Compliance reporting for economic development incentives

The City of Lawrence, KS, offers a good example – and sets a high standard – for economic development incentive reporting in its 2015 Annual Report: Economic Development Support & Compliance. This post is part of an occasional series examining state and local reports assessing economic development incentive programs.

Compliance in context

In the Smart Incentives 4x4 framework, we emphasize data, analysis, transparency and accountability throughout the incentives process and distinguish between compliance and evaluation in the reporting phases. Compliance emphasizes monitoring whether incentivized companies have fulfilled the terms of their performance agreements and met their commitments to your community. Evaluations help determine if incentive programs as a whole have helped the community meet larger economic development objectives in an effective manner. The focus of the Lawrence report is compliance.

We also advise economic development organizations to ensure incentive deals align with economic strategy and communicate these themes in plain and concise language. Lawrence does a good job connecting individual deals to the city’s economic development objectives and provides clear information on “what was done, with whom, how much it cost, and outcomes” – which is what stakeholders typically want from such a report.

Property tax abatements

The City of Lawrence requires business receiving property tax abatements to provide certain information, which is then compiled into an annual report containing:

  • List and characteristics of active property tax abatements
  • Company profiles
  • Abatement performance – projected and actual investment, employment and wage milestones by company
  • Performance summary - projected and actual investment, employment and wage milestones in total
  • Employment summary – full-time jobs and jobs meeting or exceeding mean wage by company
  • Employment history - historical employment records over five years by company
  • Abatement compliance – actual/target goals by category, by company

An interesting section describes additional community benefits, including local expenditures and non-local sales; property tax generation (since there are no 100% abatements); and social impacts relating to the environment, community engagement and environmental practices for each recipient.

The company profiles, employment history, and community benefits sections help readers understand how these businesses operate in Lawrence and what they contribute, complementing the data related to the tax abatement costs and outcomes.

Other incentives and services

The remainder of the report addresses several other economic development programs. It does not appear that city code requires businesses to provide information for these programs, so this section reads more like an annual report providing information on each category, how and why programs are used, recipients and terms. The report describes:

  • Industrial revenue bonds
  • Neighborhood revitalization areas
  • Tax Increment financing
  • Transportation development districts
  • Other support programs including economic development services (such as the Bioscience & Technology Business Center’s attributes, costs and achievements), neighborhood infrastructure, shared infrastructure, development grants, relocation assistance, workforce training support, business expansion assistance, and affordable housing development

Here, specific descriptions, maps and photos bring life to each project and help convey their value to the community.

Finally, appendices provide detail on past assistance and investment totals by program and project so readers can get a sense of the full costs – beyond the single year snapshot that is the focus of the main report.

We encourage you to view the full report here: 2015 City of Lawrence, Kansas Annual Report: Economic Development Support & Compliance. It is also serving a larger purpose in informing debate on how incentives are used in Lawrence.

 

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