On March 23, IEDC hosted a webinar entitled, "COVID-19: Preparing for What Comes Next" in which economic developers shared their experiences responding to previous disasters and what their organizations are doing now related to COVID-19.
Bill Allen, CEO of the Los Angeles County Economic Development Corporation (LAEDC); Mike Williams, general manager of the City of Toronto; and Jeff Sjostrom, president of the Galveston Economic Development Partnership (GEDP), were joined on the panel by Mike Grella of consultancy Grella Partnership Strategies. Eloisa Klementich, president and CEO of Invest Atlanta, served as moderator.
The objectives of the webinar were to discuss what economic development organizations (EDOs) can do now to support businesses in their communities; how EDOs are adjusting their staff and focusing internally; and what to expect when this crisis passes.
Bill Allen, Los Angeles County: Between threats of wildfires and earthquakes, the Los Angeles region has plenty of experience with disasters – yet, “I believe this will be one of the greatest economic challenges of our lifetimes,” said Allen. Noting the close cultural, business and education ties that the Los Angeles region has with China, “the minute we heard there was a problem in China, we realized that problem would be on our shores,” he said.
Unemployment insurance claims are soaring across the L.A. region and California. Los Angeles County has 1 million people employed in accommodation and food, retail, and arts and entertainment, nearly all of which have been shut down due to stay-at-home orders. LAEDC is particularly concerned about small businesses and microenterprises – particularly those owned by or serving underrepresented communities – that are undercapitalized and at existential risk.
One of LAEDC’s goals is to help employers find capital to keep their doors open as long as possible. Last week, LAEDC launched a page of online resources for businesses and workers in the region, and aims to keep the public up-to-date about new sources of capital as they come on line (for example, the city of Los Angeles is launching an $11 million fund for microenterprises and small businesses in marginalized communities). Steps LAEDC had taken previously are paying off, Allen noted; for example, it has operated a business assistance program for 25 years, and a Layoff Aversion Program since the Great Recession, which saved tens of thousands of jobs by working with the most at-risk businesses (identified using Dun & Bradsreet data and outreach). Many of those businesses are contacting LAEDC now for help.
Mike Williams, Toronto: Toronto was one of the worst-hit cities during the SARS epidemic. One of the things city leaders are doing differently this time is trying to identify covid-19 cases as early as possible. In regard to economic development, local municipalities are currently deferring property taxes and other fees, and are working with federal and provincial governments to do the same with those and with sales taxes, in order to lessen the burden on business and residents. Team Toronto, a group of EDOs, chambers of commerce, investment promotion agencies and other groups, is working together to determine what constitutes an essential business and to ensure that key parts of the supply chain, such as pharmaceutical manufacturers, can continue.
Williams says the region had a great public-private partnership in place for recovery when SARS ended; it initiated a quick burst of well-funded activities to bring the hospitality industry back. “I think this will be a longer process,” Williams noted. He also believes that recovery efforts will need to focus first on how to get primary industries going again before working on hospitality.
“It’s important to begin planning for recovery now, even while we are trying to cope with the fast moving nature of the disease and responses to it,” Williams said. “This is completely uncharted territory. Depending on how long this takes, it could be very difficult for everybody. Encourage the young to stop socializing. The organizations and places that do the best job getting it done today will be the most successful. It’s important to all work together.”
Jeff Sjostrom, Galveston: Galveston, Texas‘s experience recovering from hurricanes is proving useful now, noted Sjostrom. GEDP has reactivated a business recovery loan program; put up a covid-19 resource page; is in conversation daily with representatives of its three key economic sectors (maritime, tourism, and healthcare); and is monitoring and exploring local options to leverage state and federal programs as they roll out. It participates in weekly conference calls with economic developers in the region coordinated by the Greater Houston Partnership, which is also collecting and inventorying economic recovery best practices, resources and activities.
Sjostrom talked about the resources GEDP developed after Hurricane Ike struck in 2008. A coalition of community lenders came together to create a short-term, low-interest program that all lenders offered, ultimately reinvesting more than $40 million into the Galveston business community between September and December of 2008. Those funds were essential to helping businesses stay open while they were waiting on insurance or financial assistance from other programs. Another loan program was created with community development block grant funds, and a revolving loan fund program was set up with the Houston-Galveston Area Council (seeded by Economic Development Administration grants).
Mike Grella: Grella sees a three-phase approach for economic developers responding to covid-19: reassess, respond, and reinvent. He emphasized the importance of using data analytics to understand a community’s assets and vulnerabilities, then setting new policies going forward.
In the Q&A following the speakers’ presentations, part of the conversation focused on how to help small businesses. LAEDC’s Allen talked about augmenting the city of Los Angeles’s loan program with philanthropic resources, and emphasized the need to be flexible and inclusive to get funds to the region’s most vulnerable communities. In terms of advice for helping businesses in small towns and rural areas, speakers suggested that the search for capital should start locally, then expand to the region, and that sources such as New Markets Tax Credits and Opportunity Zones may be helpful. Corporations such as JP Morgan and Amazon have opened funds as well.
Galveston’s Sjostrom reiterated a tough point: “We have to get our small businesses planning more on the front end to mitigate financial loss on the back end. We will have to do more of that in the future.”
Toronto’s Williams believes that tourism’s recovery will need to start small, getting people comfortable with going out to restaurants and small events before progressing to larger events. Allen believes that once people feel safe, significant pent-up travel demand will bel unleashed – but that Los Angeles’ many international visitors may not return until there is an anti-viral drug or vaccine.
Also in regard to recovery, Grella encouraged listeners to look for reshoring opportunities, as corporations are likely to re-assess their supply chains going forward. He also predicted exponential growth for e-commerce and omni-channel retailing, with customers increasingly using virtual reality to look at products and shop.
At the end, the panelists offered some closing thoughts:
Bill Allen: “As a profession, we have to recognize how unprepared our businesses were. We have to challenge ourselves and the businesses we serve to be better prepared, and help business learn to become much more resilient.”
Mike Williams talked about the importance of small businesses having an internet presence and cited the city’s Digital Main Street program, which has been in place for several years to help small businesses better use the web for sales, marketing and customer service. He also talked about programs such as a restaurant bond, in which customers could buy gift certificates now to redeem later.
Jeff Sjostrom: “Stay calm, focus on recovery, and recognize that you are the lifeline to the business community. Use this as an opportunity to create a [business recovery] task force if you don’t already have one.” He also recommended IEDC’s RestoreYourEconomy website as a resource, particularly for smaller communities; they may be able to find programs there that were enacted in other places and could be used to inspire ideas among business leaders in their communities.
Mike Grella: “We will have to rely on data and information; you don’t have to be a big company to use data. Businesses need to be on social media and have a website. We need to talk to employers and companies about being responsible citizens. You need to be smart and play the long game, and not try to win back what you had.”