Defining Economic Development

                                        IN SUPPORT OF LOMPOC

A mathematician, an accountant and an economic developer
apply for the same job. The interviewer calls in the mathematician
and asks "What do two plus two equal?" The mathematician replies
"Four." The interviewer asks "Four, exactly?" The mathematician looks
at the interviewer incredulously and says "Yes, four, exactly."
Then the
interviewer calls in the accountant and asks the same question "What
do two plus two equal?" The accountant says "On average, four - give
or take ten percent, but on average, four." 
Then the interviewer calls
in the economic developer and poses the same question "What do two
plus two equal?" The economic developer gets up, locks the door, closes
the shade, sits down next to the interviewer and says "What do you
want it to equal?" 

This is the problem all economic developers face. You can line up 10
people and ask them to define economic development and they will all
give you different answers.  And everyone is an arm chair economic
developer.  Do this, do that.  It can and has unfortunately cost the
jobs of many an economic developer in the effort to accommodate
the demands of communities.

Kate Griffith, Economic Development Manager for Lompoc is facing a
similar situation.  The economic development program has been confronted
by criticism by some community members. Kate has written three articles
that were published in the local newspaper to explain the purpose and actions
of economic development.  However, before you read Kate's articles, read the
article by William Schweke illustrating the important components that lead
to economic development success.

                          Why Community Capacity Building Really Matters 
                                                in Economic Development 
                                                       by William Schweke,
                                         vice president of CFED, North Carolina 
             August 2007 from the Carrboro Citizen, Carrboro, North Carolina


Strong and intelligent leadership can turn economies around. Economic developers
that neglect this important but intangible asset do so at their peril. Indeed, most
mainstream economic developers seem to still believe that economic development
is the “art of the deal". "I disagree". Instead, it is more about “the art of collaborative
problem solving.”
It’s true that without a steady and growing stream of new ventures
and business expansions, an economy will not renew itself. And if improvements in the
labor force or infrastructure are not generating such results, something is wrong. But
such a focus on the project can also steer development in the wrong direction.

A focus on deal making perpetuates a quest for the one sure thing – the new branch
plant facility, a stadium, a convention center, a casino, a theme park or even a prison.
(“If we build it, they will come.”) At best, these are outcomes of a good development
process, but none is the silver bullet that developers and elected officials seek. Production
of this silver bullet (or, more precisely, a variety of tools) requires an organizational and
 leadership precondition that we call “social capital” or “community capacity.” By social
capital, we mean the capacity of a community to work consciously and effectively to
shape its economic future. Indeed, the ability of residents – and their leaders and officials –
to participate, lead, make decisions, implement plans and influence outcomes is a community
asset as important as labor force skills, natural resources, the physical infrastructure, the
financial capital and entrepreneurial drive. The possession or absence of community capacity
increasingly will distinguish progressing communities from declining ones.

A few years ago, a group of seasoned practitioners of this art, including me, formed the
Community Capacity Building Learning Cluster under the auspices of the Aspen Institute
and identified the concept’s key dimensions and how they might be assessed and measured.

A community will be well positioned for future development success if it has:
  • Broadened participation in local decision-making;
  • Expanded its leadership base;
  • Developed strategic plans for community and economic development;
  • Increased individual skills and knowledge about how to move toward development goals;
  • Established effective community and economic development organizations;
  • Improved its access to and use of local and outside financial and professional resources;
  • Made measurable progress toward its goals;
  • Developed a system for monitoring and evaluating successes or failures.
North Carolina has been active in this area. Universities, the Department of Commerce, the
N.C. Rural Economic Development Center, foundations and corporations have all supported
actions such as leadership development programs, economic development training, nonprofit
management assistance and courses, strategic planning efforts and so forth.

Still, a greater effort is needed if we are to equip communities to excel in all three dimensions
of community capacity building and prosper in today’s New Economy. One expert describes
them as follows: We must increase the “breadth” of involvement and partnerships. We must
enhance the “depth” of local skills. And we must “heighten” their relationships to resources
beyond their community. This is the way to “move beyond the deal” and cultivate a more
democratic development practice.

_____________________________________________________________________________

The following are three articles by Lompoc Economic Development Manager Kate Griffith.
The articles; City Defends its Efforts at Economic Development; City Meeting Its Goals for
More Jobs
and Marketing Helps Boost Local Economy are about the state of economic
development in Lompoc, which has come under recent criticism. These articles were printed
in the Lompoc Record newspaper to illustrate the value of the program. As you read them,
determine if Kate made a strong enough case in defining economic development and shed
light on the positive actions and value that economic developmen thas had on Lompoc. Also
determine if Kate has identified achievement in the areas illustrated in William Scweke's article
on positioning a community for future development success.
_____________________________________________________________________________


                                             


City Defends its Efforts at Economic Development

The City of Lompoc has a clear economic development strategy that has delivered
results. As a consequence, Lompoc enjoys one of the healthiest and most diversified
economies on the Central Coast, based on defense and commercial space, mining,
agriculture, manufacturing, government, tourism and entrepreneurship. To assure a
sustainable economy in the Lompoc Valley, the city will continue to spawn new
entrepreneurs, grow existing businesses, and attract new industry.
As stated in the
2007/2009 City Budget, the Economic Development Mission is to design, implement,
and monitor economic development programs in the city. This includes improving the
quality of life for Lompoc's residents through:

1) The provision of timely technical and financial assistance to business-owners, 
    investors, brokers, developers and others necessary to retain and create 
    employment opportunities in the city
2) The retention and expansion of the local tourism trade
3) The recruitment of new business to the community
4) Marketing of the community
5) Creation of small-business opportunities
6) Enhancement of local workforce.

The city budget defines the city's Economic Development Program goals:

1) Reduce the number of Lompoc residents commuting to work outside of the Lompoc Valley
2) Increase property tax, sales tax, use tax, and transient-occupancy tax revenues
3) Increase small-business opportunities in Lompoc through the Self Employment Training 
    and Micro-Enterprise Loan Program
4) Launch broadband as an economic development tool and overall quality of life enhancement 
    for citizens.

The budget outlines specific Economic Development Program performance areas:
administration, economic development advertising, financial programs, training
programs, strategic partnerships, Chamber of Commerce, tourism advertising,
and community events. These areas are described below.

The City of Lompoc Economic Development Program collects, compiles, analyzes and
presents economic and demographic data about the community; recommends the
establishment of economic development goals and priorities; develops and prepares
informational brochures and other materials describing the community; initiates contact
with businesses interested in investing in the community, initiates recruitment efforts
to attract businesses which meet the city's job creation goals, makes visits to business
and industry; maintains current information about tools for financing business and
industrial investments; coordinates economic development activities between city
departments; and prepares applications for grants or loans for economic development
activities.

The one-person Economic Development office creates and funds economic development
marketing programs targeted to business owners, investors, brokers and developers. The
ED office defines and promotes financial tools available for local businesses, e.g. Lompoc
Economic Development Revolving Loan and Redevelopment Agency funds, USDA Business
& Industry Guaranteed Loan, etc. The ED office also organizes, administers, and promotes
the Self-Employment Training (SET) and Micro-Enterprise    Loan Program. This includes
marketing and underwriting analysis.
 
The Economic Development office also coordinates with other economic development
programs and organizations such as the City of Lompoc's Redevelopment Agency and
Community Development Block Grant Program; California Space Authority; U.S.
Department of Labor Workforce Innovation for Regional Economic Development;
California Association for Local Economic Development; International Economic
Development Council; U.S. Economic Development Administration; U.S. Small Business
Administration; Coastal Business Finance; Workforce Investment Board; Private Industry
Council; etc.

It is the Economic Development office that manages the contract for financial support
to the Lompoc Valley Chamber of Commerce and Visitor's Bureau for material and staff
expenses related to the fulfillment of literature and information requests, small-business
assistance services, tourism marketing, and businessattraction marketing support material.
The ED office also manages payment for the tourism-marketing program administered under
contract by the Chamber of Commerce. The ED program provides for limited support of the
Lompoc Flower Festival and expenses related to dignitary hospitality.

The city's Specific Economic Development objectives are

1) To create a minimum of 100 new jobs during the budget cycle, by either assisting in the expansion 
    of local businesses, or by attracting new businesses into the community; and
2) To continue to update and implement an Economic Development Marketing Campaign to attract 
    new businesses.

To attain these objectives, the city budgeted almost $11 million for economic
development programs and projects in fiscal year 2007/2008. The Lompoc Redevelopment
Agency and Lompoc Community Development Block Grant Program, which are mandated
to contribute to the economic vitality of the community, provide 97 percent of this
commitment  and the city General Fund and Electric Fund provide less than 3 percent.
From the city General Fund, Economic Development and Tourism comprises $191,541,
over 88 percent of which goes to the Chamber of Commerce for services ($120,000)
and ad placement ($50,000). The General Fund also contributes for partial salary and
benefits for Economic Development Manager. The Electric Fund contributes $28,000
for community promotion.

The Lompoc Redevelopment Agency budget for fiscal year 2007/2008 is over $8.3 million,
which includes: salary and benefits for Redevelopment staff; partial salary and benefits
for two administrative assistants, city Planning Manager, and Economic Development
manager; office expenses; professional services for legal work; property maintenance;
legal and accounting expenses; economic development marketing ($40,000); training
and meeting expenses; pass through amounts to other local and county agencies;
and debt service for loans and the Aquatic Center bond.

The $8.3 million Redevelopment Agency budget includes over $3.2 million that is
allocated to commercial and city projects and programs. More than $2.5 million is
allocated to housing programs and projects. The Agency is currently funding several
projects in Old Town: Art Alley and a pocket park, as well as renovation of Lompoc
Theater and Lompoc Museum. The agency also partially funds the Police Activities
League Program and Athletic Center and programs to assist commercial property
owners renovate their property in the project area.

The Community Development Block Grant budget for fiscal year 2007/2008 is
$2.3 million, which includes salaries and benefits for CDBG staff, partial salary
and benefits for code enforcement and planning staff, and grant, loan, and
scholarship programs. The budget includes an Economic Development Revolving
Loan Fund. CDBG resources have recently funded Americans with Disability Act
upgrades at the Lompoc Library and affordable housing projects. Lompoc Theater
renovation, Police Activities League Athletic Center, and a replacement Community
Center are currently earmarked for future funding.
With comparable resources, the
city outlined similar objectives in the previous budget cycle and attained them by
creating over 100 new jobs and launching new marketing campaigns to attract
new business.

City Meeting its Goal to Provide More Jobs

Among the city's economic development objectives is the creation of 100 new jobs
each fiscal year. This article discusses how the city did that during the last budget
cycle.

Lompoc enjoys one of the healthiest and most diversified economies on the Central
Coast. To further diversify the local economy, the city has focused on value-added
agriculture and entrepreneurship. The local flower seed industry evolved into research
and development, which includes higher skilled/higher paying jobs than traditional
agriculture. Now less productive land is giving way to well-suited wine grapes, which
also require higher-skilled labor and pay higher wages for winegrowing.
The city works
to grow a prestigious wine industry and to promote Lompoc as a wine destination. In
five years we have grown from five to 30 labels produced in 14 wineries across the city,
as well as opened five tasting rooms and a wine shop. We have also attracted the
largest wine event in the county, the Santa Barbara County Vintners' Festival, and
branded Lompoc Valley as the “Gateway to the Santa Rita
Hills Wine Country.”

Reference USA data suggests that the 30 boutique wineries in Lompoc have created
more than 100 jobs, and each winery generates, on average, from $500,000 to $5
million in annual sales, depending on the winery size. Combined with Lompoc area
wineries, such as Babcock, Sanford and Foley, which are closer to $25 million to
$50 million in annual sales, winegrowing has emerged as a new economic engine
driving entrepreneurship in our area.

The wine industry creates new employment opportunities in Lompoc Valley, from
winemakers, cellar staff and tasting room hosts to vineyard managers and crew.
As Lompoc's boutique wineries grow, they move into larger space and hire more
employees. Secondary and tertiary benefits are also created as these wineries
support other local service businesses, such as wine fulfillment, equipment rental,
construction, legal, accounting, banking, and restaurants.

Located in Lompoc's “Wine Ghetto,” Presidio Winery provides a de facto incubator
or custom-crush facility that has fostered winemakers who do not have the capital
for their own equipment. Camaraderie among the residents of the “Wine Ghetto”
has allowed the boutique wineries to grow. Thus, Lompoc wineries illustrate local
innovation, sharing marketing, equipment, facilities and technical expertise to reduce
costs.
A few years ago, Lompoc's wine production spilled out of the “Wine Ghetto”
over to West Central Avenue, where Ken Brown Wines, Ampelos Cellars, Pali Wine
Company, the Loring Wine Company, P2 Wine and Cargasacchi Vineyards found a
home. New production facilities have recently been completed for the Pali
Wine Company and the Loring Wine Company on Aviation Drive. Sea Smoke Cellars
has proposed construction  of a facility on North O Street. Rosario Perry has also
proposed a multi-tenant production facility for North L Street.
 
Winegrowing brings direct and indirect benefits to Lompoc Valley. The launching of
the prestigious Sta. Rita Hills American Viticultural Area brought immediate cachet
to the community. Corporate direct investment in the area, such as Kathy Joseph's
partnership with Napa-based Beringer Blass Wine Estates in Fiddlestix Vineyard, brings
new capital to the area.

Over the past couple of years, Napa-based Premier Pacific has purchased more than
4,000 acres in the Lompoc area, much of which is in the Sta. Rita Hills appellation.
Premier Pacific continues to invest in planting pinot noir and chardonnay vineyards
where it is viable. To give some perspective to the investment, local estimated costs
for planting and irrigation are $25,000 to $35,000 per acre, excluding the cost of land.
Vineyards prove to be more sustainable than row crops, which are easily switched out
from year to year, because they require at least a 25-year commitment. The Lompoc
district wine grape planting is estimated to be more than 2,500 acres and new acreage
is planted every month. Vineyard manager Bill Henri points out that “The wine industry
is sexy and attracts investors with deep pockets who will pay more for the land
and cattle than they are worth!”

Lompoc Valley has also attracted a significant infusion of international capital over
the past five years. In 2005, Chicago-based Terlato Wines International purchased
majority ownership of Sanford Winery
on Santa Rosa Road. Terlato, a leading marketer of luxury wines around the world,
brings international savvy in wine marketing to the area. During the same year,
Lompoc-based Celite Corporation diatomaceous earth mine was purchased by
Imerys, a French industrial minerals and pigments company. Many Celite employees are
local residents.

In 2003, Swedish-owned Fagerdala World Foams purchased Lompoc-based Pactuco to
manufacture polymer foam products used for insulation, packaging and decoration, as
well as thermoformed packaging and injection molded products used in the toy, food
and electronics retail market. The company retained a number of the former Pactuco
employees and has a seasonally adjusted workforce of 60 to 93 employees.
The city also attracted multinational corporation Raytheon Vision Systems to the
community in 2003. RVS employs 30 workers who develop and manufacture infrared
sensors for scientific, commercial and government applications. RVS contributes to the
economic vitality of our community by providing high-paid jobs.

The city attracted new jobs with national retailers over the past five years, including
Walgreens; Home Depot; Ross Dress for Less; Petco; Pier 1; and California Dodge,
Chrysler, Jeep. Michaels will soon open and two retail locations that have been dark
for years due to long-term leases, Office Max and the eastside Vons, will soon house
In Shape Health Club and an indoor market. Other local retailers, such as Cindy's Sweet
Creations, have opened storefronts and are growing national business. Several
restaurants have also opened in the past few years, including Jalama Beach Café,
with about 25 employees.

While the closure of Lompoc's Ford dealership is unfortunate, it reflects a corporate
decision to close about 600 dealerships across the country rather than anything
negative about Lompoc.
The Bedfords of Sunset Auto and other Lompoc employers,
including Wayne's Tires, immediately absorbed most of the 30 Ford employees.

The city also stimulated local competition in broadband technologies by launching
the Lompoc Broadband Feasibility Study in 2002. City residents now have at least
three competitors offering high-speed data options to choose from, as well as new
employment opportunities within those organizations.

The broadband initiative also seeks to inspire local entrepreneurs to develop e-commerce
business models and Web-based strategies for innovating new business and maximizing
existing business operations.

A recent article in the Lompoc Record, “Vintegrated Solutions brings wine to masses”
illustrates one Lompoc-based company where “about 90 percent of the sales are
completed online or by e-mail. ...” Many wineries also rely on Internet sales for the
majority of their business. In particular, Sea Smoke Cellars uses radio frequency ID
for inventory control in its vineyards and winery.

Lompoc welcomes clean and green technology-based businesses.

To diminish the number of commuters that leave Lompoc every day, the city
supports all types of entrepreneurship. Toward that end, the city launched the
Self-Employment Training Course with instructor Tim Harrington in 2003. Since
the first workshop, 45 individuals representing businesses from sole proprietors
to corporations have attended the course.

Businesses currently operating in the Lompoc Valley that have attended the SET
course include Amy's Village Frame Shop, Cards by Kathy G, Global Vision Computing,
Fin-Up Racing Suspension, Knightlighting, Solutions for People, and Animal Care Hospital.
City economic development resources are used to promote the course and provide
scholarships to low-to-moderate income participants. The next course will be offerd
this winter.

The city also partners with the U.S. Small Business Development Center to contract
with the Chamber of Commerce for Harrington to provide free small-business
development services.
At least 100 new jobs created in the wine industry, retail
sector, and entrepreneurial class illustrate that the city met its objective for job
creation during the last budget cycle.

Marketing Helps Boost Local Economy

Today’s article discusses how the city attained its second economic objective, to
update and implement an Economic Development marketing campaign to attract
new businesses. Creating
jobs was the first objective.

During the past budget cycle, the city focused on publishing Lompoc Valley Magazine,
Lompoc Valley Fold-up Map and producing the Discover Lompoc TAP TV program to
ramp up the marketing campaign. These emerged as important marketing tools for
branding the city as a wine production center and wine-tasting destination, and
Lompoc Valley as the ”Gateway to the Sta. Rita Hills Wine Country.”

Lompoc Valley Magazine has been a valuable promotional tool for attracting/retaining
business and tourism, as well as an interesting read for area residents. Lompoc Valley
Fold-Up Map is an attractive promotional piece that updated new roads and housing
developments before any alternative was available. Discover Lompoc TAP TV program
has also enhanced the visibility of many facets of the community and demonstrates a
valuable resource available to residents and businesses at TAP TV studio.

Over the past few years, the city cultivated a relationship with the Santa Barbara
County Vintners Association. When the association was seeking a new venue for the
Vintners Festival, we pursued the opportunity. As a consequence, the Santa Barbara
County Vintners’ Festival relocated to Lompoc River Park this year.
Collaborating with
the Vintners Association and the Lompoc Valley Chamber of Commerce, the city hosted
a first-rate event with more than 3,000 participants from all over the United States.
Demographics prove that wine consumers are generally upscale with disposable income
to spend on food, wine, travel and leisure. The city welcomes these tourists to
our tasting rooms and to the next Vintners Festival on April 19, 2008.
 
Likewise, the city cultivated rapport with the Santa Barbara Conference & Visitors
Bureau and Film Commission and now participates on the Board of Directors. The
Santa Barbara CVB spends more than $1 million annually to market the county and
Lompoc benefits from the cachet of their regional, national and international
promotional campaign without direct expense. The city will also benefit from
a countywide Visitors’ Profile that the Santa Barbara CVB will begin in December.

For the past three years, the city has co-sponsored the Santa Barbara International
Film Festival. Festival sponsorship raises the city’s visibility in the arts and entertainment
industry, which is congruent with the city identity as the “City of Arts and Flowers.”
The Festival’s Field Trip to the Movies program provides Lompoc students with an
opportunity to learn about career paths they might otherwise not have known about.
Post festival film screenings in Lompoc establishes a precedent for quality programming
that will eventually be available to the renovated Lompoc Theater.

Because of the continuing countywide revenue generated by the movie
“Sideways,” the city seeks to attract other film production to the community.
Two feature films, Quentin Tarantino’s “Grindhouse” and Paul Thomas Anderson’s
“There Will Be Blood,” and numerous commercials were shot in the Lompoc area
over the past couple years. We also seek to attract post-production activities,
such as editing, with citywide broadband.

In recognition of the $1.7 billion economic engine that Vandenberg Air Force
Base represents  for the region, the city has been a member of California Space
Authority for five years and participates on the California Space Enterprise Council
and the California Space Center Advisory Committee.
The proposed space center
is of particular interest because Lompoc will be one of the biggest beneficiaries.
The center is projected to contribute $1.3 billion to the regional economy,
attract 200,000 to 400,000 visitors annually, and create 1,600 jobs. California
Space Authority recently submitted a lease proposal to the Air Force for acreage
at the former Hawk’s Nest near Lompoc. With a signed lease, fundraising for the
center will begin.

To enhance the role of Lompoc’s space and technology workforce, the city partnered with
CSA in a Department of Labor Workforce Innovation Regional Economic Development (WIRED)
grant. City consultants Tim Harrington and Dulcie Sinn provided an innovation asset inventory of
local companies; federal research laboratories and federally-funded research centers; federal
military R&D laboratories and military installations; and research universities and specialized
university-linked research institutions. The WIRED survey facilitates marketing for companies
and other innovation organizations to get connection with their capabilities and what
they can do for other businesses.

The city dedicates much of the Economic Development marketing resources to the Lompoc
Redevelopment Agency and it has paid off! Lompoc’s “Wine Ghetto,” Brewer-Clifton Winery on
North F Street, Vintegrated Solutions on North E Street, and La Purisima Plaza wine storage
at the former Grefco site are all in the Redevelopment Area. Other Redevelopment Area
projects under construction include Crown Laurel industrial building for wineries on West
Laurel, and Melville Winery storage warehouse on East Laurel. All these businesses bring
cachet to the Redevelopment Area and enhance property values.

Within the Redevelopment Area, Old Town is a specific focus of the city’s economic
development strategy. The city has dedicated agency resources for pavers and lighting,
a pocket park, Art Alley, as well as renovation of Lompoc Theater and Lompoc Museum.
The agency also assists commercial property owners to renovate their property in the
project area. City Community Development Block Grant resources have also been
earmarked for the Lompoc Theater renovation.

The city promotes Lompoc utilities as the most affordable and reliable in the region.
Yet, LompocNet provides a unique challenge because it is marketed in a competitive
service environment. For several years LompocNet ads have been placed in Lompoc
Valley Magazine. A new ad campaign recently launched in the Santa Barbara
News-Press will eventually extend to the Lompoc Record.

The city launched several new advertising campaigns in September. We promote
Lompoc public art in Southwest Art magazine’s special feature on “Art in Unexpected Places.
” We also placed ads in the Santa Barbara News-Press and Lee Central Coast Newspapers
Supplement “Go Green” to bring visibility to the city’s history of green practices and to attract
 like-minded business. The city will also promote Lompoc in an ad in United Airlines Hemisphere
Magazine, December issue, to complement the feature on Santa Barbara County.

The city also reimburses the Chamber of Commerce for tourism advertising. This includes
ongoing ad placements in several local, regional and state publications. The city contracts
with the chamber to promote tourism through visitor center services, e.g. answer phone
calls and e-mails by potential visitors, Web site update, distribution of printed material,
maintenance of at least 12 off-site distribution locations, a minimum of 25 step-on guide
tours, volunteer staff, information and photographs for travel writers, event
coordination and management, familiarization tour for film company reps, etc.

The city’s economic development Web site is under construction and will soon re-launch
with a fresh look and new content. Inclusion of Lompoc Valley Magazine and Discover
Lompoc TV program via streaming video on the city Web site has already attracted many
unique viewers. With exciting new content, the economic development site seeks to attract
even more viewers. m
Be sure to look at the site on a regular basis as new pages open with
more content to keep you abreast of Lompoc’s economic development activities.

________________________________________________________________________________


So do you think Kate made a strong case for Lompoc's economic development program?
It is evident from the three articles she is high performer.  However, do her efforts
follow the directions identified by Scheweke needed to create a successful future development
program in Lompoc? Or is Kate confronted by a parochial attitude from locals

In addition, economic development theory tells us that it takes four factors to grow an economy:

Increase of Population
Infusion of Capital
Harvesting of Natural Resources
Changes in Technology

Is Kate following theory in formulating a diverse and sustainable economy in Lompoc?

In support of Kate, she did not under promise in her work plan and then pull a quick one by
performing just above the under-promised levels. Figuratively, she has pulled out all of the 
resources from the prorverbial tool box.Kate is a true concientious economic development
professional. But is she doing too much and not focused enough in specific areas to produce
and illustrate greater results?

Let's hear your comments.  Or better yet, let Kate know.

Lompoc Economic Development Manager Kate Griffith can be reached at 805-875-8232, or at
k_griffith@ci.lompoc.ca.us.
 

 

 

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