Introduction | Summary | Master Plan Document | Annual Reports | Implementation Strategies
2005 Master Plan Annual Report
Economy
2005 Annual Report | Land Use | Economy | Community Appearance | Community Facilities & Services | Housing | Transportation | Implementation
Click here to view/download a pdf version of the Economy section.
Economy Meeting Summary
From Meeting Dated Monday, March 6, 2006
In Attendance
- Patty Dalton (City Manager’s Office), Moderator
- Robin Sowry (City Attorney’s Office), Recorder
- Chad Gibson (Development Department), Emma Bramley, Joe Valentino (City Manager’s Office), Jeff Nelson (Information Technology Department), Cathe Armstrong (Finance Department), Dean Sivinski (Development Department)
Goal
Emphasize high quality jobs and businesses, collaborative partnerships, and enhancement of the local tax base, while respecting the residential character of the community and creating a stronger and more diverse economy.
Executive Summary
The goals of the Economy section are the foundation for the Master Plan’s overall success. Assuring the City’s fiscal health over the long term is key to assuring the continuance of quality services and the health and vitality of the community. The Master Plan identifies enhanced income tax revenues, realized primarily through redevelopment of the City’s commercial districts, as the main contributor to Upper Arlington’s long-term financial stability.
The cumulative effect from projects that received incentives is paying dividends. Since 2000, the City’s economic development incentive program has successfully assisted in the recruitment of 49 new and the retention of seven existing businesses, equaling more than $80 million in investment. Likewise, despite challenging economic times in recent years, the City’s income tax revenues saw only minor declines compared to other communities, and realized a significant gain in 2005, reaching its highest year on record at approximately $14 million.
These projects demonstrate that Upper Arlington remains an attractive location for a niche market of office users, such as small medical and professional entities. With a below-average office vacancy rate compared to the region, as new developments occur they are quickly occupied.
Immediately following Master Plan adoption, the framework for requiring and encouraging redevelopment in the Study Areas was established, primarily through the Unified Development Ordinance. Realizing the desired change however depends on factors outside the City’s control – desires of the private property owners and market forces – and may not occur for many years if at all. If such opportunities for significant redevelopment do occur, City participation at some level may also be required in the form of incentives or necessary infrastructure improvements.
The City does not have the resources to support redevelopment in all the commercial districts, therefore some exercise to prioritize how the City might allocate project incentives is recommended in the near future, as well as revisiting the feasibility of the desired change occurring in all Study Areas.
A business retention and expansion program begun in 2005 is working to better understand the successes and challenges facing Upper Arlington’s corporate citizens, and equally importantly, to strengthen relations and ultimately support retention and expansion efforts.
The City’s physical realities serve as a challenge to economic development activities. Upper Arlington is land-locked and fully developed. Compared to cities of a similar size, the commercial-to-population ratio is worse than the parkland-to-population ratio. Likewise, there are few opportunities for annexing adjacent areas, as was the case with the recent annexation of a commercial portion of Lane Avenue.
These factors emphasize the importance of increasing density within the existing commercial districts to maximize their revenue generating potential for the City.
Efforts continue to secure necessary revenues without the need to seek property tax increases. The City continues to pay close attention to its fiscal health through a combination of budgeting, long-range planning, an adherence to sound financial policies, enhancing cost recovery practices and seeking out alternative funding sources, and participation in lobbying efforts to effect change in how State and Federal funds are distributed to support reinvestment versus new investment.
Several Economy objectives and strategies are considered completed or ongoing as part of routine City business. They have been marked as such and will only contain update information in future reports as projects or items of note occur. No additional changes to streamline the strategies (listed at the end of this section) are recommended as part of this Annual Report.
Objective Highlights
Objective 1. Enhance the City’s revenue sources.
- As a fully developed community, enhancing revenues through new “greenfield” development is not an option. In order to increase City revenues without raising residential property taxes, attention must be turned towards income tax generated by those who work, but do not necessarily live in the City. Specifically, attracting and retaining high-wage businesses and/or intensifying the amount of development on a commercial site are the most likely means to accomplish this goal.
- As a regular course of business, the City prepares a biennial budget, mid-year progress reviews, and a mid-budget review to estimate and monitor its fiscal needs. Adoption of a seven-year Capital Improvement Program has extended the budgeting process out further, thereby assisting with long-term planning.
- The Study Area Plans provide conceptual renderings for the main commercial areas in the City. Each Study Area concept is based on a number of assumptions and caveats that ultimately impact the development outcome on any given site. A key principle cited in the Master Plan Study Area Volume is that “Market realities must inform the City’s land use preferences.” As projects come forward for approval, compliance with the Master Plan is weighed with these assumptions and caveats in mind.
- Since 2000, the City has negotiated incentive agreements resulting in 49 new companies and the retention of seven existing businesses. These projects represent over 300,000 square feet in new office and medical space, and over $80 million in new investment, suggesting a strong demand for office and medical space in Upper Arlington. Central Ohio as a whole has one of the highest office vacancy rates in the nation, running counter to Upper Arlington’s recent experiences. Many of these businesses are representative of the target high-end office user, including The Ohio State University Foundation and Development Department, several financial planning and investment firms, as well as the Orthopedic Center of Excellence, the third largest physician-owned medical center in Central Ohio.
- Income tax collection for 2005 was 16 percent higher than 2004 (cash basis) following three straight years of decline. The $14 million collected is five percent higher than the $13.4 million collected in 2001 and represents the best year on record.
- Continuing a trend in recent years, 2005 was a near-record year for the issuance of building permits, another indicator of successes in the economic development arena and the community’s confidence in Upper Arlington’s future.
- Since adoption of the Unified Development Ordinance, implementation of the Study Area concepts has met with varied success. Further study is recommended to assess the best means by which to implement the concepts while being sensitive to market and development constraints.
- The year 2005 was a banner one for securing grants and alternative funding sources, with the value of these donations exceeding $1 million.
- In its first full year, the Fire Division’s Emergency Medical Services (EMS) Transport Billing Program generated $679,000, exceeding the $450,000 projection. These funds are being set aside to support future emergency/medical equipment and facility needs.
- It is suggested the City work to identify priority areas for the use of incentive tools.
- While consideration and expansion of cost recovery practices remains a priority across the organization, Staff does not consistently create cost-recovery reports at this time, and intends to begin exploring how it can develop a comprehensive internal review and reporting process.
Objective 2. Retain and expand existing businesses.
- Competition for office users in Central Ohio remains high. Communities recognize the income benefit of retaining and recruiting professionals and as such, heavy incentives are often used to attract target businesses. One of the greatest challenges for Upper Arlington is the lack of available larger office spaces for growing businesses. Additionally, competitive office rates throughout Central Ohio present an increasing challenge to business retention.
- In 2005, a contractor was retained to assist Staff in implementing a business retention and expansion survey program. To date, over 80 businesses have participated in the survey. Information collected from the survey should help the City better anticipate and serve business needs.
- Staff’s relationship with the Upper Arlington Area Chamber of Commerce continues to be strong, with Staff participation on the Chamber’s Business Advocacy Committee.
- The City continues to evaluate what is an appropriate role for providing or facilitating access to state-of-the-art technology. Business survey results to date suggest businesses are satisfied with current access to technology. The Information Technology Department continues to monitor efforts by other communities and in time will form a recommendation to Staff and the City Council. To date, it has concluded a fiber-optic network is cost-prohibitive but Wi-Fi technologies may present an opportunity for City involvement.
- Local research and development company EMC² became a property owner rather than a tenant with assistance from the City in 2005. The City incentive enabled the company to remain in Upper Arlington and supported the company’s growth needs.
- The City may wish to continue to explore and develop programs specific to business retention, as well as how to work with property owners to facilitate the improvement of existing office space as it comes vacant.
- The Arlington Bank acquisition and redevelopment of an existing building at the corner of Reed and Mackenzie is an example of a successful rehabilitation project. The project did not request any City incentives. The building transitioned from being dated, partially vacant and difficult to lease to a highly attractive owner-occupied office/banking facility.
Objective 3. Attract new corporate citizens to the City.
- Economic development activities to attract new corporate citizens are primarily undertaken through word-of-mouth and networking on a local/regional level, efforts that continue to prove successful and cost effective.
- As reported earlier, the City’s incentive program has attracted 49 new businesses to Upper Arlington since 2000.
- A constraint to achieving this objective is the amount and quality of available office space that can be promoted to prospective businesses, but to date as new office space has been built it has quickly filled.
- New businesses to the community in 2005 included The Ohio State University Foundation and Development Department, Crossroads Financial, and 16 businesses that annexed into the City limits.
- Staff continued to explore and expand collaboration with the Chamber of Commerce for both business retention and attraction.
Objective 4. Expand the amount of office space in the City.
- The framework is in place to facilitate the expansion of office space, but progress is contingent upon available space and/or land, market forces, and the plans of private property owners and developers.
- Recent successes include the 57,000 square foot office building at 1480 Lane Avenue and continuing construction at the Arlington Falls project, with the second of five buildings begun in 2005, expected for completion and occupancy by mid-2006.
- Given the large percentage of retail space in the City’s land-use mix, encouraging office development can be challenging. As plans come forward, serious consideration must be given to all impacts and opportunities.
- Further exploration of zoning incentives is recommended, whereby flexibility on zoning criteria would be available if projects meet or exceed zoning requirements specific to increasing office space.
Objective 5. Promote live/work units in redevelopment areas.
- The Unified Development Ordinance has laid the framework to support future development of live/work units, however local developers have not expressed an interest in this product. Staff recommends this objective be revisited to determine its value and how to proceed.
Objective 6. Partner with regional, state and national economic development organizations to promote the City.
- Much of the work of this objective is conducted as routine City business practices.
- Emphasis is placed on local and regional opportunities since the low level of return experienced at a national level does not justify the necessary cost and effort.
- As part of this effort, the Deputy City Manager – Economic Development will serve as Vice President for the Mid Ohio Development Exchange (MODE) in 2006.
- While much work has already been done to raise awareness of the issues faced by aging first-tier suburbs such as Upper Arlington, it is hoped expanded participation by members of the Central Ohio First Suburbs Consortium and related lobbying efforts can begin to effect change – with more programs created to support reinvestment versus new development. The City Manager was appointed to the National League of Cities First Suburbs Committee and maintains a Board seat with Greater Ohio, focused on promoting more efficient and productive land uses in Ohio.
Objective 7. Establish a net fiscal benchmark to measure the success of plan implementation.
- Within the Master Plan document is a broad review of fiscal benefits based on a specific scenario of plan implementation within the Study Areas. This was intended as an example of what could be achieved given a certain set of circumstances, not what must happen for the Master Plan to be considered successful.
- As a regular course of business, Staff tracks and reports annually the net fiscal impacts to the City arising from development projects that have received incentives.
- The City has a limited amount of funding available to support incentives, therefore Staff recommends further review of this situation to consider how best to prioritize projects, to include the following considerations:
- What level of incentives can the City realistically support – for both short and long term scenarios?
- How should the City prioritize projects?
- Should incentive “hotspots” be identified?
- Revisiting the current incentive programs to ensure they are an efficient use of City resources, while maximizing the long-term fiscal benefit.
Objective 8. Establish alternative revenue sources
- Staff continues to explore alternative revenue options.
- Following detailed research, utility right-of-way user fee legislation was adopted in 2006.
- The Development Department has seen a dramatic increase in permit revenue (about 41 percent) over the last two years which can be attributed to two significant factors:
1. A 10 percent fee increase in January 2003
2. Increase in quantity and size of construction projects (both residential and commercial)
Previously, permit fees had not been increased since 1996. Following evaluation, adjustments were made to better align the amount of administrative time in relationship to the application. These changes followed by a three percent fee increase in 2005, combined with an overall increase in construction activity, helped permit revenue reach a record of $733,300 in 2005.
- It was suggested that an Information Technology fee could be applied to permit fees in order to generate a funding stream for Information Technology enhancements.
Economy
Strategy Responsibilities / Recommended Amendments
Objective 1. Enhance the City’s revenue sources.
a. Adopting a program to estimate fiscal needs (i.e., capital, operations, maintenance, and replacement) and monitoring progress.
| Finance, City Council |
Ongoing / Routine |
b. Expanding the City’s personal income tax base by facilitating redevelopment of commercial areas per the Study Area Plans.
| Economic Development, City Council, Board of Zoning & Planning, Community Improvement Corporation |
Ongoing
|
c. Creating opportunities for office development that emphasizes high-paying jobs.
| Economic Development,, City Council, Board of Zoning & Planning, City Attorney, Community Improvement Corporation |
Ongoing
|
d. Continuing to maximize state and federal grant and loan programs.
| City Manager, Development, Finance, Economic Development, Community Improvement Corporation
| Ongoing
|
e. Using tax increment financing (TIF) to fund infrastructure improvements in redevelopment areas.
| Economic Development, Community Improvement Corporation
| Ongoing
|
f. Monitoring cost recovery programs for City services.
| Assistant City Manager, City Council, Finance
| Ongoing
|
g. Capturing income tax from construction sub-contractors.
| Finance, City Attorney, Development
| Ongoing / Routine
|
Objective 2. Retain and expand existing businesses.
a. Implementing the retention and expansion (R&E) plan for business retention and expansion.
| Economic Development, City Council, Development, Community Improvement Corporation
| Ongoing / Routine
|
b. Utilizing economic and zoning incentives packages to target existing businesses.
| Economic Development, City Council, Development, City Attorney, Community Improvement Corporation
| Ongoing
|
c. Facilitating the development of new office space to accommodate growing businesses.
| Economic Development, City Council, Board of Planning & Zoning, City Manager, Community Improvement Corporation
| Ongoing
|
d. Encouraging rehabilitation or redevelopment of existing office space.
| Economic Development, City Council, Board of Planning & Zoning, City Manager, Community Improvement Corporation
| Ongoing
|
e. Promoting the City as a good place to conduct business.
| Community Affairs, Economic Development, Chamber of Commerce, Community Improvement Corporation
| Ongoing / Routine
|
f. Continuing the business ombudsman function in City government through the economic director.
| Economic Development
| Ongoing / Routine
|
g. Continuing to encourage home-based businesses.
| Economic Development, City Council, Board of Zoning & Planning, all City departments, Community Improvement Corporation, Chamber of Commerce
| Ongoing
|
h. Facilitating a fiber optic network and other state-of-the-art technology.
| Information Technology, City Council, Economic Development, Community Improvement Corporation
| Immediate and Short Term / Pending further research and direction
|
Objective 3. Attract new corporate citizens to the City.
| a. Promoting aggressively the City as a great location for corporate offices, OSU research spin-offs, medical professionals, and entrepreneurs. | Economic Development, City Council, Development, Community Improvement Corporation, Chamber of Commerce
| Ongoing / Routine
b. Marketing the City to corporate executives currently living in Upper Arlington.
| Economic Development, Community Improvement Corporation
| Ongoing / Routine
|
|
Objective 4. Expand the amount of office space in the City.
a. Adopting and implementing Study Area Plans.
| Economic Development,City Council, Development, Community Improvement Corporation
| Adoption complete, Implementation ongoing
|
b. Adopting an economic and zoning incentives package targeting office development.
| Economic Development, City Council, Community Improvement Corporation, Chamber of Commerce
| Ongoing
|
c. Facilitating the development of a high-tech business incubator.
| Economic Development, City Council, City Attorney, Chamber of Commerce, Community Improvement Corporation
| Immediate and Short Term / On Hold
|
Objective 5. Promote live/work units in redevelopment areas.
a. Working with a developer to produce live/work units.
| Economic Development, Development, Community Improvement Corporation
| Ongoing
|
b. Adopting an economic and zoning incentives package targeting live/work units.
| Development, City Council, Board of Zoning & Planning, Economic Development, Community Improvement Corporation
| Immediate and Short Term / Further direction required
|
Objective 6. Partner with regional, state and national economic development organizations to promote the City.
a. Maintaining involvement with regional development organizations.
| Economic Development, City Manager, Development, Community Improvement Corporation
| Ongoing / Routine
|
b. Maintaining involvement with the Ohio Department of Development.
| Economic Development, City Manager, Development, Community Improvement Corporation
| Ongoing / Routine
|
c. Continuing to promote the City at local and regional development conferences.
| Economic Development, City Council, City Manager, Development, Community Improvement Corporation
| Ongoing / Routine
|
Objective 7. Establish a net fiscal benchmark to measure the success of plan implementation.
a. Forecasting net fiscal projections by redevelopment area as plans are implemented over time.
| Finance, Economic Development, Community Improvement Corporation
| Ongoing
|
b. Monitoring net fiscal results relative to forecasts and initiating reports.
| Finance, Economic Development, Development
| Ongoing
|
Objective 8. Establish alternative revenue sources.
a. Re-evaluating how the City uses property tax millage.
| Finance, City Council
| On Hold Until Needed
|
b. Evaluating income tax as an alternative to enhance revenue.
| Finance, City Council
| On Hold Until Needed
|
c. Targeting millage increase proposals to infrastructure projects.
| Finance, City Council, Development, Public Services
| On Hold Until Needed
|
d. Establishing a property assessment-monitoring program.
| Development, City Council, Finance
| Ongoing
|
e. Exploring non-traditional revenue sources.
| Finance, City Council, City Attorney
| Ongoing
|
Updated 5/25/06
City Manager's Office
City of Upper Arlington
3600 Tremont Road
Upper Arlington, OH 43221
Phone: 614-583-5040
Fax: 614-457-6620
www.ua-ohio.net
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