Kansas Center for Community Economic Development
Institute for Public Policy and Business Research
The University of Kansas





Economic Development in Medium-Sized
Kansas Communities: 1989 to 1998






Prepared by:

Genna M. Ott
Co-Director, KCCED

Fernando T. Conde
Graduate Research Assistant, KCCED






Charles E. Krider
Director, Institute for Public Policy and Business Research
The University of Kansas


Report No. 255

May 1999




Acknowledgments

The Kansas Center for Community Economic Development is funded by a grant from the U.S. Department of Commerce, Economic Development Administration. The statements, findings, conclusions, recommendations and other data in this report are solely those of the authors and do not necessarily reflect the views of the United States Government, the University of Kansas, or any other individual or organization.

Special thanks and gratitude go to the community leaders who took the time to participate in the survey. Special thanks also go to Charles Krider, Director, Institute for Public Policy and Business Research and Thelma Helyar, Research Assistant, Institute for Public Policy and Business Research.



Table of Contents

Executive Summary

 i
Introduction

 1
Methodology 2
Telephone Survey 2
Budget Survey

 2
Organizational Structure of Economic Development 3
Partnership Model 3
Government Model 6
Chamber Model 8
Economic Development Directors 8
Levels of Participation 8
Leadership

 10
Financing Economic Development 11
Budgets 11
Sources of Financing

 14
Cooperation and Economic Development

 15
Strategic Planning

 16
Economic Development Strategies 18
Change in Resources Devoted to Strategies

 19
Economic Development Efforts

 20
Conclusions

 22
References

 24
Endnotes to Table 9

 25


List of Tables and Figures

Figure 1

 Medium-Sized Kansas Communities: Map 3
Table 1


 Organization Interviewed and Organization Primarily Responsible for Economic Development: 1998 4
Table 2

 Organization Interviewed: 1989, 1993, and 1998 5
Table 3


 Organization Primarily Responsible for Economic Development: 1989, 1993, and 1998 5
Table 4

 Community Economic Development Leaders: 1998 6
Table 5

 Economic Development Directors: 1998 7
Table 6

 Role of City Government: 1989, 1993, and 1998 9
Table 7

 Role of Chamber of Commerce: 1989, 1993, and 1998 9
Table 8

 Role of County Government: 1989, 1993, and 1998 10
Table 9

 Change in Funding Sources: 1989, 1993, and 1998 11
Table 10

 Economic Development Budgets: 1998 12
Table 11

 Changes in Annual Economic Development Budgets: 1989, 1993, and 1998 13
Table 12

 How Cities Finance Economic Development: 1989, 1993, and 1998 14
Table 13

 Cooperation with Other Cities and Counties: 1993 and 1998 15
Table 14

 Strategic Planning Efforts: 1993 and 1998 17
Table 15

 Strategies for Economic Growth: 1989, 1993, and 1998 18
Table 16

 Change in Resources Devoted to Strategies: 1989, 1993, and 1998 19
Table 17

 Existing Business Assistance Programs: 1993 and 1998 20
Table 18

 Use of Financial Incentives: 1993 and 1998 21
Table 19

 Change in the Use of Incentives: 1989, 1993, and 1998 22
Endnotes to Table 9

 25


Executive Summary

In May, 1998, the Kansas Center for Community Economic Development (KCCED) at the University of Kansas updated its 1989 and 1993 studies of economic development in medium-sized Kansas communities. The purpose of this update was to identify changes in methods used by communities in organizing, planning, and funding for economic development. Using the questions in the 1989 and 1993 surveys, KCCED conducted telephone interviews with the same thirty communities from the original 1989 study. The following is a summary of the results.

Organizational Structure

Box 1 The three organizational models for economic development identified in previous studies - partnership, government, and chamber of commerce - were also used in 1998. Thirteen (43 percent) of the communities utilize the partnership model, where a public/private organization takes full or partial leadership in economic development. Eleven (37 percent) of the communities use the government model, which involves the city, county or multi-government agency taking the lead in economic development. Nine communities are classified under the chamber model, where the chamber of commerce takes the lead. There appears to be a trend away from city governments back to more chambers claiming primary responsibility for economic development.

Twenty-three (77 percent) of the communities surveyed have economic development directors. Nine directors work for economic development organizations, seven directors work for the chamber of commerce, five directors work for the city, and two directors work for multi-government agencies.

Box 2 The level of participation by city and county governments and chambers of commerce in community economic development has increased since 1989. In 1998, all three organizations are more involved in providing leadership, with city government (90 percent) identified slightly more than the chamber (87 percent). In 28 (93 percent) communities, the city government provided funds for economic development, making it the leading financial supporter of economic development. In 1998, the same number of chambers of commerce provided funds for economic development as did in 1989. More cities are providing funds for economic development in 1998 than in 1993, while the number of chambers providing funds has remained the same and the number of counties has decreased.

Financing Economic Development

Box 3 Total funding for economic development in the communities surveyed increased 29 percent, from $3.67 million in 1993 to $4.73 million in 1998. The public sector continues to be the primary funding source for economic development with 79 percent of the total budget for 1998 coming from city and county sources. The share of funding from city governments increased from 45 percent in 1989 to 55 percent in 1998. The share of county funds decreased from 38 percent in 1989 to 24 percent in 1998. In 1998, nine cities (30 percent) reported that they have a city mill levy to support public economic development activities, while eleven cities (37 percent) reported that their county had a mill levy specially designated to support economic development activities. Two communities did not designate any money for economic development in 1998.

Cooperation and Economic Development

Box 4 More cities report that they are working more with other cities, with their county, and with other counties in their economic development efforts than they had in the past. In 1998, twenty-eight (93 percent) reported that their communities worked with other cities as part of their economic development efforts. Twenty-five (83 percent) said that they work with the county in economic development efforts, and fifteen (50 percent) reported that they work with several counties.

Strategic Planning

Box 5 The number of communities with strategic plans increased from twenty in 1993 to twenty-five in 1998. Communities commonly used citizen surveys, open meetings, consultants and, especially, advisory committees in their strategic planning process. Economic development organizations were responsible for developing strategic plans for ten (37 percent) communities surveyed while five communities (16 percent) reported that the city government was responsible for the planning process. All twenty-five communities with strategic plans are currently implementing their plans. Twelve communities (40 percent) appointed economic development organizations with the implementation of these strategic plans.

Economic Development Strategies

Box 6 Many communities would rather not name a single, primary strategy for economic development but prefer a balanced approach between recruiting, retaining and assisting new firm creation. However, when pressed to choose one strategy as primary, fourteen communities (47 percent) reported that they focus primarily on existing business retention and assisting in expansion. Communities are spending more time and resources on recruiting outside businesses and assisting entrepreneurs in 1998 than in 1993. Eighty percent of those surveyed in 1998 reported that their communities had a program in place to assist existing businesses.

Economic Development Efforts

Box 7 All but two of the communities surveyed have used financial incentives in the past two years to encourage economic development. The range of incentives varied, with the most frequent being the issuance of tax abatements (83 percent), followed by tax-exempt bonds (73 percent), and infrastructure development (70 percent). Among the remaining financial incentives, donation of unused real property saw the greatest growth in frequency of use since 1993. Loan subsidies, sale-leaseback, tax-exempt bonds, and infrastructure development saw decreased use as a financial incentive.

Economic Development in Medium-Sized
Kansas Communities: From 1989 to 1998

Introduction

With the development of a state strategy for economic development in 1986 (Redwood and Krider, 1986), communities in Kansas started to become more organized in their efforts to increase jobs.
Box 8 Economic development organizations emerged and funds were designated specifically to these efforts. Communities found themselves competing more with other communities (both in and out of state) to attract new jobs and retain existing ones by offering incentives, such as tax abatements, enterprise zones, training programs and other business programs.

In 1989 the Kansas Center for Community Economic Development (KCCED) at the University of Kansas conducted a study of medium-sized communities to determine how they organize, finance and plan economic development activities (Ott and Skalla, 1989). Few of the communities surveyed at that time were engaged in strategic planning for economic development. However, in 1990 the Kansas Legislature passed the Community Strategic Planning Assistance Act to help counties develop strategic plans and finance action elements of those plans.

Since the passage of the Act, strategic planning in Kansas has increased and Kansas communities have begun to assume greater responsibility for economic development (Ott and Tatarko, 1992). Consequently, the thirty communities surveyed in 1989 were re-surveyed in 1993 and again in 1998 to update information on the status of economic development in Kansas and to determine how they have adapted to the changing business environment in the state.

Box 9 This report discusses the results of the 1998 survey and investigates what medium-sized Kansas communities are doing to encourage economic development and how their efforts may have changed from 1989 to the present. Specifically, this report looks at organization, finance, cooperation, strategic planning, strategies, and activities and incentives for each of the thirty communities.


Methodology

Telephone Survey

A telephone survey was administered to 30 medium-sized cities across Kansas (Figure 1). According to the 1996 Census figures, the cities included in the survey ranged in population from 9,248 (Chanute) to 71,887 (Lawrence). Most of the cities are located in the eastern half of the state, with only five located in western Kansas. Eight of the cities are located in or adjacent to urbanized areas: Derby, Lawrence, Leavenworth, Leawood, Lenexa, Merriam, Prairie Village, and Shawnee. In addition, El Dorado and Newton are located in the outlying counties of the Wichita Metropolitan Statistical Area. The remaining twenty cities are situated in predominantly rural areas.

Box 10 For each community, initial contact for the survey was made with the city manager or city administrator. In cases where the city manager or administrator was not the economic development expert for the community, he or she referred researchers to the person most knowledgeable in the city’s economic development effort. The analysis for this report is based on one interview for each community. Table 1 lists the organization interviewed for each city as well as the organization designated as primarily responsible for economic development.

Of the thirty organizations interviewed, ten (one third) were city governments although only five city governments were designated as primarily or jointly responsible for economic development (Table 1). Their interviews can be justified by recognizing that city governments are active partners in economic development either through the public/private corporations or multi-government agencies and/or as major contributors to the economic development budgets.

Table 2 compares the organizations interviewed in 1998 to those interviewed in 1989 and 1993. Fewer city governments were interviewed in 1998 than in 1993. Two more chambers of commerce, public-private non-profit corporations, and multi-government agencies were interviewed in 1998 than in 1993.

Budget Survey

During the telephone interview, a special effort was made to obtain the 1998 economic development budgets for each community. Besides a request for a budget amount during the interview, letters were sent to all communities in May 1998 requesting budget information. Additional phone calls were also made to clarify some of the amounts.


Figure 1: Medium-Sized Kansas Communities

Source: KCCED/IPPBR, 1993 Survey of Medium-Sized Kansas Communities.


Organizational Structure of Economic Development

Box 11 In previous surveys, KCCED found that the organizational structure for encouraging economic development can be classified according to three models: government, chamber of commerce, and partnership. These models were again the major economic development models in 1998, with the most common being the partnership model (Tables 3 and 4).

Partnership Model

The partnership model involves a public/private corporation taking the lead in the community’s economic development effort. The organization can be either not-for-profit or for-profit. In some cities it is called an economic development corporation, in others a commission and in still others a council. No matter what the organization’s title, it is a partnership between the government (city and/or county) and the private sector. There are thirteen communities (43 percent) classified under the partnership model in 1998 (Table 4). In 1993, fifteen communities were classified under the partnership model.



  Table 1. Organization Interviewed and Organization Primarily Responsible for
  Economic Development: 1998

City Organization
Interviewed 		Organization
Primarily Responsible
Arkansas City Multi-Government Multi-Government
Atchison Chamber Chamber
Chanute City City
Coffeyville City Public/Private Non-Profit
Derby City Chamber
Dodge City Pub/Priv Non-Profit Public/Private Non-Profit
El Dorado Pub/Priv Non-Profit Public/Private Non-Profit
Emporia City Multi-Government
Garden City Pub/Priv Non-Profit Public/Private Non-Profit
Great Bend Multi-Government Multi-Government
Hays Pub/Priv Non-Profit Public/Private Non-Profit
Hutchinson Pub/Priv Non-Profit Public/Private Non-Profit
Independence Chamber Chamber & Public/Private Non-profit
Junction City Multi-Government Multi-Government
Lawrence Chamber Chamber
Leavenworth Pub/Priv Non-Profit Public/Private Non-Profit
Leawood City City & Chamber
Lenexa Chamber Chamber
Liberal City Public/Private Non-Profit
Manhattan Chamber Chamber
McPherson Pub/Priv For-Profit Public/Private For-Profit
Merriam City City
Newton Pub/Priv Non-Profit Public/Private Non-Profit
Ottawa Chamber Public/Private Non-Profit
Parsons City City
Pittsburg City City
Prairie Village City Public/Private Non-Profit
Salina Chamber Chamber
Shawnee Chamber Chamber
Winfield Multi-Government Multi-Government

  Source: 1998 Community Survey, KCCED, IPPBR, the University of Kansas, 1999.



  Table 2. Organization Interviewed: 1989, 1993, and 1998

Organization Interviewed 1989 1993 1998
City Government 13 16 10
Chamber of Commerce 8 6 8
Multi-Government Agency 1 2 4
Public/Private Partnerships:


    Non-profit Corporation 7 5 7
    For-profit Corporation 1 1 1
Total 30 30 30

  Source: 1989, 1993 and 1998 Community Surveys, KCCED, IPPBR,
  the University of Kansas, 1999.



  Table 3. Organization Primarily Responsible for Economic
  Development: 1989, 1993, and 1998

Organization 1989 1993 1998
City Government 8 5 4
Chamber of Commerce 9 4 7
Multi-Government Agency 2 5 5
Public/Private Partnerships:


    Non-profit Corporation 10 11 11
    For-profit Corporation 1 1 1
Advisory Council -- 2 --
Combination* -- 1 2
No organization -- 1 --
Total 30 30 30

  * Both the Chamber of Commerce and a Public/Private Non-profit Corporation share
  responsibility for economic development in the City of Independence. In the City of
  Leawood, the city and chamber share responsibility.

  Source: 1989, 1993 and 1998 Community Surveys, KCCED, IPPBR,
  the University of Kansas, 1999.



  Table 4. Community Economic Development Leaders: 1998

Primary Economic
Development Organization 		Cities
Government Model:
    City Government Chanute, Leawood*, Merriam, Parsons,
Pittsburg
    Multi-government Arkansas City, Emporia, Great Bend,
Junction City, Winfield
Chamber Model:
    Chamber of Commerce Atchison, Derby, Independence*, Lawrence,
Leawood*, Lenexa, Manhattan, Salina,
Shawnee
Partnership Model:
    Public/Private Non- Profit Coffeyville, Dodge City, El Dorado, Garden
City, Hays, Hutchinson, Independence*,
Leavenworth, Liberal, Newton, Ottawa,
Prairie Village
    Public/Private For-Profit McPherson

  * Independence listed both the chamber and public/private non-profit corporation (Montgomery
  County Action Council) as primarily responsible for economic development in the community.
  Leawood listed both city and chamber as primarily responsible.

  Source: 1998 Community Survey, KCCED, IPPBR, the University of Kansas, 1999.



Of those 13 partnership communities in 1998, nine have a full-time director for economic development. Five economic development directors work for a public/private partnership, two directors work for the city, one director works for the chamber and one works for a multi-government agency (Tables 4 and 5).

Government Model

In the government model, the city government or a multi-government agency formed by both city and county governments provides economic development leadership. Ten (33 percent) of the communities surveyed employ the government model (Table 4). In half of these communities, the city government was primarily responsible for economic development, and, in the other half, a multi-government agency had primary responsibility. Notably, in 1998 as in 1993, there are no medium-sized communities where the county government is solely responsible for economic development.



  Table 5. Economic Development Directors and for Whom They Work: 1998

City Has a
Director 		Organization Director
Works for 		Organization
Primarily
Responsible
Arkansas City Econ Dev Organization Multi-Government
Atchison Chamber Chamber
Chanute City City
Coffeyville City Public/Private Non-Profit
Dodge City Pub/Priv Non-Profit Econ Dev Organization
Emporia Econ Dev Organization Multi-Government
Garden City Econ Dev Organization Public/Private Non-Profit
Great Bend Econ Dev Organization Multi-Government
Hays Econ Dev Organization Public/Private Non-Profit
Hutchinson Econ Dev Organization Public/Private Non-Profit
Junction City Multi-Government Multi-Government
Lawrence Chamber Chamber
Lenexa Chamber Chamber
Liberal City Public/Private Non-Profit
Manhattan Chamber Chamber
McPherson Econ Dev Organization Public/Private For-Profit
Newton Multi-Government Public/Private Non-Profit
Ottawa Chamber Public/Private Non-Profit
Parsons City City
Pittsburg City City
Salina Chamber Chamber
Shawnee Chamber Chamber
Winfield Econ Dev Organization Multi-Government

  Source: 1998 Community Survey, KCCED, IPPBR, the University of Kansas, 1999.



Of the ten communities under the government model, eight have economic development directors (Table 5). Three directors work for the city government, four directors work for an economic development organization, and one director works for a multi-government agency.

Chamber Model

The chamber of commerce model consists of the chamber of commerce taking the leadership role in economic development. Nine communities fit into the chamber model (Table 4) (1). Under this model, the economic development director works for the chamber. Six of the nine chamber model communities had an economic development director (Table 5). All six directors report directly to the chamber of commerce. In one of the communities with no director, there was also no budget for economic development.

Economic Development Directors

Box 12 Twenty-three of the thirty communities surveyed responded that they have economic development directors Table 5) (2). Nine directors work for economic development organizations, five directors work for cities, seven directors work for chambers of commerce, and two directors work for multi-government agencies. The city (73 percent), followed by the county (47 percent) and then the chamber (23 percent) help finance the economic development director positions.

Levels of Participation

Box 13 The level of participation in community economic development by city and county governments and the chambers of commerce has increased. More communities are working cooperatively within their community and are providing leadership for economic development. However, fewer communities reported that the city, county, and chamber have a staff devoted to economic development.

In 1998 cities were seen as the leading and most active agents of economic development in most communities. This is consistent with what was found in 1989 and 1993 (Tables 6, 7, and 8). Cities were reported most often as a provider of leadership (90 percent) and financing (93 percent) for economic development. Chambers of commerce were more likely to employ full-time staff for economic development duties than cities (53 percent for chambers and 30 percent for cities). However, all three entities -- city, chamber and county -- were generally perceived as willing to cooperate with each other when working to advance development in their communities.



  Table 6. Role of City Government in Economic Development: 1989, 1993, and 1998

Role 1989 1993 1998
No. Pct. No. Pct. No. Pct.
Provides Leadership 7 23.3% 23 76.7% 27 90.0%
Staff Devoted to Econ. Dev. 4 13.3 16 53.3 9 30.0
Works with the County 6 20.0 26 86.7 24 80.0
Works with the Chamber 11 36.7 27 90.0 27 90.0
Provides financing 24 80.0 28 93.3 28 93.3
Other* 20 66.7 18 60.0 3 10.0

  * Other includes: producing brochures and promotional information, tax incentives, infrastructure
  improvements, networks with Kansas Department of Commerce and Housing (KDOC&H) and Kansas
  City area development councils, partners and supports, coordinates with other organizations, etc.

  Source: 1989, 1993 and 1998 Community Surveys, KCCED, IPPBR, the University of Kansas, 1999.



  Table 7. Role of Chamber of Commerce in Economic Development: 1989, 1993, and 1998

Role 1989 1993 1998
No. Pct. No. Pct. No. Pct.
Provides Leadership 11 36.7% 20 67.7% 26 86.7%
Staff Devoted to Econ. Dev. 12 40.0 18 60.0 16 53.3
Works with the County 15 50.0 25 83.3 24 80.0
Works with the Chamber 5 16.7 28 93.3 29 96.7
Provides financing 8 26.7 10 33.3 10 33.3
Other* 13 43.3 10 33.3 1 3.4

  Other includes provides staff, provides office administration, coordinates marketing, and provides
  secretarial support.

  Source: 1989, 1993 and 1998 Community Surveys, KCCED, IPPBR, the University of Kansas, 1999.



  Table 8. Role of County Government in Economic Development: 1989, 1993, and 1998

Role 1989 1993 1998
No. Pct. No. Pct. No. Pct.
Provides Leadership 2 6.7% 13 43.3% 20 66.7%
Staff Devoted to Econ. Dev. 1 3.3 9 30.0 4 13.3
Works with the County 7 23.3 28 93.3 23 76.7
Works with the Chamber 6 20.0 23 76.7 22 73.3
Provides financing 13 43.3 25 83.3 22 73.3
Other* 16 53.3 8 26.7 2 6.7

  Other includes industrial recruitment, assistance with industrial park development, advertising,
  marketing, tax abatements, etc.

  Source: 1989, 1993 and 1998 Community Surveys, KCCED, IPPBR, the University of Kansas, 1999.


Box 14 The number of chambers of commerce providing leadership has increased from eleven (20 percent) in 1989, to twenty (68 percent) in 1993, and to twenty-six (87 percent) in 1998. Although survey respondents frequently reported county governments as providers of financing, the number of counties providing financing has declined from twenty-five (83 percent) in 1993 to twenty-two (73 percent) in 1998. Consequently, city governments are increasing their share of funds to support economic development, from 48 percent in 1993 to 55 percent in 1998 (Table 9).

Leadership

Box 15 Since 1989, economic development leadership has increased at all levels in Kansas’ medium-sized communities. Four more cities, seven more counties, and six more chambers were reported to provide leadership for economic development in 1998 than in 1989 (Tables 6, 7, and 8). All three surveys (1989, 1993, and 1998) found the city more likely to provide leadership than the county and the chamber of commerce. In all three surveys, county governments were least likely to provide leadership for economic development.



  Table 9. Change in Funding Sources (Percent of Total): 1989, 1993 and 1998

Year Budget City County Private Other
1989 $2,663,335 45.1% 38.2% 13.3% 2.9%
1993 $3,671,553 47.7% 28.2% 14.2% 10.6%
1998 $4,726,832 54.6% 24.1% 14.0% 7.4%

  Does not include Arkansas City, Derby, Dodge City, Leawood, Merriam, Parsons, Prairie Village,
  Shawnee and Winfield, which were not part of the 1989 Financial Survey.

  Source: 1989, 1993 and 1998 Community Surveys, KCCED, IPPBR, the University of Kansas,
  1999.


Financing Economic Development

Box 16 The 1989 study found that despite its relatively low-profile leadership role, the public sector was primarily responsible for financing economic development efforts (Krider, Ott, and Skalla, 1989). In 1998 the public sector continues to have a high-profile leadership role, particularly city government, and continues to be primarily responsible for financing economic development efforts (Table 9).

Budgets

The 1998 budgets for economic development ranged from $0 to $273,000 (Table 10). Two communities reported no budget for economic development. Thirteen communities reported budgets greater than $200,000. The average 1998 economic development budget for a medium-sized community was $162,994. In general, the larger the community (greater population), the higher the budget. The average budget for a city with over 30,000 population was $ 210,077, while the average budget for a city with less than 15,000 population was $134,006. The average budget for communities between 15,000 and 30,000 population was $159,686.

For 1998, the total dollars budgeted for the cities surveyed were approximately $4.73 million compared to $3.67 million in 1993 -- a 29 percent increase (Table 10). Arkansas City/ Winfield, Emporia, Manhattan, Prairie Village, and Shawnee enjoyed economic development budget increases of 50 percent or more from 1993 to 1998 (Table 11). Eight cities reported decreased budgets from 1993 to 1998.



  Table 10. Economic Development Budgets: 1998 (i)

City Budget City County Private Other
Population over 30,000
Lawrence $ 246,501 $ 74,167 $ 74,167 $ 98,167 $ ---
Salina 273,000 85,000 15,000 173,000 ---
Leavenworth 153,000 58,000 50,000 36,000 9,000
Shawnee 196,133 173,047 --- 19,000 4,086
Hutchinson 92,100 22,500 60,000 9,600 ---
Manhattan 263,000 120,000 42,000 101,000 ---
Lenexa 246,807 211,807 --- 35,000 ---
Population 20,000 to 30,000
Emporia 209,726 209,726 --- --- ---
Garden City 231,756 40,000 120,000 --- 71,756
Leawood --- --- --- --- ---
Prairie Village 25,000 15,000 --- --- 10,000
Dodge City 209,900 91,210 30,000 63,190 25,500
Junction City 220,000 134,000 90,000 --- ---
Population 15,000 to 20,000
Pittsburg 126,100 126,100 --- --- ---
Hays 213,560 63,000 60,000 53,712 36,848
Newton 248,839 107,156 66,800 --- 74,883
Liberal 216,450 206,450 10,000 --- ---
Derby --- --- --- --- ---
Great Bend 214,900 69,400 145,000 --- 500
Population less than 15,000
Merriam 75,000 75,000 --- --- ---
McPherson 46,000 23,000 23,000 --- ---
Arkansas City/Winfield 135,000 40,000 20,000 --- 75,000
Coffeyville/Independence 158,100 32,000 97,000 26,000 3,100
Independence 123,376 123,376 --- --- ---
El Dorado 243,250 44,000 155,000 44,000 250
Parsons 204,000 204,000 --- --- ---
Ottawa 95,045 50,000 32,000 2,000 11,045
Atchison 169,500 90,000 50,000 --- 29,500
Chanute 90,790 90,790 --- --- ---

Total $ 4,726,832 $ 2,578,729 $ 1,139,967 $ 660,669 $ 351,467
Percent of Total
54.6% 24.1% 14.0% 7.4%

  See Endnotes for further information about budgets and their sources.

  Source: 1998 Community Survey, KCCED, IPPBR, the University of Kansas, 1999.



  Table 11. Changes in Annual Economic Development Budgets: 1989, 1993, and 1998

City 1989 1993 1998 1993-1998 1989-1998
Arkansas City/ $ * $ 4,000 $ --- $ N/A $ N/A
Winfield** * 15,000 135,000 116,000 N/A
Atchison 94,100 100,775 169,5000 58,725 75,4000
Chanute 48,500 83,050 90,790 7,740 42,290
Coffeyville/ Independence 103,000 142,500 158,100 15,600 55,100
Derby * 70,000 0 (70,000) N/A
Dodge City * 139,468 209,900 70,432 N/A
El Dorado 189,000 242,200 243,250 (1,050) (54,250)
Emporia 72,365 105,000 209,726 104,726 137,361
Garden City 100,000 151,387 231,756 80,369 131,756
Great Bend 131,500 227,000 214,900 (12,100) 83,400
Hays 198,270 212,000 213,560 1,560 15,290
Hutchinson 215,000 227,255 92,100 (135,155) (122,900)
Junction City 175,000 260,000 220,000 (40,000) 45,000
Lawrence 130,000 171,000 246,501 75,501 116,501
Leavenworth 100,000 109,440 153,000 43,560 53,000
Leawood * 15,000 0 (15,000) N/A
Lenexa 163,000 167,212 246,807 79,595 83,807
Liberal 80,000 145,609 216,450 70,841 136,450
Manhattan 180,000 130,000 263,000 133,000 83,000
McPherson 125,000 77,000 46,000 (31,000) (79,000)
Merriam * 104,000 75,000 (29,000) N/A
Newton 154,000 174,836 248,839 74,003 94,839
Ottawa 84,000 86,000 95,045 9,045 11,045
Parsons * 140,000 204,000 64,000 N/A
Pittsburg 151,000 134,521 126,100 (8,421) (24,900)
Prairie Village * 0 25,000 25,000 N/A
Salina 169,600 187,500 273,000 85,500 103,400
Shawnee * 40,000 196,133 156,133 N/A

  * City was not part of 1989 financial survey and therefore data are not available. N/A: Not Applicable; can not
  calculate net change from 1989 to 1998.

  ** Arkansas City combined economic development efforts with Winfield by 1998.

  Source: 1989, 1993, and 1998 Community Surveys, KCCED, IPPBR, the University of Kansas, 1999.


Sources of Financing

Of the total budget amount for 1998, approximately 55 percent came from city government sources, 24 percent from county government, 14 percent from private, and 7 percent from other sources (Table 9). In 1993, 48 percent came from city sources, 28 percent county, 14 percent private, and 11 percent from other.

Box 17 In 1998, twelve cities (40 percent) reported relying on general tax revenues to support economic development compared to 22 cities (73 percent) in 1993 (Table 12). Several cities also have a special sales tax to help fund economic development. Other financial sources mentioned in addition to special and general tax revenues were transient guest taxes, federal grants, and special benefit district bonds. Nine respondents (30 percent) reported that their communities have a city property tax mill levy specially designated to support economic development activities.(3) Eleven communities reported financing their budgets with a county mill levy.(4)



  Table 12. How Cities finance Economic Development: 1989, 1993, and 1998

Source of Financing 1989 1993 1998
No. Pct. No. Pct. No. Pct.
General Tax Revenues 16 53.3% 22 73.3% 12 40.0%
Special Tax Revenues 7 23.3 9 30.0 6 20.0
Combination Special and General 1 3.3 8 26.7 8 26.7
Other 1 3.3 10 33.3 2 6.7

  * Other includes transient guest tax, federal grants, tax abatements, special benefit district bonds, sales
  tax exemptions, CDBGs, utilities, etc.

  Source: 1989, 1993, and 1998 Community Surveys, KCCED, IPPBR, the University of Kansas, 1999.


The number of communities that had a separate budget specifically for economic development increased from sixteen (53 percent) in 1993 to twenty-four (80 percent) in 1998. Five communities reported off-budget economic development activities. Off-budget items included promotion of tourism, promotion and marketing of industrial parks, research support and contact, seed capital pools, and transportation and highway development.

Cooperation and Economic Development

Box 18 Communities are working more cooperatively in their economic development efforts than they have in the past. Twenty-eight (93 percent) of the communities reported that they worked with other cities as part of their economic development efforts (Table 13). Twenty-five (83 percent) said that they work with the county in economic development efforts, and fifteen (50 percent) reported that they work with several counties. These numbers are all up from the 1993 findings.



  Table 13. Cooperation with Other Cities and Counties: 1993 and 1998

Cooperates with 1993 1998
No. Pct. No. Pct.
Other Cities 25 83.3% 28 93.3%
County 19 63.3 25 83.3
Several Counties 14 46.7 15 50.0

  Source: 1993 and 1998 Community Surveys, KCCED, IPPBR, the University of Kansas, 1999.


Strategic Planning

Box 19 Twenty-five of the communities reported having written strategic plans in place in 1998 while five others have no strategic plan and are not engaged in any phase of the strategic planning process (Table 14). This compares with only twenty communities having strategic plans in 1993 (Krider, Ott, and Hamilton, 1993). Communities surveyed commonly used citizen surveys, open meetings, consultants and, especially, advisory committees in their strategic planning process.

Box 20 Economic development organizations were most often identified as the entity responsible for strategic planning in the communities surveyed (Table 14). This was reported to be the case in ten communities in 1993 and eleven communities in 1998. The city government was responsible for developing the strategic plan in five communities in 1998. County governments were solely responsible for the economic planning efforts in three cities while the chamber was solely responsible in two cities.

Box 21 All twenty-five communities with strategic plans in place in 1998 reported that they were implementing their plans (Table 14). Economic development organizations were named responsible for plan implementation in twelve cases. Four city governments, four chambers, and three county governments were also identified as responsible for implementing strategic plans.



  Table 14. Strategic Planning Efforts in Medium-Sized
  Kansas Communities: 1993 and 1998

Planning Status 1993 1998
No. N=30 No. N=30
Has Written Plan 20 67.7% 25 83.3%
No Plan 3 10.0 5 16.7
Developing Plan 7 23.3 0 0.0
Implementing Plan 19 63.3 25 83.3

Methods Used
by Communities 		No. N=20 No. N=25
Advisory Committees 20 100% 21 84%
Open Meetings 19 95 21 84
Citizen Surveys 16 80 17 68
Consultants 15 75 14 56

Group Responsible for
Developing Plan 		No. N=27 No. N=25
Econ Dev Organization 10 27.0% 11 44.0%
City 1 3.7 5 20.0
County 0 0.0 3 12.0
Chamber of Commerce 1 3.7 2 8.0
Task Group/Committee 6 22.2 1 4.0
Other * 9 33.3 3 12.0

Group Responsible for
Implementing Plan 		No. N=20 No. N=25
Econ Dev Organization 10 50% 12 48%
City 2 10.0 4 16
Chamber of Commerce 2 10 4 16
County 1 5 3 12
Special Task Group/Committee 1 5 0 0
Other * 4 20 2 8

  * Other includes local port authority, city/county/chamber, all of the above, small
  business development corporation, county/economic development organization, etc.

  Source: 1993 and 1998 Community Surveys, KCCED, IPPBR,
  the University of Kansas, 1999.


Economic Development Strategies

Box 22 Fewer communities in 1998 reported having NO strategy than in 1993, suggesting that communities are getting more focussed in their efforts (Table 15). In general, economic development strategies are to recruit existing businesses from other locations, to foster creation of new business, and to help existing business expand. Studies have shown that more (net) new jobs come from existing firms, certain kinds of small businesses, and new firms than from recruiting branch plants (National Governors’ Association, 1988). In 1993, medium-sized communities in Kansas were moving away from using recruitment to create new jobs to a more balanced approach that emphasized job creation from within the community. In 1998, there appears to be a movement back to recruitment as the primary strategy (Table 15).

Fourteen of communities surveyed in 1998 (47 percent) responded that they are focusing strategies and resources on existing business retention and expansion to encourage economic growth (Table 15). This is an increase of three communities from 1993. Six communities in 1998 identified recruiting outside business as their primary strategy. In 1993, no community had identified this as its primary strategy for economic development. Four communities in 1998 reported employing a combination of recruitment, retention and creation strategy.



  Table 15. Strategies for Economic Growth in Medium-Sized Kansas Communities:
  1989, 1993, and 1998

Primary Strategy 1989 1993 1998
No. Pct. No. Pct. No. Pct.
Retain/assist existing business 12 40.0% 11 36.7% 14 46.7%
Recruit outside business 6 20.0 0 0.0 6 20.0
Combination-recruit, retain, and create 8 26.7 10 33.3 4 13.3
Assist in creating new business 0 0.0 1 3.3 2 6.7
No primary strategy 4 13.3 8 26.7 2 6.7

  Source: 1989, 1993, and 1998 Community Surveys, KCCED, IPPBR, the University of Kansas, 1999.


Change in Resources Devoted to Strategies

Box 23 As shown in Table 16, the resources that communities devoted to each type of strategy, whether primary or secondary, varied widely both in 1993 and 1998. The reported percentages of resources apportioned to each type of activity indicate that the emphasis on business retention and expansion has become even more focused. In 1998, on average, over forty-three percent of communities’ economic development resources are devoted to retention and expansion of existing businesses.

Box 24 Twenty-four (80 percent) of the respondents reported that their communities had a program in place to assist existing industry (Table 17). Of the twenty-four who identified the components of these programs, twenty-three stated that personal visits were part of their community’s program. The other most common elements, in descending order of frequency, included tax incentives, surveys, financial assistance, and export assistance tax incentives, and surveys. Existing business programs are in the infancy stage in most communities and the exact elements of such programs have not yet been determined. Existing business programs are not formalized to the extent that industrial recruitment programs are. Most state and local incentive programs still favor recruitment efforts.



  Table 16. Change in Resources Devoted to Strategies: 1989, 1993, and 1998
Strategy 1989 1993 1998
Min Max Mean Min Max Mean Min Max Mean
Recruit 5% 80% 39.1% 0% 75% 32.1% 10% 80% 33.5%
Retain assist 9 90 43.5 5 100 43.5 15 90 43.6
Assist entrepreneurs 0 34 15.3 0 50 16.9 0 45 18.2

  Source: 1989, 1993, and 1998 Community Surveys, KCCED, IPPBR, the University of Kansas, 1999.



  Table 17. Existing Business Assistance Programs in
  Medium-Sized Communities: 1993 and 1998

Status 1993 1998
No. Percent
N = 30 		No. Percent
N = 30
Has a Program 24 80% 24 80.0%

Program Consists of: No. Percent
N = 23 		No. Percent
N = 24
Personal visits 23 100% 23 96%
Tax incentives 15 65 19 79
Financial assistance 16 70 17 71
Surveys 15 65 17 71
Training 17 74 16 67
Export assistance 10 44 13 54
Other* 9 40 1 4

  * Other includes: manufacturers round table, "TLC", counseling, management,
  industrial advisory council, coordination of state agencies, information
  clearinghouse, other activities as needed - customized to each business, etc.

  Source: 1993 and 1998 Community Surveys, KCCED, IPPBR,
  the University of Kansas, 1999.


Economic Development Efforts

Box 25 Most communities try to make themselves attractive to new industries and most encourage current companies to stay in town. To give themselves what they consider a slight edge, cities offer various incentives, from money, to speculative buildings, to infrastructure improvements.

Twenty-eight (93 percent) of the communities in 1998 responded "yes" when asked if their city uses financial incentives to encourage economic development (Table 18). Only two communities reported that their city did NOT use financial incentives to encourage economic development.



  Table 18. Use of Financial Incentives in the Past Two
  Years: 1993 and 1998

Status 1993 1998
No. Pct. No. Pct.
Used Incentives 26 86.7% 28 93.3%

Incentives Used in the
Past Two Years: 		No. Pct. No. Pct.
Tax abatements 22 73.3% 25 83.3%
Issue tax exempt bonds 26 86.7 22 73.3
Infrastructure development 25 83.3 21 70.0
Direct loans to private businesses 14 46.7 14 46.7
Loan guarantees 11 36.7 11 36.7
Loan subsidies 11 36.6 10 33.3
Donation of unused real property 5 16.7 10 33.3
Direct cash contribution 7 23.3 9 30.0
Sale-leaseback 9 30.0 8 26.7
Share equity 2 6.7 3 10.0

  Source: 1993 and 1998 Survey of Medium-Sized Kansas Communities.
  KCCED/ IPPBR.


Box 26 The diversity of approaches utilized by the communities has increased since 1989. Tax-exempt bonds, infrastructure development, and tax abatements remain the leading incentive methods. The use of tax abatements by communities has increased in frequency from twenty-two in 1993 to twenty-five in 1998 (Table 19). Among the remaining financial incentives, the greatest growth in use over the four-year period was the donation of unused real property, which increased from five to ten, an increase of one hundred percent. Loan subsidies, sale-leaseback, tax-exempt bonds, and infrastructure development decreased in use as a financial incentive.



  Table 19. Change in the Use of Economic
  Development Incentives: 1989, 1993, and 1998

Economic Development
Incentives 		1989 1993 1998
Tax abatements 19 22 25
Issuance of tax-exempt bonds 19 26 22
Infrastructure 21 25 21
Direct loans to private business 13 14 14
Loan guarantees 8 11 11
Loan subsidies 6 11 10
Donations of unused real property 9 5 10
Direct cash contribution 6 7 9
Sale-leaseback 6 9 8
Shared equity 1 2 3

  Source: 1989, 1993, and 1998 Community Surveys, KCCED, IPPBR,
  the University of Kansas, 1999.


Conclusions

Box 27 All the cities in our survey recognize the need for economic development. Each city, however, defines economic development according to its own standards, and each is at a different point in creating an economic development program. Their strategies are diverse. Nevertheless, several conclusions can be drawn from the survey results.

  • Medium-sized Kansas communities are split in their organizational approach between three models: government, chamber, and partnership. The public/private partnership approach was the most common model.
  • City governments remain a strong advocate of economic development planning through their leadership, involvement in partnership organizations, and increased financial support of economic development activities. City government’s share of economic development budgets increased from 48 percent in 1993 to 55 percent in 1998.
  • County governments still played a participatory role in community economic development although their budget contribution as a percent share of total budgets has declined from 28 percent in 1993 to 24 percent in 1998.
  • More chambers of commerce play a leadership role in community economic development efforts with three more communities reporting chambers as the primary economic development organization.
  • Financing of economic development has increased in most communities in the past four years and communities are relying more on cities to fund their efforts.
  • Communities are taking a more balanced approach to economic development strategies and are allocating less resources to business retention and expansion and new business creation strategies than they had in the past. Six communities claimed recruiting outside industry as its primary economic development strategy in 1998.
  • In the 1998 survey, more communities view strategic planning as a critical step to success in community economic development. Local economic development organizations are taking the lead in overseeing the process and implementing the plan.
  • Ninety-three percent of communities surveyed (28) are using financial incentives to encourage economic development. The most frequently used incentives are tax abatements, infrastructure development, and tax exempt bonds. Communities are using more incentives than they have in the past.

Box 28 In 1998, communities are looking more towards cooperative efforts to accomplish their economic development goals. Medium-sized Kansas communities have come a long way in the past few years regarding their economic development efforts. They have adapted their organizations and increased funding to ensure success. More partnerships exist and more formalized economic development programs have been developed since 1993. Since 1993, communities have learned many lessons in economic development planning and have modified their organizations and strategies to increase their chance for success.


References

Krider, Charles E., Genna M. Ott, and Patty Skalla. "Economic Development in Medium-Sized Kansas Communities," Kansas Business Review 12, 4 (Summer 1989): 10-16.

National Governors’ Association. New Alliances for Rural America. Washington, D.C.: National Governors’ Association. 1988.

Ott, Genna M., and Patty Skalla. Economic Development in Medium-Sized, Non-Metropolitan Kansas Communities (Report No. 167). Lawrence, Kansas: Institute for Public Policy and Business Research, University of Kansas. July 1989.

Ott, Genna M., and James D. Hamilton. Economic Development in Medium-Sized, Non-Metropolitan Kansas Communities (Report No. 210). Lawrence, Kansas: Institute for Public Policy and Business Research, University of Kansas. November 1993.

Ott, Genna M., and Elizabeth Tatarko. Kansas Community Strategic Plans (Report No. 201). Lawrence, Kansas: Kansas Center for Community Economic Development, Institute for Public Policy and Business Research, University of Kansas. November 1992.

Redwood, Anthony, and Charles E. Krider. Kansas Economic Development Study: Findings, Strategy, and Recommendations. Lawrence, Kansas: Institute for Public Policy and Business Research, University of Kansas. June 1986.

Upmeier, Helga K. Comparison of Economic Development Expenditures in Kansas Communities (Report No. 162). Lawrence, Kansas: Institute for Public Policy and Business Research, University of Kansas. March 1993.


Endnotes

(i) Table 9 Notes:

Arkansas City/Winfield: Budget for the Cowley County Economic Development Agency (CCEDA). City includes $20,000 from Winfield and $20,000 from Arkansas City. Other includes an EDA grant.

Atchison: Economic Development Budget for the Atchison Chamber of Commerce. Other includes carryover and misc. funds.

Chanute: Budget for General Expenditures for Economic Development for the City of Chanute. Does not include $26,000 for Main Street support and $230,000 for Industrial Development.

Coffeyville/Independence: Budget for the Montgomery County Action Council. City includes $14,000 from Independence, $14,000 from Coffeyville, $2,000 from Chaney, and $2,000 from Cherryvale. Does not include $25,000 from RDA (Dept. of Agriculture) to establish a revolving loan fund for the business incubator and the $25,000 local match from reserves. Other includes Wal-Mart grant and misc. income.

Derby: Budget information from the telephone survey.

Dodge City: Budget for the Dodge City/Ford County Development Corporation. Other includes grants, CROP, interest, expense reimbursements, and contributions.

El Dorado: Proposed budget for Butler County EDC ($155,000) funded by the county's industrial mill levy. Does not include $25,000 for the Industrial Park. Budget includes $88,250 for El Dorado, Inc.

Emporia: Budget for the City of Emporia's Industrial Development Sales Tax Fund. Does not include $100,000 for land acquisition, $97,350 for infrastructure financing, and $584,150 in reserve funds for special projects. It does include job-creation incentive grants ($67,726) and an appropriation to the RDA ($142,000).

Garden City: Budget for the Finney County Economic Development Corporation. It is a two-year budget for 1997-98. Other includes interest and reserve funding.

Great Bend: Proposed budget for the Mid-Kansas Economic Development Commission. City includes $8,850 from Hoisington and $5,550 from Ellinwood. Other includes interest.

Hays: Based on the draft budget for the Ellis County Coalition for Economic Development. City includes $2,000 from Ellis and $1,000 from Victoria. Other includes existing funds and interest.

Hutchinson: Operating budget for the Reno County Economic Development Council.

Independence: Budget from the City of Independence. Does not include $14,000 to the Montgomery County Action Council (see Coffeyville/Independence) and $93,741 for salaries, CDGB rehab loans, and CDBG matches.

Junction City: Budget (obtained from the telephone survey) for the Junction City/Geary County EDC.

Lawrence: Budget for the Economic Development Marketing Program with the Lawrence Chamber of Commerce. Private includes a one-year commitment of $24,000 by Douglas County Development, Inc. Does not include $100,000 for the Kansas Innovation Center and $30,000 for the SBDC, both Horizon 2020 initiatives, which are funded equally by the City of Lawrence and Douglas County.

Leavenworth: Adopted budget for the Leavenworth Area Development Corporation, a countywide organization that includes four principal cities (Basehor, Lansing, Leavenworth and Tonganoxie). "Other" includes interest, meetings' income, Wal-Mart grant, Port Authority, and CDC fees.

Leawood: The City of Leawood has not had an economic development budget in place since 1995. The newly formed Leawood Chamber of Commerce is exploring the feasibility of an economic development director.

Lenexa: Economic development budget (obtained from the telephone survey) for the Lenexa Economic Development Council.

Liberal: Economic development budget (obtained from the telephone survey) for the City of Liberal. The City's economic development budget includes community development.

Manhattan: Economic development budget (obtained from the telephone survey) for the Manhattan Chamber of Commerce.

McPherson: Projected expenses for the McPherson Industrial Development Company, Inc. Does not include salary expenses paid by the McPherson Board of Public Utilities.

Merriam: Economic development budget (obtained from the telephone survey) for the City of Merriam.

Newton: Budget for the Harvey County Jobs Development Council, Inc. City includes $3,651 from Burton, $8,300 from Halstead, $11,523 from Hesston plus another $5,000 from Hesston's Industrial Building Assistance, $4,915 from N. Newton, $5,925 from Sedgwick, and $931 from Walton. Other includes interest and cash reserves.

Ottawa: Economic development budgets for the Ottawa Area Chamber of Commerce. Other includes reserve funds.

Parsons: Anticipated economic development expenditures for the City of Parsons. Does not include $135,000 for Industrial Park improvements, $294,000 for Property Acquisition and $140,000 for One-Stop Employment Center.

Pittsburg: Amended budget for the City of Pittsburg's Expenditures for Industrial Promotion.

Prairie Village: Economic development budget (obtained from the telephone survey) for the City of Prairie Village. Other was estimated by KCCED.

Salina: Economic development budget (obtained from the telephone survey) for the Salina Chamber of Commerce.

Shawnee: Budget for the Shawnee Economic Development Council. Private funds come from SEDC membership dues. Other includes receivables from the Expo and Lunch.


(1) Two communities claimed two organizations as primarily responsible. Independence was classified under both chamber and partnership models because both the chamber and a countywide public/private partnership were primarily responsible. Leawood was classified under both chamber and government models.

(2) Communities responding that they did NOT have an economic development director were: Derby, El Dorado, Independence, Leawood, Merriam, Newton and Prairie Village.

(3) Those communities were: Chanute, Coffeyville, Emporia, Independence, Junction City, Manhattan, McPherson, Ottawa, and Parsons.

(4) Those communities were: Atchison (Atchison), Coffeyville (Montgomery), El Dorado (Butler), Garden City (Finney), Hays (Ellis), Junction City (Geary), Leavenworth (Leavenworth), Manhattan (Riley), McPherson (McPherson), Newton (Harvey), and Ottawa (Franklin).