The Emergence of Local Economic Development

Authored on September 30, 2006

It's no secret that many of the major gains in employment opportunities, standards of living, and community vitality that Californians have enjoyed in the past century can largely be attributed to economic development. Tax base expansion, job development, and business retention are just a few of the favorable outcomes that have ensued from local economic development advocacy and education.

Wayne Schell, President/CEO of the California Association for Local Economic Development (CALED) says, "I like to think that the emergence of a proactive program of local economic development in California communities has played a major role and impact on the current positive economy of our state." CALED plays a special role in the history of economic development in California by supporting its members in the delivery of economic development services to communities and business clients.

This article explores the evolution of local economic development in California and describes some significant milestones that have taken place that are the basis for its continued emergence. It addresses both challenges and successes and offers perspectives on the future viability of economic development partnerships.

The Evolution of Economic Development

The United States, including the State of California, has a rich legacy of responding to national, local, and regional economic development needs. Beginning in the 19th century, individual states assumed accountability for economic development projects ranging from building canals and highways to chartering banks. The federal government for many years played an indirect role through the creation of land grant universities, subsidies for railroad construction, and other initiatives. However, it was Roosevelt's New Deal of the 1930s however that marked the beginning of the federal government's direct role in providing economic development assistance.

A significant economic development milestone for the federal government occurred in 1949 with the passing of the Housing Act. This piece of legislation allowed areas to capitalize on the use of eminent domain to unlock the economic value of urban land as well as to provide funds for planning, clearance, and infrastructure development.

After World War II, and throughout the 1950s, modifications were made to federal legislation that allowed for flexibility and new initiatives in community development, including housing rehabilitation. This period was marked by the disbursement of large shares of federal funds supporting active urban renewal projects-the infrastructural fabric of which still exists today.

The 1960s saw the emergence of President Kennedy's Area Redevelopment Act, the precursor to the federal Economic Development Administration (EDA) and eventually the Department of Housing and Urban Development. In the 1970's, these two agencies assumed administrative responsibilities for the Urban Development Grant Program (UDAG) and the Local Public Works Program respectively. In particular, UDAG utilized a flexible and competitive urban redevelopment model that focused resources on projects with an economic development goal. "CALED's roots as California's leading organization for economic developers can be clearly traced back to the efforts put forth by the U.S. Economic Development Administration in the late 60's and early 70's, says Steve Dukett, Redevelopment Director for the City of Upland and the fifth Chair of CALED. "This period of time served as the catalyst for much of what we do today," says Dukett.

During the 1980s through the 1990s, states had become the major drivers of innovative economic development. In making the shift from the narrow focus of industrial recruitment, states began integrating technology based economic development programs which promoted commercialism, university partnerships, entrepreneurship, nonprofit intermediaries, and manufacturing extension services.

The 1990s was also a time period that we saw the adoption of a new economic development model which integrated strategic planning, matching dollars, and discretionary grants. Today the federal government administers an array of programs aimed at community and economic development. Its primary role is to undertake initiatives that impact national economic objectives as well as to administer programs and policies that have state and local implications.

Blazing the Local Economic Development Trail in California

California like the rest of the nation has a long, storied history involving the advancement of economic development. The first Economic Development Corporations in the state were formed in Kings County, Shasta County , Santa Maria in Santa Barbara County, and Pittsburg in Contra Costa County. In 1966, then Governor Reagan initiated the state's first Department of Commerce. The years 1982 to 1990 were pivotal years for California as Governor Deukmejian undertook a number of major economic initiatives. These included the creation of the California economic development corporation for the purpose of marketing the state to new businesses as well as folding the Department of Economic and Business Development into the re-created Department of Commerce. It was during these years that rural and regional economic development began to flourish in the state.

A landmark in California's economic development efforts took place in 1979 when Wayne Schell, Director of the State Office of Local Economic Development, Mark Buell, Director of the San Francisco Mayor's Office of Economic Development, and Jim Hankla, Director of Community Development for the City of Long Beach began to explore the need for a statewide association to assist California's economic developers in the areas of education and professional advancement. In 1980, CALED was officially formed with a diverse member board which included representation from state, rural, urban, private, and non-profit organizations. By 1981, CALED was already up to 152 members and hired Kay Reynolds as its first Executive Director via a grant through the State Office of Local Economic Development.

CALED continued its mission in professional networking and program delivery in 1984 with its move to Sacramento from Pittsburg, CA. In subsequent years the association began to experience rapid membership growth and forge a cohesive foundation. "I entered the field in the late 80s when the profession was just getting underway. Since that time it's been interesting to see where CALED has evolved to today-from a small group to a thriving organization of over 700 members," says Paul Saldana, President & CEO of Tulare County Economic Development Corporation and current CALED Chair.

This coalescing of the group became evident at CALED's 2002 Orange County Chapter Meeting where twenty-five economic developers came together to tackle questions around their professional role as well as to articulate the characteristics which distinguish them from other professionals. This meeting served as an important springboard for CALED's push to establish a comprehensive framework for the economic development profession.

Today Saldana sees CALED at the forefront of a growing movement to redefine the value of local economic development. "There is definitely a push towards a more holistic approach to economic development-one where the emphasis is not simply on jobs but on the impact that businesses have on the overall quality-of-life in a community," says Saldana.

Mission Enhancement

Today, the role of local economic developers continues to evolve in the face of new trends and challenges affecting our local communities. "10 years ago California was still the Golden State, the preferred place to live work and invest," says Patrick Collins, President and CEO of Kern Economic Development Corporation in Bakersfield, California. "Since that time the field of economic development has had to become much more focused and sophisticated in its efforts to remain competitive both domestically and globally, "says Collins.

It is with this that CALED continues to make great strides as the premier California association for the advancement of economic development professionals. The original by-laws articulating CALED's role in the Economic Development field were: "The general function of the association shall be to encourage and assist community economic development in California with the primary emphasis being to foster a public/private partnership to promote economic development that maximizes the public good."

Reflecting the emerging changes in the profession, CALED continuously strives to maintain its forward-thinking approach and value to its members, which shows in their mission:

"CALED is the premier statewide professional economic development organization dedicated to advancing its members' ability to achieve excellence in delivering economic development services to their communities and business clients."

CALED also plays a major role in the advancement of economic development professionals by offering a variety of other services, including technical assistance. This includes Professional Advisory Services, where groups of Economic Development Professionals are used onsite to help public and private agencies through a situational analysis and one day assessment, Local Elected Official Training, where presentations are conducted for local elected officials in a community on the inner workings of Economic Development, Frontline Training, an educational forum for staff members who have significant interaction with their area business community, and Facilitations which are designed to assist organizations in their endeavors to have productive retreats and successful planning efforts. "What distinguishes CALED from other organizations in the field is its primary focus on training and developing economic development professionals," says Dukett. "These professionals in turn take what they've gathered and apply it to their work in preserving, expanding, and growing their local economies-skills that are especially valued when an area is facing an economic downturn."

CALED is also actively involved with legislative and policy advocacy, including tracking important pieces of legislation and sharing it with its members. This represents one of many ways that CALED works to keep its members on the cutting edge of useful knowledge versus just information.

Building a Legacy

Over the years the CALED staff is one of the main reasons why the association has maintained such a strong presence in the Economic Development field. Much of this can be attributed to the passionate leadership of Wayne Schell, CALED's current President, who has a long history in California's economic development. "Our commitment to discovering new trends and providing useful knowledge in Economic Development has allowed us to stay ahead of the curve in our outreach efforts to those whose job it is to attract and retain business," says Schell.

As a result of the tireless efforts of Schell, the CALED staff, over 700 association members, as well as other advocates, economic development is now recognized for its value and enormous impact on local economies. In addition, the field of economic development is now considered to be a highly regarded profession, attracting many new entrants each year "As a result of the efforts of CALED and countless others in the field, there is a much larger recognition of the impact of economic development on the lives of every single person in a local community," says Saldana. "It is in this sense that economic development professionals play a unique role of leaving a community better than when they started-a lasting legacy for the future."

"There are now over 1,000 local economic developers in California working to maintain their local economies. We have come a long way since the 70's, 80's or even the 90's," says Wayne Schell.