Lately, economic development incentives has been a very buzzworthy topic. The New York Times is currently running a series based on its investigation into “How Taxpayers Bankroll Business.” The reason for this newfound focus? As always, it usually comes down to following the money. And since money is tight (on both the state and local levels), taxpayers are paying extra attention to where their money is being spent.
Unfortunately, in many cases, the funds used for economic attraction are deployed unproductively. On the local level, this can mean neighboring communities using incentives to induce companies to pull up their stakes and locate only a few miles away to the detriment of the home jurisdiction. On the state level, cities that lie directly on the border between two states can fight perpetual border wars over firms and the jobs they provide.
Competition is usually a good thing, but is this unscrupulous variety worth it, especially when tax incentives are often relatively low on a firm’s list of location priorities?
Communities that cooperate regionally can stem the tide of injurious competition among localities while improving business attraction and retention prospects. NLC’s new release: Regional Cooperation Agreements in Economic Development highlights four operational regional cooperation agreements being used in Montgomery and Cuyahoga Counties in Ohio, the Metro Denver region, and California’s East Bay.
Each region pursued its own unique path when devising the agreements, but each contained similar provisions. Here is a sample of some key takeaways:
– Information sharing and transparency were paramount: Sharing information while respecting individual prospect confidentiality allowed communities to work together to find the best place for a business, as long as it was within the region. It also allowed cities to stay ahead of the curve, if in fact a company was planning to relocate.
– Anchor cities signed on: In each of the examples, the regions’ anchor cities (Dayton, Denver, Cleveland, and Oakland) participated in the agreements. This gave the agreements a big boost in accomplishing a widespread buy-in on the part of other communities within the region.
– Agreements were adapted to best fit the region: In some regions (Cuyahoga and Montgomery Counties), it made sense to create an agreement at the county level. Other regions (Metro Denver and East Bay, CA) devised agreements at an economic development organization level. Either way, the agreements accomplished the goal of developing a unified economic development strategy that benefited the region as a whole.
– The regional agreements started slow: Regional cooperation in economic development might not be perceived as an attractive policy by certain communities in your region. The agreements highlighted in the publication did not happen overnight; they started modestly to achieve consensus from the majority of communities within the region. After this was accomplished, it opened the door to more vigorous regional cooperation down the road.