15 Nov Alphabet Soup: CDAs, RDAs, BIDs – which is right for your community?
Step 1) Weighing organizational optionsThere are a wide variety of organizational structures commonly used to facilitate economic development projects. One main thing that they all have in common is a tendency to refer to themselves in acronyms. In Wisconsin, CDAs (Community Development Authoritys), RDAs (ReDevelopment Authorities), BIDs (Business Improvement Districts), and EDCs (Economic Development Corporations or, sometimes, Committees, are a few of the more common. Each entity has different principles guiding its formation, operations and guiding the types of projects that it can take on. In general, there are three categories of organizations typically involved in economic development which serve distinct purposes within a community: Organization Type: Public (governmental) Structure: Public bodies operate under the oversight of the local unit of government (including CDAs, RDAs, and sometimes EDCs). In the case of an Economic Development Committee the group is primarily a work group comprised of municipal council or board members which discusses issues associated with economic development matters. Capabilities: The group’s role is primarily to advise the governing body on topics associated with economic development in the community and to serve as an authority on issues concerning business and community economic health. CDAs and RDAs, on the other hand, have statutory powers of their own, and can undertake projects and manage funds on behalf of the municipality. The differentiating factor between CDAs and RDAs is the ability of CDAs to focus on both housing and redevelopment, while RDAs focus primarily on redevelopment activities. Housing Authorities, a third organizational type, focus only on housing issues. Each of these organizations operates as a separate organization with a governing body including not more than two Council/Board members. The entities can then condemn property, buy and sell real estate, issue bonds (less of an option in the current financial climate) and enter into contracts. The entities also have the ability to utilize TIF funding through the municipality, and also to raise funds from real estate contracts, leases and sales to fund projects. Many successful CDA or RDA-led projects are featured in other blog posts. Best Suited For: Facilitating strategic redevelopment which requires municipal funding or support to succeed, carrying out long term initiatives associated with land use planning. Organization Type: Public-Private Public-private economic development entities can carry out marketing and outreach initiatives to attract private sector investment. Structure: In some communities, the bulk of the heavy lifting associated with economic development is conducted by a public-private entity. Because these entities are not statutorily defined, they vary greatly in composition and operations. One example is the Business Improvement District. BIDs are geographically defined and receive property tax dollars from a special assessment on commercial and industrial taxable properties within their district to fund operations. These districts are most successful if created based on a desire of local property owners, although they must receive approval from the municipal government (including a public hearing), and BID board members are officially appointed by the President/Mayor of the municipality, although at least five of the members must be property owners in the district.
Aside from BIDs, public-private economic development entities in most cases represent economic development corporations. In some cases these groups operate as a separate entity, while in others they may be associated with a local Chamber of Commerce or Private Investment Club. Some of these entities are focused on a specific area – i.e. industrial development corporations which oversee industrial park development, management and operations, while others are geographic in scope, serving municipalities or Counties. However, organizations that receive a majority of funding from public sources may be subject to open meetings laws. In practice, these groups often have formal agreements with the local municipality to represent its interests in specifically defined areas such as business retention or recruitment or industrial park development or operations, but also raise funds from business members, real estate transactions and operating revenue from leased properties. Capabilities: Public-private entities possess all of the powers of a private corporation or individual and can buy and sell real estate or enter into contracts. Because these organizations have members or investors, the guidelines for activities will be driven by member interests and supported by the organization’s bylaws. Because public-private groups are non-elected and have fewer open records restrictions, they often serve as the point organization for prospective businesses in a community. The organization can provide relevant information and initial guidance without risk of disclosure. Best Suited For: Development of business or industry-supported infrastructure, facilitating business to business relationships, marketing development sites or owned real estate. Organization Type: Non-Profit Structure: Organizations are typically structured as 501c3 entities under IRS statutes, which provide tax exempt status. Some organizations may also have educational or lobbying arms. Although EDCs or other vehicles discussed above may be structured as a not-for-profit entity for tax purposes, the non-profits covered in this section operate primarily for the public good. While many community non-profits benefit the economic interests of a community, including churches, civic organizations, community foundations and food pantries, there are several organizational types which conduct activities closely tied to economic development activities. These include downtown organizations, chambers of commerce, community foundations, arts councils and event sponsoring organizations. Capabilities: Non-profit designation allows entities to accept foundation or other grant dollars and offer tax advantages to investors. These groups are essential to a community for their ability to recruit a wider variety of citizen members and volunteers and receive charitable donations. In many cases, the activities of these organizations are also the most visible and publically recognized forms of economic development. Because non-profits typically conduct events, sponsor contests and include retail and consumer-focused members in their mix, these groups can have a significant impact on the overall culture and character of a community. Recognizing the effectiveness of non-profits in economic development, many communities have established programs supporting non-profit organizations or activities. Outside support is also available which can be leveraged by the creation of certain types of organizations, including the Wisconsin Main Street Program, regional Community Foundations and the Wisconsin Arts Board, all of which provide funding, training and support for organizations acting in certain capacities within local communities. Best Suited For: Event planning and management, community marketing, residentially-oriented community development programming.