Two messages stood out in comments here Tuesday by site selection consultant Mark Sweeney. No. 1: Prepared communities win. No. 2: Communities without economic incentives lose.
The preparation angle is hard to dispute: Identify and develop community leaders who will represent you well. Maintain a portfolio of available sites. Stay ahead of infrastructure needs. Show improvement in your education system and invest in training resources. Develop a community vision and plan. Never stop investing in the quality of life of your community.
On the incentive front, Sweeney said what you’d expect a consultant who advises industry to say. He recommended having “creative tools” to encourage investment. If a community decides to get out of the incentive business, he said, that’s its prerogative. But don’t expect great results. “A community that decides to back off incentives … will be on the losing end of most if not all site selection searches,” Sweeney said.
Since site selection consultants are the filter through which most searches are conducted, what Sweeney says matters. A lot. This is the way the system works now, and Rowan cannot afford to drop off the site selection radar. But the county can strengthen its stance ó for the sake of prospective industry and taxpayers alike ó by focusing on a few points.
– The tax abatements Rowan has spelled out are discretionary, not automatic. Commissioners Tina Hall and Jim Sides underscored that fact by voting against recent incentive agreements, but the point may be lost on some business advocates. An automatic incentive becomes an entitlement, which is not good. The county’s position is stronger when it can be selective about granting incentives. According to Good Jobs First, a taxpayer advocacy group, discretionary incentives are usually more transparent because the industry has to make application and provide information that becomes public.
– Rowan’s incentive policy or “investment grant program” awards incentives solely on the basis of real and personal property tax value. Some local governments also award incentives based on the number and quality of jobs created, even going so far as to require the hiring of a certain number or percentage of local residents, as opposed to in-migrants. The employees’ health benefits could even be factored in. Such areas of business would be far more difficult to monitor than property tax value, but some critics of incentives have raised the job-creation issue. The county might benefit from a study of this possibility and a public discussion of the pros and cons.
– The county’s policy requires the Economic Development Commission to provide a fiscal analysis of the project’s impact. Thanks to scant awareness of what the county policy actually says, that hasn’t always been done. Incentives are under greater scrutiny now, though, and the public is getting skeptical, so it’s imperative that the county be sure the social benefits of the incentives package will outweigh the cost ó and that there are “claw back” provisions to recover some portion of the incentives if the business does not live up to the numbers it submits for that analysis.
Rowan doesn’t want a policy that appears to be unfriendly toward prospective industries. But if the county needs to offer incentives to remain competitive with other locations ó which it does ó it also needs to stay in step with the way other locations are refining their policies. This is high-stakes, sophisticated business.