Definitions Flashcards
Absolute Advantage
Term used when comparing two economies. An economy has an absolute advantage over another when it can produce more of a product, simply because it has more resources.
Absolute advantage says nothing of efficiency, nor opportunity cost.
Ad Valorem Tax
A tax levied on the value of the taxed item. Local property taxes are generally ad valorem taxes.
Adaptive Reuse
The rehabilitation of old property for a new purpose.
AFDC
Aid to Families with Dependent Children provides income assistance to low income families. This has been replaced by TANF, Temporary Assistance to Needy Families
Amortization
The liquidation of a debt via a specified schedule of payments.
Anchor or “Key” Tenant
The most important tenant, and often largest, in a development project whose lease is usually instrumental in securing financing for the project and in attracting other tenants.
Affordable Housing
Housing with consumers no more than 30% of household income.
Angel Investor
An investor who provides equity investment to start-up businesses.
Assessed Valuation
The monetary worth of a property for the purposes of taxation. Total assed valuation denotes the sum of the monetary worth of all taxable properties within a jurisdiction.
Assets
Business property acquired at a measurable cost, the use of which is related to the business operations.
BOTs (Build, Operate and Transfer)
Process in which a private company, finances, builds, and operates an infrastructure system for a fixed time, during which the government has a regulatory and oversight role. At the end of the project, usually 15 to 25 years, the system is transferred back to the government.
Bankable
A person who can qualify for a loan at a commercial lending institution.
Base Industry
Also known as “export” or “primary” industries, base industries sell or export their products and services outside the community and bring new dollars into the community, increase the total dollars that circulate within the community and that are spent on non-base industries.
Benchmarking
Quantifiable measures of economic competitiveness and quality of life that can be collected on a regular basis. They are used to measure a region’s economic status and progress against comparable regions.
Bond
A certificate of debt issued by a government or corporation guaranteeing payment of the original investment, plus interest by a specified future date.
Bond Banks
State-level agencies that assist local governments in acquiring capital financing, usually through debt issuance.
Bond banks are especially helpful for smaller communities that typically have lower budgets and cannot afford the true costs of bond issuance.
Bond Rating
An estimation of the relative credit-worthiness of a corporation or governmental unit. Private investment service companies make such estimates, generally designating the most credit-worthy borrowers as a triple A.
Brownfields
Commercial or industrial sites that are abandoned or under-utilized and have real or perceived environmental contamination.
Business Assistance Center
A one-stop center for streamlining local permitting, licensing, and fee payment processes and facilitating the decision-making processes.
Business Climate
Usually referred to as the attitude of a local government toward business, but can also consider attitudes of local labor force, and local business networks.
Business Incubator
Entity that nurtures and supports young companies until they become viable, providing them with affordable space, technical and management support, equity and long-term debt financing, and employment.
The three basic objectives in creating an incubator are 1. spur technology-based development, 2. to diversify the local economy, and 3. to assist in community revitalization.
Business Improvement District (BIDs)
Legally defined entities formed by property and business owners, where an assessment or tax is levied for capital or operating improvements, as a means of supplementing city funding.
The district is created by the public law or ordinance, but is administered by an entity responsible to the district’s members, or to the local governing body.
Recent BID programs include economic and social development, transportation, parking management, and conversion of redeveloped commercial buildings for residential use.
Business Recruitment and Attraction
Traditional approach to economic development to entice companies to relocate or to set up a new branch plant or operation in a state or locality; often referred to as “smokestack chasing”.
Business Retention
Systematic effort designed to keep local companies content at their present locations, which includes helping companies cope with changing economic conditions and internal company problems.
CBD
The Central Business District of a locality. Usually this is an area with the highest concentration of businesses, including financial institutions, shops, offices, theaters, and restaurants.
CDBG
Its purpose is to encourage more broadly conceived community development projects and expand housing opportunities for low- and moderate-income persons.
The three primary goals of CDBG are to 1. serve low- and moderate-income people, 2. to eliminate slums and blight, and 3. to address other community development needs that pose a serious and immediate threat to the health and welfare of the community.
CDC (Community Development Corporation)
Community Development Corporation; organizations, typically non-profit 501 (c) (3), which can obtain federal and private support. They are governed by local residents, businesses, and community leaders through a board of directors that is in most cases elected from the CDC membership or the community.
CDC (Bank CDC)
Bank-sponsored community development corporations are a way for banks to contribute to economic revitalization by investing in local businesses and real estate investment projects that benefit low- and moderate-income groups. Bank CDC’s can purchase, construct, or rehabilitate property.
CDC (Certified Development Company)
The originating and administrating body for the SPA 504 loans. The program provides long-term fixed-rate financing to small businesses to acquire real estate, machinery, and equipment for the expansion of businesses and modernization of facilities.
CDFI (Community Development Financial Institution)
Works in market niches that have not been adequately served by traditional financial institutions. CDFI’s provide a wide range of financial products and services, including mortgage financing, commercial loans, financing for community facilities, and financial services needed by low income households.
To be a certified CDFI, an institution must engage in community development, serve a targeted population, provide financing, have community representatives on its board, and be a non-governmental organization.
CHAS (Comprehensive Housing Affordability Strategy)
A federally mandated five-year low- and moderate-income housing plan, describing needs, outlining strategies, and listening resources, which is required, with annual updates, for state and local governments to receive federal housing funds.
CHDO (Community Housing Development Organization)
A federally defined type of nonprofit low- and moderate-income housing provider eligible to receive 15% of all federal HOME Investment Partnership funds for housing development and 5% of HOME funds for operating costs.
CRO (Community Reuse Organization)
Organization which oversees the transition of a U.S. Department of Energy facility from governmental to civilian/commercial use.
Capacity Building
Developing the ability of a community-based neighborhood organization to effectively design economic development strategies through technical assistance, networks, conferences, and workshops.
Capital
Consists of property of wealth from which income is derived, expressed in terms of money, and which can be used to produce additional property or wealth.
Capital Costs
Costs of investment in major physical improvements, infrastructure and equipment, such as buildings, roads, and machinery.
Capital Projects Fund
Money that accounts for the acquisition of capital facilities. This money can be raised through bond issues or grants.
Capitalization Rate
The rate of return that deems investment in a development project reasonable, often referred to as the “cap rate”.
Cash Flow
A statement showing total cash receipts and disbursements for a specific period of time.
Clawbacks
Clawbacks describe the punitive steps taken against firms that break incentive contracts.
Comparative Advantage
Term used when comparing economies of regions. It is the economic advantage gained by one area over another due to the fact that it can produce a particular product more efficiently. More efficient production of one good means there is a higher opportunity cost to produce another. This is the concept that drives trade between economies.
Inter-regional and international trade exploits the comparative advantages of economies.
Competitive Niche
A market in which a business or economic region finds itself to perform well.
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) or “Superfund”
Under this act, sites with the worst environmental damage may be designated National Priority List (NPL) sites. If an owner/operator fails proper remediation, fines can total up to 3 times the cost of clean up. They receive federal assistance.
Consolidated Plan
The consolidated plan, or ConPlan, combines all of the planning, application, and performance requirement previously required separately for CDBG, HOME, ESG, HOPWA, that require a Comprehensive Housing Affordability Strategy (CHAS).
Cost-Benefit Analysis
A method for evaluating the profitability of alternative uses of resources.
Cost Effective Analysis
Compares alternative projects or plans to determine the least costly way to achieve desired goals.
Usually, some index or point system is developed to measure the effectiveness of the proposal in meeting the goals and objectives.
Council-Manager
A form of city government which places all administrative authority in the hands of a professional manager who is hired by the elected council. The duties of the mayor are usually mainly ceremonial.
Deed restrictions
Clauses in a deed limiting the future uses of the property. Deed restrictions can take many forms. They may limit the density of buildings, dictate the type of structures that can be erected, prevent buildings from being used for specific purposes or used at all, and limit the resale price, etc.
Deferred Loan
A type of loan in which payment is put off until some later date. If all conditions are met at the later date, the loan may be forgiven and reclassified as a grant.
Depreciation
A decrease in value through age, wear, or deterioration. It is important for tax assessments. The rate of depreciation can be manipulated to effectively raise or lower tax paid on the value of an asset.
Development Authority
An agency independent of city government that usually possesses special powers beyond those of city government. Such powers could include eminent domain authority to issue special types of bonds, special taxing powers, and regulatory powers.
Discount Rate
The rate the Federal Reserve charges member banks for inter-bank loans. The interest rates that banks charge customers are based on the discount rate.
This is not to be confused with a discount rate for a development project, which reflects the opportunity cost and risk involved in the project.
Easement
The right to use the property of another which may be granted explicitly, or earned by implication.
Economic Base
A method of classifying all productive activity into two categories: base industries which produce and sell goods that bring in new income from outside the area, and service industries which produce and sell goods that simply circulate existing income in the area.
Economic Base Analysis
A comprehensive study of a locality’s economy, focusing on the importance of exports. It should include an economic history, data on existing industries, trends, and forecasts of growth in wages and employment.
Economic Development Administration (EDA)
Created by the Public Works and Economic Act of 1965 as a part of the Commerce Department. The EDA’s main goals are to alleviate unemployment and diversify the economy, as well as assist urban areas with planning and emergency public works programs.
Economically Disadvantaged
A person who is a member of a family which either receives cash welfare payments or has a total annual income in relation to the family size which does not exceed poverty level determined by the OMB.
Econometric Modeling
A qualitative method for analyzing the impact of a proposed action on the economy. A model permits testing the effects of an anticipated or hypothetical change.
Economies of Scale
The phenomenon of production where the average cost of production declines as more of the product is produced.
Edge City
A newly emerged city on the edge of an existing city that serves as a work and shopping center, with a large amount of office and retail space.
Also known as Exurb.
Elasticity
The proportion that represents the impact on one factor by a certain percentage of change in another. For example, price elasticity of demand represents the change in demand per change in a single unit of price.
Eminent Domain
The authority to “take” private property for a public purpose upon paying a fair price for the property and relocating the tenants.
The most frequent use of this authority is the act of “condemnation”.
Empowerment Zones/Enterprise Communities (EZ/EC) Initiative
Established in 1994 and administered by HUD and Dept. of Agriculture, federal EZ/EC tools include not only business tax incentives but also transportation to work or school, drug and alcohol rehabilitation, and other local priorities.
The program creates incentives for localities to develop their own approaches to alleviate poverty.
All federally designated zones are areas of pervasive poverty, unemployment, and general distress. Each designated city receives a mix of grants and tax-exempt bonding, which employers in the EZ/EC receive tax credits for new hires and accelerated depreciation credits.
Enterprise Zones
State enterprise zones are designated geographic areas that are eligible for special treatment and incentives to attract private investment.
State guidelines define the size of a zone and the minimum level of economic distress to qualify as an enterprise zone.
Entitlement Community
An entitlement community is eligible to receive annual CDBG funds that it can use to revitalize neighborhoods, expand affordable housing and economic opportunities, and/or improve community facilities and services, principally to benefit low- and moderate-income persons.
Eligible grantees include local governments with 50,000 or more residents.
