Types of Economic
Development Organizations
Public
Private
Public-Private
Public EDO’s
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Independent Agencies
Regular Local Gov’t departments
Part of one of the local departments
Part of the local gov’t manager or
mayor’s office
Public EDO’s Encourage Econ Development
Thru Implementation & utilization of:
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Infrastructure Improvements
Eminent domain
Ownership of land
Control of right of ways
Zoning and regulatory powers
Special permits
Special Improvement Dist.
Tax Increment Financing agreements (TIF’s)
Construction and operation of public facilities
Business incentives both tax and non-tax varieties
Business Marketing, retention & expansion
Entrepreneurial/minority business assistance
Characteristics of an Innovative,
Entrepreneurial Public Sector Organizations
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Catalytic &
Facilitating
Community-Owned
Competitive
Mission-Driven
Results Oriented
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Anticipatory
Decentralized
Market-Oriented
Enterprising
Customer-Driven
Types of Public EDO’s
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Local Governments
Regional Planning Organizations
State Economic Development
Organizations
Executive Director
Deputy Director
Business Development
Assist. Dir.
Administrator
Assist. Dir.
Finance & Administration
Mgr
Account.
PR
Procurement
Potential Problems
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Duplication of work between departments
Staff may make assumptions about what
others are responsible for
Poor coordination of department efforts
Ability to build consensus, but difficulty in
spurring action
Poor communication or coordination with
field offices
Duplication of mission and/or efforts
between area EDO’s
Advantages of Public EDO’s
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Access financing mechanisms to leverage
private investments
Direct access to sources of public funding
(CDBG, revenue sharing)
Municipal powers: taxing authority,
eminent domain, ownership of land, rights
of way, zoning, and regulatory powers and
the ability to construct and operate public
facilities and services , which can be used
in economic development initiatives.
Advantages continued
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Access to other city or county resources
such as planning, research, and public
works.
More likely to have better buy-in from
public officials and executives for
economic development initiatives
Can use their municipal powers and
planning capability to create/coordinate
city and countywide policies and strategies
Disadvantages
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The economic influence of public EDO’s is
essentially limited to their surrounding
political area
Public EDO’s face municipal debt
limitations, which restrict economic
development finance.
Often prohibited from lending money
directly to the private sector and often
cannot participate in profit-making
ventures.
Disadvantages Continued
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Normally cannot build or operate nonpublic facilities.
Elected official turnover can cause
inconsistent economic development
policies.
Commitment by officials may vary.
Private organizations often mistrust
governmental activities.
Public disclosure laws may prevent private
negotiations with relocating businesses or
developers.
Private EDO’s
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A Private EDO is defined as an
organization with the express mandate of
promoting economic growth, but which
has no public control of governance and
no formal links to government. A private
Edo can rely more on its own decision
making process to act quickly and flexibly.
Private agencies can lack adequate clout
with local policy makers, potential major
limitation.
Types of Private EDO’s
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Chambers of Commerce
• Membership Services
• Business Marketing
• Business Advocacy
• Job Training
• Neighborhood and downtown
revitalization
• Business Advocacy
• Regulatory reform
Types of Private EDO’s con’t
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Community Development
Corporations
Community Development Financial
Institutions
• Community Development
• Community Development
• Community Development
• Communtiy Development
Capital Funds
Banks
Credit Unions
Loan Funds
Venture
Private Advantages
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Serve as intermediary through which individuals
can deal with the government on behalf of a
private client.
Not directly accountable to a broad constituency.
Organized to make decisions quickly.
Perform functions and activities that may be in
the public interest but are not necessarily
allowable by “government activities” for a
municipal corporation.
May invest equity capital and generate profit
Can raise funds in the private market
Can receive donations (nonprofit corporations
only)
Advantages con’t
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Are able to successfully insulate individual
investors from risk.
Free to utilize subsidiary for-profit and nonprofit
resources for project development purposes.
Can receive some federal (like SBA) funds.
Private EDO Disadvantages
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Lack powers of eminent domain and other public
land management powers
May lack public sector support and commitment,
which means they take risks in assuming
responsibilities for economic development. This
may make it unprofitable and inefficient for them
to assume the responsibility for economic
development without government cooperation.
May face excise taxes on investment income (12% annually)
Disadvantages con’t
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Face strict prohibitions on self-dealing. For
example, a director is prohibited from selling an
asset to the foundation even on terms extremely
favorable to the foundation. Finally minimal
annual distribution of assets are required.
Since the private agency must support itself,
sometimes efforts are shifted away from
economic development.
Public/Private EDO’s
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Public-Private organizations are
usually formed as a result of cost
savings and collaboration. Publicprivate organizations share longterm goals related to the social,
political, and business environment
in a community.
Public-Private Participants
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CEO’s form major businesses
Utility representatives
Chambers of Commerce
Banks
Industrial Parks
Real Estate Developers and brokers
Accounting and law firms
Public and private colleges
Labor organizations
Successful Characteristics
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Clearly defined missions that address concerns of
public and private sectors
Internal autonomy over the organization
Consensus among members regarding the
mission of the organization and how to
implement the mission
Adequate funding to achieve goals
The commitment of the public & private sector
Established performance measures & benchmarks
to justify continued support and funding
Public-Private Advantages
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Excessive politicization of the EDO’s work is less
likely to occur
Neither public nor the private EDO’s have the
degree of freedom in hiring, firing, and setting
salaries than public-private agencies
Greater risk takers because directors and board
members do not run for election. An unpaid
board has little to lose from making bold
decisions. Able to use resources and powers
without public limitations (red tape, citizen
review, civil service restrictions)
Public-Private Advantages
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Free to expand on gov’t powers, are not restrained by city
charters. Can invest in nonprofit and profit ventures if
needed
Some agencies can take on projects, proposing the project,
sampling public reaction and allow gov’t/planning to
support of oppose.
Private sector has three things the gov’t needs:
• Resources, knowledge, and public support
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Public is less willing to support public sector spending. I a
public agency wants to develop a project, it may find a
better source of funding in the private sector than the
legislator
Draws on a broader range of expertise. Working together
builds upon & creates news skills and understanding of
various points of view
Public-Private
Financial Advantages
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Mobilization of resources, and financially flexible
Maximize use of available gov’t funds
Use financing tools to pay for large, revenue- generating
infrastructure projects
Can invest in private business ventures
Municipal debt ceiling does not affect public-private EDO’s
borrowing powers
Able to accept donations due to tax exempt status, offer
tax advantages to contributors
Insulate governance from financial risk through
incorporation laws
Potential self supporting through management and service
fees and/or membership dues
Public-Private Disadvantages
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Not under the same degree of public control,
limiting its accountability
Limited accountability may cause a public-private
EDO to forfeit a portion of their influence if the
public sector and the citizenry are not
satisfactorily represented
Limited accountability can also restrict its
freedom of action
New Organization Chart
Executive
Director
Chamber
Manager
PR/Media
Relations
ED
Assistant
Office
Assistant