IEDC Definitions Flashcards
Amortization
The liquidation of a debt via a specified schedule of payments.
Affordable Housing
House which consumes no more than 30% of household income.
Angel Investor
Investor who provides equity investment to start-up businesses.
Assessed Valuation
Monetary worth of a property for the purposes of taxation. Total assessed 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. (Fixed Assets)
BOTs (Build, Operate & Transfer)
Process in which a private company finances, builds, and operates an infrastructure system for a fixed time, during which the gov’t has a regulatory and oversight role. At the end of the project (usually 15 - 25 years) the system is transferred back to the gov’t.
Bankable
A person who can qualify for a loan at a commercial lending institution.
Base Industry
AKA ‘Export’ or ‘Primary’ Industry. Base Industries sell or export their products and services outside of the community and bring new dollars into the community, increasing 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
A bond bank is an independent entity, created by the state, that consolidates local bond issues into a single pool to offer better financing options for state or municipal projects.
Bond Rating
An estimation of the relative credit-worthiness of a corporation or gov’tal unit. Private investment service companies make such estimates, generally designating the most credit-worthy borrowers as ‘Triple A’.
Brownfields
Commercial or industrial sites that are abandoned or underutilizied, 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 process.
Business Climate
Usually referred to as the attitude of a local gov’t toward business, but can also consider attitudes of the 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 mgmt support, equity and long-term debt financing, and employment. The 3 basic objectives in creating an incubator are 1) to spur technology; 2) to diversify the local economy; and 3) to assist in community revitalization
Business Improvement Districts (BIDs)
Legally defined entities formed by property and business owners, where an assessment or a 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. Some states authorize non-gov’t, non-profit corportions to admisiter the district. Recent BID programs include economic and social development, transportation, parking mgmt, and conversion of redeveloped commercial bldgs 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 ‘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 (Central Business District)
Usually an area with the highest concentration of businesses, including financial institutions, shops, offices, theaters and restaurants.
CDBG (Community Development Block Grants)
Under Title I of the Housing and Community Development Act of 1974, eight former categorical grant and loan programs were replaced by a system of unified block grants under which communities with more than 50K people are entitled to receive funding, while other communities may apply for discretionary funding. Its purpose is to encourage more broadly conceived community development projects and expand housing oppys for low and moderate-income people. The 3 primary goals of CDBG are 1) to serve low & moderate-income people; 2) to eliminate slums and blight; and 3) to address other community development needs that pose a serious threat to the health and welfare of the community.
CDC (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 elected from CDC membership or community. Some CDCs perform only economic development services, but most work only on housing issues. Those active in economic development provide technical assistance and financing and are committed to serving the impoverished people of America.
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. A community can establish a bank CDC by working with one or more local banks, the Federal Reserve, the Comptroller and its respective state financial institutions’ regulators. In the case of consortium bank CDCs. where several banks join together, the investors do not have to be just local banks. Bank CDCs can purchase, construct or rehab property.
CDC (Certified Development Company)
The originating and administrating body for the SBA 504 loans. The program provides long-term, fixed-rate financing to small businesses to acquire real estate, machinery and equipment for the expansion of business or modernization of facilities.
CDFI (Community Development Financial Institution)
A specialized financial institution which works in market niches that have not been adequately served by traditional financial institutions. CDFIs provide a wide range of financial products and services, including mortgage financing, commercial loans, financing for community facilities, and financial services for low income households. Some CDFIs also provide technical assistance. To be certified as CDFI by the CDFI Fund of the Dept. of Treasury, an institution must engage in community development, serve a targeted population, provide financing, have community representatives on its board, and be a non-gov’t organization.
CHAS (Comprehensive Housing Affordability Strategy)
A federally mandated 5-year, low and moderate-income housing plan, describing needs, outlining strategies and listing resources, which is required, with annual updates, for state and local gov’ts 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 US Dept. of Energy facility from gov’t 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 or wealth from which income is derived, expressed in terms of money and which can be used to produce additional property or wealth.
While money itself may be construed as capital, capital is more often associated with cash that is being put to work for productive or investment purposes.
Capital Costs
Cost 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
Many localities enter into contracts with firms to which they offer incentives that require local commitments. Clawbacks describe the punitive steps taken against firms that break these contracts. For example, a firm may be required to pay fines or assist in finding a new tenant for its property if it chooses to leave a community.
Clawbacks act as insurance policies in the event of fraud or misconduct, poor performance or otherwise breaking commitments made in the contract.
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 oppy cost to produce another. This is the concept that drives trade b/w economies. Interregional 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) (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 3X the cost of cleanup. Owners of contaminated sites not on the NPL must complete remediation of their sites before they can be reused, but they do not receive federal assistance or face the same regulatory pressures as Superfund sites.
Consolidated Plan
Aka ‘Con Plan’, combines all of the planning, application, and performance requirement previously required separately under CDBG, HOME, ESG (Emerg. Shelter Grants), HOPWA (Housing Oppys for People with AIDS), and programs such as HOME, that require a Comprehensive Affordability Housing Strategy (CHAS).
Cost-Benefit Analysis
A method for evaluating the profitability of alternative uses of resources.
A systematic process that businesses use to analyze which decisions to make and which to forgo.
Sums the potential rewards expected from a situation or action and then subtracts the total costs associated with taking that action.
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 / objectives.
Council-Manager
A form of city gov’t which places all administrative authority in the hands of a professional manager who is hired by the elected council to service at its pleasure. The duties of the mayor are usually mainly ceremonial.
i.e. City of Ogallala
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 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 this later date, the loan may be forgiven and reclassified as a grant. The conditions of a 7-year deferred loan, for example, might specify that the property not be sold during this time and that it remains the principal residence of the purchaser.
Depreciation
A decrease in value through age, wear, or deterioration. It’s 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 gov’t that usually possesses special powers beyond those of city gov’t. 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 interbank 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 oppy 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 2 categories: Basic industries which produce and sell goods that bring in new income from outside the area; and service industries which produce and sell good 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 part of the Commerce Dept. The EDA’s main goals are to 1) alleviate unemployment; 2) diversify the economy; 3) assist urban areas with planning; 4) assist urban areas with 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 family size which does not exceed the poverty level determined by the Office of Management & Budget (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.
An econometric model is one of the tools economists use to forecast future developments in the economy.
In the simplest terms, it measures past relationships among such variables as consumer spending, household income, tax rates, interest rates, employment, and the like, and then tries to forecast how changes in some variables will affect the future course of others.
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. Aka 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.
Economists use price elasticity to understand how supply and demand for a product change when its price changes.
Price elasticity of demand is a measurement of the change in consumption of a product in relation to a change in its 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 the HUD and Dept. of Ag. 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, while employers in the EZ/EC receive tax credits for new hires and accelerated depreciation credits.
Federal EZ/EC tools include not only business tax incentives but also transportation to work or school, drug and alcohol rehab and other local priorities.
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. States can also limit the number and type of enterprise zone. These restrictions are generally set out in the state enterprise zone program.
Entitlement Community
An entitlement community is eligible to receive annual CDBG funds that it can use to revitalize neighborhoods, expand affordable housing and economic oppys, and/or improve community facilities and services, principally to benefit low and moderate-income persons. Eligible grantees include local gov’ts with 50K or more residents, other local gov’ts designated as central cities of metropolitan areas and urban counties with populations with at least 200K (excluding the population if entitled cities). The State CDBG Program offers funds to the states, which they then allocate among localities that do not qualify as entitlement communities,
Entrepreneurial Training
Programs that provide guidance and instruction on business basics such as accounting and financing, to ensure that new businesses improve their chances of success. The most common training methods include classroom training, workshops, speakers, peer groups and 1:1 counseling, lectures, internships, as well as self-study and home-study.
Externality
A side effect of production or consumption that is not paid for. Pollution is a negative externality of oil refining, which the building of roads has a positive externality for later generations who use it.
Fair Market Value
The estimated worth of a property made by a certified appraiser, which reflects the price at which the property could be immediately sold in a competitive market.
Fiscal Impacts
The direct and indirect costs incurred and revenues received by local gov’ts resulting from land use and other types of decisions.
501(c)(3)
Approval given by the IRS granting exemption from federal income tax to a nonprofit organization, under Section 501(c)(3) of the Internal Revenue Code. Donations to such organizations are tax deductible. The organizations described in 501(c)(3) are commonly referred to under the general heading of ‘charitable organizations’.
501(c)(6)
Approval given by the IRS granting exemption from tne federal income tax to a business league, under Section 501(c)(6) of the Internal Revenue Code. Trade associations and professional associations are considered to be business leagues. The business league must be devoted to the improvement of business conditions of one or more lines of business, as distinguished from the performance of particular services for individual persons. No part of its net earnings may inure to the benefit of any private shareholder or individual and it may not be organized for profit or organized to engage in an activity ordinarily carried on for profit.
Flex Space
(Flexible Use Space) Space that can be used for one or a combination of different types of production (i.e. manufacturing, office, service or distribution).
Front-End Costs
Capital required at the early stages of a development project, such as cost of land, plans and working drawings, construction materials and labor.
Gap Financing
A loan required by a developer to bridge the gap, i.e. to make up a deficiency b/w the amount of mortgage loan due on project completion and the expenses incurred during construction (financing that covers the difference b/w what a project can support and the cost of development or purchase).
General Fund
The portion of a municipal budget devoted to basic administrative functions. It includes funds that are not otherwise earmarked for specific uses.
General Obligation (GO) Bonds
Limited Tax GO Bonds - Tax exempt bonds secured by the revenue from the application of a fixed rate against taxable property. Not all states permit limited tax GOs but in those that do, such bond issuance does not require voter approval.
Unlimited Tax GO Bonds - Tax-exempt bonds secured through taxes that are levied w/o rate or amount limitations, in order to repay the principal and interest of the bond. They are typically used to finance public works infrastructure and land acquisition for blight elimination.
General Partner
The co-owner(s) of a venture who is liable for all debts and other obligations of that venture as well as for the management and operation of the partnership. The general partner can have control of the business and can take actions which are binding on the other partners.
Gentrification
The migration of middle-class residents into a deteriorating area. This migration may help revitalize an area, but it also tends to ‘squeeze out’ lower-income families by inflating property values.
Geographic Information Systems (GIS)
Computer programs that integrate social, economic and demographic information and mapping. GIS is particularly useful for market studies, transportation analysis, crime studies and housing impact studies.
HOME Investment Partnership Program
The HOME program was created under the National Affordable Housing Act of 1990. HOME provides grants to states, local gov’ts and Indian tribes to implement local housing strategies. HOME is intended to increase home-ownership and affordable housing for low and very low-income households. It was also designed to stimulate creative partnerships with nonprofit community-based development organizations.
HUD (US Dept. of Housing & Urban Development)
HUD was established as a cabinet department in 1965 as part of Pres. Johnson’s ‘War on Poverty’. The dept is responsible for national policy and programs that 1) address America’s housing needs, 2) improve and develop the Nation’s communities and 3) enforce fair housing laws. Major programs include Community Development Block Grants (CDBG) to assist communities with economic development, job oppys and housing rehab; fair housing education and enforcement; Section 8 subsidized housing; homeless assistance; HOME Investment Partnership Act to develop and support low income housing; and mortgage & loan insurance through the Federal Housing Administration.
Hard Costs
Bricks and mortar costs of development, including contractor’s fee and overhead.
Holding Costs
A term used by economic developers denoting the costs of owning land or property during the pre-development stages of a project.
Housing Development Corporation (HDC)
A private, multifamily housing corporation established to serve a specific geographic area (neighborhood, city, state, region). An HDC provides technical assistance, lends seed money and directly sponsors housing developments. Generally, community residents, local businessmen and gov’t officials have representation on its board of directors.
Housing Finance Agency (HFA)
State agencies which are responsible for the financing of housing and the administration of subsidized housing programs. State HFAs also allocate Low-Income Housing Tax Credits and tax-exempt bond authority in each state.
Impact Fees
Fees required to covers costs of improving and/or building infrastructure needed as a result of the expected impact of a development project on those facilities. Often required by localities for the approval of development projects.
Incentives
Benefits offered to firms as part of an industrial attraction, retention or expansion strategy. A few incentives are tax abatements and credits, low interest loans, infrastructure improvements, job training and land grants.
Industrial Development Bonds
These bonds are issued by a gov’t agency and used to finance acquisition, construction, expansion or renovation of mfg faciliites and the purchase of machinery and equipment depending upon state law for private companies. IDB financing is subject to state and local laws, and federal income tax laws and regulations, if the interest on the bonds is expected to be exempt from federal income taxation.
Industrial Park
A specified area of land zoned for industrial use which has specified covenants and restrictions to be followed by all occupants.
Industrial Revenue Bonds
Bonds issued by a gov’t agency on behalf of a private sector company that provides lower-cost financing for real property improvements, or the purchase or construction of buildings, facilities or equipment.
IRBs raise capital to fund the development of a manufacturing facility or equipment that will benefit the community at large; bondholders are repaid by the revenue the project generates.
Industry Clusters
Geographic concentrations of related businesses that are complementary or competing. Regions identify clusters as targeted businesses for planning and marketing efforts. There are 2 types: 1) buyer-supplier clusters (vertical); and 2) shared resources clusters (horizontal).
Infrastructure Banks
Public-targeted lending facilities, financed through a combination of bond issues, gov’t funds and external donor support. They mobilize domestic funds and create an attractive vehicle for donor funding.
Infrastructure banks use initial seed capital to lend money for infrastructure projects and then recycle the repayments in a revolving loan fund to finance future projects.
They are used within local governments to leverage local funding dollars for more flexibility when seeking matching funds or quickly delivering public works projects.
Investor Networks
Investor Networks match up potential investors (either anonymous angel investors or known investors) with start-up firms needing capital.
Land Banking
A program that preserves industrial space for a city. A city or local development authority acquires and holds land until a developer steps forward with a proposal for its use as an industrial site.
The practice of aggregating parcels of land for future sale or development.
Local Development District
A multi-jurisdictional organization that is designated by the Appalachian Regional Commission and serves a variety of functions for its member organizations.
Local Reuse Authorities
Agencies that oversee the transition of UP Dept. of Defense facilities from military to civilian/commercial use.
Location Quotient
The % of total local employment in a particular industry compared to the percentage of total national employment in that same industry.
Localization Economies
The condition where costs decrease for firms in a particular industry as total industry output increases. The lower costs come as a result of the firms in an industry locating close to each other.
Increased productivity that occurs when the same type of industries locate in close proximity to each other.
Advantages arising from the localization together of a number of firms in the same type of industry.
Low-Income
A definition based on family income as a percentage of an area’s median income. Different programs may set different percentages According to Section 8 of the US Housing Act of 1937, a household whose annual income adjusted for family size is at or below 80% of the median income in a particular metropolitan area, as determined by HUD, is considered to be low-income.
Low-Income Housing Tax Credit
A tax credit allowed for investors as an incentive for the development and preservation of multifamily rental housing that is affordable to low and very low income households.
Low-Income Neighborhood
A neighborhood that has at least 51% of its households at or below 80% of median income for the area.
Matching Grant
A grant for the same amount that the grantee expends on a project. This effectively subsidizes the project, which giving the grantee incentive to spend more on the project.
Mayor-Council
A system of city gov’t which separates legislative and executive power. Mayor council forms of gov’t range along a continuum from extremely strong to very weak. The strong mayor often has executive powers, which the weak mayor sees power dispersed among separate agencies.
Microenterprise
A business that is ‘smaller-than-small’. Operated by a person on a full- or part-time basis, usually out of a home (i.e. carpenters, day-care providers, crafts persons and caterers).
Microloans
Very small, short-term unsecured loans given to people w/o credit history and/or the collateral necessary to obtain a conventional loan. These are available from either local lenders or the SBAs 7(m) Microloan Program.
