Economic Development Committee

TOWN OF MOUNT PLEASANT, SOUTH CAROLINA ECONOMIC DEVELOPMENT COMMITTEE Monday, December 4, 2017 Municipal Complex, Committee Meeting Room, 3rd Floor 100 Ann Edwards Lane Mount Pleasant, SC 29464 MINUTES Members Present: Bob Brimmer, Chairman, Joe Bustos, Kathy Landing, and Rick Crosby (MPW) Staff Present: Eric DeMoura, Town Administrator; Amy Livingston, Business and Tourism Manager Mr. Brimmer called the meeting to order at 1:54 p.m. 1. Approval of Minutes from the November 6, 2017 meeting Mr. Bustos moved for approval; seconded by Mr. Crosby. All present voted in favor. 2. Public Comments Will Haynie, 316 Mallard Court, thanked members for their service and said he is looking forward to working with them. 3. Review of Economic Development Strategy Mr. Brimmer stated that this is an item he asked for because this Committee of Council is composed of entirely new members. He said his thoughts were to have Ms. Livingston provide a basic overview of the Town’s economic development strategy so the Committee is aware of what the Town has been working on. He said he would also like to provide the Committee an opportunity to ask questions regarding whether any adjustments need to be made. He stated that Mr. Bustos, as the new Planning Committee Chair, thought it may be useful to look at the Economic Development strategy to see if there are opportunities to  Economic Development Committee December 4, 2017 Page 2 of 22 craft a Comprehensive Plan that will support the Economic Development strategy. Ms. Livingston stated that our current Economic Development Strategy runs from 2013 to 2017 with the idea that instead of crafting a brand new strategy, that they would first work through the Comprehensive Plan, since this is the Town’s guiding document, to ensure we are all moving in the same direction. She stated that she recently attended training and was challenged to think where the Town would be in 2030. She said that we have now shifted into a new economy, and there are a many economists that believe there will be several changes continuing between now and 2030, whether they are disruptive technological changes or functional improvements. She said that manufacturing is no longer king in economic development; our economy is driven by knowledge, for which workforce is the prime resource. She said there is a fundamental change in the workforce being driven by a demand in these new economy jobs. She said there may be fewer permanent jobs, and we, as a society, must rethink how we work. She said the idea of the workday being 9 am – 5 pm was built on the manufacturing system and may or may not be what is needed today.  Economic Development Committee December 4, 2017 Page 3 of 22 She said the first five items are thought to be traditional economic development components. She said we are used to the idea of business attraction, site selection, but we must also keep in mind that the last are also equally important to economic development. Ms. Livingston stated that many have their own idea of what economic development is, but they all trend towards the same concept.  Economic Development Committee December 4, 2017 Page 4 of 22 She stated that Committee will continue to see this idea of quality of life, quality of place and the betterment of our people. She said that typically the goal to accomplish economic development is measured by job creation, job retention and quality of life. She said if you think about the business community, not every entrepreneur or business is the same. She stated that we categorize businesses into big categories; they are typically in these categories based on the revenue and also the intent of the business.  Economic Development Committee December 4, 2017 Page 5 of 22 She stated that there are an estimated 30 million total businesses in the United States, and of those, approximately 20 million are micro businesses, making less than $35,000 in revenue and may be in business for a few years. She stated that this is where you tend to see women and minorities primarily. She said there are approximately 9 million small businesses, and these tend to be lifestyle businesses. She said that innovators tend to be the tech companies, and venture companies tend to have IP associated with them, and “looking to take over the world.” She stated that it is an important best practice that we tailor our solutions to the business based on who they are and what their intent is. She said that this is what they have been attempting to do here in Mount Pleasant—look at the different types of businesses in our community and figure out how to meet each one where they are. She added that it is important to have all these types of businesses to create an ecosystem. She said that it is the small and micro businesses that give the community its feeling, fiber and what makes a community unique. She said often we ask what the distinction is between economic development and business development. She said that many would argue that business development is one component of economic development. She thinks of business development as the support services that the  Economic Development Committee December 4, 2017 Page 6 of 22 Town does, such as ribbon cuttings and the small things that are done to support those businesses. She said that economic development is very wide reaching, and people tend to think of it as those value-added companies that bring in net wealth, but there are a number of different components to this. She said having this strategy, as we do in Mount Pleasant that address both elements, is important. She stated there are a number of players involved when discussing economic development. She stated that these players range from the federal government who handles monetary and fiscal policy, down to the state government who is typically doing a lot of recruitment and incentives. She said you must also remember the utilities, such as Mount Pleasant Waterworks and other workforce development organizations, community colleges, etc. She said looking at the Town’s team, we often work with people at the State of South Carolina, primarily the Department of Commerce and any type of large economic development project will have a project manager who is assigned to that project. She said they are also involved with Department of Employment and Workforce; when you see large  Economic Development Committee December 4, 2017 Page 7 of 22 announcements in the State, there are often customized training programs developed for those companies as part of their incentives package. She stated that the State is very well renowned in the country for doing this, which is one of the reasons the State has been winning. She said there is also the Department of Parks, Recreation and Tourism which is a key player in a state like South Carolina. We would be remiss if we did not think about the impact to our economy that tourism has and on our quality of life. She said looking regionally, who are the other players and how does the Town fit in. She said the largest regionally would be the Charleston Regional Development Alliance (CRDA), who is focused primarily on marketing and covers the tri-county area. She said they market the whole regional, not just nationally, but internationally and have an international recruitment team that travels all over. She said they also take a leadership role in terms of regional strategy. She said the One Region Strategy, which has been reviewed in the past, is the regional strategy for  Economic Development Committee December 4, 2017 Page 8 of 22 economic development and is cluster based. She said that they, along with other partners, led that effort. She said that other strategies such as the Foreign Direction Investment strategy was recently conducted and they are now determining how to implement this. She said they also work with the state on the Landing Pad program which is a state initiative that has been implemented at the regional level, and the Town received the first two companies that came through that program. She added that these are companies that have an international footprint and are expanding into the US for the first time. She said that Golfbreaks may seem a little odd. She said on they are an ecommerce solution, they are large in their respective market, have set up an office here and are expanding their footprint. She said that Fitness First USA, a health food e- commerce business, has a manufacturing component, and has a flagship store and corporate headquarters here in the Town. She said the idea is to bring the ecommerce here and potentially expand out to the manufacturing. She stated that Charleston County Economic Development has been working with the Town and one of the most important things that they do with the Town is working with existing industry. She said that it is a trend in their field to show the importance of having a robust existing industry program. She said this means cataloging all the businesses or types of business that you really want that are already in your community. She said most job creation is going to come from companies who are already here. She said it is important that we track these companies; are they expanding, do they have enough room to expand at their current site, are they at the end of their lease and what are the trigger points where they may leave and address those. She said one thing they did this past year was take a number of companies that had regional headquarters here and went to the corporate headquarters and met with them and expressed how much they appreciated them being in Charleston County. She said they also work with Charleston County Economic Development in terms of incentives. She said how the state is set up is typically the county is a lead in economic development; therefore, if the Town has a project, they would work with the county through to the state, which is the typical  Economic Development Committee December 4, 2017 Page 9 of 22 protocol. She said they control a large portion of available incentives with property taxes. She said that some of the announcements that they have had include MTAG Services and Heatworks, which is in a donut hole of Charleston County in the Town. She stated that there is also the Charleston Metro Chamber, the Mount Pleasant Chamber and the Harbor Entrepreneur Center, who are the players that are helping the Town support in the other types of economic development that were mentioned. She stated that regarding the regional strategy, most have seen the cluster-based strategy which outlines key target clusters based on what the numbers of companies/jobs are currently in the market versus what our regional assets are and where growth can be shown. She said that she took this and put stars next to those that overlap with the Town’s strategy, values and assets. She stated this would include everything in the information technology area, life sciences, advanced logistics, logistics corporate headquarters (General Logistics), logistics IT, and then corporate headquarters, which is not really a cluster, but something that the Town would like to see and  Economic Development Committee December 4, 2017 Page 10 of 22 the Town is very primed for this. She said that you will note that where it indicates Back Office, when she visited Tampa and met with their Economic Development group, they originally had a number of large corporate Fortune 500 companies that were doing back office work, and slowly over time, they were able to build up to capacity as to where they are now getting the regional and corporate headquarters. She said seeing the shift in their economy was intentional. They were able to build up the workforce. Mr. Brimmer stated that in reference to the Port, a star was not indicated on the illustration for some of the other logistics items and asked how Ms. Livingston sees the Port activity. He said he realizes some are logistics and maritime freight; however, it is not listed as an obvious focus. Ms. Livingston said that there are several items showing that are not starred such as warehousing and storage, maritime freight and cold storage, which will be discussed shortly in the discussion related to the challenges. She said the biggest challenge in trying to locate additional businesses such as these, comes down to the cost of land and then availability. She said we look at the salaries of industries and try to put jobs in the communities where people can live and work to lessen regional transportation issues, those particular industries do not catch her attention as there is a large focus on high-wage jobs that are not land intensive.  Economic Development Committee December 4, 2017 Page 11 of 22 She stated that Mount Pleasant is a unique community with many great assets. She said this definition and mission were developed over time with citizens and their input, and a great deal of thought and energy went into this and encompasses quite a bit. Mr. Brimmer stated that one thing he does not see in this statement is discussing the long term, as opposed to making sure it is healthy today. He said there is no focus to ensure it stays vibrant in 10, 20 and 30 years. Ms. Livingston stated that this was a valid point and stated that she has copies available of the Town’s strategy, indicating the goals that were outlined in that strategy. She stated that we want to proceed in the same direction as our partners, but pulling out those pieces that make sense for Mount Pleasant. She said that it is important to support the retention and growth of existing industries and business, specifically those selling products and services beyond the region. She said this may be obvious to some, but the Town looks at them as net generators of income and wealth. She said if businesses are selling outside of the community, those dollars are still coming into the Town, which adds to the prosperity of our community.  Economic Development Committee December 4, 2017 Page 12 of 22 She stated that the Town’s strategy can be defined in four different ways. She stated that some of the projects that have been accomplished; things that were outlined and of those that have been accomplished, one of the objectives outlined in the strategy was to discuss creating incentives. She said that we are one of the few municipalities that have a formal incentives package and are very proud of it. She stated that they created during the implementation of this economic development strategy and also expanded it as well. She stated that doing a land inventory is ongoing because the dynamic shifts in the real estate market are constant. She said that one of her  Economic Development Committee December 4, 2017 Page 13 of 22 team members is a commercial real estate broker and therefore, the Town now has access to the MLS which was not available previously. She said that supporting the existing businesses has been accomplished with business outreach meetings, Council and the Mayor going to different businesses and having roundtable-type meetings to discuss what is or is not working. She stated that staff will periodically drop in to businesses to show appreciation for them doing business in the Town, and the businesses appreciate the one-on-one contact. She said that it has significant meaning to businesses when Mayor and/or Council attend their events, listen and show their appreciation to the business owners. Ms. Landing mentioned an article in the paper regarding Heatworks and that they would be adding 60 additional employees. She said her immediate thought was to ensure we keep them here and happy. Ms. Livingston stated that the typical best practice is for staff to keep in contact with the business every six months, ask specific questions in terms of their expansion and what their limitations are, to ensure the Town does not lose them. She added that keeping them involved in the community is also a great way to keep them embedded. Ms. Landing asked if there is a process for her to call on a business. Ms. Livingston stated that for any major visit, she would suggest reaching out to her office. She would like to work together with Council to further develop the business outreach meetings. Ms. Landing said that being new to Town Council and having read the paper over the years, asked if there is anything in writing indicating what the Town has learned in the process, such as losing a Blackbaud or Benefitfocus to Daniel Island, and what to do better in the future. She stated that we want to attract new businesses, but also want to keep those that are here happy. Ms. Livingston stated that every business case in going to be different, and there are times that the Town will lose a business and have no control over it. She said that the Town’s incentives are not just for businesses who are new to the area, but also for expansions, which is a  Economic Development Committee December 4, 2017 Page 14 of 22 very important item, as some communities are not interested in looking at this. She said it is much easier to add five positions to a company of 60 than to go out and find a company with 65 jobs, because it uproots employees who may have families. She said there is a process when looking at this and communicating more efficiently. She said that staff attempts to be out in the community; however, if Council members hear something, her staff would like to be aware because the challenge is that they currently have 5,700 businesses. She stated that other things accomplished within the strategy include updates to the zoning code, developing economic development zoning within the Town and looking at permitted uses; revising the zoning permitted use table was a major component. She added that a Retail Market Analysis was accomplished in 2017, and one of the items in the strategy indicated looking at retail use and what the Town needs and does not currently have. She said that relative to the film industry, the strategy pointed to looking at incentives for the film industry. She said in working with them, they found that incentives were not really needed, but an easy permitting process was desirable. She said that has been accomplished. She said they also advertise in the South Carolina Film Guide. She added that the Special Events office handles the permitting and has been commended on how easy the permitting process is in the Town. Mr. DeMoura stated that on the film side, the major incentives come from the State of South Carolina. He said several years ago, the state threatened those incentives. He stated that there is always things the Town is able to do; however, this is the key for the film side. Mr. Brimmer asked if those incentives are still in place. Mr. DeMoura stated that much of them still are. Ms. Livingston stated that it is always important to do an analysis of what the Town’s strengths and assets are. She said that the Town has a number of these.  Economic Development Committee December 4, 2017 Page 15 of 22 She stated that the Town’s quality of life is second to none, between the schools, low crime, weather and the fact that the Town continues to invest in infrastructure. She said that businesses do want to locate in communities in which the local government is investing. She stated that we also have a highly educated citizenry, with low labor costs and disposable income. She said our other assets include our location, being on the East Coast, proximity to the beaches and downtown. She said the Port is definitely an asset to the Town, not only for moving goods, but the image it displays. She said that there has also been an increasing number of direct flights at the airport, which is very attractive to businesses. Mr. Bustos said that it is important to let the public know that Mount Pleasant has an airport. He said that more corporate aircraft are coming into Mount Pleasant, as well as UPS, who delivers to Mount Pleasant twice a week. Ms. Livingston stated that this has always been one of the selling points, especially with the Carolina Park property. Ms. Landing stated that with the tax reform currently in front of Congress, if there is a large cut in the corporate tax rate, there is strong opportunity country-wide, as well as in our area to attract more foreign  Economic Development Committee December 4, 2017 Page 16 of 22 businesses. She asked if anyone was thinking about direct flights to certain cities overseas. Mr. Bustos stated that while Charleston is an international airport, there are no direct flights, as this is driven by the carriers and the FAA. He said that Charleston’s runway is long; however, those decisions are primarily influenced by the airline carrier. He said that there is not enough market here to justify an overseas flight. Ms. Livingston stated that from a visitors’ standpoint, the CVB has been targeting an increased portion of their budget to international travel advertising. She stated that if we are able to gain more opportunity to those areas that do have international flights or prices decrease, this could also help. She stated that some of our challenges are land -- the availability of it and the cost. She said that there is slightly less than 700 acres of available commercial property that has not been developed. She stated that there are opportunities in revitalization that is not counted in this. She said that the availability of commercial office space is a very tight market. She said we need to have a place to put someone, and when we find a place, it is expensive in Mount Pleasant. She said it is a very desirable place to be and can be costly. She stated that she worked very diligently to bring  Economic Development Committee December 4, 2017 Page 17 of 22 Heatworks to the Town, and they landed in Mount Pleasant, but in a Charleston County donut hole. She said that their key input is water and have some financial incentives to be within corporate limits, but they are leasing that facility. She stated that the donut holes in Charleston County puts a strain on the Town. She said that there is also going to be a bit of a challenge in our region without a research university, when looking at software jobs. She said when we are not the Research Triangle Area, and do not have three or four research universities turning out this specific skill set, they must be recruited in or the students go away and come back. She said this is something that was cited as a regional challenge. She said we do have Jack Russell Software who launched their coding school here (JRS Coding School) and other opportunities with the College of Charleston. She said that some of the other opportunities may be as it relates to perception. She said there were properties that were rezoned from commercial to residential, and the message that this sends to the outside business community is that suburbia and not a viable place for business. She said that there are key opportunities to try and change the messaging if this is Council’s direction. She said that there is also an opportunity of innovation districts and a key component of this is internet infrastructure. She stated that this is a component that has been discussed at the staff level. She said that we think about the other infrastructure in the CIP, but also need to think about, when preparing ourselves for a new economy, is whether we have all those pieces of that particular infrastructure in place for those businesses to be successful, too. She said there are countless stories she has heard of challenges to obtain the type of internet needed on upper King Street. She said that this is an area of opportunity that the Town could really take on. She stated that when thinking about the tools to help us with those challenges, we do have an Economic Development Incentive Grant Program, and in order to be eligible, you have to substantially add to the tax base, create clean high-paying jobs, compatible with Mount Pleasant, both build and naturally, a company that could locate anywhere, but want to be there, and are minimally dependent on the economy of the  Economic Development Committee December 4, 2017 Page 18 of 22 Town of the Charleston region. She said this means that the company gets more than 30% of their revenue from outside of the region. She stated that there is a set amount each year during the budget process that Council allocates towards this program, and it is a reimbursement grant. She said that the Town is able to reimburse impact fees, building permit fees, plan review fees or business license taxes. She said that how this works is that they apply and staff will review, and then goes to Council with a recommendation. She said Council then considers approval and has the latitude as to the percentage of funding. She said that this grant program allows for reimbursement at CO (certificate of occupancy). Mr. Crosby asked about the amount set aside. Ms. Livingston stated that it has been $100,000 each year. Mr. Crosby asked if this has been accessed in the past. Ms. Livingston responded in the affirmative. She said that Jear Logistics is one and another will announce on December 15th that Council has approved. Mr. Crosby asked what the maximum amount per project is allocated.  Economic Development Committee December 4, 2017 Page 19 of 22 Ms. Livingston stated that this would be at Council’s discretion. She said that the budget will set the maximum amount available for incentives. She said that the business license tax is the unique area, which at Council’s discretion, can be carried forward for five years, but it is on a declining rate. She said that Council could offer to reimburse a business license tax the first two years up to 100% and after that time, it declines such as up to 75%, then 50%, then 25% the following three years. Mr. Brimmer stated that there have been articles regarding the Town’s increase in impact fees and it is unfortunate that this type of information was not included in these articles showing that the Town does attempt to work with businesses. He said that he hopes that future articles will tell the whole story because they are important and valued by companies. Ms. Livingston stated that the Town is one of the few municipalities in the state that has a program like this and can do a better job of getting this information out. Mr. Crosby asked if the dental location on Coleman, would this have been an eligible participant. Ms. Livingston stated that it would not because the dental office would acquire their clients locally from the population, so they would not be a net generator of wealth.  Economic Development Committee December 4, 2017 Page 20 of 22 She reviewed some of the Business Development tools available. Mr. Bustos stated that one of the issues of economic development is that the Town rezoned commercial economic development land to residential and said that it is getting unbalanced. He said that the Town does need more economic development. He asked if there is a list of economic development assets in the 700 acres and has this been provided to the CRDA and to the County’s Economic Development. Ms. Livingston stated that it has and it is important to note that when we look at the 700 acres, the largest parcel of this is in Carolina Park. She said that everything else on the list other than that in Carolina Park, is very small, made up of one acre or less that are of not much use to the types of companies targeted by these companies within the economic development strategy. Mr. Bustos said that he spoke with people who are engaged in the real estate community and economic development, and they feel that getting that list out is very important, so they know what the Town has to offer. He said that he believes we must also engage the private sector because there are people who have a deep understanding of economic development. He said the attraction of larger companies to come here and have headquarters and bring new money from outside of the region is very important. He said that we need to have a review of zoning. He said that this is something that the Comprehensive Plan group needs to review. He said on the idea of affordable housing, if we create jobs that are low paying, those individuals cannot afford to live in Mount Pleasant and it makes the commuting issues worse. He said we need to find companies that can come into Class A office space, generate less traffic, pay higher salaries and housing becomes more attainable rather than trying to lower the cost of housing. He said this is almost impossible with the price of land in Mount Pleasant. He said that the Town needs to have a new wave of economic development because it will work for the Town in reducing traffic and not having people leave the Town, and increase salaries. He said that the County’s Economic Development Department needs to be reenergized. He said that the CRDA also needs to be  Economic Development Committee December 4, 2017 Page 21 of 22 reenergized to ensure they are out there doing what they can to find the companies to come here. Then, we can find a place for them. He said that this is what needs to be done if we are going to change the ratios of what we have now to one that is going to be good for the Town. Ms. Livingston stated that when the Town is looking at the attraction aspect, we are looking at those things that Mr. Bustos is pointing out, in order to provide jobs where people are able to afford to live and work here. She said that we also need to ensure that we are diversifying our economy. She said that companies are not going to wait for the Town to find the space for them and are going to want the space to be available now. She said if companies do not find the space immediately, they are not going to take a second look. She said that the state obtains these requests for information from companies who are looking at this state, which is then filtered down to the County level. She said that the Town has been included on several of them but are never told why we may be been eliminated. Generally, the state does not hear this back from the prospect. She said she suspects that many times it has to do with cost. Mr. Bustos stated that economic development is very important at this time. He said we have enough houses and traffic, and now we need to get those high-paying jobs within the Town. He said with the notion of hotel districts and trying to get more employees and economic development companies, the Town needs to look at a transportation system to move people around. He said he has long been an advocate that Mount Pleasant should have their own transportation system as opposed to being a sideline for CARTA. He said that as we continue to grow, this is going to be very important. Ms. Landing stated that we as a Town need to identify things earlier, before they go elsewhere. Mr. Crosby said to Mr. Bustos’ point, if the Town is going to get serious about economic development, we need to be more strategic and identify what an ideal prospect is for the Town. He said we should narrow the list of companies we would like to pursue to those the Town is able to accommodate. He would suggest that we have a follow up meeting to do  Economic Development Committee December 4, 2017 Page 22 of 22 more planning and strategize how to go after the market. He said that Mount Pleasant is not a fit for everyone for a variety of reasons and believes we need to identify those that the Town would like to go after. Mr. Brimmer said that there have been a number of presentations for several years from the CRDA, Charleston Metro Chamber of Commerce and others, discussing the regional strategy and how we fit into this. He said one of his priorities is going to be determining what Mount Pleasant’s place is in that strategy, because he does not think that every part of the region should take the same role, and defining what the Town’s role is. He said that being strategic is critical, as well as having the tools in place, such as the land and the incentives and elevate this. He said there are too many options for companies to have to go through that process. 4. Adjourn There being no further discussion, meeting adjourned at 2:46 p.m. Respectfully submitted, Barbara Ashe December 4, 2017