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HomeMy WebLinkAboutAgenda - 08-19-2010 - 1ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: August 19, 2010 SUBJECT: Orange County Economic Development Discussion DEPARTMENT: Board of Commissioners County Manager, Economic Development, Planning & Inspections, & Economic Development Commission Advisory Board ATTACHMENT(S): 1. May 18, 2010 EDC Agenda Item 2. Retail Market Analysis — Town of Chapel Hill 3. Office Market Analysis — Town of Chapel Hill 4. Putting Smart Growth to Work in Rural Communities ICMA 5. Orange County Summary - Economic Development Activities Currently Being Pursued Action Agenda Item No. PUBLIC HEARING: (Y /N) No INFORMATION CONTACT: Valerie Foushee, Chair, BOCC, 245 -2130 Frank Clifton, County Manager, 245 -2306 Brad Broadwell, Economic Development Director, 245 -2350 Craig Benedict, Planning Director, 245- 2575 Kathleen Ferguson, Chair, Economic Development Commission Advisory Board PURPOSE: To provide an opportunity for the Board of Commissioners, leadership of the Economic Development Commission Advisory Board, and invited guests to discuss the Economic Development Commission Advisory Board's recommendations and other related initiatives /plans for future economic development in Orange County. BACKGROUND: Orange County Commission, Orange County Economic Development Advisory Board and Invited Guests Discussion Items: A. May 18, 2010 Orange County EDC Recommendations: 1. Fully funding the water and wastewater infrastructure improvements needed in the Economic Development Districts to make them more attractive to investors and business owners. Overview - Frank Clifton, County Manager 2. Endowing the EDC's economic development tool kit so that the county can effectively respond to opportunities to recruit, retain, grow, and generate the kinds of businesses that are desirable. Overview — Brad Broadwell, County Economic Development Director 3. Commissioning research and building its knowledge base so that economic development decisions are data driven, based on current analysis, and result in performance that is valued in Orange County. Overview - Ms. Kathleen Ferguson, Chair ED Advisory Board Other Discussion Topics: B. Can we expand collaboration and coordination of economic development efforts and decisions between Orange County and the Towns of Chapel Hill, Carrboro, Hillsborough, Mebane and Durham? C. Can we better capitalize resources available to Orange County and its Towns via existing assets such as DTCC, UNC, UNC Health Care and others? D. How do we fund economic development going forward; at what levels; and what measures of performance should be employed to measure success? E. Should we modify the current County ED Advisory Board structure to enhance our ability to function in today's environment? F. Can we enhance the image of Orange County and its Towns as an economic development opportunity for new or expanding businesses? G. Next steps? Follow up? FINANCIAL IMPACT: There is no financial impact associated with the discussion of the Economic Development Commission Advisory Board's recommendations and other related initiatives /plans for future economic development in Orange County. Future decisions related to economic development such as infrastructure improvements will have impacts on costs to the County as well as impact future employment in and property and sales tax revenues for the County. RECOMMENDATION(S): The Manager recommends that the Board and other participants discuss the Economic Development Commission Advisory Board's recommendations and other related initiatives /plans for future economic development in Orange County and provide any feedback and direction to the Advisory Board and /or County staff. A"MC-4 I ORANGE COUNTY CopBOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 18, 2010 Action Agenda Item No. SUBJECT: Recommendations from the Economic Development Commission on Economic Development DEPARTMENT: Economic Development PUBLIC HEARING: (YIN) No ATTACHMENT(S): Agenda Materials Provided by EDC Chair Kathleen Ferguson Investing in Our Future: Strategic Recommendations: Places, Tools, and Knowledge (Under Separate Cover) INFORMATION CONTACT: Brad Broadwell, -245-2325 Kathleen Ferguson, Chair, Economic Development Commission, 998 -2153 PURPOSE: To receive recommendations from the Economic Development Commission (EDC) on economic development as outlined in the Commission's six -year implementation strategy and FY 2010 -2011 budget request. BACKGROUND: The Economic Development Commission (EDC) has undertaken an extensive effort working with the UNC Graduate School's of Planning and Government to educate its members and the public on the issues which surround development_ in Orange County. The EDC has provided a report with suggested recommendations as to how Orange County may move forward in creating jobs while enhancing the commercial tax base in Orange County. Among the recommendations the EDC proposes the need to: a. Fully fund the water and wastewater infrastructure improvements needed in the Economic Development Districts. b. Endow the EDC's economic development tool kit with a completed Unified Development Ordinance and a stream lined permitting process, identify and dedicate a funding source for recurring annual investments & financial incentives and recapitalize the loan fund so that the County can compete effectively with regional programs and stimulate the entrepreneurial environment in the County; and c. Commission research and build a knowledge base so that key decisions are data - driven, based on current analysis, and result in economic development performance that is valued by Orange County stakeholders. Kathleen Ferguson, Chair of the EDC, and Anita Badrock, past Chair, will present the recommendations to the Board. 3 COPY 4 FINANCIAL IMPACT: The EDC recommends that the Board of Commissioners approve the recommendations in their entirety, including fully funding the $525,000 Olgrease,Wkth9R- Economic Development Department's FY 2010 -2011 budget. RECOMMENDATION(S): The Manager recommends that the Board receive the report and recommendations of the Economic Development Commission. It may be appropriate to schedule further work sessions with the EDC to enable expanded discussion of the recommendations. ORANGE COUNTY Economic Development Commission Action Azenda Item Abstract Meetinr Date• 18 May 2010 Subiect: Approval of Investing in Our Future, the Economic Development Commissions' Recommended Six-Year Implementation Strategy Department: Economic Development Public HearinjZ: N Attachment(0: (a) Investing in Our Future: Strategic Recommendations: Places, Tools, and Knowledge, Orange County Economic Development Commission Estimated Financial Impact: Fiscal Years 2010/2011— 201512016 and Budget Request. Fiscal Year 201012011 (b) Letter from the Chair, Orange County Economic Development Commission (c) Private Investment, Jobs, and Wealth Creation: An Overview of Economic Development Strategies, Best Practices, and Activity Driving Orange County Economic Development Outcomes a. Introduction i. Summary of Recommendations ii. The EDC's Research Rationale and Key Data Sources b. The Orange County Paradox c. Facing Our Challenges d Current Trends in Business Needs i. Entrepreneur and Small Business Needs ii. Supporting Access to Capital iii. Lowering Site Selection Risk iv. The Role of Incentives in Economic Development e. Meeting Business Needs: A Look at State and Regional Economic Development i. State Priorities ii. Orange County and the RTRP Advantage iii. The Four Pillars of Regional Economic Competitiveness f. Understanding Industry Clusters and the Opportunities for Orange County i. Green Economy Business Growth ii. E- Learning Digital Gaming, and Training Innovation iii. .Reality Check (Regional Population and Job Growth) g. Leveraging Opportunity: The Role of Local Government in Economic Development h. County-Level Economic Development Best Practices Detail i. Alamance County ii. Chatham County iii. Durham County iv. Wake County i. Adapting Accepted Practices and a Data - Driven Programmatic Approach to Economic Development i. The First Leg: Infrastructure ii. The Second Leg: Economic Development Toolkit Tailored to Current Market Conditions iii. The Third Leg: Current Data, Analysis, and Knowledge j. Conclusion PO Box 1177 a Hillsborough, NC 27278 (919) 245 -2325 . FAX: (919) 644 -3008 EMAIL: edanail(aco.oranae.nc.us • WEB ADDRESS: www.co.orange.nc.us /ecodev 5 COPY ORANGE COUNTY Economic Development , Commission k Appendix I. Research Scope Requested of UNC DCRP Interns L Appendix II. The Role of Research Universities in Industry Cluster Development m. Appendix III. Comparative Funding of County Economic Development n. Appendix IV. Incentive Programs for Businesses Locating /Growing in Durham City and County o. Financing Options and Resources p. Environmental and Historical Assistance q. Appendix V. Wake County Business Investment Grant Policy i. Cary ii. Fuquay- Varina iii. Garner iv. Knightdale v. Morrisville vi. Wendell vii. Zebulon r. Appendix VI. Chatham County and Siler City Incentives Policies s. Appendix VII. Alamance Incentives Policies i. City Of Burlington Economic Development Incentive Policy I., Appendix VIII. Selected UNC Student Intern Papers L Part — Analysis of Orange County's Site Selection Attributes, Ashley Yingling ii. Part B — From Economic Base to Economic "Basin ": Keeping UNC Ideas Here and Case Study, Ben Houck iii. Part C — Tax Increment Financing and other Development Financing Tools to grow the tax base of Orange County, North Carolina, Michael Levengood iv. Part D — Possible Metrics for an Economic Development Goal Statement, Sarah Satinsky v. ' Part E — Structuring Economic Development, Megan Johnson vi. Part F — US 70 /Cornelius Street Corridor: Market Study and Development Opportunities Report, Aaron Nousaine, Dana Archer - Rosenthal, .Jamaal Green, and Amanda Campbell u. Appendix LY North Carolina Certified Site Program Information Contact: Brad Broadwell, Purpose: To provide the Board of County Commissioners with the Orange County Economic Development Commission's recommended six-year implementation strategy and FY 2010 -2011 budget request. Background: Established by the Orange County Board of County Commissioners, the EDC is tasked with providing "advice and guidance to the Orange County Board of County commissioners in implementing economic developmentpolicies which create a balanced, dynamic local economy that promotes diversity, sustainable growth, and enhanced revenues while embracing community values ". To carry out this mission given the pathways outlined in the Investing in Innovation plan and the emphasis that the Board of Commissioners have placed on economic development issues recently, the EDC embarked on a months -long mission to identify the critical path necessary for Orange County to increase its commercial tax base and to estimate the multi -year investment in economic development activities commensurate with this and the County's economic development objectives. The EDC recommends comprehensive, systematic, and strategic upgrading of the county's economic development capacity. We believe implementing the complete set of recommendations being submitted to the Board is necessary to advance the commissioners' interests in improving Orange County's economic development prospects and its commercial tax base. The EDC's recommended strategy embraces a three- pronged approach consisting of infrastructure, tools, and knowledge, which when implemented as a program will move Orange County closer to matching the economic development capacity already present in our neighboring jurisdictions, particularly Chatham, Durham, Wake, and Alamance counties, while. preserving Orange County's unique qualities. PO Box 1177 • Hillsborough, NC 27278 (919) 245 -2325 a FAX: (919) 694 -3008 EMAIL: edcmail0co.orange.nc.us • WEB ADDRESS: www.co.orangemc.us/ecod 0 In addition to providing the core recommendations, the EDC also has taken the opportunity to respond to several Commissioner requests for information concerning the current economic development environment and best practices being implemented by neighboring counties. Using Orange County's Comprehensive Plan 2030's Objective 1.8 to "explore policies to use in attracting and encouraging development of companies and enterprises that will build and expand upon the County's economic base ", as a directive, the EDC examined economic development through the eyes of economic development professionals, potential investors, and regional experts. As part of this effort, the EDC sought to learn more about the concerns of business from its perspective. In addition, we sought information about on economic development strategies, policies, and tactics practiced in our region, particularly those practiced by surrounding counties to better understand the forces driving private investment, job creation, and wealth generation. To assist the County Manager and Board of Commissioners in their deliberations, the EDC has condensed research findings in the companion paper, "Private Investment, Jobs, and Wealth Creation: An Overview of Economic Development Strategies, Best Practices, and Activity Driving Orange County Economic Development Outcomes ". In 20 pages plus appendices, the EDC has summarized data acquired over the past 12 months from a variety of sources including local economic development professionals and business investors; the North Carolina Department of Commerce and its regional economic development partnerships; area Chambers of Commerce; leading trade publications addressing the needs of site selection specialists, relocating businesses, start- ups, and entrepreneurs; and leading experts from several UNC centers of research. Financial Impact: The EDC recommends that an additional $525,000 be invested in economic development functions in FY 2010/2011 over and above FY 2009 42010 funding: In addition, the EDC estimates that over a six-year period, the entire investment in research, strategic planning, and a robust economic development tool kit will be approximately $2,200,000, excluding the cost of bringing water and wastewater treatment capacity to the Buckhorn and Eno EDDs. Recommendations: Places, Tools, and Knowledge. These are the three tenets of our recommendations. We strongly recommend the Orange County Board of Commissioners adopt a strategic programmatic approach to economic development by: • Fully funding the water and wastewater infrastructure improvements needed in the Economic Development Districts to make them more attractive to investors and business owners. • Endowing the EDC's economic development tool kit so that the county can effectively respond to opportunities to recruit, retain, grow, and generate the kinds of businesses that are desirable • Commissioning research and building its knowledge base so that economic development decisions are data - driven, based on current analysis, and result in performance that is valued in Orange County. PO Box 1177 • Hillsborough, NC 27278 (919) 245 -2325 • FAX: (919) 694 -3008 EMAIL: edcmai10co.orange.nc.us • WEB ADDRESS: www.co.orange.ncas /ecodev VA ORp NGE COUNT Em.wmic Dedopnent Cmvneuon Investing in Our Future Strategic Recommendations: Places, Tools, and Knowledge Orange County Economic Development Commission Estimated Financial Impact: Fiscal Years 2010/2011— 2015/2016 Budget Request: Fiscal Year 2010/2011 During the great recession of 2008 and 2009, our region has received 3.1 Billion in private investment-- - 1.9 Billion received last year alone. UNC received more than 1.4 B in R &D funding-- -7.16m last year alone. Home to almost 7% of the region's residents, Orange County's share of this economic investment was negligible — 0$ and negative net jobs in 2009. Had Orange County's share had equaled its population percentage, we would have received over $134M. This lost potential, when contrasted with the county's widening residential /commercial tax gap has not surprisingly raised the issue of economic development to the forefront. Orange County is home to numerous CEOs, COOS, CFOs, and other executives. It is time to become home to their businesses also. The question the Economic Development Commission has spent the past year addressing is: what steps should OC take to reverse the county's revenue and jobs slide and engage with investors and decision- makers who are clearly willing and able to invest in the region. Having spent a year of fact-finding and exploring needs expressed by the decision- makers themselves, the EDC has identified a critical path towards increasing Orange County's options for attracting and retaining healthy, growing businesses Estimated Financial Impact: Fiscal Years 2010/2011 — 2015/2016 $2.3 million plus developing the UDO $ plus NC Department of Commerce Certified Site status for Buckhorn EDD + 100% water, wastewater, and other infrastructure to Eno EDD Budget Request: Fiscal Year 2010/2011 $525,000 in new spending -- $500K for cap /recap of tools, $25,000 to continue investment in research Context U4 GRANGE COUNTY Emr kDevNapn•nt Ca Mi- • Investing in Revenue - Producing Assets Allows County to Invest in Programs Valued by Its Citizens — Economic Development is the only tool available to local governments that are capable of increasing revenues, jobs, and wealth • Invest in County Revenue - Producing Assets First — Revenue - producing capital — Ongoing revenue stream • Focus on Low- Hanging Fruit First — Local Entrepreneurs and Established Businesses — Businesses of Current and Incoming Residents — Established Industry Clusters • Eliminate Silos and Barriers — Open up to regional best practices — Active responsiveness to investor needs Our recommendations follow some tried and true maxims which are good for households, businesses, and government, alike: Failing to plan is planning to fail; You can't help others unless your own well -being is taken care of first; It takes resources to grow resources; educate yourself by interacting with experts— reinventing the wheel is never effective, and base decisions on current data, best practices. The proposed investment in the places, tools, and knowledge proposed tonight and found in our recommendations and white paper is how the EDC has expressed these basic principles in relation to economic development interests. 2 10 Economic Development Critical Path Elements oFFN�E�o�� Y Economic Deebpmx4 Canmissmn Places Tools Knowledge Like the mobius triangle, the three elements, Places, Tools, and Knowledge, inextricably comprise the critical path necessary for economic development to take root and prosper. The more prolonged and shallower the implementation, the longer it will be before OC can increase revenues from the commercial tax base and the longer before the county can set itself on a healthy fiscal course. Before ANY economic development can occur, there must be a place for it to occur and the space must meet the needs of investor funding the business' growth or expansion. With there being a greater supply of sites and facilities than businesses demand, shovel -ready sites are seen as a given, with certified sites becoming the norm, more and more. Therefore, the sooner Orange County converts the unimproved land in the EDDs to certified sites, the sooner it will be transformed into a revenue - producing asset . The needs of individual businesses starting up, expanding, and coming into the area vary widely. To engage investors funding these start-ups, expansions, and relocations, local governments must have the tools and flexibility to retain and recruit. Again, there are more locations than sites and from a business point of view, economic development is a buyers market, especially in our region. Third, our region is home to some of the most innovative, progressive businesses and leaders in the world. The State of North Carolina, the Research Triangle Regional Partnership, and local universities offer a wealth of data, analysis, best practice, lessons learned, expert, and creative knowledge - - -and the resources to take them from idea to implementation. Accordingly, we recommend that the county systematically and regularly engage with this readily available knowledge and expertise. The next few slides address specific actions OC should take to accelerate this critical path towards prosperity and economic health 3 11 Places: Shovel- and Business -Ready E-kD�I h1, • Available, Pre - Designated Land — 3 Economic Development Districts Totaling 2,450 Acres along the 1 -85 Corridor • Core Recommendation — Commit the county to bringing water and wastewater infrastructure to the Buckhorn and Eno EDDs — Within a timeframe that establishes confidence with developers, investors and business owners PLACES — Proximity to air and interstate transportation, proximity to a skilled work force, proximity to university R &D centers, proximity to residential and cultural amenities are highly prized assets that Orange County shares with our contiguous and regional counties, making Orange County one of many possible locations for a business to start, grow, or locate to. Moreover, Orange County is surrounded by an abundance of shovel -ready and certified sites located outside of our borders. For Orange County's EDDs to be seen on par with available sites in Alamance, Chatham, Durham, and Wake counties, Orange County must invest in bringing water and wastewater infrastructure to the Buckhorn and Eno Economic Development Districts (EDDs) within a timeframe that establishes confidence with developers, investors and business owners. The county cannot continue to expect developers to invest in basic infrastructure when there are so many shovel -ready sites available with attractive proximities and 90 -days or fewer permitting processes. U 12 Tools: V4 Time, Expense Reduction, Predictability E—icD « Y Cw : Dewlopmens Commission 1. Time and Predictability 2. Capitalize a $250,000 business recruitment and retention fund 3. Re- capitalize the small business loan fund with $250,000 4. Identify dedicated funding source for recurring annual investments in the local economic development tool kit. 5. Adopt a Unified Development Ordinance • Within a timeframe that establishes confidence with developers, investors, and business owners • results in less time from application to permit approval in a time - frame that is comparable with neighboring jurisdictions Unfortunately, It takes more effort and resources to overcome a negative reputation than to build up an unknown or neutral reputation. After years of charting our own course counter to industry standards, Orange County's unwanted, but not undeserved, business - unfriendly reputation is formidable BUT it can be overcome with decisive, speedy, highly - visible, direct investment into the three things that any business requires, regardless of industry, size, or scale requires. These three things are time, reduced expenses, and predictability. The tools that can deliver these and which are under the control of local governments are clear: consistent regulations facilitating streamlined permitting and fund allocation, small business loan funds, recruitment and retention funds for established businesses, and a long -term, reliable funding source dedicated to endowing these two funds on an annual basis 13 Knowledge: V4 Current Data, Expert Analysis, Best Practices oRN 1.�h C: 'o .,k De.ebpmtnt Cammnswn 1. Increase collaboration and engagement with the Research Triangle Regional Partnership 2. Invest in value- adding economic development - related research performed by UNC, NC State, Duke, NC Biotechnology Center 3. Enter into a one -year research contract with economic development specialists at UNC - Chapel Hill in 2010, with annual follow -on data acquisition, analysis, and strategic planning research contracts each year through FY 2016 One of Orange County's least- recognized assets is being in the heart of a region that is in the planet's top 3, 5, and 10 in 11 major industry clusters and even more sub - clusters. Another under - utilized asset is our proximity to RTRP, RTP, and UNC, organizations comprised of some of the world's most successful, innovative, and cutting edge leaders whose expertise is based on data, analysis, and experience. Whereas the state of North Carolina and many of its counties have taken advantage of RTRP's, RTP's, and UNC's world -class economic development expertise, Orange County has not. As a result, policy makers have not had consistent and thorough access to key data and metrics nor have we utilized benchmarks to monitor results or studied best practices to inform our policies. None of this data collection or analyses can occur without funding. Moreover, without ongoing engagement by Orange County policy- makers with RTRP, RTP, and UNC experts, there is no basis for two -way information sharing 14 Expected Results • Increase # UNC Spin -Offs locating in OC • Increase # of 10 -100 Employee Businesses (Re)Locating in OC • Increase Private Sector Job Creation • Increase Non - Residential Tax Collections (Gross and Percent of Total) • Data - Driven Performance Local universities have spun -off numerous companies and industries. Examples include SAS and Quintiles, products of NC State and UNC, respectively, both of which were started by university professors spawned global billion dollar industries. Each year, UNC's Carolina Entrepreneurial Initiative serves as the springboard for a variety of viable businesses. The most recent crop includes 25 showcased in the CEI's 6th annual business plan competition held in March. Representing customers and markets across the globe, the focus of these entrepreneurs spans beyond Orange County's borders, yet all also represent opportunities for Orange County to court and support as long -term local businesses. Even as start -ups and entrepreneurs abound, even more established business opportunities are within Orange County's grasp - - -if their needs are met. Whereas start-ups offer long -term potential, established business offer immediate opportunities on a larger scale, many of which employee 10 +, 20 +, even 100+ people and offer benefits beyond the reach of young or lifestyle businesses. Speaking with any realtor will involve numerous examples of CEOs, CFOs, COOS, CIOs, and other executives who have relocated here and who continue to choose Orange County for their personal residences while also choosing other counties as the location for their business. Investing in applicant - friendly, streamlined permitting, infrastructure, and tools tailored to entrepreneurs and established businesses, and locating in Orange County will begin to qualify as a sensible business decision . The EDC contends that a thorough grounding in economic analysis and other data - driven considerations will be required to gain the results desired in terms of business start -ups, retention, expansion, recruitments As with any endeavor, the quality of a decision is only as good as the data and analysis informing and supporting it. Moreover, Orange County will achieve only what it measures, which is why ongoing metrics and benchmarking is critical. We therefore see the Research prong of these recommendations as being critical to the overall success of this endeavor to launch a multi -year investment in economic development on behalf of Orange County. IF NEEDED: Examples of industry- standard metrics include Number of qualified inquiries Increased hit rate (number of wins gained from total number of inquiries) Increased strike rate (value of wins from estimated total value represented by inquiries) # of local university start -ups established in Orange County and verified to have remained in Orange County over time # of existing local businesses who expand and remain in Orange County over time # of relocating businesses choosing Orange County whose managers /executives /employees have chosen Orange County as home Annual measure of residential /non- residential tax ration Total value of private capital invested in Orange County Total number of private sector jobs created Number of private sector jobs by OC socio- economic strata 7 15 V4 ORANGE COUNTV E-ic De bpm Cw *W_ Investment Com fitment FY 2010 — 2011 Economic Develop ttDe Mr The EDC shares the goal of increasing the County's non - residential tax base. As such, we unshakably believe that the County must commit to investing in economic development not as a single year but as an ongoing permanent investment. To assist the BOCC in implementing specific, measurable, attainable, and realistic actions in a timely manner, the EDC is requesting line item budget allocations in the upcoming year's budget. In addition, we have provided a six -year estimate to help the BOCC and County Manager anticipate and plan for the general investment levels that will be required moving forward. 16 FY 10 -11 Budget: V4 Economic Development Department Eco-Mc Io , r �n� �, • $500,000 request for economic development tools over and above last year's funding of $0 in this category. • $25,000 request for economic development research over and above last year's funding of $0 in this category. Over the past 12 months, Orange County's $75,000 small business fund was sufficient to support two local businesses: Santosa, a local commercial cleaning service company and PhD, a local recreational flying disc company that the Economic Development Department was able to leverage into international recognition by MSNBC. However, the funds are fully allocated, with numerous local businesses eager to participate whenever additional funding becomes available. Based on this history as well as the experience of small business funds available in Durham and Chatham counties, we recommend Orange County's small business fund be recapitalized. However, Orange County also needs a retention and recruitment fund designed to meet the needs of established local businesses who are expanding or incoming businesses who want to locate here and who likely will end up employing county residents or whose managers /executives will call Orange County home. Equally important, these funds must be administered with flexibility without lengthy, complex, or onerous procedures. Lastly, quality research capable of supporting cluster, R &D, gap, or revenue stream analyses requires both faculty and student involvement. Unlike this past year's student papers, which was pro bono and involved limited scope and time investment, cluster /R &D /gap /and funding stream analysis substantive research effort is provided only on a fee basis ranging from $25, 000 to $250,000 or more. The total financial impact of this investment is <0.04% of the total county budget for FY 2010 -2011. Although Streamlined Permitting and the LIDO are under the auspices of the Planning Department, the EDC views it as a critical path requirement for economic development, thus we recommend that the county invest staffing and resources necessary to achieve these in a timeframe that inspires confidence and trust among investors, site selection decision- makers, and the development community. Secondly, while extending full water /wastewater infrastructure into Buckhorn and Eno EDDs and satisfying all criteria required for NC Department of Commerce Site Certification are critical path elements, much of this investment also will be under the auspices of the Planning Department. Although the EDC's extended budget estimates the general magnitude of the investment required, to many unknowns exist to set expectations for a firm figure. 0 17 FY 10 -11 thru FY15 -16 V4 Estimated Economic Development Department Een o ,Y Ecorwmis Developnmt Places • Estimate for Buckhorn EDD ($4,400,0000) • Eno EDD Engineering and Build -Out (TBD) • NC Department of Commerce Site Certification (TBD) 4 Tools • Business retention, recruitment, and loan' funds ($2,000,000) • Completion /Implementation of County Unified Development Ordinance (TBD) Knowledge • RTRP Dues, Intra- County Collaboration Events, Focused Research and Strategic Planning ($300,000) Total = $6.7 million + Eno EDD + UDO We anticipate that the engineering, build -out, and NC DOC site certification will require 36 — 48 months at best, assuming no delays for Buckhorn EDD alone. Given the state of negotiations with Durham, we anticipate that it will require up to 72 months for engineering, build -out, and NC DOC site certification for Eno EDD. Thus the EDC addressed a six -year timeframe for our strategic recommendations and within which to estimate the "order of magnitude" of the required investment in a comprehensive set of Economic Development activities. With Orange County being one of the top 10 start-up centers in the country, we anticipate that there will be strong demand by talented entrepreneurs for small business loans the county can provide, especially since the credit squeeze is expected to impact entrepreneurs for the coming years. Similarly, with RTP continuing to be a magnet for incoming executives and businesses, and with the competition for those businesses expected to increase, we anticipate that Orange County will need more - - -not fewer - -- options for reducing time and expenses required by established businesses to expand or locate in OC. Our estimates for research and analysis funding is based on current cost estimates provided by UNC research faculty, combined with actual expenditures invested by Chatham and other neighboring counties for the cluster /R &D /gap /funding stream analyses and strategic planning. In summary, based on current information available, we estimate that Orange County will need to invest roughly $11M over six years, with about 80% supporting water /wastewater build -out, approximately 20% supporting a basic economic development tool kit, and less than 5% for data acquisition and analysis. Note that with respect to infrastructure financing, there are both matching funds and alternative public - private financing mechanisms, such as Tax Increment Financing, that can substantially reduce Orange County's share of the total investment in water and wastewater infrastructure. "Although the estimates stated here are not exact, they point to the order of magnitude of the funding required to transform the virtually empty EDD land into revenue - producing assets. Failing to do so will cause Orange County to continue to be by- passed by private investors for surrounding counties for years if not decades. 10 18 Conclusion GFA!J GE CGU!v ?Y Economic Devebpmam Commis4on Business Tip From the Amish "[Businesses] will tell you what they want and how to sell it, if you listen. You "listen" in different ways: by scrutinizing sales statistics, by reading news and industry publications, and by old- fashioned asking. You may have to put aside your ego." Borrowed from Erik Wesner, Success Made Simple, An Inside Look at Why Amish Businesses Thrive For the better part of the year, the EDC has reached out to business, asked what they need and want, and has listened. And indeed, each time business leaders speak, they tell us clearly what they want and how Orange County can offer the solutions to these needs. We have sought out and evaluated the statistics: the total market'(3.1B +) Orange County's share (0), the product that business is in the market for: shovel- and business -ready space as well as tools that reduce time, expense, and unpredictability. We have strived to do so without ego, seeking data and best practices used by those recognized worldwide as leaders and to those who have achieved results. The product of this effort is the critical path summarized in this presentation. As a parting consideration, we realize it will be unprecedented for the Commissioner to endorse — and fund —these recommendations and that it will be tempting to stick to business as usual with respect to the county's economic development policies. At the same time, it is the EDC's responsibility to advise the Board of the likely outcomes of its choices from the perspective of those who have the means, ability, and opportunity to invest their resources in the county. We understand that sticking with what's known is sometimes more comfortable than making changes -- -even when we know that the known will not help us achieve our objectives. Yet, it is in these times that change is most needed. Failing to endorse and fund these recommendations will strongly signal businesses and citizens alike that Orange County remains welcoming to residents who are business owners and executives while maintaining barriers to private investment in commercial enterprise. Without BOCC funding of these recommendations, Orange County's economic development policies will continue to perpetuate the status quo, and Orange County will continue to rank lowest or near lowest in private commercial investment and job creation, rank highest or near highest in residential taxes and will continue to rank high in the gap between the standards of living between the wealthiest and poorest of its resident families within the entire 13- county RTRP region for the foreseeable future. We do not believe these outcomes are in keeping with Orange County values or long -term fiscal health. This year is a year of hard choices. There are no easy solutions. And, there is no way to avoid pain. We believe by endorsing and funding these recommendations the County will set itself up to begin substantially increasing its revenue and therefore its program funding and service delivery capacity for years to come. Thank You. 11 a) E 0- co 0 a)aa) c_n aa) O _0 c I U E O Q o - = . 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U a > m p ca- LT, m: cn A -,-� c6 cn N O ro O Ca O m� �c O Q >, O E cu a� U i CZ � _ > --- �. �0 - (D .X o 0 �+ ca U (D cn -- CU C6 � RT c � - _ C6 c6 cn O (n ' > ( > ca 0O CD— L O CU Q U CU ca _E X t: -� -4—• — N CU O ca N O -E N ca -� x cu C6 — -� -� ca -� E -CU ca — -- �- -� ° Q) o U M CZ cn ca a1 o O U) o 3: o o O c6 -"- a� � cu a� -F-• a� r` L o a) ca o F-- � � z 1 p{_ ql 43 ti N V Z CL c� s V DO _ t4 O d C. m .0 V w O C 3 O H Office Market Analysis Prepared for: The Town of Chapel Hill, North Carolina Prepared by: Strategy 5 LLC April, 2010 '' SrFZ4 MG YS 45 Table of Contents Section Section 1: Executive Summary Page 3 Section 2: Introduction and Methodology 10 Section 3: Site Analysis 11 Section 4: Public Process Discussion 22 Section 5: Supply Analysis Section 6: Demand Analysis 24 31 Section 7: Opportunity / Surplus Gap Analysis 39 Section 8 Findings and Recommendations 41 2 - STRA MGY 5 46 Section 1: Executive Summary Key observations, findings and recommendations of the Office Market Analysis include the following: Site Analysis There are pockets of office space scattered throughout Chapel Hill, most space is concentrated within seven primary clusters. These are: 1 - Weaver Dairy Road Commercial Area; 2 - Eastowne Drive Commercial Area; 3 - East Franklin Street; 4 - Estes Drive Commercial Area; 5 - Highway 54 East / Raleigh Road Commercial Area; 6 - Downtown Commercial Area; and, 7 - Southern Village Commercial Area The physical character of office buildings in Chapel Hill is generally very high in quality. Most office buildings appear well activated (leased) although a few newer developments remain only partially occupied. The site analysis took into account the location of proposed new projects and determined there is a limited amount of land remaining available for office development. The extensive infrastructure which the Town presents to office developers, the physical attractiveness, convenience of well designed retail centers, service areas, etc. all add to a competitive edge that may exerted on other markets if properly leveraged. Public Process The input was generally positive with regard to the office market, but also evidentiary of frustration; much of this apparently directed at the development approvals process which seems to inhibit developer (i.e. investor) interest. There appears to be a pent up demand /interest in developing additional office space by the real estate community based on input received in stakeholder interviews, the public workshops, discussions with commercial real estate professionals etc. Supply Analysis • There are approximately 2.2 million square feet of office space within the Town limits spread through approximately 100 separate properties. This includes approximately 1.7 million square feet of space in blocks over 10,000 square feet as typically tracked; plus 500,000 square feet of smaller space as identified through County tax records by the Town of Chapel Hill Economic Development Office. The latter, smaller category of space therefore equals about 22% - 23% of total office space. 3 STMATEGY S 47 The individual square footage of office properties ranges from about 2,000 square feet to about 180,000 square feet. Most properties range from about 10,000 square feet to about 30,000 square feet. The average office property therefore includes about 20,000 square feet of leasable space. Properties are primarily comprised of Class A and Class B space. Current (spring 2010) vacancy rates are about 14% totaling approximately 300,000 square feet of untenanted space, mostly located within three projects including one that has only just opened (i.e. 54 East). Total office space within the Research Triangle is estimated to include approximately 50 million square feet. This figure includes about 40 million square feet in blocks over 10,000 square feet in size as typically tracked; and, an estimated 10 million square feet of smaller office spaces. Therefore it is estimated that Chapel Hill has only about 4% -5% of the total office market supply in the Research Triangle region. Based on data provided by the County and organized by the Chapel Hill Economic Development office, approximately 70,000 square feet of office space has been absorbed on an average annualized basis during the period 1969 — 2007, within the Town limits. This does not include individual spaces smaller than 10,000 square feet that have been absorbed, as this information has not been historically tracked. Based on planned and forecast projects, it is reasonable that the Town of Chapel Hill office market may see the addition of approximately 500,000 to 700,000 square feet of leasable space over the next 5 -10 years given typical development cycles. The forecast supply is also based on the assumption that demand will eventually exceed the current supply vacancy, and that overall economic conditions improve. Considering Chapel Hill's relatively small share of the office market supply within the Research Triangle (4% - 5 %) a modest incremental gain in share could dramatically influence the local environment and further contribute to the fiscal base of the Town. For example a 1% supply-share increase within the Research Triangle (from 5% to 6% of the market supply) could mean an estimated additional 400,000 square feet of office space; another 1% equals another 400,000 square feet, and so on. In actuality, even if Chapel Hill's relative share remains the same it will have 4% - 5% of a growing market. Therefore, an actual increase in share could mean substantially greater incremental gains in supply. 4 48 STRA TEGY S Demand Analysis Demand for office space in the Town of Chapel Hill is a function of many factors including macroeconomic trends (the national and international economic climate); growth and policies of the University of North Carolina; trends in the technology sector; cost of space; availability and character of office developments; and, importantly, the overall "package" that Chapel Hill presents to prospective office users including the quality-of -life experience (schools, neighborhoods, shopping and entertainment, recreational opportunities, etc.) • Demand for office space in Chapel Hill emanates from several sources that represent a diversified economic base, yet which has the stability and resilience associated with a major University as an anchor; advantageous characteristics associated with technology transfer; entrepreneurship; and, other positive attributes. A summary of demand sources discussed in the report include: University Related; Health Care / Medical; Non - profits; Research / Technology; Professional; Financial Services. • Chapel Hill could see the addition of 500,000 to 700,000 square feet of office space (including projects /properties which are both over and under the 10,000 square foot threshold) based on current and forecast additions to supply of office space, slow but steady growth in demand, etc Based on the historical rate /amount of office space absorption within the Town limits (70,000 square feet per year) it will take approximately 5 -10 years to absorb planned and/or anticipated office space in the Town of Chapel Hill. This coincides roughly with the anticipated development implementation process (building) for currently planned projects, understanding that timelines can be accelerated or slowed based on various economic and individual financial circumstances. It is critical to note that the pace of absorption, hence growth, can be influenced by a similar range of factors. Future demand for office space in Chapel Hill will be influenced by several factors including, but not limited to opportunities and constraints described in this analysis such as: ➢ Ability/interest of the State of North Carolina, the Research Triangle, and the Town of Chapel Hill in capturing demand (including demand for office space, but also residential growth, recreational and life -style opportunities) from other markets including those elsewhere in the U.S. (e.g. the Northeast and Midwest) but also potentially international markets. ➢ Maintaining and/or increasing the competiveness of Chapel Hill relative to the other office centers within the Research Triangle. Opportunities to exploit apparent weaknesses in the regional market such as aging buildings, suburban design (lack of proximal support amenities such as restaurants, service retail, sreATrGY .5 49 etc.) and those weaknesses evidenced in other sub - markets should be explored in the context of crafting a competitive capture strategy for Chapel Hill. Conversely, competitive advantages of these sub - markets such as lower cost, access to fiber optics and other technology infrastructure need to be recognized. The Town can benefit from the University/Medical/Research community by working to anticipate, and proactively adapt to, shifts in the technology sector (including bio- technology and related sub - sectors) in order to capture entrepreneurial endeavors, expansions, relocations, etc. ➢ The ability /interest of the Town in hosting wet labs and other research uses has been anecdotally cited in the public process as a way to capture additional demand for office space. Currently there is a perception that ordinance and code restrictions severely limit or prohibit these types of uses, which then have an apparent tendency to locate in the RTP or elsewhere in the Triangle. However wet labs can be approved by Council if desired. ➢ The ability /interest of the Town in providing or facilitating development of office infrastructure such as fiber optic cable to users and/or offsetting costs associated with technology upgrades through various means. Similarly, consideration may have to be given to provision of parking support on an individualized basis in order to incentivize business development as well as continuing to enhance public transit opportunities to serve office populations. Constraints to inducing and capturing demand include the relatively limited amount of land which is available and/or approved for this type of use which is further constrained for development by associated zoning and regulatory restrictions, an apparently complex and time (cost) consuming approvals process, etc. Property tax rates are high relative to competitive office markets elsewhere in the Research Triangle. Land prices are high relative to competitive office markets elsewhere. • The 'addition of attractive /cost effective space into the market elsewhere will continue to be a constraint as competition from other communities will likely increase. This also raises the issue of "leakage" of demand from Chapel Hill, and the converse opportunity of "retention" which both figure strongly in the overall market context. Increased marketing efforts by other competitive jurisdictions including international, national, and regional activities elsewhere will continue to be a factor. More locally, competitive marketing/capture efforts by Alamance, Chatham, Durham and Wake Counties need to be particularly recognized. • The Town of Chapel Hill appears to have many competitive advantages over other office markets, particularly as it is an integral component of a highly recognized international brand — The Research Triangle" — which in turn offers an array of interwoven infrastructure from which the Town benefits. This infrastructure includes the concentration of academic institutions, research facilities, transportation and climactic elements which make it an attractive place C.1 C' SS71MATE'GY S 50 to live and work. By extension the infrastructure also includes a depth of human capital constituted by a highly educated demographic that few regions can match. • There are some essential questions raised by the demand discussion: Will demand continue to filter into the Chapel Hill market and manifest itself in new construction, additional tax base, and ensure low vacancy rates into the future? Or, will aggressive competition from outside areas erode Chapel Hill's demand base, weaken the existing office market, slow development of planned projects and impede overall absorption? The answer offered by the study is that the future of office demand and related occupancy, development etc. can — and possibly should - be influenced through a variety of means. • Based on the various economic and market perspectives advanced in this report; the Town of Chapel Hill proactively seeking to maintain and increase it's competitive advantages over market rivals; ability to foster a development environment that further encourages office growth; and a strategy of capturing demand from "foreign" markets; Strategy 5 projects that the local market can support the introduction of an additional 1 million square feet of office space over the 5 -10 years. This is roughly consistent with combining current vacant space inventories with planned projects, leaving about 300,000 additional square feet of "net supportable" space to be conceived, located, built and occupied during this period. • Given the variety of market characteristics associated with the Town of Chapel Hill, the Research Triangle, regional, national and international arenas etc. it is clear that there is significant, but not overwhelming, potential for future office business activity as a component of the local economic development environment. The ability of the Town to capture its fair share of this market hinges on key business /political principles that will influence the presence, sustainability and future vitality of the office community. These principles can be roughly categorized and described as follows: Policy, Positioning and Promotion. • Policy decisions could include review the development approvals process and overall business environment with a close eye on the opportunities and constraints as delineated in this and other studies; Consideration of the economic and fiscal implications of sustaining the office community that currently exists, and those associated with planned projects as well as those which may come to fill the opportunity gap that the consultant believes can be created; and, acting through resolution and other means to embed decisions and policies that will foster growth in this sector in the foreseeable future, and over the timeframe associated with the forecasts included in this analysis 5 -10 years. 7 C sreA mGY 5 51 A positioning strategy could include working to ensure that existing office projects receive the highest level of consideration in encouraging occupation of vacant space, continued tenancy of space, and demand for space that is in the development pipeline; Identification of development opportunities sites that coincide with site selection criteria, current Town zoning and regulatory framework, synergy with the existing office clusters and corridors, etc.; Preparation of small areas plans that further define and conceptualize office projects on the opportunity sites, as well as site - specific corridor plans, transit - oriented development (TOD) plans, etc.; Undertaking proactive developer /investor solicitations for these projects. • A promotion strategy needs to recognize the reality of a global market with technology transfer, transportation links, and increasing co- dependence between nations, industries, etc. There is already a sophisticated promotion and marketing system in place that can (and does) benefit Chapel Hill. There are a myriad of organizations at the national, state, regional and local levels that are designed to focus interest and economic activity. Some particular suggestions for the promotions element of an office market capture strategy include, but are not limited to the following: Mandating that local departments and organizations which perform promotional activities for the Town coordinate efforts with a clear leadership hierarchy in terms of pursuing capture of the office market (in this case); Merging the objectives of the Town with regard to office prosperity and development (as evidenced by the policy and positioning actions) with those of the Research Triangle Partnership especially. If they are already considered merged, then we suggest a higher level merger; and, funding these efforts through traditional and creative revenue streams — possibly tied to results in some fashion — that enable the promotional team to do its job effectively, and to enable competition at the global level. This will involve an investment, but the anticipated economic and fiscal impacts should easily offset the cost. • The logic for pursuing additional office development in Chapel Hill is based on this sector's ability to contribute to the economic and fiscal base of the community through contributions of property and personal property taxes, job creation, expenditure of wages and salaries, spending by operations, etc. Using the net additional office supply projection of 1 million square feet, a net new taxable base of $200 million (estimated) can be derived. This would generate approximately $2.68 million annually in net -new property taxes alone. New office development would generate approximately 2,100 FTE construction jobs with more than $140 million in wages and salaries paid to these workers who will in turn purchase goods and services, pay mortgages and rent, etc. The space will provide job space for about 5,000 workers who could pump $350 million into the economy annually. Leases will generate in excess of $28 million annually that will be spent by property management companies and developers to pay interest on loans, maintain staff, conduct maintenance and other services on the property, 8 " STRATEGY .5 52 and likely provide capital for further investment in the Chapel Hill and local /regional economy. Office development can have a significant economic and fiscal impact on the community. These and other economic development benefits that can accrue from policy decisions, positioning, and promotion that are strategically oriented to growing this sector of the local economy should be considered along with the other observations, findings and recommendations contained in this Office Market Analysis. 01 I STRATEGY 5 53 Section 2: Introduction and Methodology The Town of Chapel Hill retained Strategy 5 LLC in January of 2010 to prepare an analysis of the local office market, with attention paid to regional and other dynamics affecting supply and demand for office space within the Town limits. The methodology for the study included completion of a series of tasks and sub -tasks including: 0 Task 1: Preliminary Research / Data Collection • Task 2: Site Analysis / Workshops • Task 3: Stakeholder Interviews • Task 4: Supply/Demand Analysis • Task 5: Technical Report The methodology also consisted of a combination of top -down and bottom -up analysis; the former approach relating to available data (demographics, tax records, census tract data etc.) and the latter relating to the influence of location, long -term planning by the Town of Chapel Hill and University of North Carolina, changes in the technology sector, perceptions of the local market and development environment, etc. Emphasis is placed on the bottom -up portion of the methodology which is oriented toward forecasting (and possibly influencing) alternative futures as opposed to simply documenting past and current conditions. Therefore the Strategy 5 approach is a non- traditional market analysis — a think piece - designed to provide the Town of Chapel Hill and the Economic Development Office with insights and perspectives to be used in crafting policy decisions that will help ensure future vitality of the office market in the Town, and importantly, the vitality of the tax base and fiscal strength of local government. Where appropriate, technical tables, graphics, photographs, etc. have been inserted to further illustrate observations, findings or recommendations. Where appropriate, other studies, reports and secondary materials are sourced. In some cases quantitative assessments and projections are expressed as ranges to reflect the fluid nature of real estate and unknown influences on future supply and demand. Unless where otherwise stated, all observations, findings, projections, forecasts, conclusions and recommendations found in this report represent the professional opinion of Strategy 5 LLC. This Technical Report is organized in a format that coincides with the bulleted Tasks above; and the sub -tasks which were further delineated in the Scope of Work and associated contract with the Town of Chapel Hill. 10 STgAMGY5 Section 3: Site Analysis The geographical market which is the focus of this analysis is located strategically within the Research Triangle of North Carolina that is comprised roughly of the City of Raleigh, the City of Durham, and the Town of Chapel Hill. The concept of the Research Triangle dates to the 1950's when the Research Triangle Park was begun — hosting the development of numerous high -tech companies and related office users. The region has approximately 2 million residents and is defined, in part, by the presence of the University of North Carolina at Chapel Hill, North Carolina State University and Duke University. The Triangle originally referred to these universities. The concentrated presence of these and other institutions of higher learning (15 in all) and associated research facilities have led to a demographic base that is well educated, and collectively serves as a magnet for business. During the week of January 11, 2010 the Strategy 5 Project Manager conducted a windshield survey of the principal office clusters with the Town of Chapel Hill boundaries and nearby areas. This was done with the assistance of the Economic Development Officer and included commentary and information on a variety of historical elements, input regarding future development plans, transportation and access, and other matters of importance to understanding and interpreting the office market in Chapel Hill. There are pockets of office space scattered throughout Chapel Hill, but most space is concentrated within seven clusters. See Location Map. - Weaver Dairy Road Commercial Area 2 - Eastowne Drive Commercial Area 3 - East Franklin Street 4 - Estes Drive Commercial Area 5 - Highway 54 East / Raleigh Road Commercial Area 6 - Downtown Commercial Area 7 - Southern Village Commercial Area 11 54 -) ST,gA7WGY 5 55 I /I 4C MauPrePwmuyTo�dchapelHOIors � maxh 2010 i'<t14�;'vWilcs Cepl. E�inee�inp & 6exgn Services s c � S Market Office Location • 12 SMAMGYS 56 These nodes of office development have evolved over time in response to a combination of factors: access, available land, zoning and regulatory ordinances, demand for space, development policies, etc. The office space found in the seven nodes would generally be considered "Class A" and "Class B" with a mix of campus -like complexes joining stand- alone buildings, and mixed -use locations. In its Office Development Handbook, the Urban Land Institute defines office classifications used in this report as follows: • "Class A space can be characterized as buildings that have excellent location and access, attract high quality tenants, and are managed professionally. Building materials are high quality and rents are competitive with other new buildings." • "Class B buildings have good locations, management and construction, and tenant standards are high. Buildings should have very little functional obsolescence and deterioration. • "Class C buildings are typically 15 to 25 years old but are maintaining steady occupancy." The character, square footage and other elements of office space supply in the market is further discussed in Section 5 — Supply Discussion. Some of the larger properties viewed during the windshield survey (and the approximate office square footage associated with them) included the following: The Europa Center 180,000 square feet The Exchange at Meadowmont 135,000 square feet Bank of America Center 100,884 square feet Dawson Hall 70,000 square feet University Square 70,000 square feet Significant properties viewed as either recently completed or under construction included: East 54 113,000 square feet Greenbridge 16,000 square feet There were four primary objectives of the windshield survey: 1. Gain a visual sense of the office buildings in Chapel Hill including their physical character, design, materials, surrounding environment, parking solutions, etc. 13 57 CC SMATE'GY 5 2. Gain a practical sense of what projects are mature and fully leased; and, what projects are new entries to the market - some with high vacancy rates, and others with apparent low vacancy. 3. Gain a future - looking sense of what projects may be planned for entry into the market over the next several years. 4. Gain an understanding of infrastructure that can and will influence the office market including: proximity of neighborhoods and life -style opportunities; retail; restaurants and commercial support businesses; roads and public transportation routes; and, parking, etc. Summary Observations The site analysis resulted in the following observations pertaining to the objectives as summarized above: 1. The physical character of office buildings in Chapel Hill is generally of very high quality. Design tends to be of a traditional nature, although modern architecture and highly creative design elements are also in evidence. Materials tend to be high - quality and traditional in nature as well- brick and masonry construction for the most part — in keeping with Chapel Hill's overall design theme. Offices are well merged into the environment, either in campus like settings with extensive landscaping; or, in more urban settings in which structures appear well suited. 2. Most office buildings appear well activated (leased) although a few newer developments remain only partially occupied. In the latter cases the impression of the consultant is that it could take the capture of only a few key tenants to fully lease up these properties. Evidence of new offices under construction appear smartly planned in their particular environment, properly parked, oriented in most cases toward support infrastructure such as service retail, banks, shops, restaurants, etc. The importance of the University as an economic driver is never far from the business consciousness of the community. The importance of location in this regard — either through physical linkage, or less defined connections — is apparent. 3. The site analysis took into account the location of proposed new projects such as the future redeveloped University Square that will clearly have a significant role in defining the office development climate and supply of space in the coming years. That particular project will have a multiplier role as a mixed -use project that adds to the critical mass of activity in downtown Chapel Hill, and bolsters the synergistic relationship between the University itself and the Town. 4. Another observation arising from the site analysis was the fact that there is a relatively limited amount of land remaining available for office development (or other uses) within the Town limits. Land that does remain available for opportunity sites appears often constrained by the existence of hard edges that limit potential growth (e.g. existing buildings, parks and recreational areas, roads, etc.) environmental and conservation 14 58 57WATEGY 5 issues, transportation and/or access issues, terrain challenges, etc. These constraints may suggest a future that includes more dense office development in downtown. 5. The extensive and attractive infrastructure which the Town of Chapel Hill presents to office developers and tenant businesses should be considered one of the Town's greatest market strengths, and be given significant weight as a positioning and marketing tool if the policy decision is made to pursue more office development. Within the urban planning and design disciplines much is made of creating: A) A sense of place. Chapel Hill has it; and, B) Creating and fostering a place to live, work, and play. Again, Chapel Hill offers these attributes as well as being a place to achieve higher learning status, retain relationships with university colleagues and alumni, and to build business relationships using the university culture, etc. The physical attractiveness of the Town, convenience and well designed retail centers, service areas, etc. all add to the competitive edge that Chapel Hill may exert on other markets if properly leveraged. The following photographs and captions constitute an existing conditions survey as conducted during multiple site reconnaissance activities: The East 54 project is nearing completion (Spring 2010) on Raleigh Road (NC54) just outside of downtown. It will feature approximately 113, 000 square feet of "Class A " office space along with retail shops, restaurants, residential, etc. 15 STRATEGY 5 59 Iconic architectural features are also a recognizable element of East 54 making it stand out in the mix of office and other development projects. High quality materials and exterior finish details are a hallmark of many Chapel Hill properties. This building at the Exchange at Meadowmont is characteristics of the high standards for building. 16 Ci'Sr,RArEGYS AN In some cases there has been significant private investment in support infrastructure such as the parking deck shown here at the Exchange at Meadowmont. This professional building on Rosemary St. is an excellent example of infill development that can occur in downtown, merging well with the design, materials and other elements of the existing built environment. 17 C~ STRATEGY 5 61 The Europa is a large office complex that offers one of Chapel Hill's largest concentrations of "Class A " space at approximately 180, 000 square feet. The Greenbridge project undergoes construction on West Rosemary St. The mixed -use building will contain approximately 16, 000 square feet of office space, along with residential and retail components. 18 STRA MGY 5 W The Center Offices on E. Franklin are characteristic of the medical and professional offices found in the "healthcare corridor ". The Center Offices also offer some unique architectural and space variations that add to the comfortable campus feel. 19 C' STRZ4 TEGY 5 63 The Eastowne Office Park contains a mix of small and medium business that include professionals, non profits, etc. The existing University Square will be redeveloped in the next several years and is expected to offer approximately 125, 000 square feet of market rate office space over several development phases. Another 125, 000 square feet may be built to host University uses. This project in the heart of downtown will include a mix of other uses that are expected to add to the attractiveness and overall drawing power of the downtown area. 20 ` STMATEGY 5 64 Meadowmont Village is a "new urbanist" development that includes mixed -use buildings that feature retail, restaurants, etc. on the first floor, residential above, with small offices interspersed at key locations. 21 C S- MATEGY S [:I Section 4: Public Process Discussion As part of the non - traditional market analysis approach employed in this study, Strategy 5 and the Economic Development Office conducted a public process to both gather input and information; and, to inform office development and management companies, business and property owners; stakeholders and the general public about the study and its objectives. On January 20th a public workshop was held that attracted approximately 25 participants from the commercial real estate sector, public officials, representatives of various Chapel Hill organizations, etc. The input and discussion ranged widely concerning: the office market, constraints and advantages that are experienced by the market in Chapel Hill (and the Research Triangle generally). The workshop, which was organized by the Economic Development Office, provided an excellent platform for an exchange of information and opinions, as well as an opportunity to gain contact information for industry participants. On February 12th a second public workshop was held in which preliminary observations, finds and recommendations of the study were presented for discussion. Approximately 30 participants were involved in this interchange and a second round of valuable input was received. In addition to the public meetings a series of one -on -one stakeholder interviews were conducted either in person or on the telephone. These interviews provided added depth to the understanding of nuances and subtleties in the local office market and the forces which influence it. 4.1 Summary of Observations In general the input from the public process was positive with regard to the office market, but also evidentiary of frustration; much of the latter apparently directed at the development approvals process which seems to inhibit developer (i.e. investor) interest. Frustration aside, there is obviously a great deal of pride in Chapel Hill, and there was a conveyed sense that the Town commands a certain pinnacle status within the Triangle: "You may ,have to pay a premium, but it's worth it," is the message received. On a different level the public process also revealed some business models that seem to be succeeding where others are not. There appears to be a trend toward demand for smaller office space requirements (e.g. 5,000 square feet as opposed to 10,000 square feet) predicated in part on advances in technology and concurrent reductions in workforce needs, desire for flex space and highly flexible lease agreements, and a demand driver which is proximity to support infrastructure by walking — even though the perception of some complexes in this regard (i.e. I have to drive anywhere) is not necessarily the reality (i.e. It's really not that far). 22 C STRATEGY S T. Other competitive advantages that were cited included: Historically low vacancy rates Technology transfer opportunities High barrier to market entry (creating a selective environment) Other competitive disadvantages that were cited included: Impact on required rent cost due to taxes Parking requirements /cost High barrier to market entry (creating a restrictive environment) There appears to be a pent up demand/interest in developing additional office space by the real estate community based on input received in stakeholder interviews, the public workshops, discussions with commercial real estate professionals etc. However, the input received also suggested that this demonstrated demand from the development sector seeks direction, guidance, and facilitation in order for it to be manifested in new or expanded projects and plans that offer a commensurate amount of additional office space supply. 23 STWATEGY 5 A- Section 5: Supply Analysis 5.1 Introduction The supply analysis was conducted by merging the observations of the site reconnaissance, public input, research into the Research Triangle, and data provided by Orange County and further compiled and organized by the Town of Chapel Hill Economic Development Office. 5.2 Existing Supply Key office supply characteristics include the following: There are approximately 2.2 million square feet of office space within the Town limits spread through approximately 100 separate properties. This includes approximately 1.7 million square feet of space in blocks over 10,000 square feet as typically tracked; plus 500,000 square feet of smaller space as identified through County tax records by the Town of Chapel Hill Economic Development Office. The latter smaller category of space therefore equals about 22% - 23% of total office space located within the Town limits. • The individual square footage of office properties included in this estimated total range of office supply in Chapel Hill ranges from about 2,000 square feet to about 180,000 square feet. • Most properties range from about 10,000 square feet to about 30,000 square feet. The average office property therefore includes about 20,000 square feet of leasable space. See Table. • Properties are primarily comprised of Class A and Class B space (See definition in Section 3). • Current (spring 2010) vacancy rates are about 14% totaling approximately 300,000 square feet of untenanted space, mostly located within three projects including one that has only just opened (i.e. East 54). • Total office space within the Research Triangle is estimated to include approximately 50 million square feet of space hosting varying uses such as technology, professional, etc. This figure includes about 40 million square feet in blocks over 10,000 square feet in size as typically tracked; and, an estimated 10 million square feet of smaller office spaces using a modified percentage extrapolated from the supply mix seen in Chapel Hill (approximately 20% as opposed to 23 %) given the greater prevalence of "big box" office buildings that 24 ': SMATEGY 5 .: characterize much of the supply in the Research Triangle Park and other large clusters in the greater Research Triangle.) • Therefore it is estimated that Chapel Hill has only about 4% -5% of the total office market supply in the Research Triangle region. 5.3 Historical Absorption Based on data provided by the County and organized by the Chapel Hill Economic Development office, approximately 70,000 square feet of office space has been absorbed on an average annualized basis during the period 1969 — 2007, within the Town limits. This does not include individual spaces under 10,000 square feet as this information has not been historically tracked. Therefore actual absorption may be higher. 5.4 Forecast Supply The forecast supply of office space is predicated on data pertaining to building permit applications, publicly known projects that are in the planning stages, etc. Forecast demand which may affect future supply is covered in the following Section 6 — Demand Discussion. Key components of the forecast supply of office space in Chapel Hill include the following: Woodmont - According to the Town of Chapel Hill approximately 450,000 square feet of office space (primarily in the Woodmont development project) has been applied for and approved, but is as yet un- built. University Square — Approximately 125,000 square feet of market rate space is expected in several development phases. Another 125,000 square feet of space that will host University uses may also be introduced. This mixed use project will also include retail and residential components. To be located on the site of the current University Square (therefore not entirely additional space, but rather new space) the project is expected to further define downtown Chapel Hill as a center for commerce and business activity. Likewise, it will add to the "supply pull" market dynamic of the Town. • Assorted smaller infill projects, conversions, etc. that may be planned, but not officially applied for through the Town's development approvals process may add another 50,000 — 100,000 square feet over the next several years. Based on planned and forecast projects, it is reasonable that the Town of Chapel Hill office market may see the addition of approximately 500,000 to 700,000 square feet of leasable space over the next 5 -10 years given typical development cycles. The forecast 25 N. �' STRATEGY 5` supply is also based on among other things that demand eventually exceeds the current supply vacancy and overall economic conditions improve. 5.5 Summary Conclusions In order to place Chapel Hill's relative position in the regional market into context, the following illustrative example is provided: Considering Chapel Hill's relatively small share of the office market supply within the Research Triangle (4% - 5 %) a modest incremental gain in share (assuming demand to support it) could dramatically influence the local environment and further contribute to the fiscal base of the Town. For example, an approximate 1% supply -share increase within the Research Triangle (from 5% to 6% of the market supply) could mean an estimated additional 400,000 square feet of office space; another 1% equals another 400,000 square feet, and so on. In actuality, even if Chapel Hill's relative share remains the same it will have 4% - 5% of a growing market. Therefore, an actual increase in share as illustrated above could mean substantially greater incremental gains in supply. Given the projected growth for the Mid - Atlantic region of the U.S., North Carolina and the Research Triangle, allied growth in the overall office market is expected as well. Therefore, Chapel Hill should consider targeting its fair share of this growth in order to expand its office base, and by extension, the additional tax base and associated revenue it will afford the Town. 26 TRACT & i8U l Il�ta G I�IN Known Use 738432.1 9880353529.000 Office 775728.1 9798546749.001 Castilia 735264.2 9788274180.000 NC Phaimamuilcal 752358.1 9890813919,001 Office 739380.1 9890824151,001 Eastowne Office 775093.1 9890815720,001 Eastowne Office 7632311 9890827103.002 Eastowne Office 706436.1 9788372336.000 Inv Title 705186.1 9788371399.000 Inv Title 713305.1 9788372875.000 Stormwater 703262.1 9788372914.000 comer bldg 736348.1 9799038088.004 Office 737654.1 9799035187.001 Office 749050.1 97991.31396.001 Office 769812.1 9799133556.001 Office 774294.1 9799580455.000 Cosgrove 727056.1 9799268800.001 Office 733390.1 9799371243.001 Office 751175.1 9890800195.000 BCBS 772448.1 9890715045.001 Office 7511761 9890800643.000 BCBS 720488.1 9890719233.000 Office 720489.1 9890811331.000 Office 733949.1 9890802764.000 BCBS 726234.1 9890803947.000 Office 758913.1 9799151409.001 Office 725724,2 9799145239.000 Office 7230821 9799343950.000 Office 01 Town of Chapel Hill, TIC - Office Market Analysis Year 5auare Street Bull Feet Numbs 13087 110 BANKS OR 2009 45000 301 BARBEE CHAPEL RD W 5700 109 CHURCH ST 6500 101 CLOISTER CT 13000 111 Cloister Ct 20000 401 Cloister Ct 15000 211 Cloister Ct 211 -215 -222 2064 113 COLUMBIA ST N 5854 121 COLUMBIA STN 4900 208 COLUMBIA ST N 7854 210 COLUMBIA ST N 25000 101 Conner Or 28000 109 Conner Or 20000 110 CONNER DR 19000 120 CONNEROR 15862 101 COSGROVE AVE 24000 1829 Dobbins Or 12500 1829 Dobbins Or 60000 100 EASTOWNE DR 2006 38000 501 Eastowne Or 15469 600 EASTOWNE DR 1984 11734 605 EASTOWNE DR 5989 615 EASTOWNE DR 12972 700 EASTOWNE DR 23102 800 EASTOWNE DR 5828 104 Elliott Rd N 7000 200 ELLIOTT RD S 7200 101 EPHESUS CHURCH RD 12 NC 27514 NC 27516 NC 27516 NC 27514 NC 27514 NC 27514 NC 27514 NC 27514 NC 27514 NC 27S14 NC 27514 NC 27514 NC 27517 Building0escrintion OFFICE-G OFFICE -G (Cando) OFFICE -G OFFICE -MED (condo) OFFICE -G (Condo) OFFICE -MED (condo) OFFICE -G (Condo) OFFICE -G OFFICE -G OFFICE -G OFFICE -BSMT -FIN OFFICE -M (condo) OFFICE -M (condo) OFFICE -M'ED (condo) OFFICE -M (condo) OFFICE -G -SHELL OFFICE -G (Condo) OFFICE -G (Condo) OFFICE -G OFFICE -G (Condo) OFFICE -G OFFICE -G OFFICE -G OFFICE -G OFFICE -G OFFICE -G (Condo) OFFICE -G OFFICE -G Rate LEVI $39 $22 $16 J CD 743955.1 9789929831.000 Office 2400 102 ESTES DR S NC 27514 OFFICE -MED 719257.1 9789929673.001 Chamber 16140 104 ESTES DRS NC 27514 OFFICE -G (Condo) 712551.1 9799022504.000 Office Estes 9000 110 ESTES DRS NC 27514 OFFICE -MED 757988.1 9799024880.000 Fro Village 1972 29000 121 ESTES DR S NC 27514 OFFICE -G $17 9799468987.000 Office 2008 38000 100 EUROPA DR NC 27517 OFFICE -G sale 715329.1 9799464897.000 Office - Europa Ctr 1990 180000 101 Europa Drive $24 770071.1 9798441243.001 TR A UNIVERSITY VILLAGE 21282 194 Finley Golf Course Rd OFFICE -G (Condo) 714359.3 979989112.1.000 Office 55000 1830 FORDNAM BLVD OFFICE-6 732314.2 9799250069.000 Office 1288 1700 FRANKLIN ST E OFFICE -G 761723.1 9789920182.000 Office 1653 1217 FRANKLIN ST E NC 27514 OFFICE -MED 761724.2 9789922209.000 Office 2556 1229 FRANKLIN ST E NC 27514 OFFICE -G 761725.2 9789923308.000 Office 2160 1301 FRANKLIN ST E NC 27514 OFFICE-G 766783.1 9799032224.002 Office 14708 1504 FRANKLIN ST E OFFICE (Condo) 739530.1 9799032207.004 Office 29344 1508 FRANKLIN ST E NC 27514 OFFICE -G (Condo) 752726.2 9799032779.000 Office 14868 1512 FRANKLIN ST E NC 27514 OFFICE -G 752727.1 9799034445.000 Office 1986 20000 1516 FRANKLIN ST E NC 27514 OFFICE -G ? 752728.1 9799044076.000 Office 7200 1520 FRANKLIN ST E NC 27514 OFFICE -MED 753034.1 9799045771.001 Office 20000 1525 Franklin St E OFFICE -G (Condo) 705848.1 9799046232.000 Office 12000 1526 FRANKLIN ST E NC 27514 OFFICE-G 728319.1 9799048307.000 Office 4920 1600 FRANKLIN ST E NC 27514 OFFICE -G 728319.3 9799048307.000 Office 2568 1600 FRANKLIN ST E NC 27514 OFFICE - BSMT- UNFIN -STRG 701399.1 9799046830.000 Office 4168 1603 FRANKLIN ST E NC 27514 MANUAL ARTS -BLDG 706446.1 9799261213.000 Office 5412 1721 FRANKLIN ST E NC 27514 OFFICE-6 722832.1 9799264478.001 Franklin Square 20000 1829 Franklin St E OFFICE -G (Condo) 702963.3 9788372285.000 Attorney's 6934 100 FRANKLIN ST W OFFICE -G 754378.1 9788268572.000 Univ Sq 1969 70000 123 FRANKLIN ST W OFFICE -G $23 757990.1 9788265985.000 Avecla (Pavilion 1) 1999 10327 200 FRANKLIN ST W NC 27516 OFFICE -G $24 747280.1 9788264981.000 Kildare's ( Pavilon 11) 1999 10500 206 FRANKLIN ST W NC 27516 OFFICE -G $25 706365.1 9788153958.000 The Courtyard 1977 27000 431 FRANKLIN ST W NC 27516 OFFICE -G 747435.1 9788150842.000 N &O Bldg 8518 505 FRANKLIN ST W NC 27516 OFF ICE-G 772179.1 9787044829.002 Ent build So Vill 3809 301 Kildaire rd OFFICE -G (Condo) 730779.1 9880542910.001 AMERICAN BOARD OF PEDIi 15000 123/125/ Kingston Dr OFFICE -G (Condo) 712513.1 9799355461.000 Office 7492 1703 LEGION RD NC 27517 OFFICE 775572.1 9799450934.001 Office 14000 1709 LEGION RD NC 27517 OFFICE -G J SMA rEGY 5 769792.1 9799570157,003 office 1717 LEGION RD 740520.1 9788267431.000 Durham Herald 106 MALLETTE ST NC 27516 754876.2 9787053252.000 So Vill Bldgs 1999 763053.1 9787056725.000 So Vill Bldgs 2001 763055.1 9787055943.000 So Vill Bldgs 2005 763424.1 9787051878.000 So Vill Bldgs 600 MARKET ST NC 27516 730329.1 9789338610.001 Office Bldg ar Barclay Dr 724788.1 9789338263.000 Three girls Vent 2500 748100.1 9789348060.000 4432 7318711 9789346156.000 Chapel Hill Internal Med 705173.1 9789345652,000 Frank Elmore Real Estate 765831.1 9798647228.003 100.700 Meadowmai 2002 739459.1 9799158920.000 Office 976 MARTIN LUTHER KING JR BI NC 27514 770705.2 9798647228L1 Meadowmont 2002 770705.4 97986472281.1 Meadowmont 2002 740800.1 9789929684,001 med office MEADOWMONT VILLAGE CIR 774908.1 9880362277.01 Office MEADOWMONT VILLAGE CIR 703282,4 9788356004.000 Emp Credit Union No address - vacant lot/Parking 720477.1 9890811981.000 Office 112 Perkins Dr 758934.1 9890719411.001 Office 766341.1 9890715570.100 Office 757864.1 9890810552.002 Office 738255.1 9890812508.001 Office 723172,1 9890719843,001 Office 706361.2 9798254529.000 Glen Lennox 762614.1 9798531950.000 Exchange 2001 762615.1 9798529521.000 Exchange East 2001 706399.3 9788372791.000 Centura Bank 769226.1 9788388082.000 Inv Tide 2005 704515.1 9788481015.000 Dentist 7062653 9788377517.000 NCNB Plaza 1973 760963.1 9788272240.001 Kaplan Ed /CHDP 705491.1 9788165834.000 Tate Realty 765516.1 9890506664.000 Office_ 2003 12000 1717 LEGION RD 2994 106 MALLETTE ST NC 27516 36134 300 MARKET ST NC 27516 11463 400 MARKET ST NC 27516 31633 410 MARKET ST NC 27516 9685 600 MARKET ST NC 27516 12752 900 MARTIN LUTHER KING JR BLVD 2500 870 MARTIN LUTHER KING JR BI NC 27514 4432 930 MARTIN LUTHER KING JR BI NC 27514 6268 940 MARTIN LUTHER KING JR BI NC 27514 3448 976 MARTIN LUTHER KING JR BI NC 27514 37000 100 MEADOWMONT VILLAGE CIR 11000 1801 MILTON AVE 26016 MEADOWMONT VILLAGE CIR 19816 MEADOWMONT VILLAGE CIR 5212 No address - vacant lot/Parking 10348 112 Perkins Dr 5422 39000 8500 13000 8500 13000 17000 12421 60000 135000 5988 12000 5000 10000o 30000 1556 37000 310 PITTSBORO ST NC 27516 301 Providence Rd 120 Providence Rd 141 Providence Rd 150 Providence Rd 180 Providence Rd 201 Providence Rd (odd) 1201 RALEIGH RD 1414 RALEIGH RD NC 27517 1450 RALEIGH RD NC 27517 101 ROSEMARY ST E NC 27514 151 ROSEMARY ST E NC 27514 201 ROSEMARY ST E OFFICE -G (Condo) OFFICE -G OFFICE -G SECOND FLOOR OFFICES OFFICE -BSMT- PARKING BSMT- OFFICE -FIN OFFICE -G (Condo) OFFICE -G OFFICE-G OFFICE -MED OFFICE -G OFFICE -G (Condo) ? OFFICE -G OFFICE ? OFFICE ? OFFICE -G (Condo) OFFICE -G (Condo) OFFICE-G OFFICE -G -SHELL OFFICE-G (Condo) OFFICE OFFICE -MED (condo) OFFICE -G (Condo) OFFICE -G (Condo) OFFICE -G OFFICE OFFICE OFF ICE- BSMT-U N F I N-ST RG OFFICE -G OFFICE - BSMT -U NFIN -STRE- 136 ROSEMARY ST E (and E Franklin) OFFICE -G 308 Rosemary St W OFFICE -G (Condo) 341 ROSEMARY ST W NC 27516 OFFICE -G 201 SAGE RD NC 27514 OFFICE -G FIE $24 $24 $24 $31 $29 $22 $20 $24 J N STRATEGY 5 774327,1 9799599053.000 Office 15732 100 SAGE ROAD OFFICE -G 775186.1 9880553482.000 AMERICAN BOARD OF PEDb 22000 111 SILVER CEDAR CT NC 27514 OFFICE -BSMT- FIN -MED 722614,1 9880550045.000 AMERICAN BOARD OF PEDIo 8500 201 SILVER CEDAR CT OFFICE -G 730488.1 9880552089.000 Office 14000 300 SILVER CEDAR CT OFFICE -G 741553.1 9880554345.000 AMERICAN BOARD OF ORTF 25000 400 SILVER CEDAR CT NC 27514 OFFICE -BSMT- FIN -MED 756440.1 9880257940.001 UNC and Adjacent (off Perki 32000 200 Timberhill PI OFFIC" (Condo) 775895.1 9880469322.002 Office (Dawson) 2007 72000 77 VILCOM CENTER CIR NC 27514 OFFICE -G -SHELL (condo) $26 770645.1 9880560070.000 Office (Boyd) 2001 50000 55 VILCOM CENTER DR OFFICE $23 770648.1 9880465246,000 Office (Mcaamroch) 1981 43000 88 VILCOM CENTER DR OFFICE -G $20 728609.1 9799131048.001 Medical Arts Bldg 17000 891 Willow Dr OFFICE -G (Condo) TOTAL 2.203,182 30 w 74 Section 6: Demand Analysis 6.1 Introduction Demand for office space in the Town of Chapel Hill is a function of many factors including macroeconomic trends (the national and international economic climate); growth and policies of the University of North Carolina; trends in the technology sector; cost of space; availability and character of office developments; and, importantly, the overall "package" that Chapel Hill presents to prospective office users including the quality -of -life experience (schools, neighborhoods, shopping and entertainment, recreational opportunities, etc.) This view of demand constitutes one aspect of the "non - traditional" market analysis methodology referenced in Section 2, but is critical to understanding the opportunities and constraints that the Town faces in crafting policies and marketing efforts that are designed ultimately to sustain and /or increase the tax base so that the high level of services in the Town and other important infrastructure can be maintained. 6.2 Existing Demand Demand for office space in Chapel Hill emanates from several sources that represent a diversified economic base, but also has the stability and resilience associated with a major University as an anchor and advantageous characteristics associated with technology transfer, entrepreneurship, and other positive attributes. A summary of primary demand sources is provided below. • University Related — According to University of North Carolina officials, the institution currently utilizes and maintains about 300,000 square feet of office space off - campus that blends affiliated non - profits, research organizations, management, administrative, and other uses. Tenants of this privately leased space are further spread within the categories noted below. There are approximately 125 Centers and Institutes of the University that include the Center for Economic Development Research and Policy, the Center for International Business Education and Research, the North Carolina Institute for Private Enterprise, and the Office of Technology Development. These and other centers and institutes have a high level of connectivity to research and other entities which constitute related demand potential as well �r STRATEGY 5 75 • Health Care / Medical — Hospitals of the UNC Health Care System (North Carolina Cancer Hospital, North Carolina Children's Hospital, North Carolina Memorial Hospital, North Carolina Neurosciences Hospital, North Carolina Women's Hospital) drive demand for a variety of medical /technical providers, out - patient service providers, insurance companies, etc. The Blue Cross / Blue Shield organization maintains a regional headquarters in Chapel Hill that further contributes to the identification of Chapel Hill as a healthcare hub. It is understood anecdotally that the National Institutes of Health (NIH) pumps more than $50 million into the Chapel Hill economy each year through grants and other funding and research activities. • Non - profits — There are approximately 500 non - profit organizations located in the Research Triangle, with about 200 listed as having a Chapel Hill office presence. These include a wide variety of associations, many of which have global links to affiliated groups. • Research / Technology — There is no reliable data available as to how many research and/or technology companies are located within the Town of Chapel Hill, due in part to cross over business definitions and strategies. Analysis done for this report indicates that Chapel Hill itself has relatively few research and technology companies as office tenants relative to the concentrations found elsewhere such as Durham, Raleigh and of course the Research Triangle Park itself. • Professional — Other office demand includes legal, accounting, real estate, engineering, architecture, advertising, marketing, consulting and other professional service providers. • Financial services — This sector had been expanding for decades, but has shrunk under the weight of the global recession. Demand for other professional services related to this sector (consumer banking, etc) has been static due to the relative cap on residential growth in the Town. 6.3 Absorption As noted elsewhere, the Town could see the introduction of 500,000 to 700,000 square feet of office space using current and forecast additions to supply of office space, etc Based on the historical rate /amount of office space absorption within the Town limits (70,000 square feet per year) it will take approximately 5 -10 years to absorb planned and/or anticipated office space in the Town of Chapel Hill. This coincides roughly with the anticipated development implementation process (building) for currently planned projects, understanding that timelines can be accelerated or slowed based on various economic and individual financial circumstances. 32 STRATEGY 5 76 It is critical to note that the pace of absorption, hence growth, can be influenced by a similar range of factors. Basically, these are the factors delineated in the following sub- section 64 Forecast Demand. 6.4 Forecast Demand Future demand for office space in Chapel Hill will be influenced by several factors including, but not limited to opportunities and constraints described herein. The consultant has taken the opportunity to merge observations and findings with preliminary recommendations that coincide with the concept of influencing market demand Opportunities for Increasing / Capturing Demand • Critical to the demand equation is the interest/ability of the State of North Carolina, the Research Triangle, and the Town of Chapel Hill in capturing demand (including demand for office space, but also residential growth, recreational and life -style opportunities) from other markets including those elsewhere in the U.S. (e.g. the Northeast and Midwest) but also potentially international markets. Success in capturing additional market share hinges heavily on the joint efforts of organizations like the Research Triangle Partnership (which serves a 16 county constituency), Orange County Economic Development, and the Town of Chapel Hill Economic Development Office. In the consultant's opinion, these and other organizations can not only influence demand at a macro level over time, but could facilitate capture of tenants for existing vacant space by matching particular building characteristics (e.g. large floor plate suburban campus environment) with needs of a potential user (e.g. relocating corporate user with a desire for added security environment). • Maintaining and/or increasing the competiveness of Chapel Hill relative to the other office centers within the Research Triangle are also critical to capturing demand. Opportunities to exploit apparent weaknesses in the regional market such as aging buildings, suburban design (lack of proximal support amenities such as restaurants, service retail, etc.) and those weaknesses evidenced in other sub - markets should be explored in the context of crafting a competitive capture strategy for Chapel Hill. Conversely, competitive advantages of these sub - markets such as lower cost, access to fiber optics and other technology infrastructure need to be recognized. The Town can benefit from the University/Medical /Research community by working to anticipate and proactively adapt to shifts in the technology sector (including bio- technology and related sub - sectors) in order to capture entrepreneurial endeavors, expansions, relocations, etc. 33 ' STWAMGY J` 77 • Harnessing the future growth and influence of UNC including plans for Carolina North — a 1,000 acre complex that is set to host an expansion of the law school and location for the Innovation Center. These and other strategic plans for growth in the coming years will yield a range of spin -off opportunities, entrepreneurial ventures, and other demand that could be captured by the Town's office market. Growth and capture of the "creative class ". Economist and social scientist Richard Florida coined this phrase to identify a socioeconomic class that he sees as a key economic development driver for post - industrial cities in the U.S. In his book The Rise of the Creative Class (2002), Cities and the Creative Class (2004), and others, Florida has described and analyzed two basic sections of the class: a Super- Creative Core which includes occupations such as engineer, scientist, educator, research, arts, design and media. The other main group: Creative Professionals are knowledge -based workers including those engaged in healthcare, legal services, business and finance, etc. The Research Triangle and the Town of Chapel Hill specifically have been cited by Florida as places with high creative class populations, and therefore potential to tap into the resources they generate. • The Research Triangle is one of the fastest growing region in the U.S. and positive demographics including highly educated workforce, strong healthcare and education sectors, etc. Home -grown demand for office space in Chapel Hill can be drawn from this population -based source. • The ability /interest of the Town in hosting wet labs and other research uses has been anecdotally cited in the public process as a way to capture additional demand for office space. Currently there are a variety of ordinance and code restrictions which severely limit or prohibit these types of uses, which then have an apparent tendency to locate in the RTP or elsewhere in the Triangle. • The ability /interest of the Town in providing office infrastructure such as fiber optic cable to users and /or offsetting costs associated with technology upgrades through various means. Similarly, consideration may have to be given to provision of parking support on an individualized basis in order to incentivize business development. • Continuing to enhance public transit opportunities to serve office populations. Plans are being discussed to add a regional Bus Rapid Transit (RBT) system to augment the current bus service. This could obviously increase access from outlying suburbs (including those located in other sub - markets thus increasing "in -flow" of workers), soften demand for additional parking, and contribute other positives to the office market climate over time. 34 SMA rEGY 5 78 Development of additional /allied institutions of higher learning such as a community college or Chapel Hill campus of other college /university can add mass to the already rich educational environment and build on the institutional /business /research dynamic that constitutes a demand driver. According to "Analysis of Orange County's Site Selection Attributes" (Ashley Yingling — 2009) 10 commonly used criteria for business location in the region are: 1) Ease of permitting; 2) Transportation infrastructure; 3) Existing workforce skills; 4) State and local tax scheme; 5) Utility infrastructure; 6) Land/building prices and supply; 7) Workers' comp rates; 8) Flexibility of incentives programs; 9) Higher education resources; and, 10) Availability of incentives. In addition, the report commissioned by the University of North Carolina, identified additional important criteria in the site selection (capture) process: Existing clusters or related businesses including suppliers and customers; Assistance from economic development agencies; Research collaboration; Living conditions; and, Start up considerations including costs and availability of capital. The study also cited statewide and regional advantages including recognition by numerous periodicals and journals; the presence of growing high -tech clusters that enable retraining of workers; and, the fact that the state of North Carolina provides incentive packages and active recruitment. Merging Town of Chapel Hill planning and development policies with the findings and recommendations of this report (which Strategy 5 LLC endorses) could help focus demand that has evolved to the point where companies are actively seeking sites for office development. Various demand dynamics including markets from which the Town may capture business, and "inducers" or entities and organizations that may play a role in marketing, promotion and the capture process, are reflected in the Office Market Demand Paradigm illustration on the following page. 35 Cj STRA TEG Y.5 79 Office Market Demand Paradigm 36 ' STRA MG 5 :1 Constraints to Increasing / Capturing Demand While opportunities for increasing and or capturing demand outweigh the constraints to the same objective there are practical obstacles to be acknowledged. These include: • The ability of Chapel Hill to capture demand for office space may be eventually limited by its capacity to provide a commensurate supply of building space given the relatively limited amount of land which is available and/or approved for this type of use. • Limited land resources are further constrained for development by associated zoning and regulatory restrictions, an apparently complex and time (cost) consuming approvals process, etc. • Property tax rates are high relative to competitive office markets elsewhere in the Research Triangle. An in -depth comparative tax analysis was beyond the scope of this report but available data and input from local real estate professionals, property developers, etc. seems to support this contention. • Land prices are high relative to competitive office markets elsewhere. As with a tax analysis, in -depth comparative land valuation was beyond the scope of this assignment but input and anecdotal information suggests it is essentially true. • Cost differential — the cost of second generation space in RTP is significantly lower and the added costs of taxes and land noted above contribute to the cost differential and constitute a constraint to capturing demand. • The addition of attractive /cost effective space into the market elsewhere will continue to be a constraint as competition from other communities will likely increase. This also raises the issue of "leakage" of demand from Chapel Hill, and the converse opportunity of "retention" which both figure strongly in the overall market context. • Increased marketing efforts by other competitive markets including international, national, and regional activities elsewhere. More locally, competitive marketing /capture efforts by Alamance, Chatham, Durham and Wake Counties need to be particularly recognized. 37 CC` SMATEGY 5 6.5 Summary Conclusions 81 The Town of Chapel Hill appears to have many competitive advantages over other office markets, particularly as it is an integral component of a highly recognized international brand — The Research Triangle" — which in turn offers an array of interwoven infrastructure from which the Town benefits. This infrastructure includes the concentration of academic institutions, research facilities, transportation and climactic elements which make it an attractive place to live and work. By extension the infrastructure also includes a depth of human capital constituted by a highly educated demographic that few regions can match. Chapel Hill's individual competitive advantages are cited at various points in this section and elsewhere in the report and do not bear repeating here. However, these advantages have had an impact on demand, which in turn have fueled growth in the office market over time and contributed to historically low vacancy rates, high lease rates, etc. Constraints noted herein have also had, and will continue to have, their effect There are some essential questions raised by the demand discussion: Will demand continue to filter into the Chapel Hill market and manifest itself in new construction, additional tax base, and ensure low vacancy rates into the future? Or, will aggressive competition from outside areas erode Chapel Hill's demand base, weaken the existing office market, slow development of planned projects and impede overall absorption? The answer is that the future of office demand and related occupancy, development etc. can — and possibly should - be influenced through a variety of means that are further discussed in the final chapter of this report. However, they can be summarized by three words: Policy, Positioning, and Promotion. 38 C SMATE'GY 5 Section 7: Opportunity / Surplus Gap Analysis 7.1 Introduction An opportunity / surplus gap analysis is generally a calculation of either net unsatisfied demand (opportunity) and/or net un- leased supply (surplus). This type of analysis is typically used in retail studies — not office studies — because retail demand is usually locally driven and the stores that capture said demand are also in an easily defined market area (often a zip code, census tract or Metropolitan Statistical Area (MSA). Therefore the surplus / gap can be quantified through sales tax receipts, business licenses, retail space inventories, etc. By comparison, demand for office space (particularly in a market like the Research Triangle) can, and does, come from local, regional, national and even international sources. Therefore, while existing demand can be quantified in the simplest terms as leased space and the rates it commands, potential demand is impossible to quantify. We know it is there in large amounts — again especially given the market characteristics of the Research Triangle — but how large? In this section an attempt has been made to conduct a surplus / gap analysis for the Town of Chapel Hill office market as an illustrative tool that may shed some light on the supply /demand dynamics that have been presented discussed so far. 7.2 Opportunity As stated elsewhere in the report, there is an opportunity in capturing demand from within the Research Triangle, the Mid - Atlantic region, other regions of the U.S., and from within the international marketplace. Other opportunities to grow the office market from within by tapping into the creative class, cultivating and mining the links to the University and the entrepreneurial and business development climate it purposely fosters, and working through the other opportunities for increasing and capturing demand as summarized in the previous section can all have their effect. The closest we can come to quantifying potential demand comes from backing in to the projection by using the example shown in Section 5 relating to the capture of a relatively small additional share of the Research Triangle market, of which Chapel Hill currently only has about 4% - 5 %. Increasing Chapel Hill's fair share to 6% - 7% could mean an additional 1 million square feet of office space (estimated). Even if its share remains the same (4% - 5 %) it will be of a growing market and serve to match the expected additional growth in supply as discussed in Section 5. All indicators suggest that there is sufficient demand in the marketplace to support this — over time — if various efforts, trends, and motivations combine to answer it. al STWArEGY 5 7.3 Surplus 83 By definition (un- leased space inventory) there is a current (spring 2010) surplus of approximately 300,000 square feet of office space in Chapel Hill. 7.4 Net Supportable Square Footage Discussion Based on the various economic and market perspectives advanced in this report; the Town of Chapel Hill proactively seeking to maintain and increase it's competitive advantages over market rivals; its ability to foster a development environment that further encourages office growth; and, a strategy of capturing demand from "foreign" markets; Strategy 5 projects that the local market can support the introduction of an additional 1 million square feet of office space over the 5 -10 years. This is roughly consistent with combining current vacant space inventories (300,000 square feet) with planned projects, leaving about 300,000 additional square feet of "net supportable" space to be conceived, located, built and occupied during this period. Numerous factors will determine whether this space ultimately falls into the surplus category, or the opportunity gap category, and for how long. As a further illustration that may put these numbers in context is as follows: If the average amount of leased space in Chapel Hill remains at about 20,000 square feet, the 1 million square feet of additional space equates with about 50 companies being attracted to Chapel Hill over the development/absorption period (5 -10 years); or, between roughly 3 and 5 new tenants per year. 40 C_ 1 STRA TEGY 5 84 Section 8: Summary of Findings and Recommendations Given the variety of market characteristics associated with the Town of Chapel Hill, the Research Triangle, regional, national and international arenas etc. it is clear that there is significant, but not overwhelming, potential for future office development as a component of the local economic development environment. The ability of the Town to capture its fair share of this market hinges on key business /political principles that will influence the presence, sustainability and future vitality of the office community. These principles can be roughly categorized and described as follows: Policy, Positioning and Promotion. 8.1 Policy Increasingly, economic development and its associated spin -offs: capital investment, construction, FTE jobs, wages and salaries, tax revenue and other beneficial fiscal impacts, are tied to policies that are enacted, implemented and enforced by government bodies. An array of federal, state and local government entities influence economic conditions. So too does the free market and associated decisions by corporations, small businesses, individuals, and both large and small trends affecting countries, regions, cities and towns. For the Town of Chapel Hill to reach its full potential in cultivating and capturing office demand as a component of a fiscal policy that recognizes the need for revenue, it must make the conscious decision to pursue this segment of business /economic activity. This decision (if made) should then manifest itself in the implementation of recommendations referenced or implied throughout this analysis, including but not limited to consideration of the following: • Review the development approvals process and overall business environment with a close eye on the opportunities and constraints as delineated in this and other studies. • Consider the economic and fiscal implications of sustaining the office community that currently exists, and those associated with planned projects as well as those which may come to fill the opportunity gap that the consultant believes can be created. • Act through resolution and other means to embed decisions and policies that will foster growth in this sector in the foreseeable future, and over the timeframe associated with the forecasts included in this analysis (5 -10 years). 41 ; sreATEGY 5 8.2 Positioning 85 If an essential finding of this analysis is accepted; that there is sufficient market demand to support I million square feet of additional office development in the Town of Chapel Hill over time; and, the policy framework is honed to facilitate its introduction and sustainability, then the Town may choose to take steps to position itself for this market strategy. Among those steps the Town might consider in the positing strategy include: • Ensure that existing office projects receive the highest level of consideration in positioning the market to encourage occupation of vacant space, continued tenancy of space, and demand for space that is in the development pipeline. Functionally full occupancy is probably the best advertisement for future investment. • Identify development opportunities sites that coincide with site selection criteria, current Town zoning and regulatory framework, synergy with the existing office clusters and corridors, etc. These may be inventoried, quantified, photographed and placed into the context of this and other studies to provide the investment community with confidence that the Town supports private investment in this type of real estate development. These efforts can compliment, and be complimented by, local real estate brokers and other real estate professionals. • Prepare small areas plans that further define and conceptualize office projects on the opportunity sites suggested above. These can provide a platform for imbuing projects with community values, local design preferences, and solving physical development hurdles in advance — thus facilitating and encouraging investment by the real estate industry. Similar to small area plans, site - specific corridor plans, transit - oriented development (TOD) plans, etc. can be used in a like fashion. • Undertake proactive developer /investor solicitations for these projects. The realm of investment interest need not exceed the local /regional boundaries, but consider that Chapel Hill and the Research Triangle have international recognition and desirability. 8.3 Promotion Given the reality of a global market with technology transfer, transportation links, and increasing co- dependence between nations, industries, etc. it is not unreasonable to view the potential for office in Chapel Hill with something of a world view. If this view is accepted then the objective becomes capture. If capture is the objective, promotion becomes the essential tool. There is already a sophisticated promotion and marketing system in place that can (and does) benefit Chapel Hill. There are a myriad of organizations at the national level (e.g. U.S. Department of Commerce), state level (e.g. Cy] irr- STRATEGY 5 ALI North Carolina Department of Economic Development), regional level (e.g. Research Triangle Partnership), and local level (e.g. Town of Chapel Hill Economic Development Office, Orange County Office of Economic Development, Visitors Bureau, Chamber of Commerce, etc.) that are designed to focus interest and economic activity. It is the consultants opinion that if policy and positioning strategies are put into place, a more aggressive and result - oriented promotional strategy can be put into effect through increased communication and shared tactical efforts with these and other organizations. Some particular suggestions for the promotion element of an office market capture strategy include, but are not limited to the following: Mandate that departments and organizations which perform promotional activities for the Town coordinate efforts with a clear leadership hierarchy in terms of pursuing capture of the office market (in this case). Merge the objectives of the Town with regard to office prosperity and development (as evidenced by the policy and positioning actions) with those of the Research Triangle Partnership especially. If they are already considered merged, then we suggest a higher level merger. Fund these efforts through traditional and creative revenue streams — possibly tied to results in some fashion— that enable the promotional team to do its job effectively, and to enable competition at the global level. This will involve a public investment, but the anticipated economic and fiscal impacts should easily offset the cost. 8.4 Economic and Fiscal Impact Potential The logic for pursuing additional office development in Chapel Hill is based on this sector's ability to contribute to the economic and fiscal base of the community through net -new property and personal property taxes, job creation, expenditure of wages and salaries, spending by operations, etc. A complete economic and fiscal impact analysis of future office potential in Chapel Hill was beyond the scope of this assignment however some illustrative projections may be useful. The Statistical Abstract of the U.S. and U.S. Census Data are the primary sources for these projections. All numbers are expressed as 2010 dollars. Using the current Effective Combined Rate in Chapel Hill, each $100,000 of property value generates approximately $1,338 dollars in total tax property revenue (distributed to various entities). • Using the net additional office supply (Section 7) projection of 1 million square feet and a unit cost of construction of $200 per square foot (2010 dollars), and market valuation/assessment using those variables, a net new taxable base of $200 million is derived. 43 C STRATEGY. ' 87 • Applying the tax rate as above, the new office projects would generate approximately $2.68 million annually in net -new property taxes alone. • Approximately 2,100 FTE construction jobs would be created, with more than $140 million in wages and salaries paid to these workers who will in turn purchase goods and services, pay mortgages and rent, etc. • The space will provide job space for about 5,000 workers who could pump $350 million into the economy annually. • Leases will generate in excess of $28 million annually that will be spent by property management companies and developers to pay interest on loans, maintain staff, conduct maintenance and other services on the property, and likely provide capital for further investment in the Chapel Hill and local /regional economy. Office development can have a significant economic and fiscal impact on the community as revealed by the summary projections above. These and other economic development benefits that can accrue from proactive policy decisions, capture- oriented positioning, and coordinated promotion activities that are strategically designed to grow this sector of the local economy should be considered along with the other observations, findings and recommendations. contained in this Office Market Analysis. 44 s �_�_ -_ _ �z�,�,.. .�. �� �'� �� ICMA ICMA is the premier local government leadership and management organization. Its mission is to create excellence in local governance by developing and advocating professional management of local government worldwide. ICMA provides member support; publications, data, and information; peer and results-oriented assistance; and training and professional development to more than 9,000 city, town, and county experts and other individuals throughout the world. Copyright Q 2010 by the International City /County Management Association. All rights reserved, including rights of reproduction and use in any form or by any means, including the making of copies by any photographic process, or by any electrical or mechanical device, printed, written, or oral or recording for sound or visual reproduction, or for use in any knowledge or retrieval system or device, unless permission in writing is obtained from the copyright proprietor.` Putting Smart Growth to Work in Rural Communities Introduction Communities across the country want to get the most out of future growth and development. Residents and leaders from all types of communities —from urban to suburban to rural —want to achieve the best pos- sible economic, social, environmental, and public health outcomes. This desire is particularly evident in rural communities that may be experiencing changes in their traditional landscapes and ways of life. In communities with less diverse economies, the choices between "what was" and "what could be" are critical. The reverberations of simple decisions or even of inac- tion can be relatively dramatic. Rural economies may be booming, in decline, or simply in flux —this status shapes priorities and frames the local debate. In communities facing growth pressures, there is often a struggle to maintain farm- land or natural landscapes, small -town traditions, and rural character while still benefiting from devel- opment. Growth can bring traffic congestion and conflicts between the natural resources economy and residential lifestyles not dependent upon working lands. Where local economies are struggling to stay afloat, however, the focus is more often on develop- ment strategies that will attract public and private investments. This publication is designed to provide rural decision - makers with a resource for balancing com- peting goals while creating more vibrant, sustainable communities. It is intended to show how smart growth approaches can be adapted and applied in the rural context, particularly in times of change. Following a brief discussion of key issues facing different types of rural communities and how smart growth is perceived in rural environments, the majority of this publication addresses how to put smart growth into practice in rural communities. This third section of this publica- tion is framed around three key goals, which can help a community pursue its vision for accommodating and attracting sensible growth in the future, while main- taining and enhancing its rural character and quality of life. The three goals are: 1. Support the rural landscape by creating an eco- nomic climate that enhances the viability of work- ing lands and conserves natural lands; 2. Help existing places thrive by taking care of assets and investments such as downtowns, Main Streets, existing infrastructure, and places that the community values; and 3. Create great new places by building vibrant, enduring neighborhoods and communities that people, especially young people, don't want to leave. Strategies and policy tools (some commonplace, some cutting edge) supporting each of these three goals will provide some practical direction for rural communities that want to ensure that economic opportunity and growth meet the needs of new and current residents and businesses without fundamen- tally altering the community character. While the process of strategically defining growth in a rural com- munity is certain to be challenging and require time, patience, and subtlety —as is the case elsewhere —it is also likely to yield the most desirable community outcomes. Smart growth approaches, when adapted and applied in rural contexts, can help communities balance competing demands by supporting the rural landscape, helping existing places to thrive, and creating great new places. M a 0 s i" 0 a 2 Putting Smart Growth to Work in Rural Communities What is Rural? Rural can be a difficult word to define. It depends on whom you ask and where you are —a rural community in a relatively high- population state can look dramati- cally different from a rural community in a less popu- lous state. The U.S. Department of Agriculture (USDA) Economic Research Service (ERS) defines rural areas as nonmetropolitan counties. Of the nation's 3,142 counties, nearly two - thirds are rural. By this defini- tion, rural communities in the United States comprise 17 percent of the population (49 million people) and about 75 percent of the total land area.' These descriptions, however, do not address the interaction between land and place that is so integral to under- standing rural development patterns or the challenges associated with growth and development facing rural communities. From a land use and development perspective, rural America includes towns and small cities as well as working lands, farms, prairies, forests, and range- lands. Historically, rural land has been used primar- ily for the production and extraction of resources. Towns grew as part of or adjacent to these working lands to provide a place where agricultural or natural resources could be traded for value -added goods or 91 shipped elsewhere (not surprisingly, many towns were located along rail spurs and river ports or at major crossroads). Supported by main commercial streets and relatively dense, walkable neighborhoods, valu- able infrastructure also developed in towns to serve civic, cultural, and social needs of rural communities. But the working lands — farms, prairies, forests, and rangelands — surrounding these towns were the reason for their existence. The environment provided more than attractive vistas —it was integral to the social and economic life of the town. Trends Challenging Rural America Today The land -based economy and its accompanying way of life in rural communities have been affected by a num- ber of outside forces. While many of these changes have been gradual, others have been more immediate. As these communities continue to change, rural identi- ties may be altered and communities may lose the opportunity to set their own agendas. By understand- ing the challenges that their communities are facing and thinking strategically about future growth and development, rural decision - makers can direct growth in a way that benefits the community while preserving its rural heritage and traditions. As these photos illustrate, rural can mean many different things. Rural communities, whether they are small towns and cities, working lands, or tourist -based economies, are characterized by an interaction between land and place. Smart growth strategies can be used to maintain the defining characteristics of rural communities as they grow and change. Photos courtesy of US EPA Putting Smart Growth to Work in Rural Communities 3 There are many ways to describe rural communities based on their economic, geographic, or design characteristics. Certainly, each community is unique, and rural communities can include a number of complex and contradictory qualities. However, char- acterizing them can help identify common challenges they may be facing as well as opportunities that may help them adopt a sustainable approach to growth and development in the future. Most rural communities can be grouped into five categories2, though many may fall into more than one: 1. Gateway communities are adjacent to high-amenity recreational areas such as National Parks, National Forests, and coastlines. They provide food, lodging, and associated services. Increasingly popular places to live, work, and play, gateway communities often struggle with strains on infrastructure and the natural environment. 2. Resource-dependent communities are often home to single industries, such as farming or mining, so their fortunes rise and fall with the market value of that resource. A key challenge facing resource - dependent communities is diversifying the economy while maintaining their rural quality of life and character. 3. Edge communities are located at the fringe of metropolitan areas and typically connected to them by state and Many of the challenges described below are regional in nature and require regional solutions. And yet land use decisions are made at the local level. When appropriate, local governments should cooperate across boundaries to develop collaborative, regional solutions to the challenges facing their indi- vidual communities. Fewer farms and fewer farmers Since the end of World War II, farm consolidation and the transition of agricultural land into non - agricultural uses have been,a challenge for many rural communi- ties. Farmland has been converted into residential or commercial uses, and small family farms have been replaced by large corporate farms. These changes have reduced the amount of open land, and technological advancements have further reduced the need for labor on remaining working lands —a particular challenge for resource - dependent communities. With fewer farms and fewer farming families, the skills, tradi- tions, and culture built around the rural economy are less likely to contribute to a rural community's sense interstate highways. They provide their residents with access to economic opportunities, jobs, and services. More affordable housing and access to urban amenities have made many of these edge areas grow at a faster pace than their metropolitan areas as a whole. But precisely because they are such attractive places to settle, edge communities often face pressure to continue to provide more housing and services to new residents. 4. Traditional Main Street communities enjoy compact street design that is often accessible to a transportation hub. In addition, historically significant architecture and public spaces provide valuable resources upon which to build. Still, these communities often struggle to compete for tenants and customers with office parks, regional malls, and big box stores. 5. Second home and retirement communities may overlap with some of the above groups, particularly edge communities and traditional Main Street communities. Like gateway communities, second home, and retirement communities struggle to keep pace with new growth while maintaining the quality of life that drew in residents in the first place. Many rural communities are facing challenges, including decreasing farm employment, lack of amenities, remote locations, and declining populations. of place. The 2007 Census of Agriculture found that 65 percent of principal farm operators report working off - farm, and nearly 55 percent report something other than farming as their primary occupation .3 92 a 0 d 4 Putting Smart Growth to Work in Rural Communities Loss of forest land Conversion of forest land in rural communities is also changing the character of those communities. The U.S. Forest Service estimates that between 1982 and 1997, 10.3 million acres of forest land were converted to development. By 2050, an additional 23 million acres of forest land may be lost.4 This trend indicates a decline in the ecological health of rural communities, but it also means that the forestry-based economy of some rural communities may be in jeopardy and that the landscapes that have defined many communities are changing. Many rural communities are concerned that these changes may have a negative impact on tourism and their residents' quality of life. Rapid growth at metropolitan edges Across the country, the highest rates of population growth have been occurring at the edges of metro- politan areas, where suburban and rural areas meet. In the mid- 1990s, three - quarters of all new residential development was built at or beyond the urban edge. Nearly all of this development occurred on lots that are one acre or larger.5 Such development, which con- sumes 1.2 million acres of prime farmland every year,6 may appear somewhat rural from the road but actually undermines the viability of a resource -based economy. Low - density and single -use development patterns also result in additional population growth and increas- ing demands for services, often in places where it is inefficient to provide them. Edge communities, due to their rapidly growing populations, may face infrastruc- The number of farms and farmers has been declining since the end of World War ll, as farmland has been developed and large corporate farms have replaced small family farms. lure challenges and find it difficult to provide new infrastructure and services at a rate that keeps up with population growth. Higher population growth and commutes to non -farm jobs increase traffic congestion along rural routes. As growth occurs in some regional areas, tensions often develop between the "new" and '.old" residents. Edge communities, which border both urban and rural areas, and resource - dependent com- munities may see nuisance lawsuits, which are com- mon, due to newcomers' concerns about the noise, odor, dust, etc., that occur with normal operation of working lands. Shrinking population in other areas While some areas struggle to keep up with growth, other regions have the opposite problem. According to the USDA, one in four rural counties saw a drop in population between 1990 and 2000, primarily due to declining farm employment, remoteness from metro- politan areas, and a lack of amenities like a vibrant Main Street or natural features.' Communities with declining populations or a contracting economy face a combination of problems: unemployment and poverty, increasing demands for social services with fewer dollars to pay for them, an aging workforce, vacant properties, and loss of historic structures. Attempts to compete with other jurisdictions for large economic development projects, such as new manufacturing plants, office parks, or regional big box retailers, may come at the expense of local businesses and the com- munity ties they aim to support. Z 0 a 93 Access to jobs and services and a lack of transportation options Commutes to distant employment centers require a greater percentage of the family budget to be spent on transportation and reduce take -home pay. This trend particularly impacts low- income families.8 More and longer auto travel to services outside the community increases the demand for highway expansions and the viability of highway- oriented retail development, thereby reducing demand for Main Street goods and services. Long commutes have environmental and social costs as well, increasing air and water pollution and reducing leisure and family time. One of the challenges facing rural communities today is finding ways to provide convenient, cost - efficient access to jobs, shops, services, education, and health care. Land use trends have separated many of these uses, making access dependent on automobiles. Of course, transportation challenges differ based on the type of rural community. For example, gateway communities must focus on bringing tourists to desti- nations, while resource - dependent communities need to ensure efficient transportation of goods to markets. Approaches that combine transportation planning with better land development policies can help communi- ties support these high - priority economic issues while also enhancing quality of life for residents. Putting Smart Growth to Work in Rural Communities 5 Limited planning capacity While many rural communities view any growth as an indicator of success and a healthy economy, oth- ers are realizing that the conventional development pattern of dispersed development disconnected from traditional town centers can also pose challenges for communities to meet their fiscal, social, and environ- mental aims and, increasingly, public health goals. As services, products, and amenities formerly found in compact, walkable places relocate to spread -out sites across the landscape, they require more costly infrastructure that adds to the strain on local finances, degrades the environment, and leads to more car - dependent communities. Many small, rural communities face challenges of local government staffing. Limited staff size and experience can mean inadequate attention to time - consuming but important issues, such as a community visioning process, comprehensive planning, regional collaboration, and skill development to create and implement growth and development policies that support community goals and needs. The result is often haphazard development that supports individual landowner and developer interests but does little to conserve valuable resources or channel new invest- ment in the most efficient manner for the community as a whole. Rapid growth on the edges of metropolitan areas can undermine the viability of rural resource -based economies, and rapid population growth may result in traffic congestion, strained services, and tension between the "new" and 'old" residents. Photo courtesy of VS EPA Photo courtesy or NRCS �11J' 6 Putting Smart Growth to Work in Rural Communities Understanding Rural Smart Growth Smart growth approaches to development benefit the community, the environment, the economy, and public health. Rural communities hoping to imple- ment smart growth approaches must strategically facilitate community decision making and policies and make the most of their natural features and amenities, recognizing that no community has endless resources. If rural communities are to meet the broad challenge of maintaining rural character while also supporting economic growth and opportunity, they require a set of tools that can be adjusted to reflect the diversity of rural communities and that can apply to both expand- ing and contracting economies. This publication is designed to provide this set of tools. A rural community that uses smart growth approaches has a vibrant downtown, with historical buildings that have been preserved, a walkable Main Street or two, and compact neighborhoods surround- ing the downtown. It is a place with a small -town feel and sense of community that develop when you know your neighbors. Residents gather in town for important events, to shop, and to participate in civic activities. The local economy — whether it is built on resource extraction, tourism, or new economic opportunities that have evolved in rural America — celebrates, protects, and supports the use of the land. Local businesses are encouraged to flourish, particu- larly those that support the community's rural iden- tity. Housing options support a variety of financial and lifestyle choices, whether old or newly constructed, in Since the mid- 1990s, the Smart Growth Network, a network of nongovernmental organizations representing diverse interests, has been identifying best practices, policies, and strategies that help communities get the results they want from growth. The framework for these findings is a set of ten Smart Growth Prin- ciples (see below), which apply to a range of communities, from urban to rural, and were developed based on the experiences of communities around the country. See the Smart Growth Network Website for a discussion of these principles: http://www.smartgrowth.org. • Mix land uses. • Take advantage of compact design. • Create a range of housing opportunities and choices. Smart growth can help create vibrant, walkable Main Streets In rural communities, while preserving historic buildings and community character, as seen in Seneca Falls, New York. town or the countryside, in modest apartment build- ings or single - family homes. Underutilized lots in already developed areas are reused whenever possible, especially before using valuable undeveloped property for new construction, to control infrastructure costs, to preserve pristine land, and to provide more options for transportation. The community has articulated its joint vision for the future in policy documents so that devel- opers and the broader stakeholder community alike have some predictability. With such a vision in mind, it becomes clear that smart growth strategies enable the entire community to benefit from its local rural heritage and resources, just as all can share jointly in its development and conservation. • Create walkable communities. • Foster distinctive, attractive communities with a strong sense of place. • Preserve open space, farmland, natural beauty, and critical environmental areas. • Strengthen and direct development toward existing communities. • Provide a variety of transportation options. • Make development decisions predictable, fair, and cost - effective. • Encourage community and stakeholder collaboration in development decisions. a 0 d 0 g a Smart growth approaches to development can help achieve the vision of vibrant, thriving rural commu- nities outlined in the paragraph above. One way to structure a rural smart growth approach is to use the following three goals as a framework for future growth in rural communities: 1. Support the rural landscape by creating an eco- nomic climate that enhances the viability of work- ing lands and conserves natural lands; 2. Help existing places thrive by taking care of assets and investments such as downtowns, Main Streets, existing infrastructure, and places that the community values; and 3. Create great new places by building vibrant, enduring neighborhoods and communities that people, especially young people, don't want to leave. In areas experiencing rapid growth, the three goals for new development provide a framework for ensur- ing that the rural quality of life is supported. Decision makers and planners can use them. to help shape proposed developments to ensure that they correspond with the public's vision for growth and the benefits they wish to see flow from it. For communities that are not growing, leaders can use the goals to articulate a vision for the future and to prioritize. The framework can help communities more clearly distinguish the existing resources that are valuable for preservation or enhancement and build upon them, targeting their efforts toward attracting investment in various sectors of the economy that Smart growth strategies can be adapted to individual community contexts to help guide future growth and development. Putting Smart Growth to Work in Rural Communities 7 will support the community's chosen direction. Smart growth approaches are not a guarantee for success in declining rural communities, but they articulate alter- native approaches to attracting the large corporation or big factory complex, which is often the primary economic development strategy and can be at odds with rural character. Goals, Strategies, and Policy Tools for Rural Smart Growth The first step for a community wanting to improve its growth pattern is to assess the current environ- mental, economic, and social conditions. How is the community connected to other communities in the region? What are the community's best assets? Its key challenges? Then, residents, leaders, and other stakeholders can decide what the community's long -term vision is —what kind of place it should be. Defining the community's vision for the future involves identifying the community's highest priori- ties, most valuable resources, significant aspects of its identity, and so on. Once there is some agreement on the end goal, the community can determine the approaches needed to help it realize that vision. The rest of this publication provides a toolbox of strate- gies and policy tools designed to assist communities in implementing their vision for the future. The three goals described in the previous sec- tion can help create a framework for implementing smart growth principles in rural communities. They are intended not only to help communities imple- ment smart growth approaches within their individual communities but also to help them take a regional approach, partnering with other communities to sup- port better outcomes across the region. - Following each goal are descriptions of strategies and policy tools that support it. Many rural municipal- - ities already have these policy tools at their disposal, _ such as comprehensive planning, zoning authority, and tax policy. In some cases, the solution to achiev- ing better outcomes from development may be simply identifying and removing the regulatory obstacles that have prevented the construction of compact, mixed - use developments or hindered reinvestment in exist- ing commercial centers. In other communities, the greatest challenge may lie in employing these tools effectively, given the resources and technical expertise available and the realities of the current economic situation. W 97 8 Putting Smart Growth to Work in Rural Communities Miner County, South Dakota, created a clear vision that has helped direct the community's approach to development. Instead of spending limited resources trying to attract a major corporation to locate a plant or a store, citizens concentrated on building upon their towns' existing assets; instead of trying to attract new residents, Miner County aimed to create good jobs for the people still there. By 1995, Miner County's population had declined to 3,000, from its peak of 8,500 in the 1920s and 1930s. Many small towns on the Northern Plains were disappearing altogether, and Howard— Miner's county seat —was at risk. Miner County's development strategy began at the local high school that had created a Rural Resource Center with funding from the Annenburg Rural Challenge, which focuses on connecting schools with their communities' Students involved in Future Business Leaders of America (FBLA) conducted a community cash-flow study, which found that half of the county's residents shopped outside the county and that if all residents spent just 10 percent more of their disposable income inside the county, it would add more than $7 million to the local economy. In the year after the survey, Miner County's taxable sales increased by more than 40 percent. The success of the study prompted Randy Parry, a former business and economics teacher and the executive director of Miner County Community Revitalization, to form a committee to bring residents together to renew the county's economy and settlements. Using grant money and volunteer labor, partici- pants in the center pulled tree stumps from the downtown of one town and restored houses in another. They arranged seminars for farmers on emerging markets for deer, elk, and organic beef and converted a slaughterhouse that had been vacant for 30 years into a processing location for local organic beef. The center and the town of Howard bought wind turbines from a local machine shop, which has since become Energy Maintenance Services of Gary, South Dakota, lowering local electricity rates. Miner County is still struggling to maintain its population and economic viability, but it has improved local quality of life, established a revolving loan fund for local business, and acquired cell phone service. The county is making the most of its past to build a sustainable future? 1 Miner County Community Revitalization. "How Miner County Got Started:' httpl /www.mccr.net /mccr /began.html 2 Eig, J. "in Bid to Hang On, Miner County, S.D., Downsizes Dreams." Wall Street Journal, March 25, 2002, and Wells, B. Smart Growth at the Frontier.' Strategies and Resources for Rural Communities. Northeast Midwest Institute, 2002. GOALS, STRATEGIES, AND POLICY TOOLS FOR RURAL SMART GROWTH Support the Rural Landscape Help Existing Places Thrive Create Great New Places Create an economic climate that enhances Take care of assets and investments such Build vibrant, enduring neighborhoods and the viability of working lands and as downtowns, Main Streets, existing infra- communities that people, especially young conserves natural lands. structure, and places that the community people, don't want to leave. values. 1.a. Ensure the viability of the resource 2.a. Invest public and private funds in 3.a. Update strategic and policy docu- economy in the region existing places ments to accommodate new growth through compact and contiguous development 1.b. Cultivate economic development 2.b. Encourage private sector investment 3.b. Reform policies to make it easy for strategies that rely on traditional rural developers to build compact, walkable, landscapes mixed -use places 1.c. Promote rural products in urban areas 2.c. Build on past community investments 3.c. Recognize and reward developers and support other urban -rural links that build great places using smart growth 1.d. Link rural land preservation strategies 2.d. Foster economic development in and green building approaches to great neighborhoods existing downtowns Goal 1: Support the rural landscape Create an economic climate that strategic and early planning, a community can pri- oritize which land is most important to conserve and enhances the viability of working which land can accommodate the projected need for lands and conserves natural lands. future growth. Rural towns and villages are integrally linked with their surrounding landscapes. As such, smart growth in rural areas requires that communities preserve the landscapes that community members say they value. These include farmland, rangelands, forests, and natural areas —the elements that are part of the sense of place for rural communities. These uniquely rural resources are best protected when there is a support- ive economic climate that values working lands and a development climate that promotes the conservation of the natural landscape. Land development and population growth are signs of economic progress in many communities, but these indicators are often at odds with the working farms, natural landscapes, and scenic vistas that characterize rural areas and define their sense of place. When the agriculture -, forest -, and amenity -driven economies are encouraged to prosper, there is less pressure to convert land to developed uses in a haphazard manner. With GOAL 1: SUPPORT THE RURAL LANDSCAPE Strategy 1.a. Ensure the viability of the resource economy in the region Use value taxation Use value taxation (often called current use value taxation or preferential assessment) is a voluntary approach that allows land to be assessed at its current use value (as agriculture or forest land, for instance), rather than at its highest market value, which may include the value of the land based on its current use plus the underlying development rights that have not been exercised by the property owner. Use value taxation is used in some form in every state except Michigan.' Washington state, facing significant urban - growth pressure that has led to approximately 75 per- cent of its active agricultural land having fair - market values greater than the agricultural value (which, statewide, averages at 28 percent of the fair - market value), adopted a current use value taxation policy. Strategy Tools & Policies ta. Ensure the viability of the resource Use value taxation Renewable energy development economy in the region Tax credits for conservation Value-added farm and forest products • Right to farm policies processing • Ecosystem services markets 1.b. Cultivate economic development Purchase of development rights Fee simple acquisition strategies that rely on traditional rural Conservation easements Agritourism and ecotourism landscapes 1.c. Promote rural products in urban areas Direct marketing to consumers 'Buy local" campaigns and support other urban-rural links Government purchase of local products 1.d. Link rural land preservation strategies Transfer of development rights Agricultural, ranching, or forestry to great neighborhoods Priority funding areas zoning • Rural home clustering 10 Putting Smart Growth to Work in Rural Communities Right to farm polices can reduce nuisance lawsuits in areas with increasing non - agricultural populations. Larimer County, Colorado, adopted a Right to Farm and Ranch policy in 1998, protecting the rights of farmers and ranchers to use the land. Because farmers or foresters face a lower tax burden when they are taxing at current use, working the land remains more economically viable for the landowner. Currently, Washington has more than 11 million acres enrolled in current use value taxation.10 Tax credits for conservation Tax incentives for donating conservation easements can motivate a landowner to remain on the land. Fed- eral, state, and local governments can grant tax credits for land donation or conservation easements. Colo- rado has a tax credit system in place that provides the donor of a conservation easement a state income -tax credit of one -half the dollar value of the land under easement, up to an annual maximum of $375,000.11 Right to farm policies Nuisance lawsuits, based on complaints from neigh- bors or strict local policies, seek to curtail normal farming activities. Right to farm ordinances and laws protect farmers, ranchers, and foresters by preventing these lawsuits from succeeding in court. In response to an increase in the non - agricultural population and new tensions that were arising and threatening local agriculture, Larimer County, Colorado, established a Right to Farm and Ranch policy in 1998. State and county laws protect the rights of farmers, stating that as long as farms and ranches are operating within regulations, they cannot be considered nuisances. 12 Renewable energy development13 Renewable energy development on rural lands pro- vides an opportunity for farmers, ranchers, and forest- ers to increase the profits from their land, giving them an additional economic incentive to keep working lands working. The 2007 Census of Agriculture found 23,451 farms generated energy on- site.14 Here are some of the approaches they are using: 1. Some lands are suitable for wind energy develop- ment, and landowners may be able to capitalize on the opportunity to enter the energy market while still maintaining the traditional use of the land. Federal investment tax credits for wind farm devel- opment, including the Production Tax Credit, can provide an economic incentive to landowners. 2. Biomass production from trees, crops, or livestock manure, which can be processed by a methane digester to generate electricity for the farm or for sale to the grid, provides another avenue for gener- ating additional revenue from the land. 3. Production of solar energy on solar farms has potential for rural use in many parts of the country as well. Oregon has established Rural Renewable Energy Development (RRED) zones to encourage the develop- ment of renewable energy resources in non- metropol- itan areas. Energy companies developing renewable capacity in RRED zones receive a property -tax exemp- tion (as assessed on all new infrastructure and prop- erty improvements) for three to five years. Value -added farm and forest products processing By processing raw food and fiber into value -added products, landowners can supplement their income beyond simply selling the raw materials. Value -added forestry products include furniture, flooring, construc- .. 100 Putting Smart Growth to Work in Rural Communities 11 Oregon has 28 million acres of forest and 17.1 million acres of farmland- together, well over half of the state's total land cover. Oregon is the nation's leading producer of timber and forest products, and farming is one of the state's largest industries, comprising 10 percent of the state's gross domestic product. As a result of the importance of these rural industries to the state's economy, Oregon has made protecting its rural resource economy a priority. In addition to the RRED zones discussed above, Oregon uses value-added processing for farm and forest products and has tion materials, and paper; value -added food products include ice cream made from milk produced at a local dairy. These products can be developed through producer -owned cooperatives and local manufacturing plants and can also provide work for other residents in the community. Many states have adopted policies supporting value - added processing. For example, Min- nesota has adopted legislation to establish a value - added processing and marketing grant program to help farmers establish cooperatives and markets for their value -added products.15 The Blue Ridge Forest Coop- erative (BRFC) in southwest Virginia provides another example of value -added forestry products. The BRFC is a community -owned and operated forestry business that joins landowners to make value -added forestry products like trim, decking, paneling, and flooring while maintaining sustainable forest management practices. 16 Developing renewable energy capacity on rural lands can help farmers, ranchers, and foresters increase their profit margins, which provides incentive to keep the land in productive use. made protecting rural resources and the related economies a central part of its statewide planning goals. The statewide goals of preserving farmland, conserving forest land, and protecting natural resources outline planning strategies, including special zoning designations, which help limit development and urban growth on working lands. Using these strategies, Oregon has helped ensure that its rural resource economy continues to grow and thrive' 1 Oregon Department of Land Conservation and Development. "Rural Issues." httpJ/www.oregon.gov/LCD/urbanrural.shtml#Rural_lssues Oregon has worked to protect its agricultural and resource lands with statewide planning goals and special zoning designations, which limit growth on working lands. Ecosystem services markets Rural lands provide valuable ecosystem services, including sequestering carbon, filtering and storing a clean water supply, maintaining a habitat that sup- ports biodiversity, and mitigating natural hazards, such as floods and fire. Markets are emerging for these ecosystem services. In an ecosystem service market, the landowner sells ecosystem service credits to a bank, which in turn sells them to a buyer that has exceeded limits in carbon emissions, water pollutants, or biodiversity loss, based on a cap and trade system. Ecosystem services markets allow landowners to cap- ture the value of the ecological benefits their land pro- vides to the public. One of the best examples of this approach is in New York's Catskill Mountains: New York City provides payment for ecosystem services in order to protect its drinking water supply, ensuring that the land in the watershed will not be developed. 0 12 Putting Smart Growth to Work in Rural Communities Strategy 1.b. Cultivate economic development strategies that rely on rural landscapes Purchase of development rights Purchase of development rights (PDR) is a voluntary program in which a land trust or other agency buys the development rights to a parcel from the land- owner. The landowner is free to turn down the offer or try to negotiate a higher price. Once an agreement is made, a permanent deed restriction is placed on the property restricting the type of activities that may take place on the land in perpetuity. In this way, a legally binding guarantee is achieved to ensure that the parcel will remain agricultural land, forest land, rangeland, or as open space forever. This is because the agency involved retires the development rights upon pur- chase. This strategy has become increasingly popular, particularly in the West: Montana, Utah, and Arizona have all established programs with state funding. 17 (See also: Transfer of development rights, Strategy Ld.) Conservation easements For any land whose conservation is in the public inter- est, a conservation easement (or conservation restric- tion) is a legal agreement between a landowner and a land trust or government agency that permanently limits uses of the land in order to protect its conserva- tion values. This tool allows the landowner to con- Communities looking to protect rural landscapes while cultivat- ing economic development have a number of resources in Vermont. The state has not only an active land trust but also an established agritourism industry, which emphasizes the state's agricultural landscapes and heritage. The Vermont Land Trust (VLT), which has been active since 1977, has worked to place 483,283 acres, or 8 percent of all privately held land in the state, under conservation easements. This includes 650 farms, most of which are dairy farms, reflecting the traditional agri- cultural heritage of the state! In addition, VLT has joined with other land trusts and affordable housing trusts to create the Vermont Housing and Conservation Trust, which helps ensure that affordable housing remains available in Vermont's rural communities. The Vermont Farms! Association, which has 75 member farms, was formed in 1998 to promote agritourism in the state. It advertises an "out- of- the-mainstream" vacation experience, and member farms offer farm stays and group tours. Vermont tinue to own and use the land and to sell it or pass it on to heirs. There are tax advantages to landowners for donating conservation easements, including both immediate property tax and inheritance tax benefits. Conservation easements have been successful in many rural areas, including along the Bois Brule River in Wisconsin, where more than 90 percent of the riparian habitat on privately held land along the upper river is protected under easements.18 (See also: Tax credits for conservation easements, Strategy 1.a.) Vermont has an active agritourism industry. Agritourism can increase revenues by drawing tourists to stay in farm bed -and- breakfasts and participate in farming activities. Farms! hosts events throughout the year, including Sheep and Wool Week and farmhouse kitchen visits (during which traditional recipes are provided)? It is estimated that Ver- mont's growing agritourism industry resulted in an increase of $10 million in farm incomes between 2003 and 2005, and half of all participating farms report making more than $20,000 per year from their agritourism businesses (and half of those report making more than $70,000).3 In 2003, Vermont's governor declared September 15 Vermont Agritourism Day, illustrating the importance of agritourism to sustaining Vermont's rural communities. 1 Vermont Land Trust. "Farm and Farmland Conservation." http: / /www.vlt.org/ agriculture.htmi 2 Vermont Farms Association. http: / /www.vtfarms.org/ 3 The Beyond Organic Show. "Agritourism" http:/ /www.beyondorganic.com/ template /nst.php ?id = 081705 &idy = 2005 &sn =sn2: Vermont Farms Association. "Vermont Agri-tourism Survey." http: / /www.agmrc.org /media /cros /VT_ AgriTourism Survey_2003 2877B1D1E5E97.pdf a` 0 z 0 101 Fee simple acquisition State or local governments can purchase land outright to conserve particularly important land. Nonprofit land trusts can also purchase land to manage for eco- logical, cultural, or social reasons. The Arizona Land and Water Trust uses fee simple acquisition, along with voluntary conservation easements, to protect fragile and culturally important landscapes in southern Arizona.79 Agritourism and ecotourism Agritourism activities include farm visits and over- night stays at farm bed - and - breakfast operations. This may include the chance to help with farming and ranching tasks. Ecotourism targets an ecoconscious segment of the population that wants to engage in nature - related tourism on conservation lands while reducing the ecological footprint of their visit. Rural landowners can earn revenues from tourism activities on their land, including traditional recreational activi- ties such as hunting, fishing, and observing wildlife. Tourists are attracted to agritourism and ecotourism activities because they want to experience an intact rural landscape that is characterized by a meaning- ful sense of place. Oklahoma has capitalized on this interest in agritourism and ecotourism by forming the statewide Oklahoma Agritourism Association, which has more than 400 member farms and ranches that offer tours, pick - your -own events, and overnight stays.20 While agritourism and ecotourism can help protect the rural landscape, they are not viable when the character of the rural landscape is compromised. Ithaca, New York, is often described as "centrally isolated" in upstate New York. A metropolitan area of 100,000 people, surrounded by farmland and state parks, Ithaca provides an ideal market for local agricultural products as well as local arts and crafts. The city has an active "buy local" movement and supports the Ithaca Farmers' Market (IFM), which has a permanent pavilion for its 150 vendors, all of whom come from small towns and rural communities within a 30-mile radius of the city.' Along with the larger weekend market, the IFM sets up in downtown Ithaca twice a week and at a community center on Sunday afternoons. In addition to the variety of locations and times, which makes the market accessible, the vast majority of IFM vendors accept food stamps. IFM is incredibly successful, generating around $4 million in revenue per year. In addition 102 Putting Smart Growth to �Vork in Rural Communities 13 The Ithaca Farmers' Market in Ithaca, New York, has 150 ven- dors, all from within a 30 -mile radius of the city. Many vendors accept both food stamps and Ithaca Hours, the local currency. Strategy 1.c. Promote rural products in urban areas and support other urban -rural links Direct marketing to consumers Landowners can increase their profits by directly marketing their farm, ranch, or forestry products to consumers or markets. Community Supported Agricul- ture (CSA), for example, facilitates a creative partner- ship whereby, in exchange for purchasing shares during planting, CSA programs provide shareholders with regular, farm -fresh produce during the growing season. Shareholders often reside in urban centers. Farmers' markets, on the other hand, provide a venue for local farmers and artisans gather to sell their to IFM, there are 29 CSAs within a 60-mile radius of Ithaca and 41 within a 100 -mile radius ?Through CSAs and the farmers' market, Ithaca has created strong urban -rural connections that support the surrounding rural landscape and benefit the city. Ithaca has also adopted a local currency — "Ithaca Hours" — which can be used at the farmers' market and a number of local businesses. Ithaca Hours help ensure that money stays local and promote investment in the local economy.' i Ithaca Farmers' Market. "About Us." http:// www.ithacamarket.com /about-ifm/ history/ 2 Ecovian. "Ithaca CSA & Organic Food Delivery." http: / /www.ecovian.com /s? perpage =l0& distance= 60 &searchwithin= 40 &searchtext= &spatial= lthaca%2C +NY 3 Ithaca Hours. "What are Ithaca Hours ?" http: / /www.ithacahours.org /about.php s iu 0 0 14 Putting Smart Growth to Work in Rural Communities products to the community and have grown tremen- dously in popularity and economic impact in recent years. Beyond benefits to the fanners, who gain access to new consumers, the markets can also foster eco- nomic revitalization in the neighborhoods in which they are held .21 The Downtown Lawrence Farmers' Market in Lawrence, Kansas —the oldest farmers' market in the state —draws residents to the downtown area three days a week to buy farm -fresh produce, meat, and eggs, as well as local crafts, supporting both local agriculture and local businesses .22 Government purchase of local products Increasingly, state and local governments are contract- ing with regional farmers to supply food for public institutions such as schools, prisons, and govern- ment offices. Governments can also purchase locally produced forest products (like fiber and biofuels) from area foresters. For example, in late 2008, Snohomish County, Washington, leaders dedicated a new facility to store, dry, and crush locally grown seeds that will be refined into biodiesel and used to power county vehicles .23 The investment creates a new cash crop for farmers and a renewable energy source for the local government. "Buy local" campaigns Many local and state governments assist their agricul- tural regions by holding annual festivals and helping to promote their products as a unified brand. "Buy local" campaigns, ranging from "Alaska Grown" to "Something Special From Wisconsin" to "Fresh From "Buy local" campaigns have become a popular way to market locally grown products and remind consumers of the Importance of supporting rural lands. Florida," increase the share of the market dedicated to local products and remind consumers of the value of rural lands. Nonprofit and government entities may provide marketing help, supportive legal guidelines, financial support, and organizational assistance to ensure the success of these efforts. Many restaurants and stores have also increasingly begun to buy locally available food and other natural resource -based products. Strategy U. Link rural land preservation strategies to great neighborhoods Transfer of development rights Transfer of development rights (TDR) refers to a method for protecting one area of undeveloped land (the "sending area ") by transferring the rights to develop it to another area (the "receiving area "). Twenty -six states currently have legislation enabling TDR, and twelve more have TDR programs, although they do not have state -level enabling legislation .24 Developers who purchase TDR bonuses are allowed to build at higher densities, while their dollars fund the local government purchase of selected rural con- servation easements elsewhere, in order to protect farms, forests, or ranches. In 2007, there were 99 TDR programs across the country.25 Montgomery County, Maryland, has a particularly successful TDR program, which it began in 1980. In the decade before the pro- gram was implemented, the county was losing 3,500 acres of land per year to sprawling suburban develop- ment. Now, using a combination of agricultural zoning and TDR, more than 50,000 acres are protected. In all, Montgomery County has a total of 90,000 acres of protected agricultural land .26 Like purchase of develop- ment rights, described in i.b. above, transfer of devel- opment rights rely on conservation easements. Priority funding areas Priority funding areas (PFAs) identify geographic areas that qualify for financial or other assistance, such as infrastructure or accelerated project approval. Typically designated at the state level and supported by local decisions, PFAs create incentives for development to take place in particular areas, including those where infrastructure exists already, while removing incentives for growth pressure in undeveloped areas. Connecticut identifies PFAs as regional centers, growth and redevel- opment areas, and distressed municipalities. The state specifically requires that state agencies "cooperate with municipalities to ensure that programs and activi- ties in rural areas sustain village character. 1127 103 0 'o 0 0 a` 104 Putting Smart Growth to Work in Rural Communities 15 Transfer of development rights policies and priority funding areas protect undeveloped land while promoting increased density and development in existing neighborhoods and downtowns, as illustrated by these examples from Montgomery County, Maryland. Agricultural, ranching, or forestry zoning In agricultural, ranching, or forestry zoning, primary industry uses are allowed, but other uses, including res- idential development, are prohibited or very restricted. This type of rural land zoning has been applied to millions of acres of farm, ranching, and forest lands across the country. States and /or local governments can develop conservation zoning measures to ensure that productive farms, forests, and ranches are conserved. Oregon, Washington, and California provide examples of state -based conservation measures, and Pennsylva- nia and Wisconsin illustrate locally based rural land zoning.28 Oregon's Exclusive Farm Use (EFU) zoning designation has been particularly successful. Data indicates that, despite growth pressure, Oregon is losing large farms at half the national rate and midsize farms at a rate four times lower than the national average .29 Maryland established Priority Funding Areas (PFA) as a part of its 1997 smart growth legislation, and the state's experience illustrates both the potential and limitations of PFAs, which offer important lessons for states looking to integrate PFAs into their planning legislation. Maryland counties established PFAs that reflected 20 years of development capacity, and since their creation, the state has seen more urban growth and greater investment in water and sewer infrastructure inside PFAs than outside of them, and more job creation tax credits have been made available within PFAs. PFAs have also cre- ated a framework for communication between state agencies and local government. However, Maryland's PFA program has Rural home clustering "While at times controversial, cluster development can be an alternative to large lot, dispersed subdivision development. The basic premise is that a developer can build the same number of units on smaller lots (or more units if there is a density bonus system) while preserving a percentage of the developable land for agriculture or as natural land. One method of cluster development is known as a conservation subdivi- sion. The implementation of a conservation subdivi- sion typically occurs through open space zoning or an overlay district such as a cluster or planned unit development ordinance. The conservation subdivision has many compelling environmental and fiscal advan- tages, like reducing infrastructure costs and mak- ing it cheaper to provide community services (e.g., police and fire protection) while also limiting loss and weaknesses that have limited its success. The criteria used to establish PFAs vary from county to county, and the Maryland Department of Planning does not have the authority to redraw PFAs that are deemed too big. As a result, counties with a more flexible approach to establishing PFAs have seen greater success with the program. Additionally, PFAs have not become well integrated into the local land-use planning process, and state agencies have not established clear processes or systems for spatially allocating funds or for periodically reviewing and updating PFAs? I Lewis, R., G.J. Knapp, and J. Sohn. "Priority Funding Areas: A Good Idea Whose Time Has Yet to Come. "JAPA, 75.4 (Sept. 2009): pp. 457 -478. a a 16 Putting Smart Growth to Work in Rural Communities King County, Washington, home to Seattle, has adopted a num- ber of policies that help preserve rural land in unincorporated areas of the county while developing great neighborhoods in the incorporated areas. In 1999, the county adopted a TOR policy. It now administers both a TDR Exchange and a TDR Bank. The TDR Bank began with $1.5 million in funds to protect rural lands and an additional $500,000 to develop "urban amenities" in neighborhoods accepting a transfer. At the time of the trans- fer, the rural land is placed under a conservation easement. Since 2000, King County's TDR program has protected 137,500 acres. In addition to TDR, King County has four specific zoning des- ignations for working lands and rural communities: agriculture zone, forest zone, mineral zone, and rural area zone. Together, these zoning designations help protect King County's working lands and the character of rural communities while minimiz- ing the conflict between them as well as between the growing Seattle metropolitan area and the rural landscape! fragmentation of wildlife habitat.30 However, cluster development will be effective only if it is coordinated with other development and conservation priorities in the region. Implemented poorly, clustering works at cross - purposes with smart growth approaches. For instance, lack of coordination and planning can result in conservation subdivisions further fragmenting valu- able natural resource land as well as an increasing need for residents to drive if services, amenities, and jobs are not located nearby. Cluster development has become popular in a number of states, notably Mas- sachusetts, where towns like Mashpee, on upper Cape Cod, have revised zoning codes to require that at least 50 percent of new development sites be preserved as open space," Finally, King County promotes rural home clustering through its green building guidelines. The guidelines state that homes should be clustered to minimize their environmental impact and disruption of the landscape. In order to facilitate rural home clustering within rural area and urban reserve zones, King County offers a critical areas designation, which allows landowners and developers to define critical areas near the project site and to use Build Green1m grants for community and multifamily developments as well as for single - family homes.z King County's TDR program, zoning designations, and green building program have helped create great neighborhoods, both urban and rural, while maintaining the integrity and viability of the rural landscape. I King County Sustainable Building. "Transfer of Development Rights Program:' hftp: / /www.kingcounty.gov/ environment /stewardship /sustainable-buildi ng/ transfer -development-rights.aspx 2 King County Solid Waste Division. "Green Building for Rural Residents. "' http :// you r.kingcounty.gov /solidwaste /g reenbuilding /residential /rural.asp Agricultural, ranching, and forestry zoning can help preserve working lands. 105 Coal 2: Help existing places thrive Take care of assets and investments such as downtowns, infrastructure, and places that the community values. All communities can benefit from building on and enhancing previous investments — whether that is a once vibrant but now underutilized Main Street, an existing street grid that could once again provide the framework for a walkable neighborhood, or historic buildings and iconic rural architecture such as barns and bridges that are worth preserving and possibly reusing. Development that leverages future economic value out of these prior investments can be the foun- dation for helping existing places thrive. Public investments can maintain existing infra- structure and buildings to extend their useful life while also supporting appropriate new growth that is targeted in places to make the best use of existing infrastructure. Formally articulating the relationship between these resources and other community goals can further help residents and investors understand the value of these unique resources. In the absence of a community strategy to support existing places, infrastructure dollars may be inadvertently allocated to GOAL 2: HELP EXISTING PLACES THRIVE 106 support development that encourages historic property demolition or speeds up the conversion of working lands from rural uses to those that support large -scale residential or commercial uses. Creating a policy structure to take care of existing assets and investments can help preserve, reuse, and position historic buildings to anchor new investment. It can also help redevelop brownfields and vacant properties to accommodate growth as well as allow existing businesses to receive the support they need to retain workers and expand to meet new needs. Strategy 2.a. Invest public and private funds in existing places Fix -it -first Communities can employ a "fix -it- first" approach to infrastructure spending in order to help existing places thrive. A fix -it -first approach means that communities will prioritize public funding to repair, restore, and conduct preventive maintenance on existing infra- structure, including buildings, roads, and water and sewer lines, before building new infrastructure. This approach can encourage and attract development in areas that are already served by existing infrastructure, making existing communities more vibrant and saving on future maintenance costs. This approach can also Strategy Tools & Policies 2.a. Invest public and private funds in Fix -it -first • Streets and streetscape improvements existing places Historic Preservation and the Main • Targeted new development Street Approach • Parks and natural resource areas as destinations 2.b. Encourage private sector investment Infill development incentives Redevelopment readiness certification • Overcoming barriers to infill Split-rate tax 2.c. Build on past community investments Adaptive reuse School rehabilitation 2.d. Foster economic development in Local business survey Business recognition program existing downtowns 18 Putting Smart Growth to Work in Rural Communities Renovating existing buildings can help preserve a community's historic assets, as these before and after photos of the James Dean House in Rosemont, New Jersey, illustrate. help preserve historic infrastructure, such as bridges, that may have historic or economic development value. Historic Preservation and the Main Street Four-Point Approach® Communities can revitalize older, traditional business districts by encouraging historic preservation. Well - preserved private homes, examples of rural traditions such as barns, or important downtown structures enable both residents and visitors to feel a sense of place. Federal and state tax credit programs facilitate diverse preservation efforts. The Main Street Four - Point Approach of the National Trust for Historic El Dorado, Arkansas, won the Great American Main Street Award in 2009. Investing in preserving and revitalizing the downtown has created jobs and drawn tourists as well as residents. Preservation provides a useful framework for redevel- opment efforts, specifically in older downtowns .32 This approach focuses on strategically combining historic preservation efforts with marketing the businesses in historic downtown areas as a way to generate addi- tional economic investment. The strategy embraces distinctive architecture, fosters a pedestrian - friendly environment, promotes local business ownership, and creates a sense of community. El Dorado, Arkan- sas, winner of the 2009 Great American Main Street Award, found that the Main Street approach created jobs, resulted in more locally owned small businesses, drew residents from throughout the county as well as tourists to the revitalized downtown, and gave the community a renewed sense of place .33 Parks and natural resource areas as destinations Parks and other natural resource areas, such as wildlife refuges and conservation areas, have many economic, ecological, and social benefits. Parks improve residents' physical and psychological health, strengthen communities, and make neighborhoods more attractive and vibrant places to live, work, and play. They increase citizens' frequency of exercise and can increase neighboring property values. Investing in existing parks can make them destinations, drawing residents and visitors alike to help the towns around them thrive. Many rural communities have local or state parks that can serve as community assets. Other rural communities serve as gateways to larger natural resource amenities, such as National Parks or National Forests. Whether a local, downtown park or a national treasure, parks are destinations that should be high- lighted and built upon. The Finger Lakes region in J E oK a 0 E 0 u 0 'o n 107 108 Putting Smart Growth to Work in Rural Communities 19 In 2006, Victor, Idaho -a city of about 1,200 residents, located in Teton County, just west of Jackson, Wyoming -began to address the pedestrian safety challenges of having its Main Street also function as a state highway. A wide roadbed and high truck and car traffic created an unpleasant experience for pedestrians and a disincentive for quality future development in the down- town area. Presented with ideas on how to create a boulevard through the Environmental Protection Agency's (EPA) Smart Growth Implementation Assistance program, Victor's leaders central New York state has highlighted its parks as destinations, drawing visitors to local, state, and National Parks to see scenic gorges and waterfalls and helping to build the tourist economy, which supports small bed - and - breakfasts, cafes, restaurants, and local craft stores throughout the region. Street and streetscape improvements Street retrofits and streetscape improvements in busi- ness districts can make downtowns more appealing to residents and visitors and can help attract more patrons to local businesses. Ensuring that streets support multiple modes of transportation, includ- ing walking, cycling, and transit, can enhance town centers by making them more accessible to all popula- tions while also limiting or slowing automobile traffic. Streetscape improvements include street paving, side- Parks and natural resources areas can be significant community assets. Taughannock Falls State Parkin Tompkins County, New York, shown here, provides residents with a scenic place to swim and hike and draws tourists to the area. worked with the Idaho Transportation Department to stripe its Main Street in a way that reduced truck and automobile speeds, created on-street parking to serve adjacent businesses, and set the stage for additional streetscape improvements, including the medians necessary to create a boulevard' I Project Summaries. U.S. EPA Smart Growth Assistance program. Cities of Victor and Drigs, Idaho. "Growing our own Communities." http: / /www.epa.gov/ smartgrowth /sg ia_communities.htm #id Streetscape improvements can help draw people to a community's downtown area. In Idaho, Victor's Main Street, shown here before and after improvements, was renovated with assistance from the EPA's Smart Growth Implementation Assistance program. The improvements have helped lower traffic speeds and provided enough parking to serve local businesses. Photos courtesy of Charlier Associates, Inc., City of Victor 20 Putting Smart Growth to Work in Rural Communities walk improvements, street lighting, directional signs, trees and planters, street furniture, and trash recep- tacles that can improve the appearance of a down- town corridor or Main Street and thereby attract more people. State Departments of Transportation (DOTs), metropolitan planning organizations, and regional. planning commissions often have funding avail- able for streetscape improvements .14 In New Jersey, NJDOT has awarded between $750,000 and $3 million (depending on legislative appropriations) to jurisdic- tions that have participated in the New Jersey State Development and Redevelopment Plan. The funding is available for projects that enhance pedestrian and bicycle features, make streetscape improvements, and rehabilitate transportation structures. In 2009, the state also announced a Transportation Enhancement grant program through NJDOT, funded through the American Recovery and Reinvestment Act (ARRA), which has $19.5 million available to communities for "non- traditional transportation projects," including streetscape improvements.3s Targeted new development By targeting new development into existing growth areas or downtown corridors, where infrastructure already exists, communities can ensure that private investment generates the maximum benefit for the community while avoiding the expense of provid- ing new infrastructure that is required for greenfield development. Strategically designating existing areas to receive new development in a comprehensive plan (and ensuring that local ordinances support that plan) can save taxpayers money and provides predictabil- ity to developers looking for an appropriate place to build. Kentucky has a long history of preserving its historic and cultural resources. The state's first preservation organization was founded in 1978. It has evolved into Preservation Kentucky, a statewide organization focused on providing educational opportunities related to preserving historic and cultural resources. Preservation Kentucky now administers the Rural Heritage Development Initiative (RHDI), a pilot program of the National Trust for Historic Preservation. RHDI, which is funded through a grant by the W.K. Kellogg Foundation and matching funds from private donors and county governments, focuses on five goals in eight central Strategy 2.b. Encourage private sector investment Infill development incentives Current policies and regulations may inadvertently create incentives to build on greenfields by making infill and redevelopment more costly than developing on the outskirts of an existing town. To remedy this situation., communities should review their land use policies and regulations to ensure that there are incen- tives for infill and brownfield development and disin- centives for greenfieid development. Examples include faster project approval and reduced impact fees. Overcoming barriers to Infill Existing codes and ordinances may make it difficult to accomplish infill development and brownfield redevelopment. Where infrastructure already exists, communities may need to revise their existing poli- cies or adopt new ones that enable infill development to occur. The Land -of -Sky Regional Council in North Carolina, with a grant from the EPA, evaluated existing policies in the four - county region and examined how to overcome barriers to infill .37 Cities and counties in the region have been removing these barriers, facili- tating brownfield redevelopment, and creating new amenities on underused and abandoned sites. This kind of project often generates excitement, which can jump -start additional private- sector investment. Redevelopment readiness certification Communities can send a message to potential inves- tors that they are ready for reinvestment by dem- onstrating redevelopment readiness. The concept of redevelopment readiness certification is that a commu- Kentucky counties. The program works to "create a regional approach to implementing historic preservation and economic development" strategies, including developing the heritage tourism industry, developing local businesses that reinvigorate Main Streets and reflect the unique culture and heritage of the region, and preserving farmland and historic farms while devel- oping new local markets for farm products. By investing-both public and private funds, Preservation Kentucky has helped the state's rural communities thrive' 1 Preservation Kentucky, http: / /www.preservationkentucky.org/ 109 nity has formally taken the necessary steps to ensure that private investment in redevelopment will not be hindered by existing zoning regulations or other land use policies. First put into place by the Michigan Suburbs Alliance in 2005, the state - funded program consists of an eight -step process that included com- munity visioning, training for public officials, evalua- tion and streamlining of development regulations and tools, marketing, and plan review processes.38 While not yet widely in use, this model is flexible enough to be applied in diverse areas in need of investment, including in rural communities. Split-rate tax Split -rate or two -rate property tax policies divide the property tax into two parts, focusing one part of the tax rate on building value and improvements and the other part on the value of the land. This type of tax reduces the tax on the building, creating incen- tives for maintaining and improving properties, and increases the value of land, reducing land speculation and encouraging infill development. While the split - rate tax is a promising strategy for rural areas, very few states allow jurisdictions to adopt it. The two -rate tax has been particularly successful in Pennsylvania, where it has been allowed since 1913. Nearly 20 cities have adopted it, and most saw an increase in building permits issues after adopting the two -rate tax, suggest- ing that it does, in fact, encourage infill development and lead to the revitalization of downtowns and town centers. Several other states also permit the use of a 110 Putting Smart Growth to Work in Rural Communities 21 split -rate tax. In Hawaii, it is allowed in all jurisdic- tions but has been adopted only in Kauai County. Virginia and Massachusetts allow split -rate taxation in specific jurisdictions.39 Strategy 2.c. Build on past community investments Adaptive reuse Reusing existing buildings rather than demolishing the old and then building anew preserves histori- cally important buildings and conserves energy and resources. Rehabilitation of existing buildings for public and civic space provides access to tourists as well as local residents who are curious about unique local cultural heritage. Throughout the country, historic rural sites such as barns and mills have been creatively reused in a way that preserves their his- toric significance while meeting modern needs such as office space, parking, or administrative centers. Fed- eral and state tax credits as well as local policies like flexible building codes can help make such projects financially feasible. School rehabilitation As communities grow larger and /or older, they face the need for updated educational facilities. Neighbor- hood schools typically provide historic, sentimental, and even health and safety benefits to neighboring residents, whose children may be able to walk to school. Demolishing old school buildings in favor of The three -story Albemarle High School building, located In a residential neighborhood In Albemarle County, North Carolina, one block from the central business district, has been a part of the community since 1924. Despite Initial opposition from the school board, the community rallied to save the building from demolition. In 2002, it was renovated as Central Elementary School, and residents believe the renovation has contributed to the continued vitality of this rural community. Photo courtesy of Albemarle Downtown Development Corporation 22 Putting Smart Growth to Work in Rural Communities Swainsboro, a city with just under 7,000 residents in south- east Georgia —the "City Where Main Streets Meet' —has made downtown revitalization a priority. The city has established a Downtown Development Authority (DDA), whose main objective is "to foster a healthy, thriving economy in downtown Swains- boro." The DDA has developed a full inventory of downtown businesses, noting that a range of business types is essential to a healthy and balanced local economy.' The city and the DDA have found creative ways to revital- ize downtown Swainsboro. The city offered a fagade grant program to encourage downtown businesses to make fagade improvements (75 percent of businesses have done so) and converted the site of the old courthouse into a public plaza, creating a focal point in the downtown area. In 2009, the DDA, along with the city, the Chamber of Commerce, and the county's Joint Development Authority (JDA), in conjunction with the local newspaper, radio stations, and several investment and larger facilities outside existing neighborhoods forces staff, parents, and children to drive to school rather than have the option to safely walk or bicycle within the neighborhood. When new schools are required, old school buildings can be rehabilitated to other uses in order to preserve the important historic features of a community and build onto the fabric of the existing town. Strategy 2.d. Foster economic development in existing downtowns Local business survey In order to foster economic development in existing downtowns, it is important to assess the assets and needs of the businesses that are located in the area. Knowing the strengths and weaknesses of the down- town business environment will help communities tai- lor economic development strategies and investments in ways that will be most useful to those businesses and help the community thrive. Business recognition program Communities can create a recognition program to reward businesses that add architectural and economic value to the community. A program could applaud impressive historic renovations or host a creative window display competition. Acknowledging the properties firms, launched the Creative Marketplace Competi- tion. The competition is aimed at bringing new businesses downtown, further reducing the vacancy rate and diversify- ing the downtown business mix. It offers three awards, in the categories of retail, restaurant, and arts /entertainment. Winners receive three months of free rent, subsidized rent for the rest of the first year, $5,000 in start -up money, and free advertising in the local newspaper and on the local radio station. Investing in its downtown has helped Swainsboro remain a vibrant rural community.z 1 City of Swainsboro. "Downtown Development Authority." http: // cityofswainsbDro.org/ business /resources /downtowndevelopment / 2 City of Swainsboro. "Creative Marketplace Competition." http: // cityofswainsboro .org /whatsnewdowntown /downtown -projects/ downtown-business- plan-contest/ Economic development and investment in existing downtowns can help create strong community centers, support local businesses, and build the local economy. The Cotton District, in Starkville, Mississippi, draws residents to the downtown area for shopping, as well as community events and festivals. important economic, cultural, and social roles that local businesses provide offers another incentive for those businesses to remain in the downtown. Other incentives might include recognition plaques or press conferences. Such strategies can create some favor- able press about local businesses and promote healthy competition among them for future marketing efforts. a N s a 0 111 Goal 3: Create great new places Build vibrant, enduring neighbor- hoods and communities that people, especially young people, don't want to leave. Revitalization approaches are limited by the commu- nity's existing built environment. Population projec- tions and a quick scan of the landscape show that many communities need new development, especially those in high- amenity recreation areas and those adjacent to metro areas. For these rural communi- ties, therefore, the challenge is to build new places that both honor and reflect the rural legacy as well as generate economic, environmental, and community benefits for both new and current residents. Great new places are unlikely to be built with conventional codes and policies. For communities that seek to obtain the best outcomes from new development, a new regulatory framework must be put in place. By changing these frameworks, a community can begin to build vibrant, enduring neighborhoods and districts that will provide the opportunities necessary to retain current residents, especially young people, and attract new residents. GOAL 3: CREATE GREAT NEW PLACES 112 Strategy 3.a. Update strategic and policy documents to accommodate new growth through compact and contiguous development Visioning Before a community creates or updates its compre- hensive plan or makes other important growth and development decisions, it is helpful for the community to undergo a visioning process to articulate a broad vision of itself into the future. The plan's goals, objec- tives, and strategies will support its realization. Vision- ing meetings can be held at places of importance to the community, illustrating the types of places that the community sees as contributing to its identity and sense of place. Places worth preserving Before deciding where great new places should be located, the community should consider which land and resources are important to conserve for economic, cultural, or ecological reasons. Conducting a green infrastructure assessment may help a community determine where development should and should not occur. By articulating valuable assets or qualities, it is easier for the community to determine locations that should be off - limits to future development.40 Strategy Tools & Policies 3.a. Update strategic and policy docu- Visioning Infrastructure grid and transportation ments to accommodate new growth Places worth preserving options through compact and contiguous Designated growth areas Distinctive local character development 3.b. Reform policies to make it easy for Policy alignment Context-sensitive design developers to build compact, walkable, Walkability Green street design mixed-use places Parks and open space Low-impact development • Traditional neighborhood development Form -Based Codes 3.c. Recognize and reward developers Smart growth recognition programs Green building that build great places using smart growth and green building approaches 24 Putting Smart Growth to Work in Rural Communities Community visioning is Important to helping a community articulate a vision for its future and can provide the basis for comprehensive or master plans. Here, community members participate in a visioning process in Adams County, Pennsylvania. Designated growth areas Comprehensive plans should clearly identify desig- nated growth areas, including hamlets, town or village centers, and neighborhoods, in order to target new growth into the areas that the community sees as best suited for the development of new places. This strategy also prevents haphazard sprawl onto land that has scenic qualities or is better used as productive, working land. Some of these areas may be designated as receiving areas in a transfer of development rights (TDR) program. Infrastructure grid and transportation options Placing infrastructure along a grid is not only effi- cient—it also allows for easy expansion. Assuming annexation policies support it, extending existing grids of roads, sewer, and water networks to new develop- ment land can provide significant cost savings and prevent or limit sprawling growth in the long -term. Good connectivity among roadways enables multiple routes of access and reduces traffic congestion. By considering existing road networks, transit service, and trails networks, the community can make an informed decision about how to utilize existing trans- portation infrastructure and minimize future auto- mobile traffic and the associated pollution. Updating infrastructure plans to encourage compact develop- ment along a grid network can provide communities with significant savings. Horton, a town of just under 2,000 people in northeastern Kansas, has maintained a well - defined street grid and compact town center. Building on the existing infrastructure grid also makes investing in transit more feasible. Transit options for rural communities differ somewhat from those typically associated with urban areas and can range from demand - responsive service to fixed -route bus systems, varying with the size and structure of Z the community. Bozeman, Montana, has successfully implemented a fixed -route bus system, Streamline, to serve residents, commuters, and students and faculty d of Montana State University. A complementary fixed- route bus system, Skyline, now serves the ski -resort community of Big Sky, bringing tourists and seasonal employees to the community.41 Distinctive local character It is important that great new places reflect the cul- tural character of the region. Articulating what makes nearby places distinctive and attractive helps ensure that new development reflects these important fea- tures and supports the region surrounding it. This may include enhancing community design along key commercial corridors, for example, to ensure that the image being projected to visitors is attractive and unique. Pierce County, Washington, has created rural center guidelines for neighborhoods, rural activity cen- ters, and gateway community centers.42 These guide- lines help preserve the distinctive local character while allowing for the development of great new places. Both traditional neighborhood development (page 26) and the Main Street approach (page 18) can be used to help create or maintain a distinctive local character. Transportation options can be difficult to support in rural communities, but building on an existing infrastructure grid and implementing either demand- responsive or fixed -route bus systems can be successful strategies. Bozeman, Montana, has a fixed-route system called Streamline. 113 114 Putting Smart Growth to Work in Rural Communities 25 Sioux Falls, South Dakota, often called "the best little city in America, "' is at the center of one of the fastest growing metropolitan areas in the Midwest. In order to preserve its small-city character as well as the character of the rural areas surrounding it, the city has entered into joint zoning jurisdic- tion agreements with Minnehaha and Lincoln counties. The extraterritorial planning jurisdiction gives the city of Sioux Falls and the counties equal power in making decisions on zoning in the joint area 2 In December 2009, the city adopted the Shape Sioux Falls 2035 Comprehensive Master Plan. The plan has three main goals: to manage new growth effectively; to plan land use, urban form, and neighborhoods; and to improve overall com- munity sustainability.3 It defines areas for future annexation, as well as areas outside the growth boundary "where the existing rural character is to be maintained." Additionally, the plan Rural communities, like Gold Hill, Colorado, can achieve their visions for growth through policy alignment. Strategy 3.b. Reform policies to make it easy for developers to build compact, walkable, mixed -use places43 Policy alignment Once the vision is translated into the comprehensive plan, the community's zoning ordinance and other policy documents should be updated to ensure that the community vision can be achieved. For example, in many communities, zoning ordinances do not allow mixed -use, compact, walkable communities to be built by -right. To foster the development of great new places, zoning ordinances and /or overlay notes that "both city residents and the rural community have a fundamental interest in preventing scattered and haphazard development in outlying areas." The plan also ensures that as Sioux Falls expands, the city and the counties are work- ing closely together to plan rural area development policies. Through its comprehensive planning efforts and joint planning jurisdictions, which promote collaborative planning between the city and surrounding rural communities, Sioux Falls is ensuring that it will create great new places while maintaining its character and protecting the surrounding working lands. 1 CNN Money.com. "Best Places to Launch a Business -Sioux Falls, SD," http: // money.cnn.com /smalibusiness/ best_ places - launch /2009 /snapshot /314.html. 2 City of Sioux Falls. "Joint Zoning Jurisdiction." http: / /www.siouxfalls.org/ Planning /long range / master _plans /iointjurisdiction.aspx 3 City of Sioux Falls. "Shape Sioux Falls 2035." http: / /www.siouxfalls.org/ Planning /shape zones should actively encourage mixed -use, compact, walkable neighborhoods without the need for time - consuming and unpredictable code amendments or variances. Such an approach creates powerful incen- tives for the private sector to build what the commu- nity wants. Form -based codes, discussed on page 27, provide an option for policy alignment. a Walkability New neighborhoods that have a grid -like street net- work equipped with sidewalks and bike lanes encour- age residents to walk or bicycle to their destinations. Compact and mixed -use developments are also impor- tant components of walkability, ensuring that essen- tial destinations are centrally located and accessible. Walking and bicycling benefit public health, reduce pollution, and create more livable neighborhoods. From economic, environmental, community, and public health perspectives, the development pattern of new rural towns and villages should allow for safe and convenient walking and bicycling opportunities. Distances between rural communities certainly make walking and bicycling more challenging. A good trail system that links neighborhoods with rural routes and downtown destinations in nearby communities can serve as a recreational or tourism resource as well as a commuter route that is protected from higher -speed roads. Trail systems have been shown to provide eco- nomic and social benefits to adjoining areas. The Katy 'Nail, a 225 -mile long trail that runs along the former 26 Putting Smart Growth to Work in Rural Communities The MKT trail, an 8.8 -mile spur of the Katy Trail, connects the trail system and many of the small towns along the trail, to Columbia, the fifth largest city in the state and home to the University of Missouri. 0 a Missouri - Kansas -Texas (MKT) Railroad line —much of it following the Missouri River — begins in suburban St. Charles, Missouri, and runs across the state, con- necting many of the former railroad towns with larger towns and cities and providing a major recreational amenity for bicyclists and joggers." Parks and open space Planning parks and open space into the design of new places is important for a variety of reasons. Parks are not only essential community amenities but also provide important economic, ecological, and public health benefits. Building in a requirement for all new Littleton, a town of just under 6,000 people nestled in the White Mountains, is a compact, walkable, and mixed-use small town that has a thriving downtown and many amenities for residents and tourists alike. In its master plan, the city notes that "the ability of future development to protect and enhance Littleton's community character is an issue of both location and design:' As a result, Littleton has created a planning and policy framework that will help create great new developments while supporting Littleton's existing neighborhoods. This effort began with the revitalization of the downtown area in the late 1990s. At this time, Littleton's downtown was struggling with a storefront vacancy rate of 20 percent. The vacancy rate is now two percent. In addition to its thriving downtown, Littleton development to contribute to parks is easier and more cost - effective than trying to install parks in already developed areas. Thurston County, Washington, requires that all new rural residential developments designate a minimum of 60 percent of the develop- ment area as a resource use parcel, which can be a natural area or used for passive recreation space or agriculture, and developers also receive density bonuses for incorporating additional open spaces into new residential developments. As described earlier, linking these amenities to existing or planned trail systems further adds to their value as destinations. Traditional neighborhood development Compact, walkable, mixed -use development, which is located in areas that communities have identified as the best place for growth, can be supportive of bet- ter economic, environmental, community,'and public health outcomes. Traditional neighborhood develop- ment (TND) is an efficient way to accommodate a community's demand for housing, retail, and other new development. From a regional perspective, when a portion of a community's demand is accommodated this way, the pressure to convert working lands, forest, and green space into housing or other uses is reduced. Decreasing the market pressure to convert open space and working lands to development is one step toward achieving the land conservation outcomes many communities are seeking. This new urbanist strategy has been successful in rural communities like Crested Butte, Colorado, where a new TND residential devel- opment created 98 additional housing units that reflect the rural character and mining heritage of the town.41 has invested in a new industrial park -one of the largest in New Hampshire -that provides a range of employment opportunities for nearly one -fifth of the town's residents. Littleton has also located sites for new residential developments, focusing on infill developments and new cluster or "open space" subdivi- sions, and it has made plans to extend the sidewalk infrastruc- ture into newer developments. Littleton has won a number of awards for maintaining its compact, walkable, mixed-use small -town character. It was rec- ognized with a Great American Main Street Award for outstand- ing achievement in downtown revitalization as well as a New Hampshire Profile Community Award for "preserving, protect- ing, and promoting" the state's spirit of independence. 115 Form -based codes A relatively new approach to regulating development, form -based codes are used to achieve a specific urban form rather than designate specific land uses, as is typical in conventional zoning. Form -based codes can help a community support mixed uses, diverse hous- ing options, and open space while also paying atten- tion to design details such as streetscapes and facades. Because they are simpler to envision than conven- tional codes, form -based codes provide a community with a certain level of predictability about the public realm, whether applied to new or existing develop- ment. Georgia has made a statewide shift toward form -based codes, and small towns in the state, like Covington and Suwanee, have found form -based codes helpful to revitalizing town centers and preserving small -town character. Context-sensitive design Context - sensitive street design links roadway planning and design to adjacent land uses and neighborhood type. For example, when a driver is transitioning from a high -speed arterial to a downtown business dis- trict, he or she might find narrower streets lined with parked cars, which obligate slower speeds and a focus on courtesy and safety. Context - sensitive street design also includes a complete network of sidewalks and bike routes so that all have safe and affordable trans- portation options. A range of design characteristics like this can subtly change driver behavior and enhance the pedestrian experience. Context - sensitive design 116 Putting Smart Growth to Work in Rural Communities 27 Parks can help draw residents downtown and serve as local landmarks that reflect community history. can also highlight local history and heritage, as is the case with the new Cobblestone Street Interpretive Park in Booneville, Missouri. The park incorporates a his- toric cobblestone street — thought to be the first paved street west of St. Louis —that was rediscovered during site investigations for a new highway bridge. The park, developed in tandem with the highway bridge, has become a local landmark that reflects local history and helped revitalize the town's waterfront.46 Green street design Green street design options are aimed primarily at environmental enhancement, although they have addi- tional advantages. Typical strategies for green street design include reducing impervious surface cover to Context-sensitive design, as Illustrated by these street Improvements in Keene, New Hampshire, can help link roadway designs to adjacent land uses and support a range of transportation options. Photo courtesy of City of Keene a s 52 a 28 Putting Smart Growth to Work in Rural Communities Residents can help determine priorities for preservation and new growth. w 0 0 0 a assist in stormwater management and reduce the heat island effect; using the public right -of -way for multiple purposes, such as trails that can permit both stormwa- ter management and recreation; and strategic plant- ings to allow biofiltration to treat runoff and improve water quality. A more specific example might be a tree canopy that absorbs excess runoff, lowers roadway temperatures, and improves air quality. This kind of amenity not only reduces infrastructure demand but also can improve a community's appearance and help it support active transportation, including walking and bicycling. Low - impact development Like green street design, low- impact development (LID) uses natural landscaping to manage stormwater as close to its source as possible. Using strategies such as green roofs, rain barrels, and permeable pave- ments, LID can minimize the impact of built areas and promote natural water movement within an ecosystem or watershed. Within a compact area, this natural infrastructure (ideally native or drought - resistant) can reduce the impact of new development projects while also providing a natural landscape amenity that requires limited maintenance. LID is especially important in fragile ecosystems and places particularly prone to climatic events like droughts. LID practices should be implemented in conjunction with com- pact development in order to reap the most benefits. Colorado recently enacted two new laws, allowing rain barrels on private property.47 Santa Fe County, New Mexico, established an ordinance requiring that all commercial developments collect 100 percent of roof drainage and that residential developments collect a minimum of 8S percent of roof drainage in cisterns. Rainwater harvesting helps address the important issue of water conservation in Santa Fe County's high desert climate.48 Strategy 3.c. Recognize and reward developers that build great places using smart growth and green building approaches Smart growth recognition programs In many communities, developers are already working to build great new places. Publicly recognizing devel- opers who build projects that are aligned with the community's vision can serve to both draw attention to local priorities and remind other developers that great new developments and community priorities are not necessarily at odds with one another. Many state smart growth organizations have existing recognition programs. Idaho Smart Growth began awarding its Grow Smart award in 2005.49 Awards are given to com- munities or projects across the state that exemplify the principles of smart growth. Smart Growth Vermont has a biannual smart growth awards program, started in 2006, which recognizes redevelopment, infill, and his- toric preservation projects exemplifying the principles of smart growth.so Green building Green building is gaining traction nationwide as an efficient and healthy alternative to conventional building practices, including siting, construction, renovation, operation, maintenance, and demoli- tion. The Leadership in Energy and Environmental Design (LEED) Green Building Rating System" is the nationally accepted benchmark for green building. In addition to the Green Building Rating System, the U.S. Green Building Council developed the LEED for Neighborhood Development Rating System', which integrates the principles of smart growth, new urban- ism, and green building.$] By completing a LEED- certified project, developers can link their commitment to smart growth with other sustainable strategies and receive plaudits from peers in both the develop- ment and environmental communities. Minnesota has adopted statewide sustainable building guidelines. All new buildings and renovations on buildings larger than 10,000 square feet receiving funding from bond proceeds must exceed the requirements in the state energy code by at least 30 percent, work to achieve the lowest possible lifetime cost for the building, and attempt to make continual improvements to energy efficiency.52 These guidelines, which are intended to reduce energy costs, improve the health and well- being of building residents or occupants, protect the natural environment, and are compatible with LEED standards. 117 Y V a` Next Steps Rural is still an evolving term in the United States. Rural communities and rural lifestyles today look very different in many places than they did even 30 years ago. As today's rural leaders struggle to deal with both internal and outside pressures, they should seek a balance that integrates old and new and links rural economic traditions with new innovations. Bal- anced approaches can help bridge the gaps between residents who prize natural resources and those who champion new growth as a measure of success. The smart growth approaches outlined in this document are intended to provide some useful ideas for specific strategies that can build on a community's assets and further enhance its sense of place. Before implementing the ideas in this report, each commu- nity must complete a process of self - evaluation and dialogue before the right combination of policies will become clear. Such a process may include the follow- ing steps: • Conduct an assessment of current conditions. A community assessment may ask: What are the cui rent environmental, economic, and social condi- tions of the community? How is the community connected to other communities in the region? What are the community's best assets? What are As they grow, change, and diversify, rural communities can take control of their futures by assessing current conditions, engaging the community in a visioning process, and Implementing smart growth policies to achieve this community vision. 118 Putting Smart Growth to Work in Rural Communities 29 • Engage in a collaborative visioning process to help the community determine what it wants to be like in the future. A collaborative visioning process would include all stakeholders in the community and help define the desired future for the com- munity. Visioning processes often result in visual representations of a community's desired future — for example, a map illustrating key conservation areas and development areas. • Develop and implement policies that will enable the community to achieve its vision. Once a com- munity has developed a vision for its future, it must identify and implement policies and tools that will help achieve that vision. Following a process like the one outlined above will help a community develop and achieve its vision for the future and accommodate and shape the type of growth that the community desires while preserving the community's best assets and enhancing the quality of life. 30 Putting Smart Growth to Work in Rural Conununities Albemarle County, Virginia, has adopted a comprehensive approach to addressing growth. This has enabled the county to direct growth in a way that maintains the community's rural character and quality of life, which are valued by residents. Albemarle County, which is the most populous county in the Charlottesville metropolitan area, recognized that strategies for land preservation work better when complemented by policies and zoning regulations that promote better growth in places where the community has already invested in public infrastructure. The county contains many working farms and scenic natural features, including a portion of Virginia's Blue Ridge Mountains and Shenandoah National Park, but growth pressures remain strong. County leaders have adopted policies, including the establishment of designated growth areas in which infrastructure already exists, and have pursued strate- gies, such as the acquisition of conservation easements, to preserve rural character in places outside of designated growth areas. The county has also adopted a Neighborhood Model that requires new development to adhere to a set of 12 principles (see below), which ensure the livability of new neighborhoods. The Neighborhood Model describes the recommended prac- tices for new development based on 12 principles: • Pedestrian orientation • Neighborhood friendly streets and paths • Transportation networks and interconnected streets • Parks and open space • Mixed uses • Neighborhood centers • Buildings and spaces of human scale • Relegated parking • Affordability with dignity • Redevelopment • Site planning that respects terrain • Clear boundaries with the rural areas Albemarle County provides an example of how to address development in a way that promotes economic growth in places that the community believes are best while maintaining the rural landscape that is central to the community's identity. Between 2000 and 2006, Albemarle County protected more than 5,000 acres of forest and farm land, including 286 mountaintop acres. At the same time, it began or completed plans using the Neighborhood Model to both accommodate growth in desig- nated growth areas and complement the rural land protection strategies. See also: http: / /www.albermarle.org. See highlights of the Albemarle County Acquisition of Conservations Easements (ACE) program, http://www.albemarle.org/upload/images/forms-center/ departments /community_development /forms /Rural_Area /ACE Fact Sheet 2006 .pdf. 119 Endnotes I USDA ERS. "Measuring Rurality: New Definitions in 2003." http://www.ers.usda.gov/Briefiiig/Rurality/NewDefiiiitions/ 2 These five typologies have been developed by the authors through discussions with a range of Smart Growth Network member organizations, including NACo, the National Main Street Center, and the U.S. Forest Service, as well as organizations outside the network. They are now viewed as generally accepted terms within the smart growth community for describing the range of rural towns, villages, and centers, particularly given their consideration of communities' built and natural environ- ments and their role in broader regional economies. 3 USDA. "2007 Census of Agriculture: Demographics." http: www.agcensus.usda.gov/Publications/2007/Online-Highlights/ Fact_Sheets /index.asp 4 Stein, S.M., McRoberts, R.E., Alig, R.J., Nelson, M.D., Theobald, D.M., Eley, M., Dechter, M., and Carr, M. Forests on the Edge: Housing Development on America's Private Forests, U.S. Forest Service, U.S. Department of Agriculture. General Technical Report No. PNW- GTR -636. 2005. http: / /www.fs.fed.us/ openspace /fote /fote- 6- 9- 05.pdf 5 Heimlich, R.E., and Anderson, W.D. Development at the Urban Fringe and Beyond: Impacts on Agriculture and Rural Land. Economic Research Service, U.S. Department of Agriculture. Agriculture Economics Report No. 803. 2001. http: / /www.ers. usda.gov/ publications /aer803 /aer8O3.pdf, May 31, 2005. p. 14 6 American Farmland Trust. "Farming on the Edge Report." http://www.farniland.org/resources/fote/default.asp 7 USDA. "Rural Population and Migration." http: / /www.ers.usda .gov/Briefing/Population/ 8 Transportation Research Board, "NCHRP Report 582: Best Practices to Enhance the Transportation -Land Use Connection in the Rural United States" (2007). http: / /onlinepubs.trb.org/ onlinepubs /nchrp /nchrp- rpt- 582a.pdf 9 Van Eenoo, E., and Lamie, R.D. "How Use -Value Assessment Affects Real Property Tax Rates and Liabilities in Virginia." Journal of ASFRMA, 2001: 53 -63. http: / /portal.asfnira.org/ userfiles /file /journal /vaneenoo53_63.pdf 10 American Farmland Trust. "Future of Farming Project: Working Paper and Statistics on Farmlands in Washington." http: / /agr.wa . gov /FoF /docs/ Land Stats.pd f 11 For more information on federal, state, and local tax incentives for donating conservation easements, visit the Land Trust Alliance Website: http: / /www.Ita.org. 12 Larimer County. "Executive Summary: Right to Farm and Ranch Policy." http: / /www.co.larimer.co.us /policies /right_to_farrn- summary.htm 13 Recommendations in this section are drawn from Tom Daniels, "Ideas for Rural Smart Growth, Promoting the Economic Viability of Farmland and Forestland in the Northeastern United States," pp. 8 -12 (draft February 2008). 14 USDA. "2007 Census Report." February 2009. http: / /www .agcensus.usda.gov/Publications/2007/FulI - Report/index.asp 15 Minnesota Office of the Revisor of Statutes. "2009 Minnesota Statutes: 17.101 Promotional Activities." https: / /www.revisor .mn.gov /statutes / ?id - 17.101 16 Blue Ridge Forest Cooperative. "Our Services." http://www.blueridgeforestcoop.com/. 17 Western Governors' Association, Trust for Public Land, and National Cattlemen's Beef Association. "Purchase of Develop- 120 Putting Smart Growth to Work in Rural Communities 31 ment Rights: Conserving Lands, Preserving Western Liveli- hoods." http: / /www.westgov.org /wga /publicat /pdr.pdf 18 The Nature Conservancy. "Conservation Easements: Conserving Land, Water, and Way of Life." http: / /www.nature.org/ aboutus /howwework /con servationmethod s /privatelands/ conservationeasements/ fi les /consrvtn- easemnt _ sngle72.pdf 19 Arizona Land and Water Trust. "Land Acquisition." http://www.alwt.org/whatwedo/landacquisition.shtml 20 Oklahoma Agritourism. "Oklahoma's Growing Adventure." http:/ /www. oklahomaagritourism. com /index. php? /what- is-agritourism 21 Robert Liberty. "Smart Growth in the Countryside: Strengthening Rural Economies and Protecting Rural Lands," p. 3 (draft February 24, 2008). 22 The Farmers' Market in Downtown Lawrence. "Welcome to the Market." http:/ /www.lawrencefarmersmarket.com/ 23 "Snohomish County dedicates new biodiesel fuel." http: // seattletimes.nwsource.com/html/localnews/2008199030- biodiesel24m.html 24 Pruetz, R. "Ask the Author." Zoning Practice, October 2009. http:// www.planning.org /zoningpractice /ask /2009 /oct.htm 25 American Farmland Trust Farmland information Center. "Fact Sheet: Transfer of Development Rights." http: / /www . farm]andinfo.org /documents /37001 /TDR- 04- 2008.pdf 26 American Farmland Trust. "Montgomery County, MD TDR Program." http : / /www.preservethereserve.org /pages /tdr- program.pdf 27 State of Connecticut General Assembly. "Chapter 927a: Priority Funding Areas." littp: / /www.cga.ct.gov /2009 /pub /chap297a .htmuSecl6a- 35e.htm 28 Robert Liberty. "Smart Growth in the Countryside: Strengthening Rural Economies and Protecting Rural Lands," p. 23 (draft February 24, 2008). 29 Oregon Department of Land Conservation and Development. "DLCD Farmland Protection Program." http: / /www.oregon.gov/ LCD /farmprotprog.shtml 30 Arendt, R. Rural by Design: Maintaining Small Town Character. Planners Press, APA, 1994. 31 Caywood, T. "Backyard Greenery." The Boston Globe, December 24, 2006. 32 See the Main Street Four -Point Approach ®: http: / /www .preservationnation.org/main-street/about-main-street/ the - approach /. 33 National Trust for Historic Preservation. "El Dorado, AR." http://www.preser-,,ationnation.org/travel-and-sites/travel/ gamsa /el- dorado.html 34 FHWA. "Funding for Streetscape, Urban Design, and Multimodal. Improvements." littp://www.fliwa.dot.gov/planning/landuse/ tools.cfmufunding. The National Transportation Enhancements Clearinghouse also has information on funding opportunities for Streetscape improvements: http: / /www.enhancements.org/ fundingsources.aspsr5 35 New Jersey Smart Choices. "NJ Funding Programs." http: // www.njsmartchoices.org /fdb /results ?category - Streetscape % 20improvements; NJDOT. "NJDOT Announces Transportation Enhancement Grant Program." http: / /www.state.nj.us/ transportation /about /press /2009/040809.shtm 36 Preservation Kentucky, http : / /www.preservationkentucky.org/ 37 See "Stimulating Infill and Brownfield Development in the Land -of -Sky Region:" http: / /www.epa.gov /smartgrowth/ losrc.htm. 32 Putting Smart Growth to Work in Rural Communities 38 See the Michigan Suburbs Alliance Redevelopment Ready Communities Program: http : / /www.michigansuburbsalliance . org/ redevelopment / redeve lopment_ready_communities / 39 See Hartzok, A. "Pennsylvania's Success with Local Property Tax Reform: The Split Rate Tax," American Jounurt of Economics and Sociology, April 1997, http: / /findarticies.com /p /articles/ mi_m0254/is_n2_v56/ai_1 9532081 / ?tag= content;col1, and Cohen, J. P. and Coughlin, C. C. "An Introduction to Ttvo -Rate Taxation of Land and Buildings," Federal Reserve Bank of St. Louis Review, May /June 2005. http:/ /research .stlouisfed.org /publications/ review /05 /05 /CohenCoughlin.pdf 40 More information about green infrastructure assessments can be found at http : / /www.greeninfrastructure.net. 41 More information about the Streamline and Skyline bus systems can be found at http: / /www.streamlinebus.com and http: // www.skylinebus.com. 42 Pierce County Planning and Land Services. "Zoning -Quick Answers." http: / /www.co.pierce.wa.us /pc /services /home/ property/pals/regs/zoning.htm 43 For a good discussion of various code reform strategies, see Creating a Regulatory Blueprint for Healthy Community Design, ICMA Press, 2005. 44 Missouri Department of Natural Resources. "Katy Trail State Park." http: / /www.mostateparks .com /katytrail /index.html 45 Coburn Development. "Pitchfork." http: / /www.coburndev.com/ index.php /site /pitchfork /, Maynard, M. F., Dreuding, M., and Hutchins, S. D. "Breaking the Rules: Good Neighbors." Residen- tial Architect, Jan /Feb 2006. http: / /www.residentialarchitect .com /industry- news.asp ?sectionID =282 &articlefD = 239086 &artnum = 2 46 Context Sensitive Solutions. "Cobblestone Street Interpretative Park." http: // www .contextsensitivesoltitions.org /content/ case_studies /480_cobble /# 47 Johnson, K. "It's Now Legal to Catch a Raindrop in Colorado." The New York Times, July 28, 2009. http: / /www.nytimes.com/ 2009 /06 /29 /us /29rain.htrnl ?_r @ 1 &scp — I &sq = colorado % 20rain %20barrels &st = cse 48 Sammis, T. "New Mexico Climate." http: / /weather.nmsu.edu/ News /CLIMATE %20NL %20Surtnner %2009 %20final.pdf 49 Idaho Smart Growth. "Grow Smart Awards." http: / /www .idahosmartgrowth.org /index.php /projects /awards/ 50 Smart Growth Vermont. "Smart Growth Awards." http: / /www .smartgrowthvermont.org/help/awards09/ 51 USGBC. "What is LEED ?" http : / /www.usgbc.org /DisplayPage .aspx ?CMSPageID - 222 52 Center for Sustainable Building Research. 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G% MLL,�-� 5 124 ORANGE COUNTY PLANNING DEPARTMENT SUMMARY OF EXISTING ECONOMIC DEVELOPMENT RELATED ACTIVITIES CURRENTLY BEING PURSUED INTRODUCTION Orange County's existing land use plan designates over 3200 acres for economic development in three (3) economic development zones, a. Efland Buckhorn Mebane Corridor — 1800 acres b. Hillsborough — I /40 Area — 700 acres c. Eno Township I- 85/US70 near Durham - 700 acres These lands are primarily undeveloped with access and visibility to the interstates. Below are a few summaries of the planning initiatives in the area. 1. Small Area Planning studies have been approved for all three zones. Some additional land use analysis is anticipated. 2. An interlocal utility service agreement with the City of Mebane is in place for a large portion of the Efland Buckhorn Mebane Economic Development zone. Expansion is being pursued to include the addition of a 443 -acre parcel adjacent to the City of Mebane infrastructure and I- 85/I -40. 3. A master utility infrastructure concept plan (i.e. 'backbone' plan) was approved in January of this year for the Efland Buckhorn Mebane Economic Development zone with Phase II approved for engineering design. 4. Efland and North Buckhorn have completed engineering designs with over $4 million in grants and loans in process. This work will be underway within the year and have potential to support adjacent economic development. 5. Orange County and the City of Durham will be working on a Memorandum of Agreement on a utility service district program for the Eno Economic Development zone. 6. Orange County's share of Jordan Lake Allocations (1 to 2 mgd) could be used to support these economic development zones through pass- through or service utility agreements. 7. Orange County is in the midst of a Unified Development Ordinance (UDO) to assist in the understanding of development processes and regulations. Phase I UDO is primarily creating a better development code organizational framework but upcoming phases are focused on examination of land uses and associated processes to streamline and promote targeted development.