LOCAL ECONOMIC DEVELOPMENT IN NORTH CAROLINA:

The Use of Strategies and Tools Before and After the Great Recession

A paper submitted to the faculty of the University of North Carolina at Chapel Hill in partial fulfillment of the requirements for the degree of Master of Public Administration.

Sarah Osmer Viñas

Spring 2012

EXECUTIVE SUMMARY This study provides the first look at North Carolina municipal economic development strategies over time, with a focus on how towns and cities have changed their strategies in the aftermath of the Great Recession of 2008-09. It also explores the relationship between local and organizational characteristics and the level of municipal economic development effort. The findings of this study reveal the number and types of strategies used have not changed significantly between 2006 and 2011. This study also demonstrates that organizational capacity and population influence the level of municipal economic development activities more so than socio-economic characteristics.

The attached paper represents work done by a UNC-Chapel Hill Master of Public Administration student. It is not a formal report of the School of Government nor is it the work of the School of Government faculty. However, it does include some data collected by a School of Government faculty member.

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A special thanks to Dr. Michele Hoyman, Karl Knapp, and Dr. Jonathan Morgan, for their guidance in developing this paper, as well as to all the North Carolina municipalities that responded to the survey.

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INTRODUCTION

The U.S. economic recession that began in 2008, arguably, has touched all sectors of society. Municipal governments in North Carolina have not been spared the impact of the recent downturn, as revenues decreased substantially, service demands remained steady, and budgets were cut dramatically (NC League of Municipalities, 2011). As NC cities and towns strive to survive and thrive in the “new normal,” it is not known how the challenging economic and fiscal conditions may have altered the economic development strategies and tools used by municipal governments. As a result of the budgetary challenges caused by the economic recession, we might anticipate municipal economic development efforts to fizzle. Conversely, in the face of economic hardship, cities and towns may have intensified their economic development activities in an attempt to counteract the impacts of the recession at the local level. This study provides the first look at NC local government economic development strategies over time before and after the Great Recession of 2008-2009, and explores how local conditions impact the economic development strategies chosen. BACKGROUND

Many academic studies have examined local economic development strategies (Reese and Fasenfest, 1999; Morgan, 2009b; Wolman and Spitzley, 1996). One body of literature proposes a framework for understanding how local economic development strategies have evolved over time. These authors posit that there are “waves” of economic development with distinct characteristics and periods of time (Bradshaw and Blakely, 1999; Clarke and Gaile, 1992; Herbers, 1990; Leicht and Jenkins, 1994; Reese and Fasenfest, 1999; Ross and Friedman, 1990). The “first wave” of economic development was characterized by industrial recruitment strategies, whereby local governments offer incentives and subsidies, as well as marketing and other promotional assistance to attract firms to a community. The “second wave” was created in response to the growing need to broaden economic development approaches. Business retention strategies, or efforts to keep existing firms within a community, epitomize this wave. Most recently, the “third wave” has centered on broader community strategies, such as small business development and entrepreneurship activities. Other studies have examined what local conditions or factors influence the strategies adopted by local governments. These studies suggest that government structure, resources, and certain demographics explain economic development strategies (Fleischmann et al., 1992; Reese, 2006; Reese and Ye, 2011). See the Appendix for a detailed discussion of the literature. While the literature related to economic development strategies is vast, it has focused primarily on large urban jurisdictions and has not provided longitudinal comparisons of the strategies used by smaller municipalities. Many case studies provide an in-depth look at individual economic development strategies, but there are few comprehensive quantitative analyses over time of small town strategies. This study fills this void in the literature through a follow-up study of Morgan’s 2006 survey of NC municipalities.1 RESEARCH QUESTIONS

This study explores how NC municipal economic development strategies have changed over the past five years, a period that included one of the deepest recessions in U.S. history. This study also investigates the local conditions and organizational characteristics that may impact the economic development strategies used by cities and towns. More specifically, this study addresses the following research questions:

How have the economic development strategies of small North Carolina municipalities changed in the aftermath of the Great Recession?

To what extent do local conditions and organizational characteristics influence the economic development strategies utilized by North Carolina municipalities?

1 Jonathan Morgan of the UNC School of Government conducted a comprehensive economic development survey of all municipalities and counties

in North Carolina in 2006. His survey findings are published in The Role of Local Government in Economic Development: Survey Findings from North Carolina. See the Reference section for the full citation.

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METHODOLOGY

This study uses a quantitative research design to determine whether economic development strategies have changed between 2006 and 2011 and what local conditions impact the strategies employed by NC municipal governments. An online survey was sent to all NC city and town managers consisting of 13 questions about the industrial recruitment, business retention, and small business development economic development strategies used, and the barriers to economic development. The survey resulted in a sample of 231 municipalities, representing a 42% response rate. See the Appendix for a list of the respondents and the survey instruments. The demographic characteristics of the 2011 survey sample were fairly representative of the NC as a whole. See Table A-1 in the Appendix. However, it is important to note that the average population of the towns and cities that responded in 2011 was much smaller than the average population size for the state, as well as disproportionately comprised of municipalities with the Council/Manager form of government. This research involved performing Chi Square, cross-tabulations, and linear regression analyses. Statistical significance was tested at the 95% level. Basic frequencies were run for the economic development strategies and compared to the 2006 survey results for the 104 municipalities that responded to both surveys. McNemar Chi Square tests were run to test for statistical significance for the strategies used over the two years of study. Additional analysis was then conducted on the full sample of 231 municipalities that responded to the 2011 survey. Linear regression analyses were performed to determine whether there was a statistically significant relationship between recruitment, retention, small business development strategies, or overall economic development effort and local conditions. The regression models included one of the three economic development strategy indexes (a count of strategies by type) as the dependent variable, and 20 independent variables. An additional regression model was created for the overall economic development effort index, measured by the total number of economic development tools reported by survey respondents. FINDINGS AND ANALYSIS

Increasing Role of Local Government in Leading Economic Development Activities

In 2011, 64% of municipalities reported that a local government (either the municipality or county) took the lead in local economic development efforts, while only 34% of cities and towns had indicated local government was the lead actor in 2006. This change represents a statistically significance difference across the two years. The percentage of municipalities reporting a nonprofit or no single organization leading local economic development efforts also decreased since 2006. See Table A-2. Consistent Overall Economic Development Effort

Using the raw count of all strategies and tools used as a proxy for overall economic development effort, the results reveal little change pre- to post-recession. The average number of economic development strategies has remained steady, with municipalities reporting average use of approximately 6 strategies in both 2006 and 2011. See Table 1 on the next page.

Continued Reliance on Industrial Recruitment Tools

Municipalities continue to rely primarily on industrial recruitment activities. On average, cities and towns report using 3.0 recruitment activities in 2011, as compared to 4.2 in 2006. See Table 1. While the average number of recruitment activities has decreased since 2006, examination of the individual recruitment tools reveals almost no statistically significant change over the five-year period of study. The only strategy that demonstrates a statistically significant change is providing a high quality of life, which increased from 37.5% in 2006 to 56.9% in 2011. See Table A-3. Even more than in 2006, responding to inquiries from prospects represents the most popular economic development activity, with 70.6% of municipalities reporting use of

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this tool. Collaborative activities, such as partnering with a regional economic development organization or the Chamber of Commerce are also common recruitment tools.

Little Change in Use of Business Retention and Small Business Development Tools

Table 1 shows that the average number of business retention and small business development tools used has not changed significantly over the past five years. Municipalities averaged use of 2 retention tools in 2006 and 2.5 in 2011, and use of .7 and 1.1 small business development tools over the same period. More so than in 2006, municipalities are using business networking, partnerships with non-governmental entities, cash grant incentive payments, and local business publicity with greater frequency. See Table A-4. However, the only retention tool that shows a statistically significant change since 2006 is local business publicity. While the use of small business development tools continues to be relatively uncommon, the percentage of cities and towns that reported using no small business development tools has decreased since 2006 from 57.7% to 50% in 2011. However, this change is not statistically significant. See Table A-5. Consistent Use of Quality of Life Tools

There was not a statistically significant change in the use of specific quality of life tools since 2006 for any of the tools of this type. See Table A-6. Overall, investing in public parks continues to be the preferred quality of life economic development tool. This is followed by public safety, downtown development, and tourism development. These findings are consistent with the 2006 survey results. Municipalities also rely on building façade improvements, the Main Street Program, and community development visioning, with approximately one-third of cities and towns reporting use of these tools in 2011 (these items were not included in the 2006 survey). The Impact of Local and Organizational Characteristics on Economic Development Strategies

For the industrial recruitment, business retention, and small business development strategy indexes, as well as the overall economic development effort index, several variables showed statistical significance in explaining the number of economic development tools employed by NC towns and cities in 2011. Across all models, the following variables are statistically significant: staff capacity, form of government, and municipal population. See Table 2, and Tables A-7 through A-10 in the Appendix for full regression results. Staff capacity is the strongest predictor of the variables examined in the regression models. As municipalities dedicate more staff time to economic development, the number of economic development strategies used by cities and towns increases. More specifically, for every staff person that spends at least 75% of their time on economic development efforts, a municipality will do two more economic development activities. Form of government also predicts the number and type of municipal economic development tools employed. The Council/Manager form of government correlates with a higher number of economic development activities, whereas the Council/Mayor and Council/Administrator forms of government predict fewer economic development activities. Municipalities with the Council/Manager form of

Table 1. Comparison of Index Scores by Type 2006 & 2011

Strategy Type Minimum Maximum Mean

Recruitment Index 2006 0 12 4.2 2011 0 8 3.0 Retention Index 2006 0 10 2.0 2011 0 12 2.5 Small Business Dev. Index 2006 0 5 .7 2011 0 7 1.1 Overall ED Effort Index 2006 0 25 6.9 2011 0 27 6.5

n=104

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Table 2. Regression Results with Statistical Significance in Predicting the Quantity and Type of ED Activities

government will do three more strategies than municipalities with the Council/Mayor, and two more strategies than the Council/Administrator forms of government. This finding supports the notion that a professional staff facilitates higher levels of economic development involvement. Municipal population also correlates positively with municipal economic development activities. As population increases, towns and cities report a greater number of economic development tools. Confirming the findings of some previous studies, these findings suggest that the size of a city or town helps explain the number of economic development activities employed locally. Economic development budget, race, and region also show statistical significance in some of the regression models. See Tables A-7 and A-9. Not surprisingly, the more money a municipality dedicates to economic development, the greater the number of economic development tools utilized. Race also correlates with the number of economic development efforts. For every 24% increase in White population, municipalities will use one less economic development tool. Because there is not an obvious explanation for this finding, it may be that the race variable is substituting for another factor not included in the regression models, such as poverty. While income and educational attainment were controlled for in this study, the poverty rate may represent a stronger indicator, more so than race. In addition, region also demonstrates predictive power in the retention index regression model. Municipalities in the Advantage West region reported doing 1.5 more retention activities than those in the prosperous Research Triangle region. However, it is important to note that region does not show statistical significance in predicting the level of economic development activities of municipalities in any other regression models, and thus is limited in generalizability.2 None of the other independent variables show statistical significance in any of the four regression models: unemployment, educational attainment, income, industrial composition, or urban/rural designation. IMPLICATIONS FOR NC LOCAL GOVERNMENTS

This study has several implications for North Carolina local governments: 1. Local governments are playing an increased role in leading economic development efforts. One of

this study’s most striking findings is the dramatic increase since before the Great Recession in municipalities leading local economic development efforts. As private investment in economic development may have suffered as a result of the economic recession, cities and towns remain committed to the development of the local economy in NC.

2 The many efforts of the Advantage West Regional Partnership may facilitate the greater prevalence of retention strategies in that region, as compared to other regions across the state. For example, Advantage West’s Blue Ridge Entrepreneurial Council supports entrepreneurs in its region through several retention activities, including: education, mentoring, networking, and capital formation (Advantage West).

Economic Development Indexes (raw count of strategies by type) Local & Organizational Characteristic Variables Industrial

Recruitment Business

Retention Small Business Development

Overall ED Effort

Staff Capacity + + + + Form of Government – Council/Mayor - - - -

Form of Government – Council/Administrator - - - -

Municipal Population + + + +

Budget for Economic Development + +

Race – Percent White - -

Region – Advantage West +

+ = Positive relationship; - = Negative relationship

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2. Even in challenging economic times, NC municipalities are essentially staying the course. The survey results reveal that cities and towns are doing roughly the same number and types of economic development activities as before the recession. Even as resources available for economic development may have diminished, the average number of economic development activities remained steady over the past five years. Further, there is no evidence of a shift away from traditional industrial recruitment activities. Industrial recruitment continues to be the dominant type of economic development strategy employed by NC municipalities, large and small. This finding stands at odds with much of the literature on economic development, which suggests that there is a shift underway from recruitment to small business development and entrepreneurship activities (ICMA, 2010). Further, this survey finding indicates that NC municipalities continue to embrace activities consistent with the first “wave” of economic development, despite the promptings to broaden efforts that are evident in the literature.

3. Organizational capacity and resources impact municipal involvement in economic development. This study reveals that staff capacity and financial resources impact municipal involvement in economic development efforts, more so than underlying community characteristics. Municipalities that dedicate more resources and staff time to economic development tend to do more economic development activities. Human and financial resources are important components of an organization’s capacity to initiate and implement economic development activities. Further, these findings provide support for the role of professional staff in stimulating municipal economic development activities.

4. Population influences economic development activities. Consistent with some previous research, this study confirms that larger municipalities in NC across the board do more to stimulate economic development. As noted by Morgan (2009), a likely explanation for this difference is that smaller municipalities do less because they have fewer resources and perhaps are unable to utilize many of the recruitment, retention, and small business development tools because of issues with scale and capacity. It is also possible that very small towns and cities rely on other entities to do economic development on their behalf, perhaps out of necessity, but maybe by choice. The more limited activities of small towns may suggest the opportunity for collaboration across jurisdictions to address the challenges with scale, resources, and capacity that may inhibit further economic development activities by individual small towns.

5. Local characteristics do not strongly influence the quantity and type of local economic development activities. This study reveals that income, educational attainment, unemployment rate, industrial composition, and urban/rural designation are not significant in explaining the economic development strategies and tools being used in NC cities and towns. However, the statistical significance of region and race in some of the statistical models reveals that these characteristics may play a role in predicting economic development activities.

CONCLUSION

This study provides the first look at North Carolina municipal economic development strategies over time, with focus on how towns and cities have changed their strategies since the economic downturn. It also sheds light on the relationship between local and organizational characteristics and the level of municipal economic development efforts. Future research might expand this study to include county governments, which tend to play a greater role in local economic development efforts than municipalities in NC (Morgan, 2009). Possible studies might move beyond measuring the quantity of economic development strategies to investigate the effectiveness of particular economic development tools, in terms of specific outcome measures. Future studies might take a closer look at socio-economic characteristics, such as poverty and race, since these variables showed predictive power in some of this study’s regression models. The UNC School of Government also might continue this longitudinal study by surveying municipalities in another five years to see if economic development activities may change over a longer time period.

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Clarke, S. E. and Gaile, G. L. (1992). The next wave: Postfederal local economic development strategies. Economic

Development Quarterly, 6(2), p. 187-198.

Cox, G. H., Daily, John, H., and Pajari, R. N. (1991). Local Government Support for Economic Development. Public Administration Quarterly, Fall, p. 304-327. Daniels, T. L. (1989). Small Town Economic Development: Growth or Survival? Journal of Planning Literature, 4,

p. 413-429.

Dewar, M. E. (1998). Why State and Local Economic Development Programs Cause So Little Economic Development. Economic Development Quarterly, 12, p. 68-87.

Eisenger, P. K. (1988). The Rise of the Entrepreneurial State: State and Local Economic Development Policy in the United States. The University of Wisconsin Press, Madison.

Feiock, R. C. (1989). The Adoption of Economic Development Policies by State and Local Governments: A Review. Economic Development Quarterly, 3, p. 266-270. Feiock, R. C. (1992). The Political Economy of Local Economic Development Policy Adoption. Paper presented at the annual meeting of the Urban Affairs Association, Cleveland, OH, April. Feiock, R. C. and Clingermayer, J. (1986). Municipal Representation, Executive Power, and Economic Development Policy Administration. Policies Studies Journal, 15, p. 211-229. Fleischmann, A., Green, G. P., and Kwong, T. M. (1992). What’s a City to Do? Explaining Differences in Local Economic Development Policies. The Western Political Quarterly, 45(3), p. 677-699.

Green, G. P. (1995). Structuring Loyalty: Economic Development Growth Management in Wisconsin Cities and Villages. In N. Walzer (Ed.) Local Economic Development, p. 159-180. Boulder: Westview.

Herbers, J. (1990). A Third Wave of Economic Development. Governing, 3(9), p. 43-50.

Knapp, K., Nida, C., and Viñas, S. O. (2011). Budget and Tax Rate Survey Results 2011-2012. North Carolina League of Municipalities, p. 1-11.

Koven, S.G. and Lyons, T.S. (2010). Economic Development: Strategies for State and Local Practice. The International City/County Management Association Press, Washington D.C.

Lambe, W. (2008). Small Towns Big Ideas: Case Studies in Small Town Community Economic Development. School of Government, University of North Carolina at Chapel Hill.

Leicht, K. T. and Jenkins, J. C. (1994). Three strategies of state economic development: Entrepreneurial, industrial recruitment, and deregulation policies in the American states. Economic Development Quarterly, 8(3), p. 256-269.

McGowan, R. P. and Wittmer, D. (1998). Gaining A Competitive Edge: Economic Development Strategies for State and Local Governments. Public Administration Quarterly, Fall, p. 301-314.

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Morgan, J. Q. (2010). Governance, Policy Innovation, and Local Economic Development in North Carolina. Policy Studies Journal, 38(4), p. 679-702.

Morgan, J. Q., Editor. (2009a). Economic Development Handbook, Third Edition. UNC School of Government and the NC Economic Development Association.

Morgan, J. Q. (2009b). The Role of Local Government in Economic Development: Survey Findings from North Carolina. The School of Government at the University of North Carolina at Chapel Hill, June, p. 1-14.

Ohren, J. F. and Reese, L. A. (1996). You Get What You Pay For: Professionalism, Resources, and Local Economic Development Policies. Paper presented at the annual meeting of the Urban Affairs Association, New York, March.

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Reese, L. A. (2006). Not Just Another Determinants Piece: Path Dependency and Local Tax Abatements. Review of Policy Research, 23(2), p. 491-504.

Reese, L. A. and Fasenfest, D. (1999). Critical Perspectives on Local Development Policy Evaluation. Economic Development Quarterly, 13, p. 3-7.

Reese, L. A. and Rosenfeld, R. A. (2002). The Civic Culture of Economic Development. Thousand Oaks, CA: Sage Publications. Reese, L. A. and Ye, M. (2010). Policy Versus Place Luck: Achieving Local Prosperity. Economic Development Quarterly, 2011, 25, p. 221-233.

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Entrepreneurial Economy Review, 90, p. 3-10.

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APPENDIX

Literature Review Many academic studies have examined local economic development strategies (ICMA, 2010; Fleischmann et al., 1992; Morgan, 2009b; Reese, 2006; Reese and Fasenfest, 1999; Reese and Ye, 2011; Wolman and Spitzley, 1996). The International City/County Management Association (ICMA) survey conducted every five years sheds light on national trends in local government economic development (ICMA, 2010). This survey found that from 1994-2004, local governments have shifted away from concentrating solely on business attraction strategies, and now employ a multi-faceted approach that includes recruitment, retention, and broader community strategies (ICMA, 2010). The survey also revealed an increasing focus on accountability, regional cooperation, and quality of life initiatives (ICMA, 2010). Another body of literature proposes a framework for understanding how local economic development strategies have evolved over time. These authors posit that there are “waves” of economic development with distinct characteristics and periods of time (Bradshaw and Blakely, 1999; Clarke and Gaile, 1992; Herbers, 1990; Leicht and Jenkins, 1994; Reese and Fasenfest, 1999; Ross and Friedman, 1990). According to the literature, the “first wave” of economic development was characterized by business recruitment strategies, whereby local governments offer incentives and subsidies, as well as marketing and other promotional assistance to attract firms to a particular community. The “second wave” was created in response to the growing need to broaden economic development approaches. Business retention strategies, or efforts to keep existing firms within a community, epitomize this wave. Most recently, the “third wave” has centered on broader community strategies, such as small business development and entrepreneurship activities (Reese and Fasenfest, 1999). Other studies have examined what local conditions or factors influence the strategies adopted by local governments. These studies suggest that government structure, resources, and demographics explain economic development policy and strategies (Fleischmann et al., 1992; Reese, 2006; Reese and Ye, 2011). The evidence on government structure is mixed, with some studies suggesting Mayor/Council cities are more innovative, and other studies proposing the presence of professional staff positively impacts economic development activities at the local level (Feiock, 1989; Reese, 1997; Feiock and Clingermayer, 1986; Sharp, 1991). Staff capacity and resource investment show positive correlations with economic development activities (Ohren and Reese, 1996; Reese, 1997; Fleischmann et al., 1992). The effects of several demographic variables on economic development efforts have also been explored in the literature (Feiock, 1992; Green, 1995). Population correlates positively with economic development activities (Green, 1995). Morgan’s 2006 baseline survey of NC local governments revealed that smaller jurisdictions employ fewer economic development strategies and invest less in these activities than larger jurisdictions, without controlling for other explanatory variables (Morgan, 2009b). He also found that smaller jurisdictions do not demonstrate a high reliance on non-traditional, “third wave” strategies, instead following the same tendency as larger municipalities that rely most heavily on the business recruitment strategies associated with the “first wave” (Morgan, 2009b).

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Tables Table A-1. Description of Survey Sample

Demographic 2011 Survey North Carolina

Municipal Population 3,372 9,595

Unemployment rate 10.9% 11.1%

Racial Composition (% White) 82% 69.4%

Educational Attainment (% Bachelor’s Degree+) 20% 22%

Form of Government (% Council-Manager) 64% 45%

Urban (% Metropolitan) 51% 60%

Income (Average wage) $35,562 $33,830

Industrial Composition (% Manufacturing) 10% 10%

n=231

Table A-2. Leadership Role on Economic Development Efforts (Percent Reporting) Lead on Economic Development 2006 2011

Local Government 33.7 64.4** Nonprofit 25.0 17.3 No Single Organization 29.8 9.6** Other 11.5 8.7

n=104, ** p < .001

Table A-3. Industrial Recruitment Tools by Type 2006 and 2011 (Percent Reporting) Recruitment Tool 2006 2011

Responding to inquiries from prospects 58.7 70.6 Collaboration with regional ED partners 56.7 67.3 Partnership with Chamber 56.7 60.6 Website/community profile 51.8 50.0 Provide high quality of life 37.5 56.9* Cash grant incentive payments 30.8 32.4 Building and site inventory 28.8 28.4 Promotional and Advertising 23.1 29.8 Staff calls on business 19.2 23.1 No Recruitment activities 19.2 16.8 Cluster targeting of specific industries 18.3 14.7 Attendance at conference/trade shows 18.3 20.6 Worker training assistance 13.5 11.8 Other 8.7 5.9

n=104, *p < .05

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Table A- 4. Business Retention Tools by Type 2006 and 2011 (Percent Reporting) Retention Tool 2006 2011

Staff calls on businesses 37.5 36.5 Partnership with other local governments 26.9 26.0

No Retention activities 26.0 29.8 Partnering with non-governmental entities 24.0 30.8 Business networking activities 23.1 29.8 Surveys of local businesses 16.3 12.5 Cash grant incentive payments 14.4 18.3 Worker training assistance 12.5 15.4 Buy local initiatives NA 29.8 Local business publicity 13.5 20.2* Business achievement/recognition awards 11.5 11.5 Revolving loan fund 9.6 8.7

Other 8.7 2.9 Industry cluster program 3.8 6.7 Business ombudsman program 1.9 4.8 Export development assistance 1.0 2.9

n=104, *p < .05

Table A-5. Small Business Dev. Tools by Type 2006 and 2011 (Percent Reporting) Small Business Development Tool 2006 2011

No small business development activities 57.7 50.0 Small business development center 13.5 14.4 Other 13.5 3.8* Matching grants to upgrade businesses 12.5 21.2 Revolving loan fund 10.6 9.6 Marketing assistance 9.6 15.4 Business incubator 8.7 6.7 Business networking activities NA 28.8

n=104, *p < .05

Table A-6. Quality of Live ED Tools by Type 2006 and 2011 (Percent Reporting) Quality of Life Tool 2006 2011

Public parks 68.3 71.2 Public safety 55.8 52.9 Downtown development 52.9 56.7 Tourism development 44.2 48.1 Historic preservation 40.4 42.3 Local libraries 31.7 27.9 Sports/recreation complex 28.8 28.8 Development of local arts 28.8 27.9 Local school system/public education 26.9 23.1 Affordable housing 26.9 23.1 Theater or arts center 22.1 24.0 Transportation and mass transit 18.3 17.3 Medical/health care facilities 15.4 20.2 Convention center 11.5 8.7 Building façade improvements NA 36.5 Main Street program NA 30.8 Broadband internet NA 13.5 Community development visioning NA 30.8 Cultural amenities NA 28.8 Other NA 10.6

n=104

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Regression Results Table A-7. Economic Development Effort Index and Local and Organizational Characteristics

Variable B Beta t Significance Staff Capacity * 5.401 .259 4.093 .000 Budget for Economic Dev.* 4.244E-6 .151 2.528 .012 Population * 4.921E-5 .234 3.512 .001 Unemployment Rate .049 .018 .252 .801 Percent White * -.042 .018 -2.266 .025 Educational Attainment .004 .011 .148 .883 Income 4.535E-5 .048 .647 .518 Industrial Composition 4.992 4.948 1.009 .314 Urban/Rural – Neither -.354 -.030 -.468 .641 Urban/Rural – Micropolitan -.022 -.002 -.024 .981 Form of Government – Council/Mayor *

-3.019 -.234 -3.912 .000

Form of Government – Council/Administrator *

-2.209 -.164 -2.770 .006

Region – Piedmont .385 .027 .310 .757 Region – Charlotte .925 .069 .767 .444 Region – Advantage West 1.174 .081 .877 .381 Region – Southeast -.294 -.019 -.238 .812 Region – Eastern -.499 -.036 -.452 .652 Region – Northeast -.768 -.041 -.546 .586

n = 231 Adjusted R Square = .431 * Statistically significant F = 9.375

Table A-8. Industrial Recruitment Index and Local and Organizational Characteristics

Variable B Beta t Significance Staff Capacity * 2.336 .226 3.438 .001 Budget for Economic Dev. 1.282E-6 .111 1.781 .077 Population * 1.846E-5 .213 3.076 .002 Unemployment Rate .014 .013 .166 .868 Percent White -.012 -.118 -1.437 .152 Educational Attainment .002 .012 .159 .874 Income 2.201E-5 .056 .724 .470 Industrial Composition 3.793 .122 .1686 .094 Urban/Rural – Neither -.510 -.103 -1.535 .127 Urban/Rural – Micropolitan -.153 -.028 -.391 .697 Form of Government – Council/Mayor *

-.1462 -.260 -4.203 .000

Form of Government – Council/Administrator *

-1.166 -2.05 -3.333 .001

Region – Piedmont -.118 -.020 -.221 .825 Region – Charlotte .339 .059 .651 .516 Region – Advantage West -.183 -.031 -.318 .751 Region – Southeast -.126 .020 -.234 .815 Region – Eastern -.630 -.110 -1.324 .187 Region – Northeast .001 000 .002 .999

n = 231 Adjusted R Square = .414 * Statistically significant F = 8.431

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Table A-9. Business Retention Index and Local and Organizational Characteristics

Variable B Beta t Significance Staff Capacity * .901 .253 3.876 .000 Budget for Economic Dev.* 2.326E-6 .185 3.002 .003 Population * 2.302E-5 .245 3.559 .000 Unemployment Rate -.002 -.002 -.021 .984 Percent White * -.020 -.192 -2.372 .019 Educational Attainment -.003 -.018 -.233 .816 Income 3.255E-5 .077 1.007 .315 Industrial Composition 1.742 .054 .763 .447 Urban/Rural – Neither .017 .003 .048 .961 Urban/Rural – Micropolitan .286 .051 .697 .487 Form of Government – Council/Mayor *

-.911 -.158 -2.557 .011

Form of Government – Council/Administrator *

-.700 -.118 -1.922 .056

Region – Piedmont .400 .062 .699 .486 Region – Charlotte .842 .140 1.513 .132 Region – Advantage West * 1.583 .248 2.574 .011 Region – Southeast .248 .037 .434 .665 Region – Eastern .147 .024 .289 .773 Region – Northeast -.201 -.024 -.310 .757

n = 231 Adjusted R Square = .392 * Statistically significant F = 8.161

Table A-10. Small Business Development Index and Local and Organizational Characteristics

Variable B Beta t Significance Staff Capacity * .487 .238 3.220 .002 Budget for Economic Dev. 5.820E-7 .081 1.155 .250 Population * 8.908E-6 .165 2.114 .036 Unemployment Rate .073 .108 1.259 .210 Percent White -.007 -.117 -1.288 .199 Educational Attainment .001 .014 .165 .869 Income -5.08E-6 -.021 -.241 .810 Industrial Composition 1.151 .062 .771 .442 Urban/Rural – Neither -.046 -.015 -.204 .838 Urban/Rural – Micropolitan -.169 -.052 -.631 .529 Form of Government – Council/Mayor *

-.653 -.196 -2.812 .005

Form of Government – Council/Administrator *

-.552 -.161 -2.321 .021

Region – Piedmont .001 .000 .001 .999 Region – Charlotte -.173 -.050 -.479 .633 Region – Advantage West -.001 .000 -.003 .997 Region – Southeast -.293 -.074 -.786 .433 Region – Eastern .020 .006 .060 .952 Region – Northeast .012 .002 .028 .978

n = 231 Adjusted R Square = .230 * Statistically significant F = 4.277

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Variables and Sources

Table A-11.

Variable Source Date Region Bureau of Labor Statistics 2010 Charlotte Regional Partnership NC Southern Commission NC Eastern Region Research Triangle Regional Partnership Piedmont Triad Partners NC Southeastern Commission Advantage West Unemployment Bureau of Labor Statistics 2010 % unemployment by county Race U.S. Census Bureau 2010 % White by municipality Income U.S. Bureau of Economic Analysis 2010 Average wage per job by county Industrial Composition U.S. Bureau of Economic Analysis 2010 % manufacturing by county Form of Government NC League of Municipalities 2011 Council/Mayor Council/Administrator Council/Manager Educational Attainment American Community Survey 2009 % Bachelor’s Degree or higher by municipality

Urban/Rural U.S. Census Bureau 2009 Metropolitan county Micropolitan county Neither county Staff Capacity Author’s survey 2011 # of staff who spend at least 75% of time on ED activities

Budget for ED Author’s survey 2011 Dollar amount allocated for economic development in annual budget

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Discussion of Barriers to Economic Development In addition to questions about economic development strategies, the 2006 and 2011 surveys also included several questions about barriers to economic development. What follows is a discussion of the survey findings in this area.

Economic conditions represent the most commonly reported barrier, with 73% of municipalities identifying this obstacle to economic development. See table below. Distinct from Morgan’s 2006 findings, deficiencies with the physical and built environment were less of an impediment to economic development in 2011. The percentage of municipalities reporting the lack of available sites and building and lack of infrastructure decreased from 55% to 36% and 37% to 17% respectively. However, approximately one-quarter of municipalities responding to the 2011 survey cited the age and condition of downtown buildings and difficulty converting and re-using vacant buildings as barriers, indicating that the built environment continues to pose challenges for NC municipalities in stimulating economic development. The inclusion of these new items in the 2011 survey may have affected how respondents perceived the available sites and infrastructure questions, explaining the lower percentage of municipalities reporting these survey choices in 2011. Further, over half of municipalities consider the limited number of major employers to be problematic, up from 32% in 2006. Financial constraints also pose increasing challenges for municipalities, as 44% reported that the lack of capital/funding was a barrier to economic development, increased from 39% five years ago. The 2011 survey results reveal that municipalities are experiencing increasing human resource or workforce challenges, as an increased percentage reported that the inability to retain young people and population loss were barriers to economic development.

Table A-12. Barriers to Economic Development by Type 2006 and 2011 (Percent Reporting)

ED Barrier 2006 2011

Lack of available sites and buildings 54.8 35.6 Lack of capital/funding 39.4 44.2 Limited number of major employers 31.7 51.9 Lack of infrastructure 37.5 17.3 Lack of skilled workforce 18.3 14.4 Citizen Opposition 17.3 15.4 Inability to retain young people 17.3 33.7 Other 15.4 6.7 Lack of leadership 14.4 10.6 Lack of recreation and cultural amenities 14.4 8.7 Lack of regional collaboration 14.4 7.7 Inadequate public school system 12.5 13.5 Lack of political support 10.6 8.8 Loss of population 8.7 12.5 Economic conditions NA 76.9 Lack of staff capacity NA 27.9 Age and condition of downtown buildings NA 23.1 Difficulty converting and re-using vacant buildings NA 29.8

n=104

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2006 and 2011 Survey Respondents Albemarle Archdale Asheboro Autryville Bayboro Burgaw Asheville Belville Bessemer City Blowing Rock Boiling Spring Lakes Boiling Springs Burlington Candor Carrboro Cary Catawba Chapel Hill Cherryville Columbia Concord

Cramerton Davidson Dillsboro Durham Eden Edenton Elizabeth City Farmville Fayetteville Gamewell Garner Gibson Havelock Henderson Hertford Hickory High Point Hildebran Hillsborough Huntersville Kannapolis Kenansville

Landis Laurel Park Lenoir Lewisville Lexington Locust Lumberton Maggie Valley Magnolia Maiden Marion Mars Hill Momeyer Morrisville Mooresville Morganton Mount Airy Mount Pleasant Murphy Nags Head New Bern Newport

Pine Knoll Shores Pinehurst Pinebluff Pinetops Pittsboro Polkton Ramseur River Bend Rocky Mount Saluda Scotland Neck Seven Springs Southern Pines St. James St. Pauls Stallings Star Summerfield Sunset Beach Sylva Tarboro

Trent Trinity Valdese Varnamtown Wade Wake Forest Weaverville Weldon West Jefferson Whispering Pines White Lake Whiteville Wilkesboro Wilmington Winston-Salem Woods Youngsville Zebulon

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Survey Instruments

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