Floods … hurricanes … tornadoes … mudslides … natural disasters can take a variety of forms. But in their wake, they can leave neighborhoods, businesses, and sometimes entire communities in shambles. Obviously, when disaster strikes, recovery precedes anything else. But after recovery efforts are complete, communities have some pivotal decisions to make about their future.

The economic development strategies that are used to rebuild a community are complementary to those used under more “normal” circumstances, according to Denny Coleman, Chair of the International Economic Development Council and President and Chief Executive Officer of the St. Louis County Economic Council. Land development, housing rehabilitation, business attraction, and entrepreneurial support are all aspects of economic development that can be utilized to aid in the “rebirth” of a community.

MuniNet: What is the first step a community needs to take after a natural disaster takes a toll on area neighborhoods and businesses? 

Coleman: Before any rebuilding strategies can be considered, the full emphasis is on recovery. The next phase is to determine the needs and wants of the community, which will influence the types of strategies that the community might use to move forward. In some cases, businesses – or even entire communities – may choose to rebuild and in others, they may choose to relocate.  When The Great Flood of 1993 damaged the town of Valmeyer, Illinois, for example, the entire town moved to higher ground, away from the floodplain on which it was originally built. In this case, the town decided that not only was it easier to move than to rebuild, but also that relocating neighborhoods and businesses to higher ground would eliminate the risk of repeat flooding.

If disaster hits an already dilapidated area, it may become an opportunity for a fresh start – to assemble run-down or abandoned buildings and clean up the area for a “second chance” in which to breathe new life into the community.

In situations where disaster strikes an economically thriving business district, the question may not be “whether” but rather “how quickly” to rebuild. When the 1993 flood damaged the Chesterfield Valley area, located in a flourishing suburb of St. Louis, the county decided to make a strategic investment to rebuild the levees to restore the area and to, rebuild our corporate airport and incentivize new investment by building a small business incubator. Today the Chesterfield Valley is home to 800 licensed businesses with 43,000 full-time employees. Pre-flood numbers were 240 businesses and 4,400 full-time employees.

MuniNet: How does the process of rebuilding begin?

Coleman: If a community decides that rebuilding is a viable option, the first phase is to ensure that physical structures, including land, are restored to usable condition. This process might involve cleaning up grounds, grading the land, rebuilding levees, restoring or enhancing roads and utilities.

Land assemblage, which involves packaging smaller parcels of land into one larger property, also might take place during this phase. Land assemblage is an economic development tool often used to attract businesses to an area under a variety of scenarios. This strategy enables companies considering a move to the area to negotiate with one developer rather than multiple property owners.

In situations where disaster strikes an economically thriving business district, the question may not be “whether” but rather “how quickly” to rebuild.

MuniNet: Are there any different or unique economic development strategies that a community might use after a disaster?

Coleman: Following a natural disaster, an economic development agency might implement several short-term strategies. The first may be to quickly organize a “business recovery center,” a one-stop shop set up to provide local, state and federal resources and services for businesses after a catastrophic event. This may need to be set up within one to two weeks after the disaster, depending on the impact of the catastrophe and re-entry access to the community. In the case of Jefferson Parish, Louisiana, the economic development agency kept two business recovery centers open for a year after Hurricane Katrina.

The agency might also deploy an intense business retention campaign for outreach to key businesses and economic anchors and provide necessary assistance to address major redevelopment issues and business continuity issues where relevant.

Other ideas include creating a labor-sharing agreement among businesses for the local workforce, particularly for small businesses with fewer resources. In Galveston, Texas, for example, after Hurricane Ike in 2008, the restaurants and fast food chains shared employees so they could open more quickly and stay in business.

After a disaster strikes, a community may need to reevaluate its strategic plan to identify post-disaster issues that might have altered the plan’s relevance in specific strategic areas. There may be new constraints – or new opportunities – based on the impact of the disaster and financial implications, including donations and funding options.

MuniNet: The economic struggles of states and municipalities are headline news; how do governments already facing fiscal challenges cope with the financial toll resulting from a natural disaster?  

Coleman: When a natural disaster hits, the generosity of a community really emerges. The spirit of cooperation is often at its highest in these situations, where residents and non-residents alike often pitch in to help in whatever way they can. While financial assistance starts at the federal level, rebuilding a community is a collaborative effort between federal, state, and local government, the private sector, and many support institutions such as the Red Cross, Salvation Army, etc.

The International Economic Development Council has been actively engaged in activities designed to provide economic recovery support and technical assistance (see sidebar for more details) to communities in need.

MuniNet: Are there more – or different – funding options available for economic development when a community has experienced the devastating effects of a natural disaster?

Coleman: When a natural disaster strikes, the federal government steps in and provides the first line of funding. The Federal Emergency Management Agency (FEMA) offers public assistance grants to aid government in their recovery efforts, from the removal of debris to the repair of public infrastructure such as roads and bridges. The U.S. Small Business Association (SBA) also provides disaster assistance to businesses that have been damaged or destroyed by a “Presidential-declared disaster” in the form of grants and low-interest loans for damages not covered by insurance.

Other financing tools include low-interest loans from the SBA, and the issuance of capital improvement bonds for specific projects. Financing tools may include FEMA’s mitigation fund for infrastructure (although communities are having a hard time using this fund to fortify their infrastructure), U.S. Department of Labor’s National Emergency Grants (NEG) for temporary staffing issues, communities have used EDA money to establish a Revolving Loan Fund (RLF) for small businesses as well as disaster CDBG funds for an RLF (although the paperwork is extensive). The U.S. Department of Agriculture has funds for both reconstruction as well as funding businesses located in rural communities.

Also, Community Development Financial Institutions (CDFI) such as Seedco have established themselves in various communities after a disaster and assisted in providing low-interest loans to businesses.

MuniNet: Is there a line between urban planning and economic development, or do they work hand in hand, with areas of overlap?

Coleman: Urban planning and economic development should truly work together. Assessing the needs of the community, prioritizing an action plan and gauging the market potential for implementation are at the very heart of urban planning. Decisions about how to attract companies or rebuild neighborhoods rely on good planning which can then translate into effective economic development strategies.

Today’s younger employees, for example, are drawn to quality-of-life considerations – environmental awareness, lighting, landscaping, access to bike paths or hiking trails, walkable restaurant and entertainment districts, to name a few – which may influence the development of an office park or a downtown development. Urban planners can work with economic developers to effectively create and market an area to a specific type of company which, in turn, will attract a certain caliber of employees. This type of collaboration can really shape a community, and set it on a path for success.