Based on the theory that making development more affordable would boost the local economy, the city used redevelopment funds to pay for up to 80 percent of public improvements such as sidewalks, curbs and gutters. The program also allowed property owners to defer interest on the city portion of their property tax bills and provided low-interest redevelopment agency loans to help merchants improve their buildings by putting up facades, new signs and lighting.
The Lancaster City Council agreed that fast action was needed to stimulate the local economy and bring neighborhood businesses back from the verge of extinction. As the federal government debated how to deal with the economic crisis, Mayor Rex Parris and the city council launched Lancaster’s own Economic Stimulus Package. Designed to create $110 million in local economic activity by leveraging $400,000 in redevelopment agency funds, Lancaster’s stimulus package ultimately generated $123 million in economic activity.
Beaumont
With the nation facing its worst economic crisis since the Great Depression, the Beaumont City Council unanimously approved a local economic stimulus program in early 2009 to help homeowners, merchants, builders and contractors through hard times.
Beaumont (pop. 34,217), located in the heart of the Inland Empire region and 78 miles east of Los Angeles, reduced building fees for new homes and businesses by 30 percent and slashed processing fees for existing businesses and residents by 50 percent.
Based on the theory that making development more affordable would boost the local economy, the city used redevelopment funds to pay for up to 80 percent of public improvements such as sidewalks, curbs and gutters. The program also allowed property owners to defer interest on the city portion of their property tax bills and provided low-interest redevelopment agency loans to help merchants improve their buildings by putting up facades, new signs and lighting.
Program Increases Development
The program produced almost immediate benefits. Beaumont issued more new home building permits in 2009 than any other city in Riverside and San Bernardino counties. Beaumont’s total represented 10 percent of all new home permits in Riverside County. During 2009 Beaumont issued 350 new permits – about 17 percent more than in 2008. Developers saved money and didn’t have to borrow because the city delayed collecting fees until people moved into their homes.
Beaumont issued a total of 679 permits in 2009 and 2010, an average annual increase of 13.2 percent compared to 2008. During the same two-year period, Riverside County’s permits declined by an average of 9.4 percent annually.
Energy Conservation Helps Small Businesses
Beaumont’s economic stimulus program emphasized sustainable practices by encouraging energy conservation. The city partnered with Southern California Edison (SCE), the Beaumont Chamber of Commerce and about 100 local businesses in 2009 to cut electricity use. Under SCE’s Direct Install program, prequalified local merchants received nearly $123,000 in free energy-saving improvements, including new fluorescent lighting, LED exit signs and upgrades to refrigeration equipment. Participating small businesses saved a total of 440,000 kilowatt-hours – the equivalent of the electricity used by about 26 homes in a year.
Beaumont also saved 394,405 kilowatt-hours of electricity with two retrofit programs that installed new interior lighting at the Civic Center and “smart” pumps at the sewer lift station. As a result of the energy savings, SCE paid the city an incentive of nearly $33,000.
Fueling the Economic Engine
The city’s economic stimulus program will more than pay for itself in the long run despite the fee cuts. The lower fees gave developers, homeowners and merchants an incentive to move forward on projects they had been postponing. This in turn helped the local economy and created more revenue for Beaumont. The new development also increased revenue, which led to more sales and property taxes, and provided economic growth and jobs.
The business community is enthusiastic about the local economic stimulus program, which will remain in full effect until 2012. Developer Grady Hanshaw received approximately $500,000 in fee credits from the city when he spent about $600,000 to add two street signals to his Beaumont Marketplace shopping center. Business owner John Dexter says the fee cuts helped his clients and business save money and boost the local economy. “It keeps the wheels turning in hard economic times,” says Dexter. So far Beaumont has waived more than $3.3 million in fees.
Beaumont Mayor Brian De Forge has watched the city that he grew up in prosper despite today’s daunting economic challenges. He credits Beaumont’s visionary stimulus plan and a can-do attitude with helping to make the difference. “Everyone benefits when cities decide to give back to the communities that they serve,” says De Forge.
Lancaster
The City of Lancaster (pop. 145,875), located approximately an hour north of Los Angeles, was hit hard by the recession that began in 2008. Lancaster faced some dismal statistics – a 10 percent decrease in the number of licensed businesses, retail sales down by 8.5 percent and nearly 15 percent of area residents unemployed in late 2008.
The Lancaster City Council agreed that fast action was needed to stimulate the local economy and bring neighborhood businesses back from the verge of extinction. As the federal government debated how to deal with the economic crisis, Mayor Rex Parris and the city council launched Lancaster’s own Economic Stimulus Package. Designed to create $110 million in local economic activity by leveraging $400,000 in redevelopment agency funds, Lancaster’s stimulus package ultimately generated $123 million in economic activity.
This temporary, timely and targeted package focused on getting dollars flowing through the local economy, with a variety of programs that encouraged people to shop in Lancaster and explained how doing so helped local services. The stimulus package targeted four major categories – merchant assistance, infrastructure and construction projects, hospitality and developer/broker incentives. The city sought considerable public input, including discussions with the Antelope Valley Chambers of Commerce and the Antelope Valley Board of Trade, in creating the programs.
“Our goal was to engage the local business community and our residents in a united effort to protect local jobs and services,” says Parris. “To accomplish this, we had to do everything in our power to encourage residents to shop locally by helping them understand how essential their purchases are to public infrastructure, city services and local businesses.”
Innovative Programs Spur Broad Participation
The merchant assistance program included Shop & Dine Lancaster, which encouraged consumers to shop locally and underscored how doing business in Lancaster supported the community and city services. From March 30 through April 29, 2009, when a shopper accumulated $300 in sales receipts from one or more Lancaster businesses, the consumer could exchange those receipts for a $30 Shop & Dine gift card that could be used at more than 400 participating businesses in the city. Shop & Dine distributed 5,300 gift cards to families throughout the Lancaster area.
“The final day of the Shop & Dine program was one of the most rewarding days in my career,” says Economic Development Director Vern Lawson Jr. “More than 1,300 people poured into Lancaster City Hall to claim their gift cards. Every city staff member, from the city manager down, worked side by side at the finance counter to serve our residents. In a time of great economic difficulty, we were able to provide thousands of local families with economic help, while simultaneously guaranteeing more than $1.7 million in purchases at local businesses.”
A similar program, Shop & Drive, was offered in conjunction with the Lancaster Auto Mall. From March 30 through
June 30, 2009, people who purchased new vehicles at the auto mall qualified for a rebate of the registration fees in the form of a Shop & Dine gift card. As a result, car sales skyrocketed, and 273 new vehicles were sold or leased in the first month, totaling more than $7.4 million in new car transactions. When the three-month program concluded, Shop & Drive had prompted more than $25 million in local new auto sales.
The infrastructure and construction program rehabilitated more than 100 foreclosed homes and supported the construction of two new parks and an art museum. The developer/broker incentives program streamlined planning and permitting processes and offered incentives to commercial and industrial real estate brokers.
Lancaster’s Convention & Visitors Bureau, which was established in partnership with the private sector and other agencies including the Antelope Valley Fairgrounds, created new destination ventures as part of the hospitality program. One such event, the inaugural Streets of Lancaster Grand Prix go-karting event, attracted approximately 20,000 attendees. Expanded national sports tournaments and other events infused $21.8 million into the local economy through the hospitality sector. As a result, the city received national media attention from the Wall Street Journal, NBC Nightly News, CBS Evening News, Fox Business News, CNN and all major regional television stations.
Exceeding Expectations
“The feedback regarding the stimulus package has been outstanding. For some local businesses, these programs meant the difference between closing and thriving,” says Mark Bozigian, Lancaster’s city manager.
Lancaster has added nearly 700 new businesses since launching its Economic Stimulus Package, which puts the city close to achieving its peak level of 6,259 businesses in 2006. Overall, the package helped the city reconnect with local businesses, build new partnerships and restore consumer confidence. Lancaster’s effort provides an excellent example of how a community can pull together during tough economic times.