City Limits in a Postrecessionary World

Date01 December 2014
AuthorJeffery L. Osgood,Cynthia R. Rugeley,Susan M. Opp
Published date01 December 2014
DOI10.1177/0160323X14560414
Subject MatterArticles
SLG560414 236..248 Article
State and Local Government Review
2014, Vol. 46(4) 236-248
City Limits in a
ª The Author(s) 2014
Reprints and permission:
Postrecessionary World:
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DOI: 10.1177/0160323X14560414
Explaining the Pursuit of
slgr.sagepub.com
Developmental Policies
after the Great Recession
Susan M. Opp1, Jeffery L. Osgood, Jr.2,
and Cynthia R. Rugeley3
Abstract
This article explores the changing landscape of local economic development in the United States
from a period of stability (1999) to a period of recessionary pressures (2009). This research finds
support for one of the key components of the city limits thesis: competition drives developmental
policy use. Additional notable findings include a declining role for private business in the economic
development process, a mixed relationship between policy adoption and resident’s level of need for
economic development, and an emphasis on higher visibility policies during recessionary periods.
Keywords
local economic development, developmental policies, city limits, Great Recession
Introduction
as City Limits (Peterson 1981). City limits the-
orists contend that localities can be viewed as
In recent years, American cities have struggled
rational self-interested actors that pursue devel-
to deal with the effects of the nationwide eco-
opmental policies above all other policies. In
nomic downturn. When recessionary pressures
other words, local officials will favor policies
increase, developmental policy choices become
that are revenue positive over ones that are neu-
even more important and difficult for Ameri-
tral or tax the locality’s budget. A large body of
can cities. While local economic development
research emerged in the years following
policy has historically remained an important
subject of inquiry for both scholars and practi-
tioners, the recent recession provides a unique
1 Colorado State University, Fort Collins, CO, USA
opportunity to revisit one of the most popular
2 West Chester University of Pennsylvania, West Chester,
economic development theories during a time
PA, USA
period when cities faced the worst recession of
3 University of Minnesota Duluth, Duluth, MN, USA
modern times.
Corresponding Author:
One popular explanation for a city’s eco-
Susan M. Opp, Colorado State University, CD 1782
nomic development policy choices has been
Andrew Clark Building, Fort Collins, CO 80523, USA.
an application of public choice theory known
Email: susan.opp@colostate.edu

Opp et al.
237
Peterson’s work testing whether local munici-
situations worsen and officials experience
pal officials’ policy choices were, in fact, con-
greater pressures from external forces, the more
strained by interjurisdictional competition as
unpredictable their budgetary decisions
the city limits thesis claimed (Mollenkopf
become. These findings pose interesting ques-
2010). One recent example includes Basolo and
tions when one considers Martin, Levey, and
Huang’s (2001, 327) investigation of the effects
Cawley’s (2012, 175) argument that there is a
of ‘‘intercity competition and other factors’’ on
‘‘new normal’’ for local government that is
both the existence and the amount of funding
characterized as ‘‘fewer resources, smaller
provided in support of economic development.
workforces, and new ways of delivering ser-
Overall, they found ‘‘ . . . little support for a
vices’’. To be sure, the increased fiscal stress
public choice explanation of city economic
from the recession will ‘‘ . . . increase pressure
development expenditures’’ (Basolo and
on local governments to attract firms to stimu-
Huang’s (2001, 337).
late the economy . . . ’’ (Warner and Zheng
Despite the efforts of others to test the degree
2013, 2). Local economic development, a pol-
to which local policy choices are ‘‘limited’’ by
icy sphere closely connected to the national
the need to pursue economic development, an
economy, is one area where these shifts are
examination of the use of developmental poli-
likely to be found. In fact, previous research
cies is both timely and important. The first
examining economic development policy
decade of the new millennium provides us with
choices of municipalities over a ten-year period
a unique opportunity to test for differences in
found that localities tend to return to a
developmental policy choices based upon signif-
competition-inducing, incentive-driven per-
icant economic stress. During this decade, the
spective after times of economic hardship/
United States experienced two significant and
decline (Osgood, Opp, and Bernotsky 2012).
unprecedented recessions. The first occurred
Given the significant changes that have
from March to November 2001 and the most
occurred in the United States after the Great
recent, commonly termed the Great Recession,
Recession, a number of questions remain
lasted from December 2007 until June 2009
regarding local economic development policy
(National Bureau of Economic Research
choices. The major goal for this research is to
2011). The greatness attached to the recent eco-
test whether the central arguments of the city
nomic downturn is related to the fact that its
limits thesis are more relevant in times of reces-
duration is the longest of the post–World War
sion and recovery than in times of relative pros-
II recessions, lasting more than eighteen months.
perity. This article makes a unique contribution
According to a 2010 Pew Research Center
to the literature by examining the differences in
Report, the recent economic decline has caused
the adoption and use of developmental policies
a marked shift in Americans’ economic habits
during periods of economic stability and during
and attitudes and there is a lingering concern that
times of national contraction. If it is true, as the
it will take more than just a few years for the
city limits thesis argues, that municipalities
economy to correct itself. Compounding these
must respond to competition by emphasizing
uncertainties is research suggesting the Great
developmental policies, and after the Great
Recession affected the productive capacity of
Recession competition for development is
the U.S. economy to such an extent that its tra-
higher than in previous years; then it is
jectory is now ‘‘lower and shallower’’ than it had
expected that during times of recession the city
been immediately preceding the downturn
limits thesis has greater explanatory power than
(Reifschneider, Wascher and Wilcox 2013).
it does during times of relative prosperity. In
There is also emerging evidence to suggest
addition to testing the city limits theory, this
that this last recession caused shifts in policy
research seeks to identify any other changes
behaviors among elected and municipal offi-
in municipal approaches to economic develop-
cials (Levine and Scorsone 2011; Nelson
ment that may have occurred since the Great
2012). Nelson (2012) found that as economic
Recession.

238
State and Local Government Review 46(4)
This research uses survey data collected by
Place branding is a common form of promotion
the International City/County Management
where a locality seeks to attract development
Association (ICMA) and the National League
through marketing and participation in trade
of Cities (NLCs) inventorying economic devel-
shows and conferences. Infrastructure policies
opment policies and practices from municipali-
have low visibility and are generally targeted
ties throughout the United States from both
in their approach. These include such things
1999 (a time of relative stability and prosperity)
as ordinance exemptions, flexibility in special
and 2009 (a period of retraction). This time
zoning, and infrastructure improvement. Infra-
period provides us with unique insights into
structure policies can often double as policies
the linkages between local economic develop-
that improve the built environment. The final
ment approaches and the national economic
developmental policy type is technical assis-
condition. The following sections provide an
tance, which is diffuse in impact and has lower
overview of the relevant local economic
levels of visibility. These developmental
development and urban policy literature, the
approaches include zoning/permit assistance
research methods used in this analysis, and
and training support.
concludes with the findings and lessons
This study uses this classification scheme to
learned from this research.
categorize developmental policies for a more
in-depth analysis of what changes have
occurred in the past ten years in municipal
Developmental Policies:
developmental policy choices.
Understanding the Different
Categories
Local Economic Development
Developmental policies can be classified using
Policy Decisions
dimensions of distribution and visibility.
There is a great deal of literature that seeks to
Feiock and Clingermayer (1992) contend that
explain municipal decisions in economic devel-
a classification system that examines a particu-
opment policy. While the research in this area
lar tool/approach for its visibility and ‘‘distribu-
is well known, the following section briefly
tional consequences’’ allows for a more
introduces the major concepts of this research
comprehensive identification, understanding,
and then describes how these concepts are oper-
and categorization of developmental policies.
ationalized in this research.
Using their framework, each policy is classified
as having either a high or a low visibility and
Competition for Economic Development
either a targeted or a...

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