Reopen, recover, reset: Baker Tilly’s COVID-19 economic development road map for local governments

For local government leaders, COVID-19 is first and foremost a humanitarian crisis and public health emergency. However, as the immediate health threat begins to subside, their top priority will quickly need to shift toward rebuilding local economies. 

Public sector leaders are facing surging unemployment, widespread financial distress among local businesses and entire sectors of local economies that need to be rebuilt. These challenges will be compounded by revenue declines limiting resources available to address these issues.  In addition, the economy that emerges from the crisis will likely be fundamentally different. New industries will arise, supply chains will be transformed, workforce patterns with shift, technology will accelerate and companies will change the way they assess risk when making location decisions.  

Municipalities need to be ready to respond with nimble, creative and aggressive economic development programs and strategies. Communities will need to use every economic development tool they can obtain to attract capital, maintain financial viability, put people back to work and help shape a post-COVID-19 economic future. 

How Baker Tilly can help

Baker Tilly can support local governments and economic developers as they navigate the post-COVID-19 era through our Road map to Reopen, Recover and Reset (R3) initiative. The R3 road map for local governments combines the knowledge of our municipal advisors with Baker Tilly’s extensive inter-disciplinary expertise in private sector finance, tax incentives, small business and risk management. Our objective is to provide unmatched expertise to help local governments analyze their current situation, unlock new sources of capital and strategically plan for their economic future.          

The R3 framework for economic development includes seven specific steps local policymakers and economic developers should start taking to position their communities for recovery and to thrive in a post-COVID-19 environment.

REOPEN

1. Maximize federal and state support – Federal support will play a key role in the reopen and recovery effort, and the next several months will likely to see an evolving landscape of new programs coming from Washington D.C. Local governments should start by fully leveraging the Coronavirus Aid, Relief, and Economic Security (CARES) Act funding and the other stimulus programs already adopted. As new federal funds come online, local leaders should stay in touch with their representatives and be ready to quickly respond to new programs. In addition, local governments should double down on efforts to utilize other federal programs to attract capital, including opportunity zones, new markets tax credits, housing tax credits, etc. In the months ahead, maximizing the flow of outside capital into communities should be a key goal for local leaders. Baker Tilly is maintaining a COVID-19 Stimulus Guide that outlines the COVID-19 stimulus package (including CARES Act, Coronavirus Preparedness and Response Supplemental Appropriations Act and Families First Coronavirus Response Act), as well as state and local financial assistance programs. Our incentives and tax credits specialists can help communities unlock new sources of capital to implement economic development efforts.

2. Conduct fiscal and economic development assessments and scenario analysis – Understanding the breadth of the damage is an important early step. Municipalities should start with a review of their existing economic development programs, policies and agreements. They should gauge how these are impacted by COVID-19 and by the potential recession that will follow. They should stress test their fiscal resilience with analysis that forecasts different scenarios for tax base, job losses, housing values, etc.  In particular, cities should evaluate their tax increment financing (TIF) programs, assess their ability to meeting current TIF obligations and evaluate the capacity of their TIF districts to support recovery priorities.

RECOVER

3. Amplify business retention and expansion efforts – During the recovery period, it will be important for local governments to maintain contact and provide support to the existing businesses in their communities. Cities should develop a business survey to better understand their challenges and find ways to help. Further, communities should work with local lenders to help businesses access state and federal funding. Baker Tilly is pioneering new ways to virtually engage the business community through surveys and other online tools. 

4. Position for business attraction – The economy is shifting under our feet and it is difficult to predict how this might affect site selection decisions. With changing workforce behaviors and new risk factors, companies will rethink their priorities when selecting locations for new facilities and operations. Local economic development leaders should evaluate their risk profiles and maintain contact with site selectors to position their communities. Baker Tilly’s experience and ability to study industry trends and needs and connect with site selectors can help cities position themselves with the changing dynamics of site selection decision-making.

RESET

5. Update your economic development strategic plan – The communities that are proactive and strategic in pivoting their economies for the post-COVID-19 era will have a competitive advantage. Municipalities should update their economic development strategic vision and create a new action plan. They should identify key priorities and look for ways to align local, state and federal resources with those priorities. Their strategy should be implementation-focused and geared towards accelerated action to put people back to work and encourage investment in their communities.

6. Coordinate a regional response – Local leaders should find opportunities for strategic economic development partnerships. Regional ED organizations may take a more prominent role in the COVID-19 recovery phase. Regions may want to appoint an inter-governmental coronavirus leadership committee, task force and/or individual to coordinate efforts across agencies and jurisdictions.

7. Understand short- and long-term industry and supply chain impacts – The pandemic is disrupting global supply chains and transforming entire industries at an accelerated pace. In the short-term, economic developers should work with local companies to understand how supply chain disruptions might affect their operations.  Longer term, economic developers should identify strategies to position their communities to succeed in the post-COVID-19 economy. Cities should conduct supply chain mapping and industry cluster analyses to assess the resilience of their local industries and uncover opportunities for future growth.  

With our depth of financial and economic development expertise, Baker Tilly is available to help public sector leaders as they address the current economic crisis and chart a path toward a new economic future. Visit Baker Tilly’s state and local government coronavirus resource page for more information on how we can help your community.

For more information on this topic or to connect with a public sector economic development specialist, contact our team.