The Latest in Economic Development – 1.17.12

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This week’s blog entry focuses on the friction between economic development incentives and demonstrated results, a trendy way to fund startups that is looking for an extra push, a green-tech cluster in an unlikely state, and the importance of a diverse, high(er) tech economy. Comment below or send to common@nlc.org.

Get last week’s blog here.

The high-tech race is currently at full throttle. And more cities are likely to join in. The Economist takes a look at two examples of governments attempting to diversify into high-tech; New York City’s well-funded entrepreneurial efforts and planned applied science campus and Nevada Governor Brian Sandoval’s push to move away from gambling and prove that Nevada can nurture high-tech companies. (The Economist) According to (TechCrunch) via (Innovation Daily), more mayors are likely to follow suit, but success will be no easy feat.

Texas isn’t usually noted for progressive energy policies. But Austin is quickly becoming one of the major hubs of green energy technology. Austin isn’t stereotypical Texas; it’s a college town – an island of blue in a sea of red. And now, because conditions are ripe for success, entrepreneurial types are coming from all over the nation to build a green energy ecosystem. (Time)

Recently, and with good reason, economic development incentives are being more closely scrutinized. The hiring promises made by companies in return for tax incentives or credits are showing a mixed record of fulfillment. A recent Ohio Department of Development study found that the statewide compliance rate was only 48%. Also troubling, when companies don’t follow through, officials have been hesitant to recoup taxpayer monies lost. (Middletown Journal) via (Economic News from Ohio’s Regions)

Michigan Governor Rick Snyder is taking a new approach to economic development. In the past, Michigan focused heavily on tax incentive packages that had a tendency to pick winners and losers. Now, Snyder is reducing the amount of tax credits to individual companies in favor of lower taxes across the board. The new deal “will allow the state to invest in needs such as infrastructure and get repaid for those investments, creating a pool of money for other projects.” (Detroit Free Press)

Crowd funding by sites like kickstarter.com has taken off in the last few years and has allowed entrepreneurs of all kinds to raise money online. The only problem is that crowd funding is unable to unleash its full potential – raising equity for startups – due to federal laws that prohibit investments from unaccredited investors. Both sides of the aisle, along with the White House, are working to amend the law; however a number of technical and practical barriers still remain. (Crain’s New York Business) via (Innovation Daily)