campbell, Butler County Local Working Group Hosted by the Ohio Local Government Innovation Fund Program Ohio Development Services Agency Columbus, Ohio June 23, 2014 Funding by Ohio Local Government Innovation Fund Program

Today’s Objectives Share the overall results of the Butler County Integrated Development Budget (IDB) Feasibility Study. Gain feedback and generate interest in putting the IDB concept to work in Ohio communities, counties, and regions. 2

Agenda Welcome and Introduction by Ohio LGIF Program. Center for Public Innovation/Butler County Presentation. Questions and Discussion. Next Steps. 3

IDB Definition The integrated development budget (IDB) is a development financing strategy that has been used by four states (Texas, Vermont, Kansas, Kentucky, Rhode Island) and the District of Columbia to: 1) provide full accounting for all types of public funds invested in economic development; 2) improve the efficiency and effectiveness in using these funds; 3) improve the coordination in using these funds; and 4) increase the return on investment (ROI) in using these funds. 4 IDB Operating Budgets Economic Development Incentives Development Related Infrastructure Includes direct (budgeted) expenditures and foregone tax revenues

History of the IDB in Ohio Recommended in a comprehensive assessment of the fiscal and economic impacts of all Ohio economic development programs. (Study by Cleveland State University Urban College/Don Iannone, Project Director.) Given serious consideration by the Ohio Legislature and Ohio Department of Development, but not implemented because of change of administrations (Voinovich to Taft) and lack of readiness to adopt the approach. $3.14 billion in estimated State of Ohio direct and foregone revenue spending in Return on investment (ROI) unclear because of limited tracking of impact. Local spending on economic development not calculated but estimated as very significant for tax incentives. Case studies showed that for enterprise zones there were clear winners and losers. 5 Foregone State Tax Revenues $2.4 billion (All tax abatements and credits specifically for economic development.) Foregone State Tax Revenues $2.4 billion (All tax abatements and credits specifically for economic development.) State Technology Investments $193 million State Technology Investments $193 million State Workforce Development Investments $98 million State Workforce Development Investments $98 million State Funded Development Infrastructure $181 million State Funded Development Infrastructure $181 million Other State Programs ~$270 million (especially loans) Other State Programs ~$270 million (especially loans) Total State Spending: $3.14 Billion in or $785 million per year

Ohio ED Spending - Return on Investment In the 1990s in Ohio: Measured on a program by program basis. Key measures: private investment leveraged, jobs, payroll, and taxes. Limited attention to setting ROI expectations. No comprehensive assessment of how economic development spending relates to ROI. 6

ED and CD Definitions Economic development (ED) is about building quality local economies. ED works hand in hand with community development (CD), and it is defined as those policies and programs that directly and indirectly shape (improve) the climate and capacity of a community, county, region, or state by strategic using local and non- local assets and resources to grow a more productive, innovative, creative, and globally competitive economic base that increases business quality and competitiveness, stimulates value-added entrepreneurship, provides quality employment opportunities for residents and workers, and strengthens broad-based prosperity. Community development (CD) is about building quality communities and places. CD works hand in hand with ED, and it is defined as those policies and programs that directly and indirectly shape (improve) the quality of life in a community, county, region or state to provide quality residential opportunities for residents, educates students at and above the required standards of educational attainment, provides quality and affordable shopping, recreation and entertainment, healthcare, social support networks and services, provides effective access to information and knowledge needed by residents, equips the area with efficient and quality transportation and other public services, and increases the capacity of the residents to plan, envision and engage in their communities on a regular basis. 7

IDB Parameters 1.New approach to economic and community development budgeting and investing, which requires a shift in how budgets are created, how and what data is used, how and with whom data/information is shared. 2.Jurisdictions and development organization need to transition away from the separate and disconnected approach to development finance to the new “connected” and “integrated” approach. 3.Requires a higher level of disclosure and transparency in how public funds are used for development. 4.Eventually the IDB approach prepares development organizations and jurisdictions to collaborate and innovate more frequently and effectively. 5.The ultimate payoff is: 1) increased collaboration around shared development priorities; 2) coordinated and linked investments in these priorities; 3) improved development outcomes and efficiencies; and 4) a higher return on investment (ROI) from development efforts. 8

Butler County and Development Patterns Older cities are holding their own but faced with growing problems of decline. Their central challenge is redevelopment and increasing their share of future development opportunities. Newer interstate townships have experienced rapid growth in population, retail shopping, and businesses and jobs. Their central challenge is managing growth and ensuring growth pays for itself. Overall Butler County is in good financial position with some weak spots. The County is experiencing growth pressures from the north (Dayton area) and south (Cincinnati area). While plans guide communities in the county, there is no unifying plan for the overall county. Sprawl is a growing problem in the County as growth spreads across a much larger land area. 9

Butler County Project Players 10 Butler County Collaborative Partners Working Group Butler County Port Authority (Champion) Countywide (County Govt., Transportation Improvement District, Hamilton Area Chamber, Workforce One) Cities (Hamilton, Middletown, Fairfield, Monroe, Trenton) Townships (West Chester and Liberty) State of Ohio LGIF Program (Funding Role) State of Ohio LGIF Program (Funding Role) Center for Public Innovation (Project Director Consultant)

Working Group Working Group was a staff-driven group and not a leadership- based group. Leadership on a countywide basis was not ready to engage across jurisdictions yet. A recommendation to Butler County for the future is to create a leadership-based entity where public and private sector leaders (including education) can work and learn together. Hamilton does have a such a group. One outcome of the IDB project is that the Working Group has decided to continue to work together. 11

Butler County Project Work Process 12 Nov April 2013: Organization and Analysis May 2013-December 2013: Priority Setting and Feasibility Assessment Jan June 2014: Options, Strategy, Recommendations - Economic base analysis - Demographic analysis - Economic and community development system analysis - Public finance analysis - Existing development priorities -Rank priorities and choose top three - Assess feasibility -Draft and final reports -Communications and feedback -Final recommendations

Top Butler County Priorities 13 Long List Of Possible Priorities Workforce Development Transportation Infrastructure Fiber Optics Ring Key Choice Drivers: Collaborative and non-competitive areas of focus or priorities. Important to all communities in Butler County. Does not favor one or a few. Lower level of political resistance in working in these areas over other priorities, such as a changing how business prospects are worked with or creating a shared ED investment fund. Observations About These Priorities: Resources to support economic and community development. Transportation infrastructure is a current success through the TID Building a competitive workforce for middle and high skilled jobs is a top priority. The County-owned fiber optic ring has been problematic and not used effectively to support economic developments. Preference: Start with lower hanging fruit from a collaboration standpoint

Action Areas Under Priorities 14

Using the IDB to Strengthen Industries and Communities 15

Three-Step Development Process Feasibility Study 2. Real-World Demonstration Project 3. Real-World Implementation (with monitoring) IDB is feasible in Butler County if approached in small steps but sufficient readiness does not exist but it may in six months We are here now

Feasibility Options 17 Most likely implementation with 1 or 2 small demo projects

Key IDB Elements 18 Stakeholders working together more closely and investing in development in a coordinated way. Providing the information needed to gain stakeholder collaboration and coordinated investment.

IDB Vision, Mission, Goals Vision Statement Create a future environment in which high quality growth and development occurs in Butler County communities, resulting in increased high-wage job creation, broad-based prosperity, business and industry competitiveness, and sustainable community-building with a favorable return on public and private funds invested. Mission Statement and Goals The Integrated Development Budget (IDB) will increase the efficiency, effectiveness, and beneficial impacts of public and private sector investments in economic and community development projects in Butler County by achieving these four general goals: 1.Strengthen teamwork and collaboration among economic and community developers in Butler County for the purpose of increasing positive economic and community development results for communities and the entire county. 2.Increase the return on investment (ROI) of countywide and community economic and community development investments and efforts in Butler County. 3.Reduce the unintended long-term costs associated with public sector investments that increase sprawl (spread development over too large a land area) and otherwise make unproductive use of public sector resources. 4.Increase Butler County’s long-term economic competitiveness as a location for high quality businesses and jobs. 19

IDB Bottom Line Assessment in Butler County 1.Willing to commit to small action steps: 1) working group stays in place; 2) one or two small demonstration projects are possible. 2.Other demands on time and resources at countywide and community levels. 3.Lost our “champion” for immediate action because of changes in Butler Port. 4.“Political will” and a sufficiently collaborative and trusting development culture does not exist to attempt anything big. 5.Other readiness factors (teamwork, shared vision and plan, money, organizational capacity, etc.) must be addressed. 6.No major crisis at this time requiring the IDB. 7.Not willing to approach this from an opportunity standpoint; that is to bolster competitiveness; save money; increase ROI from development spending and activities. 20

Single Community IDB 21 Economic Development Community Development and Planning Shared Services Public Works Budget and Finance

Countywide (Multiple Communities) IDB 22 Economic Development Community Development and Planning Development Funds (State. Federal, Foundations, Other) Workforce Development Development Infrastructure Shared Services

Regional (Multiple Counties) IDB 23 Economic Development Community Development and Planning Development Funds (State. Federal, Foundations, Other) Workforce Development Development Infrastructure Shared Services Technological Innovation

Thoughts for Other Ohio Communities, Counties and Regions 1.Be willing to learn more about the IDB concept and its benefits in intermediate and longer terms. 2.Commit to a local or regional conversation about the role of the IDB as a new development finance tool. 3.Identify a single area in which the IDB approach could be applied. 4.Explore the IDB as a tool to both increase competitiveness and increase development efficiency (reduce sprawl and its long term costs and problems. 24

Discussion Questions 1.What value do you see in the IDB concept? 2.How can you capitalize on the IDB as a tool to increase economic competitiveness and community and regional sustainability? 3.What would make the IDB concept of greater interest and value to you? 4.How would your area or organization use the IDB concept? 5.How can the IDB help solve some of the problems state and local governments are trying to address now? 25

Contact Don Iannone Executive Director Center for Public Innovation/Sourcing Office 600 Superior Avenue East | Suite 1300 Cleveland, Ohio Phone: