Digitized by the Internet Archive in 2019 https://archive.org/details/financingeconomiOObarb Financing Economic Renewal Projects by Barbara A. Cole and Meredith Miller Workbook # 9, Economic Renewal Program Copyright © Rocky Mountain Institute 1988 Rocky Mountain Institute 1739 Snowmass Creek Road Snowmass CO 81654-9199 (303) 927-3851 Permission Granted to the State of Colorado, Department of Local Affairs, to Reprint within the State of Colorado This workbook is one component of the larger Economic Renewal Program — a tool kit for helping communities help themselves economically. Economic Renewal (ER) workbooks and casebooks are used by community residents as they examine their town’s unique problems and assets, explore examples from hundreds of communities, mobilize existing skills and resources, and develop specific projects to renew the local economy. This workbook can be used independently or in conjunction with two other workbooks, Developing Economic Renewal Projects and Organizing for Economic Renewal Projects, to help carry out projects to strengthen community economies. Rocky Mountain Institute is also developing workbooks and casebooks that help identify and evaluate sustainable development opportunites in specific sectors of the local economy: energy, food and agriculture, housing, water, waste management, and health. Tested in four communities, ER’s self-help workshop process results in long-term im¬ provements that mean survival to many towns, prosperity to others. Rocky Mountain In¬ stitute (RMI) conducts the workshop process in communities. To make the Economic Renewal Program more affordable, Rocky Mountain Institute offers training workshops to teach local citizens and regional professionals to manage and coordinate the ER Com¬ munity Workshop Process. RMI also conducts ER seminars for community leaders and for development professionals, and supplies speakers for conferences and seminars. Rocky Mountain Institute is an independent, nonprofit research and educational foun¬ dation located in Old Snowmass, Colorado. Its mission is to foster the efficient and sus¬ tainable use of resources as a path to global security. RMI’s primary concerns are energy, water, agriculture, community economic development, national security, and their interconnections. RMI seeks ideas that help people solve complex problems through collective action, their own common sense, and the power of the free market. For more information on the Economic Renewal Program, or to order publications, contact: Rocky Mountain Institute, 1739 Snowmass Creek Road, Snowmass CO 81654-9199, (303) 927-3851. Disclaimer: We undertake to use normal professional care in our research and publications and to verify our informa¬ tion from sources believed to be reliable. However, we do not imply endorsement of any product, service, or company mentioned in this publication. Anyone undertaking to rely on particular details contained herein should independently verify their applicability to a given situation. FINANCING ECONOMIC RENEWAL The authors wish to thank the following people for their careful review and comments on this workbook: John Gunyou, Finance Director, City of Minneapolis Patty Howe, Town Council Member, Town of Palmer Lake, Colorado Randy Russell, Economic Development Director, San Luis Valley Economic Development Corporation, Alamosa, Colorado Leslie Klusmire, Community Development Director, City of Glenwood Springs, Colorado Linda Martin, Finance Advisor, Department of Local Affairs, Division of Local Government, State of Colorado. Four of our colleagues at Rocky Mountain Institute also made significant contributions to both the form and content of this workbook. They are Hunter Lovins, Executive Director; Michael Kinsley, Economic Development Program Director; Jon Klusmire, Media Director; and Alison Gold, Economic Renewal Intern. John Hess of Region 12’s Council of Governments in Frisco, Colorado, provided some of the initial information for this Workbook. Illustrations by Nancee McClure, Rocky Mountain Institute would like to thank the following organizations for their support in the development of the Economic Renewal Program: The Ford Foundation The C.S. Mott Foundation The State of Colorado The Tennessee Valley Authority The U.S. Small Business Administration The Western Area Power Administration This publication is printed on recycled paper. FINANCING ECONOMIC RENEWAL Financing Economic Renewal Projects Introduction the purchase of a new house or car, there is no one way or right way to generate the money necessary to get your projects off the ground. T Some of the most interesting and successful com¬ munity projects are financed using unusual his workbook explores different ways to methods. finance your economic renewal project and provides a step by step process to evaluate which funding mechanisms best match your Using the workbook project needs. There are a number of ways to use this workbook. The workbook is the ninth workbook There are three primary sections of the of the Economic Renewal Program, a program Finance Workbook. They are: to help your community strengthen its economy. While not as effective, this workbook can be • Basic Principles of Project used independently. You can use the workbook Finance as a reference document for information on a •Menu of Funding Sources specific financing tool. The workbook could • Selecting an Appropriate also be used by a group working their way Funding Mechanism through the funding process for a specific project. The information presented in the first two sections is reintroduced in the last section in workbook form, which allows users to write in responses to questions or to copy these The workbook describes 6 materials for use in a group meeting. basic funding mechanisms: This workbook is not intended to limit your A. Loans and Equity Investments thinking to the methods presented, but to stimu¬ B. Grants, Donations, and Other Gifts late your creativity in developing the most useful C. Municipal Bonds and efficient financing strategy possible for your D. Local Government Assessments and particular project needs and values. Revenues E. Organizational Mechanisms F. Incentives This workbook was developed to assist people just starting their first economic renewal project. Whether you are a community volun¬ teer, newly elected municipal official, or a plan¬ ner for a small town, this workbook will help you understand the range of financing tools available for your project as well as the pluses and minuses of each tool. We have attempted to define terms as they first are introduced and to simplify some relatively complex concepts. All of this information is presented as a start¬ ing point. Just as there is no one way to finance ECONOMIC RENEWAL PROGRAM PAGE 1 ROCKY MOUNTAIN INSTITUTE . ■ Basic Principles of Proj ect Finance