Economic Development Philosophy #2
Submitted by scharton on Sun, 12/03/2006 - 12:59.
ED Philosophy #1 (written several months ago)was about how investors sometimes focus on price rather than value and/or the underlying profitability of companies. The stock market fluctuates so crazily because people are following stock price rather than profitability.
California cities have been making a similar mistake since the passage of the famous Proposition 13. Simply put, Proposition 13 kept the state or local governments from raising property tax rates. Property taxes had been the source of funding for counties, cities and school districts. As soon as property taxes were frozen, government agencies began to hunt for a new source of revenue, and sales taxes became their target.
Cities began to compete with each other for sales tax generating retailers. They hired firms to find out where they were losing sales tax dollars. These reports showed cities where other cities were supposedly leaking their sales tax dollars.
Just like misguided investors who focus on price, rather than value, cities began focusing their attentions on tax generators instead of locally-owned profit generators. They began to woo big box retailers and to ignore their existing businesses. While a major retailer might create thousands of dollars in sales tax revenue, it often put dozens of locally-owned businesses under. They gained the taxes but sent profits elsewhere.
Economic development is a rather simple formula…a city should want dollars to come into their jurisdiction from outside, and once a dollar is inside their economy, a city should desire to keep it there as long as possible.
The businesses that should be the heroes of economic development are locally-owned or locally headquartered businesses that sell products or services to people or businesses from outside of their boundaries. The profits from these businesses tend to stay within our economy. They are our economic generators.
The businesses that keep the profits within our local economy are circulators. These are locally-owned banks, grocery stores, builders, retailers, professionals, and others. Their profits are largely generated from within our local economy, and their profits tend to stay here and circulate the dollars longer.
So, cities that focus their support to economic generators and circulators bring profits into their economies and then keep them inside of their economies longer. This philosophy focuses on building and keeping a healthy local economy, which should secondarily lead to a larger tax base for government entities. The horse (economy) should be ahead of the cart (tax revenues). The beneficiaries of this type of economic development are…everyone who lives within the healthier economic system: business people, nonprofits, school districts…everyone.
Economic development based on sales tax generators sends our profits out of the local economy and slowly cripples it, carrying everyone into a negative economic spiral.
I wonder if Mr Sharton was pestered by "the Marla"
when he was a City Councilman?
400 people sick from waterpark {Lady Pipes}
http://news.aol.com/health/story/ar/_a/about-400-sick-after-water-park-v...
Are you the one driving around with the WAR flag?
What's up with the WAR flag?
Marla is severed feet your new obsession?
Give us some real info on the sewers.
Not blogs you write.
That's no proof.
Re: Prop !3 Now Marla's creating phony websites.
She is creating fake websites to back up her crazy delusions.
Maybe next she will pull a Mike Eagles and run for Mayor with her sockpuppets.
Marla's just upset because her house will ber condemnd
As part of the plans for the "revitalized" Tower that will be connected to Downtown creating a sports, art and entertainment area. It will reach from Downtown to the Tower.
Look for new hotels built in the Tower. With Drug Fair closed and the bakery closing watch Chicken Pie and the Dollar Tree go soon.
Maroa will be closed and the two propertys will become one big property featuring retail amd lofts. It's a key to the plans because its the center of the Tower.
It's already been discussed at a few meetings.
Olive will be cleaned up from the Park to Cedar.
Belmonts beautification will be finally finished.
The Zoo will be expanded and included in this area.
Watch for more banners to prote the Zoo in the Tower.
Also pay close attention to the "signs".
Dont forget to get your tin foil befor Dollar Tree is gone.
Prop 13 - Tower Dist.
What I discovered:
http://fresnopropertytaxes.blogspot.com/
I'm alive and kicking
I have been absent for awhile. I started working for the Central Valley Business Incubator (www.cvbi.org) in July and my new assignment has eaten into my blogging time. I do miss being the the Fresno Famous community. Thanks for the question, maybe this will inspire the blogging part of my brain to re-engage!
Craig
Craig
Fresno: Garden City under the Sierra Nevadas
I've used Fresno Famous for about a year now - trying to get acquainted with my new adopted town. I've noticed that we haven't heard from scharton for a while and I wonder if I missed something. Did he move off to a new venture or city and not tell us? It seems odd that he's been missing from the blogs. Does anyone know if hes doing alright?
Perhaps it is not the Big
Perhaps it is not the big chains who are at fault for putting Locals out of Biz. I would argue that it might just be the local consumers who don't support the Local merchants who hold the locus of the blame. No one is forcing the masses to shop at Wal Mart
Buy your underwear at the chains...then have a great meal at The Olive Press ;)
I like your point, Jeff.
I haven't really heard that point of view, its usually either/or. But what is the rebuttal for the argument that the big/box chains completely put the locals out of business? We aren't just talking Wal-Mart and Best Buy here. (Because really, do local drug stores really exist in places other than Kingsburg or Riverdale?) But what about grocery stores, and restaurants, and even clothing stores? I think many people are hesitant to try the local spots when they get comfortable with the familiar chains. I mean, why try Mings when you KNOW that P.F. Chang's is really good? Or why go to a little clothing boutique when you know you can find unique brands at Anthropologie (and, you can scope out the selection before even entering the store)? And unless the general population has these convictions to support the local businesses (like you, me and Just Another Dude), I kind of wonder if the locals and the chains are really complementary to each other. But who knows? Maybe the niche for those who support local business is big enough here already. I suppose many cities do have have a mixed economy. But it seems like our balance in Fresno is strongly biased towards the chains.
Jeff G is my hero!
I applaud Jeff G. You are absolutely right. Because I can save on basic supplies for the house, I can afford to have a brewskie at Fagan's and support the Grizzlies. I like the way you think, man!
Just Another Dude
local business ..
.. but, can it be what we pick and choose? After all, Starbucks isn't a local business, but even the people who holler about local business spend their dollars at starbucks. Same with borders and barnes and noble. Why is Walmart so bad if we skip the locally owned bookstore and locally owned coffee shop?
I think it's all just too frustrating and mind boggling. I guess I'll leave the real debate to those of you who really understand it and can have some impact. .. I just get more confused, and know that you guys know so much more about the big picture.
That's why I like this website - your ideas and comments really help me to learn and understand more about how "it" all works. Keep up the goodwork! It is a good learning tool for me - even though I'm not really involved with the moovers and skaers of the community. I'm just involved as a citizen and a consumer. I read the bee for the news but look here for the real story .. I like reading about what all of you are involved in.
So thank you again for this interesting banter. I look forward to checking fresno famous every day.
By the way, where were you, Scharton? We didn't hear from you for a long time.
The answer is...Both
Both the nationals and the Locals will be needed for succesfull economic growth to take place here in Fresno. The cheap priced goods at Wal Mart allow the community to stretch their dollar on commotities like toliet paper and socks, and helps increase disposable incomes for things like local restaurants, shows and shops. As Famous Guest pointed out, "Jobs ? Affordable goods ? Community philanthropy ? Local business anchors and traffic generators ? are actually the things that these big box nationals do provide the local economy outside the minimized circulator. Starbucks actually raises the quality and drives traffic to the local coffee shops just up the street. Revue always seems packed in the Tower. They are doing pretty well right across the street from Starbucks. Same with Kern St Coffee. So what gives ? Where is the evil distruction of these local merchants once the national chain moved in ? Kern is actually expanding and opening up other stores.
If folks want the products available at Best Buy, why do we call them stupid, misguided and/or coerced instead of seeing it as a function of free market demand ? If locals can't provide cheaper, then they need to focus on better, or closer, or more unique. I personally would rather buy at a Local and support their efforts and put 4 or 5 times the economic value in my community. But if I ever need to buy a big screen TV, I know exactlly where I'm going 'cause I can't afford the additional $500.
All big boxes...very bad agreed. Provides only a fraction of the circulator multiple. All local owned...romantic, but bad as well = barely surviving, rarely thriving
The truth in my opinion is that we will need a mixed-use economic make up to really feel the flow of economic growth...not either or
Jeff G
p.s. The bigger threat may be when everyone gets used to the convenience and savings of ordering on-line. Then the brick and mortar Locals and Big Boxes will have an even harder time competing and justifying locating in our neighborhoods
Supporting local business
I have a question though...how do we revive the local businesses when many of our consumer preferences are conditioned to the big boxes?
I read that the San Diego City Council recently banned Wal-Mart Super Centers from the city. Apparently, the mayor may try to veto the decision, but it stands for now. I am really curious to see if people will just drive further to different communities to shop at the Wal-Mart Super Centers for those bargains (although, with a longer drive, I feel like the bargain isn't worth it!). I would love to think that a move like this would really be beneficial for Fresno and its local businesses. But being that we, the consumers, are driven by price (and not always value) it seems that inevitably the demand would be for the chains. And in Fresno, that seems to be the more popular opinion, at least from what I have seen. Because-- the more we can save, the more we can buy to keep up with the status quo as exemplified by our wonderful neighbors in southern California.
In short--I would love for Fresno to thrive on an economy driven by local businesses. It is so very economically sustainable. And in order to make it work, I feel either extreme government regulation or extreme marketing or extreme product differentiation is necessary. (I'm sure more can be added to that list. It's just my rendition.) Government regulation with our current situation seems unlikely. I'm not really sure about the product differentiation. I really think the marketing could use a little nudge or perhaps an explosion behind it.
geeze
Whow, you should be a councilman or something.
Jobs are going to be the next topic
Craig
Fresno: Garden City under the Sierra Nevadas
Jobs ? Affordable goods ? Community philanthropy ? Local business anchors and traffic generators ?
The theory is sound.
What is the true bottom line differential ?
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