If you’ve been following our blog or listening Economic Development Secrets, you know we’ve been talking about strategic plans. As Steve Jenkins points out, economic development strategic plans are likely outdated the day your board signs off on it. So what’s an economic developer to do? Well Steve suggests a framework that guides the ED organization’s efforts but doesn’t necessarily tie the EDOs hands. That concept of flexibility resonates with us.
Taking this a step further, we believe a good economic development incentive policy should allow for a degree of flexibility too. We’re not promoting a “no rules” incentive approach but instead we suggest you define the circumstances when an incentive can be considered but stop short of outlining the amount or type of incentive. Let me explain.
In general, there are or should be certain types of projects you want to encourage in your community. You need to have a set of criteria or conditions to be met for an incentive to even be considered. Will the business generate jobs for local residents (vs. nearby or new)? Is it in a particular industry you’ve chosen to target? Will the business generate new local activity and not just churn local dollars? A coherent incentive policy should specify the hurdle or hurdles for a project to be considered for an incentive. The actual incentive can be determined with a return on investment approach discussed pretty much everywhere on this site.
The reason for this is simple and I’ll reference back to our economic development muscle analogy from a couple of posts ago. You’re trying to build economic development muscle so you’re hitting the gym and eating right. But without a clear goal at the beginning of your transformation you may not end up where you intended to be. Imagine if you wanted to look like Arnold Schwarzenegger as Mr. Olympia but trained and ate like Brad Pitt in Fight Club.
Bottom line, be flexible with your incentives but set some goals.
Banner Photo Credit: FreeImages.com/Andrzej Pobiedzinski