Using Incentives to Achieve Community Goals

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It was another standing room only crowd to hear about economic development financing and incentives.  City leaders packed the room on Friday afternoon at the National League of Cities Congress of Cities to talk about the wide range of economic development financing tools communities can use, innovative financing and public private partnerships, and using incentives to achieve community goals.

I had the pleasure of leading the discussion on the last topic.  You can download my presentation here.   Some of the  takeaways from that session are:

  • Cities remain concerned that the community benefits they expect to receive from incentive packages will not/have not come to pass.  City leaders want more assurances that their investments will pay off.
  • There is tremendous interest in how to write effective performance agreements for companies receiving incentives. Challenges include incorporating clawbacks, monitoring performance, and enforcing the terms of the agreement. 
  • Seemingly mundane elements, such as precise definitions of expected outcomes and project timeframe, are also fraught with challenges.
  • Communities want to know how to determine the right type and amount of incentive by project – based on level of risk, expected fiscal return, actual need of the business or developer, and forecasted community benefits, among other factors.

Without this type of information, it is very hard for officials to generate broader political support for proposed incentive-financed projects, which can in turn affect the overall environment for economic development.

We also covered the different types of analyses communities can use to assess the attractiveness of projects before committing to a deal, including connecting project characteristics to community economic development goals and conducting detailed fiscal and economic impact analyses.

I also continue to refer people to two other great resources on incentive use: the C2ER State Incentives Database available to C2ER members via www.stateincentives.org and the Pew Center on the States incentive research reports, Evidence Counts and Avoiding Blank Checks

Thanks to Christy McFarland at NLC for organizing this session.  I expect to see more activity from the various entities involved in this program to help communities use incentives effectively to achieve their economic development objectives.

 

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