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Marty Mac Ver 2.0
02-01-2012, 10:54 PM
To the political pundits...the following below is a campaign promise running for mayor in my town. I see some good potential here but I also see an inadvertent double-whammy of lost revenue for the city.

What does the flock say?

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For 12 years I worked as a supervisor at different levels for a national retail chain. During this time it was drilled into our heads that the No. 1 resource for our company was the people we had working for us.

One of the highest priorities of supervisors was employee retention. Employees to a company are no different than small business is to our city. They are our production. Their efficiency, productivity, economic stability, customer service levels, etc. are all essential to their own success, which in turn provides substantial benefits to the city via sales tax revenues and jobs, which produce a trickle-down economic effect.

As mayor, I would introduce a small business support plan and base it on the years of working with employee retention plan processes. The correlations are startling.

First, we must think of our businesses as the most important economic resource we have in XXXXX. Second, we must develop a pattern of dealing with our small businesses so the environment they operate in is beneficial, supportive, and rewarding. My plan for achieving these goals is as follows:

Creating the office of Small Business Ombudsman.

A key element to any retention plan is the belief that somebody actually cares. Currently, there isn’t a specific person at city hall to call if you are a small business owner. Owners and managers need a point of contact to find a multitude of answers.

Generally a business owner or manager is sent to each department to answer a specific need. Instead of the chase, the city should have someone who will do some of the legwork. This person would be well versed in the small business process and needs of the business owners and managers. They would be able to act as intermediary when difficult issues arise, such as code compliance. They would be able to consolidate information and help the small business owner do what they do best – spend time operating their business, not chasing down people at city hall.

Creation of Small Business Roundtables

Having someone give their opinion and being able to speak frankly about problems within any structure is essential to understanding where both successes and failures exist.

The small business roundtables would be specific to industry types so the city could become familiar on a much more finite level.

Restaurant owners, insurance agents, real estate agents, soft goods retailers, grocers, etc. could all benefit from shared learning, experiences, and express their individual needs to the city. Our Economic Development department would host these roundtables and they would include key stakeholders such as representatives from MEDA and the city council.

Creation of a Small Business Incentive Plan

Incentives can be highly effective in retaining top talent. The same is true of businesses. If businesses add economic base and jobs, the logical result is an increase in tax revenues and economic productivity in our city. My plan could be called an investment by the city because of the way it would be structured to help offset financial obligations while giving the city a return in increased revenues.

The 100,000-foot view of the plan would be to allow new and current businesses that are creating jobs to use a sales tax credit to pay down development impact fees.

For new businesses there would be a delay in development impact fee payments for a period that would allow a business to begin operations without the significant up-front costs associated with DIFs.

They would enter into an agreement with the city that would place a portion of their sales tax revenue in a credit account that could be used to pay down the DIFs when they come due. The benefit to the business is more working capital to start, while having an incentive to boost sales to offset the fees. Any current business in XXXX would benefit by being able to expand operations and increase jobs, while using already accrued tax credits to pay for development impact fees.

The city would become an investor in these businesses by allowing development to happen while delaying impact fee payments, with the ultimate goal being the generation of enough revenue through business development and expansion to completely offset the development impact fees while creating new jobs.

An example would be a restaurant that has operated in XXXX for say, four years. During that time the restaurant was able to produce $1 million in sales annually, resulting in $20,000 in sales tax revenue each year for the city. Over the course of four years, the restaurant has had a tax revenue base of $80,000.

Now the restaurant wants to expand and that expansion to a stand-alone building would result in $50,000 in development impact fees. If those fees are required up front, it is possible the restaurant wouldn’t be able to finance those fees and would have to use available capital to pay them, capital that would severely limit expansion efforts.

In my plan, they would get credit for past revenues up to 25 percent of sales taxes collected, which would equal $20,000, and the restaurant would enter into an agreement to pay the remaining balance of fees over three to five years, again using sales tax credits -- with up to 50 percent of new sales tax revenues available for credit, depending on the number of jobs created.

The net result would be an expanded business creating more jobs and higher revenues for the city while allowing a larger capital investment by the restaurant and ultimately abating the development impact fees. This method would be fair because it would be based on the real impact a business has on our economy and not how well the developer could negotiate with the city. It would also give smaller enterprises a chance to grow their businesses within the city.

Small Business is the lifeblood of our local economy

As mayor I will continue to embrace small business as a key component of any growth plan and economic development initiative. The service sector jobs created by small businesses drive local dollar recirculation and make available the day-to-day necessities for our residents. Larger industry is attracted to communities that have a robust small business base because it enhances the quality of life for employees and creates greater opportunities for secondary jobs for spouses and children of home-supporting wage earners.

The city of XXXX must make starting a business, keeping a business, and expanding a business easy and affordable. My Small Business Support Plan is one way we can do this. By showing businesses we care, asking their opinion, and creating incentives for performance, the city will be putting a framework in place to keep our most valuable economic resources -- our small businesses.

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HonestChieffan
02-01-2012, 11:08 PM
Small business does not need another local, state or federal agency. Eliminate regulations and close the agencies that have failed to accomplish any of the objectives they had when created by politicians who have zero small business experience

Bump
02-01-2012, 11:21 PM
the federal government likes to make sure small businesses have a hard time making it.

La literatura
02-01-2012, 11:45 PM
Yeah, it seems to me like the lost of public revenue is a real gamble for the public. Obviously, it will work out if the business pans out and pays the development fee back. But if the business closes shop in 1 year or so, the city is out of that fee. We know enough to say that a lot of small businesses fail within the first couple of years, so under the plan, before they start to pay that fee. However, maybe a huge factor for failing is lack of capital (capital that the business has in the city if there's a delay in the fee).

La literatura
02-01-2012, 11:50 PM
Here's an article looking at development impact fees: http://www.impactfees.com/publications%20pdf/dif.pdf

In Iowa, there's been a growth of TIF (tax increment financing), which essentially seems to shift the tax revenue benefits to a particular zone of development, like a downtown area to stimulate business growth. This does, however, mean the revenue benefit that used to go to schools or something are chipped away towards the concentrated zone, which can really ruffle feathers.

ClevelandBronco
02-01-2012, 11:51 PM
Sounds like yet another way for government to pick the winners and the losers based on criteria that eventually would have little to do with the value of goods and services in the marketplace.

La literatura
02-01-2012, 11:58 PM
Creating the office of Small Business Ombudsman.

A key element to any retention plan is the belief that somebody actually cares. Currently, there isn’t a specific person at city hall to call if you are a small business owner. Owners and managers need a point of contact to find a multitude of answers.

Generally a business owner or manager is sent to each department to answer a specific need. Instead of the chase, the city should have someone who will do some of the legwork. This person would be well versed in the small business process and needs of the business owners and managers. They would be able to act as intermediary when difficult issues arise, such as code compliance. They would be able to consolidate information and help the small business owner do what they do best – spend time operating their business, not chasing down people at city hall.

On the other hand, this seems like a good job for a business lawyer, or a specialized small business itself that focuses on being an intermediary, knowing all the issues, and conveying it to other businesses.

If there's a need for that kind of service, the market should be able to provide it. Perhaps there's an argument, however, that because the small businesses aren't there, that particular business isn't there. The creation of this position could be temporary and part time, designed to entice business to the area, and by the time business has spurred, let the market takeover.

trndobrd
02-02-2012, 10:44 AM
Here is my response from the opposing candidate:

I have built a business in XXXXX and am proud to be a part of our City. But I've also seen the way the policies of City Hall have made it harder to do business in XXXX. This has to change.

My opponent claims that "Employees to a company are no different than small business is to our city." This is wrong! Small business don't work for the City, City Hall should work for small businesses, for our kids, for our elderly and everyone in XXXXX.

As your mayor I will demand that everyone from the city manager to the parking garage attendendant does everything within their power to simplify and streamline the process for starting or expanding a business. While my opponent wants to add another layer of bureacracy, I believe in holding people accountable and using the existing resources in the economic development department to make things simpler.

It's time for the people in City Hall to get out into the business community. As your mayor, I will take the lead in working with the XXXX Chamber of Commerce, attending meetings of the XXXXX Independent Business Association, the Hispanci Chamber of Commerce and other business organizations. The City Staff will be there with me, listening to business concerns, offering advice and fostering a cooperative relationship. We don't need more meetings and taxpayer funded conferences as my opponent has suggested, we need City government to get out in the community and listen.

My opponent and I agree that Development Impact Fees are too high and strangling small business. His plan is to keep the taxes high, but play a shell game with the payments. My answer is much simpler: I will cut Development Impact Fees by 75% and will establish a clear and understandable program for those fees. No more protracted negotiations over the fees, no more uncertainty of costs, no more cronyism in City Hall. Businesses don't operate that way and neither will the City of XXXXX. The increased sales tax revenue and increasing property values will more than offset the DIF revenue.

The idea that businesses should work for City Hall has come and gone. The time has come for a new direction in XXXXX. As your mayor, I will be responsible, accountable and will work WITH the XXXX business community.

Rain Man
02-02-2012, 10:53 AM
#1 is a good idea, and it's also a revenue generator for the city. Small business startups need help on how to do all of the paperwork, and many of them don't know about the specific taxes they're supposed to pay. Things like use taxes fly completely under the radar and I bet a majority of new small businesses don't pay them because they don't know they're supposed to. So having a small business ombudsman to help with startups is a great idea.

Having a small business ombudsman for more mature small businesses can't hurt, but at the same time I'm not exactly sure what they'd do to help. Maybe there are particular problems that come up where they can advise.

#2 is not a very good idea. Generally, competing firms will not come together to talk business, because they're trying to take business from each other. I'm not going to talk frankly with my competitors unless we're figuring out a way to kill a third competitor. Maybe small business forums in general could have some value, but it would certainly end up being a very small group. You're not going to get wide-scale buy-in.

#3 is a good idea for 1985. Development fees are important for bricks and mortar businesses, but they're a minority of businesses now. Most small businesses are service businesses that aren't going to build a big retail office or factory. It's fine to capture the 25% and declining share of businesses that have big capital investments, but that group is now a niche rather than the norm.

BucEyedPea
02-02-2012, 11:01 AM
Small business does not need another local, state or federal agency.

I agree with you here. This Roundtable stuff is just more top-down govt planning and interference in markets, even if that private-govt mix. An economy gets built from the ground up. Let the people create the businesses and put the show on the road. Get the govt out of the way....and local govt needs to tell DC to also take a hike.

notorious
02-02-2012, 11:09 AM
Ideas 1-11tybillion


Cut taxes.