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Examples
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Type of Evaluation / Measures |
Results
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Lessons
Learned / Caveats
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| FINANCE (see STRATEGIES AND TOOLS) | ||||
| Using Industrial Revenue Bonds (IRBs) in Illinois | Based on interviews with a sample of IRB recipients. | For recipients: employment grew by 48 percent; 45 percent of employment growth was in high wage, professional and skilled occupations; profits increased by 54 percent; and minorities and women constituted majority of work force. | ||
| Venture capital role in technological innovation and economic development |
Developed a database on the venture capital industry over four years; tested statistical relationships; interviewed people involved in venture capital industry. |
Venture capital (VC) is very concentrated in the Northeast and Pacific regions. VC investments flow mainly to established high-technology centers. VC is only one element of an area's technology base. | Venture capitalists find investment opportunities. Study did not find gaps of venture capital due to imperfect markets. Venture capital is just one of many necessary inputs to technology-intensive economic development. | |
| Importance of locally managed venture capital funds in St. Louis | Reviewed performance of three locally managed funds. | Local VC funds financed new and expanding local businesses. Local VC funds provided financing when funds managed elsewhere were not willing to fund. | ||
| Capital Access Program (CAP), Michigan | Analyzed the Michigan CAP Program. CAP provides bank a partial loan loss reserve to absorb higher risk. | CAP was effective in providing loans to new and small firms. | CAP loan recipients' characteristics: Small firms, less than five years old, most incurred substantial debt, needing less than $100,000 in loans, provided collateral smaller than required for a conventional loan. | |
| Revolving Loan Fund (RLF) in Auburn, Alabama | Case study identified how to operate a successful RLF. Evaluation based on creation and retention of jobs, economic vitality, tax benefits, leverage ratios and availability of funds. | RLF promoted job development; no defaults on RLF loans; tax impact of $150 million annually; leverage ratios of public to private dollars invested ranged from 1:3.18 to 1: 5.36. | Guidelines for local governments: city should not be the sole investor; private sector's investment should exceed that of the local government; have a secure collateral; use sound business principles; and isolate decisions on deal's value from political interest. | |
| Study of California firms that received loan guarantees from the state. | Firms receiving loan guarantees generated more than double the number of jobs than comparable firms in the state. Tax revenues generated by firms exceeded program costs. | Loan guarantees are a cost-effective tool to support small business expansion and retention. | ||
| Microenterprise programs in three inner-city areas | In-depth study of three programs: Women's Initiative for Self-Employment in San Francisco, Working Capital in Boston and Accion New York in Brooklyn. | Access to credit was not the largest barrier. All programs offered other services. Programs helped participants establish relationships with the business, public and nonprofit sectors. | Self-employment is an important segment of the economy. Microenterprise entrepreneurs face market barriers. | |
| Tax Increment Financing (TIF) | Broad literature review and case analysis. | Mixed results on the success of TIF. Has shown positive impact on property values and development, but can also stimulate growth in blighted areas at the expense of other areas. | There are risks associated with TIF. Works best in heavily blighted areas. Differences in uses and structures of TIF programs among jurisdictions and in the types of projects funded through TIF lead to mixed results. | |
| Tax Increment Financing in Chicago | Review of several TIF districts in City of Chicago. | Mixed results on the ability of TIF to spur development. More success with districts close to the central business district. | ||
| Business Improvement Districts (BIDs) | Tool examined in several cities. | BIDs are mostly successful. Interests of local business owners guide economic development; they watch over their commercial environment; a predictable income stream allows for planning of multi-year services; all beneficiaries pay; and assessment accounts for a small share of occupancy costs. | BIDS operate as nonprofits and are accountable to those they serve. Caveats: public and private partnerships inherent in BIDs can lead to conflict; there is a conflict in the role of BIDS as marketers and as measurer of economic and social conditions. | |
| Public Works Grant Program | Reviewed 205 projects funded by the Economic Development Administration (EDA). | Most projects helped communities expand their economic base, and jobs and attract private investment. For every $1 million in EDA funding, $10.1 million was leveraged in private sector investment, and another $1 million was leveraged in federal, state or local investment. | ||
| Infrastructure and Public Works Grant Program | Reviewed 99 projects funded by the Appalachian Regional Commission (ARC). | Most projects met or exceeded expectations regarding the number of new businesses served or retained, and jobs created or retained. Each dollar of ARC funding helped leverage $2.62 in other public funding and each dollar of total public funding leveraged $16.65 in private investment. | ||
