Economic Development Plan
General Policies and Principles

Burlington as a Successful “Third Tier City”

In 2001, with support from the U.S. Economic Development Administration, Mt. Auburn Associates published a national report on the economic vitality of “hometown” or “third tier” small cities.[1] This report focused on cities with populations between 15,000 and 110,000 (and with populations that have not tripled since 1950), cities that are also primary to their regional economic base and that were incorporated before 1950.

Burlington was cited as one example of a city in this category that has remained competitive in the new economy. Factors listed in the report as contributing to “hometown” city successful economic development included:

• Enhancing local amenities – including waterfronts and arts and culture
• Building on local institutions of higher education
• Engaging in regional collaboration
• Creating an effective civic infrastructure
• Promoting diversity as strength

Burlington has successfully used these strategies, in addition to others, to create a number of economic development assets.

The Third-Tier Cities Report cited six primary economic development challenges for small “hometown” cities:

• Out-of-date infrastructure – obsolete transportation systems, brownfields, inadequate telecommunications infrastructure
• Dependence on traditional industry – over-reliance on one sector/large employer(s), lack of economic diversity
• Transformation of their human capital base – “brain drains” (difficulty retaining youth/attracting new residents)
• Declining competitiveness within their regions – out migration of people and jobs, declining tax bases, centralization of poverty, declining downtowns
• Weakened civic infrastructure and capacity – loss of local ownership leading to loss of civic leadership, limited scale, limited regional cooperation
• More limited access to resources – fewer philanthropic resources, less private financing (debt and equity)

Burlington has confronted most of these issues over the last 30 years – some successfully, with others continuing to pose challenges.

The Four E’s: Economy, Environment, Equity and Education

The City’s economic development strategies are based on four underlying principles:

• Achieving economic vitality,
• Preserving and enhancing the environment,
• Promoting social equity, and
• Promoting local and continuing education.

What Businesses Want

The City acknowledges that businesses need the following to grow and prosper:

• Predictability (regulatory system, costs, taxes, energy)
• Access to Capital
• Increase Demand
• Infrastructure (transportation, telecommunications)
• Reduce Costs
• Quality of Life (housing, environment)
• Skilled Workforce

Partners

The City’s efforts usually involve collaborations and partnerships. The Downtown Partnership, the South End Arts and Business Association, the Burlington Business Association, the Lake Champlain Chamber of Commerce, and the Greater Burlington Industrial Corporation (GBIC) participate often in a variety of efforts to continue Burlington’s economic vitality. The Community & Economic Development Office often works closely with other City Departments including the Church Street Marketplace, City Arts, the Burlington Electric Department, the Department of Public Works, the Parks and Recreation Department, Burlington Fire Department and the Department of Planning and Zoning on supporting development projects. Many of our projects are developed with collaborations of financing. Often included are HUD, VEDA, the Vermont Development Credit Union, and other lenders both private and public.

Regional Economic Plan

Burlington is participating in the development of a Regional Economic Plan. Broadly, it is our intention to cooperate and work with the strategies as they are developed for the Plan. The initial strategies identified for that Plan include:

1. Promote Workforce Development-Training for a High-Performance Regional Economy
2. Promote Infrastructure Readiness for Quality Job Creation-Retention
3. Develop a Business-Economic Development Climate of Cooperation-Helpfulness
4. Promote Access to Affordable Capital for Regional Businesses
5. Facilitate the Development of a Climate of Business Development Cooperation in the Region
6. Promote Business-Job Retention to Solidify the Regional Job Base
7. Promote Strategic Business Expansion and Recruitment to Diversify the Regional Job Base
8. Facilitate “Technology” Incubators-Centers for Innovation
9. Develop Options to Enhance Work Force Housing Options in the Northwest Region
10. Preserve-Enhance Regional Quality of Life

General Discussion: Development Constraints & Opportunities

Burlington has very limited industrial land available for development. Many successful small companies move to suburban communities as they grow and seek larger, more modern facilities that are unavailable in the City. As a result, the City nurtures small companies (which often hire residents within walking distance or that take the bus), and then loses the jobs and tax base when those companies are successful.

To offset these losses, the City must continue to foster new small businesses and to find ways to support the expansion and retention of existing ones. Redeveloping old buildings into shared, low-cost incubator space; targeting of vacant buildings for the expansion of existing small businesses; and financing and technical assistance programs to meet a range of business needs are some of the tools for this strategy.

Additionally, the reuse of existing industrial land and facilities provides a greater level of opportunity than previously existed. New technologies are providing greater numbers of jobs and higher wage levels. More urban site planning (including a willingness to provide parking decks) and structural business changes make more dense commercial development – more jobs per square foot - possible.

The South End Arts and Business District, centered on the Pine Street corridor, is an example of how redeveloped industrial spaces gives young businesses affordable room to start up and grow, provides opportunities to learn from other tenants in the same “startup” stage of business life, allows for the sharing of customers, suppliers, supplies and equipment with other tenants, and provides a concentrated core of essential services to sustain small businesses. The City will continue to support the development of this district.

The City can also fight urban sprawl by developing buildings within the City (infill) and by rehabilitating vacant upper stories of existing buildings for both housing and commercial use. Much of this space is not functional because it is not currently accessible nor in compliance with current building codes. There are, however, tax incentives available to help meet accessibility requirements and bring buildings into compliance with building codes.

The economies of the City of Burlington and the surrounding cities and towns are highly interdependent. Burlington plays a key role as the hub of business services for regional businesses, as a major contributor to the quality of life in the region that helps to attract and keep companies in the area, and increasingly as a center of new enterprise development in the region. The surrounding towns have the space that Burlington lacks for the attraction and expansion of manufacturing, warehousing, distribution, and firms that provide critical employment opportunities for Burlington residents.

While the cultural, recreational, and entertainment amenities offered by the City are a critical contributor to business formation and expansion, and thus the growth of regional employment and tax revenues, the City does not fully capture the benefits it generates. Its lack of industrial land means that the tax revenues from facility expansions are often captured by surrounding communities. At the same time, Burlington bears the budgetary burdens associated with its high concentrations of low-income residents. This imbalance is magnified by the high proportion of tax-exempt property within the City owned by governmental, educational, religious, health care and other tax-exempt organizations.

The close economic interdependency of the City of Burlington and surrounding communities in the Burlington region – and the increasing focus on containing and preventing sprawl - requires the incorporation of a regional perspective into local economic development efforts. The City will continue to work with regional planners to designate Burlington as the primary growth center in the region, working to contain sprawl by absorbing a higher percentage of regional growth in Burlington than in surrounding communities. Current tax structure, permitting processes, and other regulations need to be examined and revised to foster controlled, sustainable growth, equitable funding of services, and local funding of public enhancements.

The regional balance of job growth and housing development is in many ways mismatched. Much of the suburban job growth in the last decade has been in low-wage retail employment while affordable housing remains largely concentrated in the urban core cities of Burlington and Winooski. (The notable exception has been the development of several hundred units of affordable housing in South Burlington.) Public transportation is inadequate to bridge that disparity – there is no fixed route service to many job locations (particularly areas in Williston and Colchester which are experiencing rapid employment growth), and service is not available for second and third shift work. Workers without cars are shut out of many employment opportunities, but cannot afford to live within walking distance of those opportunities. Most of this job growth is in areas where there is almost no housing within walking distance.

Regional cooperation on economic development has not historically been strong. However, greater opportunities and incentives for regional cooperation now exist because of Act 60 and its changes to the local property tax structure. The state, which now receives a majority of the local property taxes raised by municipalities, has more reason to be concerned with local activities affecting the local tax base and to develop programs that support local economic development. Municipalities, retaining less of their local property revenues, have less reason to compete with each other to attract businesses and more incentive to work cooperatively to share the benefits and burdens of economic development.

With the advent of NAFTA and the progressive elimination of trade barriers between Canada and the U.S., the quality-of-life factors that make Burlington such an attractive location for American entrepreneurs are also likely to be appealing to Canadian entrepreneurs seeking a U.S. business location. The City can continue to explore ways to promote the City to those entrepreneurs, such as the partnership with Plattsburgh and St. Jean (Quebec) known as the Triangle of Excellence.

Burlington has a growing refugee and immigrant community. Cultural and translation support is a critical issue for refugees and immigrants wanting to start businesses. This is a separate expertise from providing business technical assistance.

There is a need to tap into the cultural heritage of refugees and immigrants. This is especially important in order to assist those refugees who face the greatest “culture shock” upon moving to the US. They are going to use their own culture as a path of assimilation into the larger culture. This tends to be especially true for new refugee/immigrant businesses. We can support this by promoting cultural diversity, for example, by encouraging ethnic business sections in Burlington or elsewhere. A variation on this idea is to support refugees’ pursuit of self-employment by working together in cooperative groups. Agriculture is one example of where this might work. Nonetheless, there would need to be a facilitator to translate ideas into action, and, of course, there would need to be technical assistance available.

The State of Vermont needs to develop an office of immigrants, refugees and New Americans so immigrants and others have a place to go in order to use and access main stream services. Having a more diversified staff in state government would support this process.

We need funding to develop a comprehensive database of refugees and immigrants, and, ideally, to track how many convert to US citizenship and patterns of population inflow and outflow. The current system does not capture this information and needs to be changed.