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Virginia Beach, Virginia inspires visitors and residents alike with spectacular sunsets over the Atlantic Ocean from its sandy shoreline. And while those sunsets are a great magnet for vacationers, city leaders wanted more for the community. They wanted a way to generate more revenue, bring in more people, add new job opportunities, and create a vibrant urban environment.
To achieve this, Virginia Beach, like many other cities and counties across the nation, have created special districts. This urban planning strategy is increasingly recognized as a powerful tool for meeting a range of economic and community development goals. Districting allows cities to address diverse local needs, from enhancing arts and entertainment to bolstering healthcare, technology sectors, and educational facilities.
Funding for these districts is just as diverse. Some regions use ad valorem tax funding, while others develop Tax Increment Financing (TIF) districts or apply for grants.
Virginia Beach, thanks to a push by the local arts community, now has a thriving arts and entertainment district working as part of its economic development strategy. It not only stimulates economic growth but concentrates cultural activities and entertainment venues in one area, increasing its attractiveness to both residents and tourists.
Such districts can increase property value, which, in turn, increases tax revenue and creates more interest from investors. It can also increase the quality of life for those living in or near the district. However, for the positive impact that special use districts can have, this strategy is not without its challenges. In this article we will examine both and highlight the importance of careful consideration and oversight when developing special-use districts.
According to Virginia Beach Mayor Robert M. “Bobby” Dyer, 2 percent of the city’s amusement tax helps fund its ViBe Creative District. A portion of their amusement tax is charged for all concerts, shows, and conventions. For Virginia Beach, arts and entertainment are a core piece of how they drive new residents to their communities.
“When a company comes to your city, they look at public safety and affordability, but they also look at arts and entertainment, key ingredients for the quality of a place,” Dyer said. “Having a robust creative arts program attracts tourists as well as young people who will want to come here to live, work, and play.”
The vibrant and accessible vibe found in Virginia Beach’s arts and entertainment district is no accident. A successful districting approach begins with strategic planning. Cities and counties must chart goals and objectives with a time frame, typically two- to five years. This becomes a road map to navigate the business environment, determine needed legislation, and traverse department dynamics and budgets.
A great example of these principles can be found in another waterfront community, hundreds of miles south of Virginia Beach. St. Petersburg, Florida, a small city on Florida’s Gulf Coast, is known as a vibrant, walkable, and culturally-rich enclave and alternative to the sprawl of its neighbor, Tampa. In recent years, it’s made successful efforts to draw young professionals, families, and entrepreneurs to its sunny confines. As part of this effort, the city established four Main Street Districts. All of which are thriving, according to Alizza Punzalan-Randle, St. Pete’s managing director for communications and community engagement, speaking on behalf of Mayor Ken Welch.
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“Overall, creating business districts is seen by the (city) as a strategic approach to support economic development, attract investment, and enhance the quality of life for residents and businesses alike,” she said. The city created its first formal business districts in 2000 but blossomed in 2014 when the EDGE District, a popular shopping and entertainment destination for young adults, and the Skyway Marina District were formed. The city also works with other business districts, including the MLK Business District, and the Warehouse Arts District.
To develop these districts, St. Pete used the Grow Smarter Initiative to identify five major industry sectors with the greatest potential to create new jobs and drive more people to the city with the goal of improving the economy.
The Grow Smart Initiative is a collective impact approach to economic development. In St. Pete, seven workgroups made up of civic leaders, residents, business owners, and community leaders were formed. The groups met periodically to collaborate on ways to drive progressive growth in their community.
“The primary goal is economic development,” Punzalan-Randle said. “These districts attract investors, create jobs, and foster business growth. They also stimulate urban revitalization in depressed areas.” She added, “The final goal is collaboration with stakeholders that include local businesses, property owners, developers, and community organizations to plan and implement business district initiatives. Engaging stakeholders in the decision-making process gives the city better input on how to best use its resources.”
St. Pete’s strategy has been a gamechanger for the community of 263,553 residents. The city’s waterfront downtown area bustles daily with restaurants on nearly every block. These restaurants serve a community that has seen a 66 percent increase in net jobs over the last two decades, according to a report by local branding and marketing agency Pyper, Inc. The area’s growth has also spawned a thriving arts scene which had a $133 million economic impact in recent years. It buoyed the local sports scene as well, leading to a partnership with the Tampa Bay Rays to build a state-of-the-art baseball stadium. Overall, St. Petersburg’s tax revenue has grown from $97.95 million in 2011-2012 to over $216 million in 2022-2023, according to city revenue reporting.
In Travis County, Texas, which includes the Austin area, a special district funded through property taxes provides healthcare, including clinics to underserved populations, and has for 20 years.
“We are ensuring that people can get quality medical care without going to the emergency room and that saves tons of money,” said Travis County Healthcare District Spokesman Mike Clark-Madison. “Healthy people go to work every day, which helps keep the economy humming.”
Legislation allowed a measure onto the ballot in 2003 to vote on the district and once approved by voters, the district formed in 2004.
“There were a lot of problems with access to healthcare,” Clark-Madison said. Now, not only are 280,000 people getting the care they need, from primary care to specialty care, but the area’s healthcare industry is growing, bringing more jobs to the Austin region.
“We have not yet done an economic impact study, but we are undergoing a performance review right now,” he said, and that will be followed by an economic impact study.
Currently, 11 cents of every $100 in property taxes in the regional area goes to fund the healthcare district.
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For all the successes, the creation of special-use districts is a controversial strategy in many U.S. cities. Critics point to examples in cities where districting has focused on areas with higher economic potential, leading to further economic disparities within a city. Increasing the economic impact of an area can increase the value of local homes, but it can also drive up the cost of living and drive out low-income families. Opponents to this strategy also feel that special-use districts can favor large companies who financially benefit from the new district.
Special districts often operate with a degree of autonomy that can lead to concerns about transparency and accountability. Critics argue that these districts may not be as closely monitored as general government entities. In a 2017 report on online reporting by special-use districts, a public interest research group, US PIRG, found that 38 percent of the group studied published their most recent budgets on their websites and 30 percent posted comprehensive annual financial reports.
As cities like Virginia Beach, Austin, and St. Petersburg demonstrate, districting serves as a vital tool in urban development, providing targeted solutions that enhance economic growth and quality of life. By strategically planning and implementing district-based initiatives, these cities have successfully attracted investments, created jobs, and revitalized their communities. This approach not only supports local economies but also enriches the social and cultural landscape, proving that when cities invest in specialized districts, they lay the foundation for a dynamic and prosperous urban future.
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