Tags
Economic Impact Values for a Profession, IEDC, International Economic Development Council, professional ethics and conduct, standards for professional platforms of accomplishments
As a very public persona but still being a private citizen and thus not a public figure as described by the law, who does work in the public arena of discourse I am often attacked for not being willing to discuss things such as current projects (which I am usually under a non-disclosure agreement). I also get criticized for my belief that the public sector needs to provide the most competitive business climate in order to attract, retain and expand business investment in their locales, and thus create and/or preserve jobs.
I would say that anyone in our industry of economic development is normally not the most beloved person of the media, because we recommend the invest of taxpayers monies in order to create the right atmosphere for these types of outcomes to occur. If they were going to occur naturally I think the outcome would already be well down the road. Thus it takes strategic thinkers, visionary leaders, and supporters that want a better tomorrow to agree on taking some form of calculated risk at the expense of their constituents. For sure these are not easy decisions to make. But over the course of a lifetime of service to our profession we do learn the most efficient process for getting to the nub of the matter and making hard choices. Usually those of us in this public spectacle get our fair share of naysayers and critics. With the advent of bloggers we sure draw in many cases our share of unwarranted abuse by uninformed and sometimes malicious and usually people who had no experience and/or involvement in the actual projects being discussed, they are just arm chair experts, with no experience themselves in being game changers, and adding measurable value to our society. Perhaps that is why we draw their negative attention so much.
None the less, one of my biggest questions is so where has the mighty guru the oz of economic development or sometimes even more cynical faux names like the Johnny Appleseed of economic development, gotten the right to proclaim his expertise? Then they use such (alleged slams) like saying that my books are self-published inferring that this means they are not well read and popular amongst my peers. When in actuality my books have sold well and that has been what has propelled my consulting business and my public speaking engagements.
But finally what is frustrating and irritating and what makes me angry is when they devalue my awards, certifications and accolades given to me over my time of service. They make comments that I am a self-proclaimed expert. This gives no validity to my certifications as a Master Business Retention Consultant, Certified Economic Developer, Certified Economic Development Finance Professional, my life time achievement award given to me by my peers at IEDC allowing me to be called a “Fellow Member,” or ignoring my projects that have won the Governor’s award in Minnesota as the Economic Development Project of the Year, “New Flyer Industries.” The New Flyer project so transformed the Minnesota economy that it created the number one automotive industry in Minnesota and attracted yet another expansion by the company in St. Cloud. It’s a good thing that my team and I brought them to Minnesota because the former #1 automotive employer Ford closed their plant and laid off 700 people a few years later. Today New Flyer employs somewhere between 1200-1400 Minnesotans. About twice the size of the former largest automotive industry. Just this one deal has had approximately over $100M in economic impact annually over since we landed them in 1995. Today the cumulative impact of New Flyer alone has been well over $1B on the Minnesota economy… all because one man (me) decided we could compete against all odds in a little town of 8,000 people in Crookston to get this deal to our state.
So when people ask me what is your experience and then they down play my expertise, my accomplishments and my impact on my industry and our society of course it is hurtful. But the main reason is there is no single method that has been endorsed and/or recommended by our IEDC organization on how to answer this question. Perhaps that is for good reason. Economic developers are not supposed to be braggers and also there is a wide variety of disagreement of what methods are best and each professional chooses their own business case for how they keep their tally if they do so at all.
My training has been on the use and experience with two primary economic impact models, those being IMplan and REMI. There is also the US Commerce RIMSII. I have found REMI to be the most conservative and thus I have stayed proficient with their models and generally try to stay close to their economic multipliers for economic impact valuation.
Now there are several manners to benchmark the value of economic projects and business development deals that we have had some involvement in, assisted in giving an opinion, been paid to manage, or provided third party support to the project’s validity and/or giving of our time on a pro-bono basis to help get small businesses funded as in my case with my service to the CDC Small Business Loans for nearly the past six years.
My service record breaks down as follows;
22 years of Economic Development Related Experience categorized the following disciplines;
- EDO CEO Level Experience 12 years
- Private Sector Fortune 50 Company- Verizon- 3 years
- Private Sector Consulting in my own Practice- 6 years
- Pro-Bono work in Economic Development Finance- 6 years
- Pro-Bono Non-Profit Board Service – 18 years (MAEDC, CUED, IEDC, CDC)
I also have used the following benchmark for general characterization of how to track projects I have had some impact on bringing to fruition and their on-going cumulative effect on their local economies;
- Direct Employment attributed to my work that I was responsible for engaging, designing and implementing over the 22 years.
- Indirect employment that was a result of my direct job creation outcomes.
- Inward investment or facilities built, and payroll impact on local economies.
- Induced investment by the leveraging of the investments that I was involved in getting projects approved and funded. This included business economic impact retained and validated by third party reference to values, impact generated by requiring match of public funds and/or attracting new funding to such projects.
- The final number of businesses served and projects undertaken.
So when I consider the number of projects I have been involved in from South St. Paul MN, Crookston, MN, Red Wing, MN, Verizon Telecommunications national subject matter expert on economic development targeted foundation investments, Wayne County, IN and then consulting literally all over the world these past 6 years, it can be a very huge number. Even some of my colleagues would be shocked. But my life has been anything but normal or usual. I have worked on some of the biggest and most exciting projects in the world. And yes, some are still in the works (thus they are not part of my tally officially until they close eventually). Some projects take a number of years to work through all the mitigation issues, such a developer failures, the global financial crisis and local politics and criticism by the media. So I tend to use a conservative multiplier between REMI and IMplan and have even accounted for the most conservative rule of thumb valuation business case. But in the absence of a formal policy by my colleagues each of us most choose a business method we are comfortable with and that we can maintain some degree of familiarity with over the years.
The following is my current tally I have been continuously questioned about by the bloggers, general public CAVE people but for some reason not ever have my clients and/or my industry asked me to produce this list. But to make it clear it is not out of my inability to provide such approximate value, give an estimate to over-all long-term economic impact or report the types of projects, it was so as to not seem arrogant. My results have been what some might say quite remarkable and some would say unbelievable, so rather than argue I just kept my statement simple, but impact. I have maintained for the past few years that my economic value to my industry has been approximately “100 projects, 50,000 jobs created and over $1B in economic impact and investment.” So after yet another barrage of naysayers and even an attack on my ethics and conduct related to my work in our industry. They even sent all my professional board colleagues a nasty set of invalid media articles from the less than the main stream media and based mainly on blogger commentaries, citing that I should be somehow ashamed of my accolades, my conduct in achieving my results, and somehow accusing me of breaking our official code of ethics. I spend 16 hours researching my historical timeline and the projects I have touched and worked on to help them achieve success. While I feel such malicious and defamatory bloggers will never be capable of accepting the truth or admitting they were wrong in their comments and accusations. Nor will any amount of disclosure or discourse sway them from their conspiracy minded thoughts. None the less, my timeline of work and career economic value using the aforementioned business case came out much greater than my much more humble previous statement of how I felt to portray a 22 year history of prolific hard work to help others find a dignified way to provide for their families.
Here is my official tally sheet to the best of my knowledge as of this my 52 year of my birth month:
- Total Direct Jobs Created from all Measured Sectors- 37,503-38,153 jobs
- Total approximate indirect jobs created-150,012- 152,612 jobs
- Total approx. indirect jobs (using Morgan rule of thumb multiplier)-93,757
- Pending direct Jobs in process- 4310 (current projects)
- Estimated In-direct jobs impact- 17,240 (current projects)
- Pending construction Economic Impact- $613M (current projects)
- Pending estimated Economic Impact Once closed annually- $155M (current)
- Pending Estimated One time construction value- $673M (current)
- Total One-time construction economic impact (completed)- $419.3M
- Total financing Invested into businesses-$2.3B (completed)
- Total Annual Economic Impact Cumulative of projects- $5B (completed)
- Total number of businesses served- 168 (without pro-bono-completed)
- Total number businesses served cumulative w/pro-bono-1657 (completed)
No I am not going to name all the projects, but I do have a written record of them now thanks to these most recent allegations. Suffice it to say that just the one project for which my peers gave me “Economic Developer of the Year” for New Flyer more than covered my billion dollar impact statement alone, and just my pro-bono service to the CDC more than covered the number of businesses I have helped to provide funding to create way more than my estimated 50,000 jobs when you measure direct and indirect jobs created and preserved.
So in my opinion this case is now officially closed. By the way I arrived at all these values by doing third party research and using third party economic values done in most cases by paid research experts and the state’s own economic valuation projections and in the case of the CDC, I used their web site and their annual report statements, so these are other folks opinions of the values of work I have been directly engaged in assisting to come to fruition.
Now the record will stand as posted. I will not argue this point any longer. In addition, I have given my colleagues a current value on the projects I am now working on currently that I am hopeful will come to fruition in the future. All in all, yes I am very capable of saying I am a world class economic development consultant and I do believe my accolades, certifications and experience is truly that of a globally respected public-policy economic development professional.
EconomicDeveloper 
Soon I will upload an approximate business case that I use for valuing our efforts as Economic Development Professionals. It has to take into account some norm or acceptable protocol for how to approximate economic impact from the direct, indirect, and induced outcome perspective and it has to be cumulative over time. It is also very important to remember than some of us serve on non-profit boards and are engaged in financing decisions for small business, which can be considered in my opinion as part of our professional contribution to economic impact related to our careers from a pro-bono perspective.
So let’s look at a couple different examples of economic impact business case scenarios to give you as a reader an idea of who one might want to quantify their work record. There are several reasons to quantify such efforts and I don’t mind saying that it is about economic value. This is especially true if you are selling your know how and intellectual knowledge to clients on a fee for hire basis. People often scoff at how we value our time, but I don’t bite on such negative naysayers. Here is why I believe professional economic developers should be valued like any other remarkable knowledge based work. We create positive change such as jobs for those willing to work. Our efforts usually include adding economic value to the local, state and national tax base, thus reducing the demand of payment for the overhead cost of government on each citizen. In addition, our efforts diversify, preserve and/or expand the local economy normally. Finally, economic development professionals should be looked at as a profit center not a cost center. Our investments turn into return on investments for our clients. Unlike the fees of attorney’s and accountants we aren’t trying to avoid costs or reduce litigated exposure, we are creating what we refer to as new or found money in a marketplace and putting it to good use to create more money in that same market on the average between 2.5 to 9 times depending on whose economic model you adhere to. Now that is a good point to clarify. There are three major software tools that run from conservative to aggressive in their leveraging multipliers for what we refer to as indirect and/or induced economic impact, which is the result of direct economic impact.
I tend to use the conservative methods of 2.5 times direct jobs and 2 times economic investment spent on payroll in the market for the cumulative number of years the project has been an on-going concern. Remember you must add indirect jobs to direct jobs for your total tally.
I also count the amount of investment into construction as a one time economic stimulus… of course I could but I do not at this point count the temporary construction jobs, but they do have a very positive impact usually for less than 2 years.
I also look at Fee based projects where I consulted directly and/or gave advice prior to the final decision to the client as eligible projects for consideration in my tally. In addition, I look at broad sweeping grant investments that created a better business climate and value the jobs in that impact area as preserved. Third I look at indirect pro-bono service such as in my case I am on the nations largest CDC small business finance board in San Diego, serving CA, NV, and AZ. My role there is to be on the board of directors which directs the staff on investments into small businesses. I do so at no fee for service. But as a member of the loan credit committee our board is actively engaged every week in reviewing small business loan applications and recommending or denying them for business loans. I count the annual jobs created and/or preserved and number of businesses served as projects each year I have served and take those numbers directly from our CDC website and the annual report published to everyone.
I believe these are a fair and impartial way to value ourselves as a professional and thus derive what our economic fee base should be based upon. In my case I have two types of fee based services… a straight fee for service opinion based on a flat rate negotiated fee with hourly rate clauses for beyond scope work and/or a cost plus performance based fee, which allows the client to pay me a percentage of the economic value case I create and that becomes engaged by a mutual agreement between the public sector and a private sector client.
At this point our professional industry as established by IEDC in Washington has not given us a standard template for how to value our economic contribution so in the absence of a national or international standard this is my business case methodology. If such a standard was created of course I would adjust and re-establish my business case and accomplishment statements according to their guidelines.