Toni Lapp

English

Research Papers in Economics

t’s a warm summer evening in
Oklahoma City, and Mark
Carmouche, a flamboyant wa-
ter taxi driver, is telling his
boatful of passengers about the down-
town river walk they are traversing.
“This used to be a slum in here, a sal-
vage operation,” the silver-haired captain
says as he gestures to the buildings on
both sides of the concrete banks. “But
Oklahoma City got rid of all that and
built this canal. Oklahoma City is a
leader in downtown renewal.”
He queries to see what out-of-state
visitors are on his boat and enthusiasti-
cally responds, “Yee haw,” when he learns
there is a group of five from Brazil.
He goes on to tell the passengers
about his city’s Metropolitan Area
Projects plan—or MAPs, an acronym
that most residents already know.
“We have no natural landmarks. No
Rocky Mountains, no Atlantic Ocean
and no Pacific Ocean. But this is
Oklahoma City, and if you build it, they
will come,” he declares. “It must be
working; Brazil’s here after all.”
Such optimism is typical in
Oklahoma City’s Bricktown neighbor-
hood. It is a model that other
communities could learn from, says an
economist at the Federal Reserve Bank of
Kansas City.
“Traditionally, communities have
sought after large firms in developing
their local economies, but research shows
that this is not likely to be a successful
policy,” says Kelly Edmiston of the 
FALL 2005 . TEN 13
BY TONI LAPP, SENIOR WRITER
I
Entrepreneurship and community development ‘
‘
they will come’
‘If you build it,FALL 2005 . TEN 14
Community Affairs Department. “We have
found that large firms ultimately do not bring
as many jobs and benefits as expected when
they relocate or open a new location. You have
to consider what might have happened in the
absence of the firm. Moreover, aggressive re-
cruitment policies often set off bidding wars
that leave everyone worse off. A better option
is to create an environment conducive to entre-
preneurship and home-grow your own
economic success.”
Edmiston has written recently about his
research on community development strategies
in a paper titled “The Role of Small Businesses
in Economic Development.” An entertain-
ment district such as Bricktown offers just such
an example of an environment conducive to
entrepreneurs. The positive effect is felt in
terms of both job creation and tax impact—by
attracting a number of small businesses and
creating a vibrant community in which people
want to live and work. 
A twist of fate gave impetus to Oklahoma
City’s Bricktown District. In 1991, the city, then
reeling from the 1980s oil bust, had put togeth-
er a financial package in a bid for a United
Airlines maintenance facility. City leaders had
lobbied residents to pass a 33-month, one-cent
sales tax to offer incentives to the airline.
Needless to say, officials were disappointed
when they learned that the airline would build
its facility in Indianapolis instead.
Then-Mayor Ron Norick was motivated
to tour downtown Indianapolis to see what it
had that Oklahoma City didn’t.
“There were people downtown, restau-
rants, hotels—lots of activity, whereas
Oklahoma City was struggling,” he said.
A seed of an idea was planted: Rather than
wait for a company to come to the rescue of its
blighted downtown, Oklahoma City would re-
build itself.
“We rolled the dice in an up or down pro-
posal,” says Norick. “It was a gamble, but our
people supported it. Every church group, neigh-
borhood group, civic group got behind it. The
thought was, ‘We’re doing it for our kids. We’re
not doing it for jobs, but for ourselves.’”
In 1993, voters approved a sales tax increase
that paid to build a baseball park, canal and per-
forming arts center, upgrade the convention
center and more—nine projects in all. Many
more projects that followed were private.
“My plan was to put as much as we were
going to spend on the aircraft plant into the
downtown area,” says Norick. “To get hotelsand restaurants, we needed lots of activities
in one area.”
Mapping a future
Jim Cowan was one of the few entrepre-
neurs who gambled on Bricktown before
anyone else did. Many people scoffed at his
business plan for Bricktown Brewery, a micro-
brewery and restaurant in the warehouse
district, he said.
“This wasn’t a proven location, but there
was excitement about what there could be,” he
said. The hardwood floors, brick walls, open
ductwork and exposed pipes of the turn-of-
the-century building—once a candy factory—
provided the atmosphere that Cowan wanted
for his business. He opened in October 1992,
the year before MAPs went to voters. 
Business was lackluster, and rumblings
about improving the area occurred in fits and
starts. MAPs jump-started the movement.
“It didn’t happen fast enough for some of
us,” says Cowan.
To be fair, Oklahoma City wasn’t starting
from scratch. There was already a convention
center downtown. Nearby, there were a lot of
vacant brick buildings already owned by the
city. Much thought was put into the projects
MAPs would undertake. The SBC Bricktown
Ballpark was the first project.
“Naturally, restaurants and clubs fol-
lowed, because they’re going to go where the
people are,” says Norick.
The theory that private investment follows
public investment is proven time and again
throughout the area, says Frank Sims, execu-
tive director of the Bricktown Association.
Sims counts off on his fingers some of the oth-
er public projects that have figured into the
taxpayers’$350 million contribution: the Ford
Center Arena, a reconstruction of the Civic
Center Music Hall and a public library. But get
him to tally the litany of private investments
that have followed and he runs out of fingers:
two new hotels, an apartment complex, a Bass
Pro Shops sporting goods store and country
music star Toby Keith’s restaurant and night-
club, just to name a few.
The challenge as Bricktown continues to
grow is to improve the mix of retail and resi-
dential to the abundance of nightclubs and
restaurants, says Sims.
There is a sense that Bricktown is reaching
critical mass.
One of the newest tenants is Nonna’s, a
FALL 2005 . TEN 15FALL 2005 . TEN 16
B
ricktown might offer an example for other
communities interested in fostering jobs
and revenue. 
The entertainment district came about in the
aftermath of disappointment over the lost United
Airlines contract. The money that was used to
build Bricktown would not have been available
had the city instead used the money to create
financial incentives for the airline, says Ron
Norick, the former mayor.
With Bricktown, Oklahoma City has created an
environment conducive to small business growth,
says Federal Reserve economist Kelly Edmiston. 
“Bricktown is likely to be self-sustaining, while
a manufacturing plant in the global economy
won’t be,” he said.
Ironically, the winner of the United Airlines
contract, Indianapolis, did not realize a great
boon from the maintenance facility. The jobs that
were created did not reach the number promised
by the airline, which filed for bankruptcy in 2002.
Yet, the bidding war for the maintenance facili-
ty is a strategy frequently pursued by communities. 
“Aggressive courting of large firms can distort
rational behavior, causing a waste of economic
resources,” says Edmiston in his paper, “The Role
of Small Businesses in Economic Development.” 
Take the case of two competing regions that
are otherwise on a level playing field, so that a
prospective firm is indifferent to locating in either
jurisdiction, says Edmiston. Wherever it locates, it
will create new jobs and income, but it will also
generate additional costs to the region, which
must provide roads, sewers and public services
such as schools and police.
“Now consider that one of the regions offers to
abate the locating firm’s property taxes, and the
other region follows suit to stay competitive. The two
regions are again on a level playing field.
“Neither region has gained an advantage by
its aggressive recruiting, but the winning region
will now be faced with increased costs but no
property taxes to offset them,” Edmiston writes in
his paper. 
Like it or not, a relocating business is going to
increase costs for the new area. Other businesses
that don’t receive tax abatements will be left pay-
ing the bill, says Edmiston.
A lesson in community development
“Aggressive courting of
large firms can distort
rational behavior, caus-
ing a waste of economic
resources.”
—Kelly Edmiston
T
BRICKTOWN
 restaurant and gift store owned by Avis
Scaramucci. She says initially she was skeptical
about the MAPs plan.
“I was going to vote ‘no,’” says
Scaramucci. “But MAPs passed, and lo and be-
hold before our very eyes, things started
happening. First the ballpark, then the library
and museum. The building began.
“I got so excited, I began coming down
here and poking around. The buildings just
caught my imagination.”
She eventually purchased a building near
the canal and relocated her establishment
from the south side of the city.
The decision was easy, she says.
“How many times in your lifetime do you
get to witness a renaissance in your own city?”
But she is not alone. Other entrepreneurs
are opening businesses in what she describes as
a “conglomeration of people and opportunity.” 
“There are so many people down here, dif-
ferent people doing different things, and we
come together as a neighborhood.”
Quality of life
“When I think about Oklahoma City and
Bricktown, the thing that impresses me is that
the goal here was not to lure companies, but to
create a nice place to live,” says Edmiston. 
The indirect benefit of improving the
quality of life was to make the city more entic-
ing for business. This was demonstrated
recently. In 2004, Dell opened a customer
service center in Oklahoma City, a move that
never would have happened before the down-
town redevelopment, says Norick.
Events such as this reflect a shift in strate-
gy in community development. Once upon a
time, communities tried to develop a niche in-
dustry for themselves. Edmiston envisions
something more organic happening—an envi-
ronment that attracts bright people who bring
their own niche ideas.
Traditionally, U.S. job growth is centered
on manufacturing, he notes. Manufacturers fo-
cus largely on keeping down expenses such as
taxes, land and labor. This focus has prompted
them to move in large numbers, first to the
South and then overseas, to contain costs. 
“Now our economy is transitioning into
something better,” says Edmiston. “We don’t
need to, nor should we try to, keep these busi-
nesses from moving.” 
Job growth is now in high-tech, high-
paying industries. With these employers, the
concern is more on finding qualified work-
ers, he says.
“Anymore, businesses with high-skill,
high-paying jobs are going to relocate where
smart, creative people want to live,” he says. 
This being the case, then Dell’s move can
be viewed as a vote of confidence for
Oklahoma City.
FALL 2005 . TEN 17
COMMENTS/QUESTIONS are welcome
and should be sent to teneditors@kc.frb.org.
T
FURTHER RESOURCES
THE ROLE OF SMALL BUSINESSES IN ECONOMIC
DEVELOPMENT
www.KansasCityFed.org/TEN
Businesses with high-skill, high-paying jobs are going
to relocate where smart, creative people want to live.
“
“

If you build it, they will come : entrepreneurship and community development

http://www.kansascityfed.org/publicat/TEN/pdf/Fall05BT.pdf

If you build it, they will come : entrepreneurship and community development

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