• Economic development leaders recently discussed how tax and other business incentives are used in Maryland, Virginia and the District of Columbia. Two takeaways are: Incentives serve a public purpose, and companies would be wise to consider the rationale and expectations underlying incentive programs. These purposes are not limited to attracting new businesses but are connected to broader economic development strategies. For example, the DC government is seeking to diversify its economy and increase hiring opportunities for DC residents. Virginia’s goals are to increase the standard of living (via good wages) across the...

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  • A new book explores how governments use economic development incentives and efforts to address the policy and governance challenges associated with incentives. Rethinking Investment Incentives provides an interesting look at incentives around the world, including those targeted to both domestic and foreign investors, and tools to ensure incentives accomplish their intended objectives. I was pleased to contribute the chapter on “Cost-Benefit Analysis of Investment Incentives” to this edited volume from Columbia University Press. The volume suggests that careful investment policies are crucial to guide the strategic and efficient mobilization of...

  • Two midwestern cities recently released reports examining their economic development incentives. These studies each had different objectives, one with a project orientation and the other with a strategic focus. Both are publicly accessible and are worth checking out if you are interested in incentives evaluations. St. Louis The purpose of this study was to examine the efficacy and efficiency of the city's economic development incentives as well as to answer basic questions on: dollar amount of incentive use, where and when incentives have been used, characteristics of incentivized projects, and how...

  • Last week’s inaugural Council of Development Finance Agencies (CDFA) Intro Incentives webcourse was a success. I had the pleasure of serving as course advisor and working with CDFA to design a program to take participants through the fundamentals of incentive program management. During our two days, we heard from top-notch speakers addressing good practices in all phases of the incentive process, including: Designing and deploying incentives Setting goals, defining metrics for program performance and evaluation, and establishing guidelines for program use are the foundation of successful incentive use. We heard...

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  • On the heels of its recent brief on Better Incentive Information, the Pew Charitable Trusts released a research collection related to economic development tax incentives best practices. The collection includes a variety of issue briefs, reports and fact sheets. Check it out here. The Business Incentives Initiative, a joint project of the Center for Regional Economic Competitiveness (CREC) and the Pew Charitable Trusts, is one component of Pew's incentive work. Learn more about the Business Incentives Initiative findings by checking out these previous posts from Smart Incentives:  Business Incentives Initiative Launch– April 2014 Evaluations are essential to...

  • Incentive use has grown dramatically and become a more prominent - and challenging - part of economic development work. Today's environment requires better analytics to reduce risk, quantify benefits, refine strategies, explain and build support for decisions and, most importantly, to achieve better outcomes when using economic development incentives. To accomplish these objectives, economic developers need to manage incentives through their entire life cycle, not just complete a deal. The graphic above summarizes the fundamental elements of good incentives program management. The four core elements are data, analysis, transparency and accountability....