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Align local economic development planning with regional goals

Align local economic development planning with regional goals

Collaboration across communities to support regional goals can make efficient use of limited fiscal resources by supporting industries that connect us to the global economy. Through their role in planning for and regulating local development, local governments support small but significant pieces of regional markets for retail, office, industrial, and other development types, which house the industries that form the base of the region’s economy. These cumulative local decisions create the region’s communities and economic centers with broad impacts on infrastructure needs, commute patterns, goods movement, and overall regional economic success. At the same time, the economic assets that make up communities' core competitive advantage often extend across jurisdictional boundaries.

 

Individual communities may find it challenging to play their pivotal role in planning for the region’s economy. The region has some examples of planning for workforce development or forming coalitions to support specific industries.[1] But, local plans often focus on land use and development types, with less consideration of their contributions to regional economic growth and prosperity. Communities respond to the direct concerns of residents and businesses by assessing how solutions fit with community character and goals, public service costs, tax revenue impacts, or traffic and parking impacts. In comparison to economic impacts, fiscal considerations may play an outsized role in development decisions and investments. CMAP research has indicated that economic development that supports higher wage jobs and induces employment region-wide may not generate significant levels of municipal revenue given current local tax policies. [2] For example, globally traded industries often operate in office or industrial development types, but some local planning efforts are not geared toward these land uses.

Many governments provide economic development incentives to specific businesses that already intend to locate within the region or submarket. Officials use incentives to subsidize revenue-generating development, compete with another jurisdiction, or compensate for weak spots in their overall business environment. This activity can result in public expenditures for limited economic gain.[3] Many communities do provide incentives to developments that meet local and regional goals such as increasing particular types of employment, promoting infill, remediating brownfields, and/or encouraging mixed-use development.[4] Given limited fiscal resources, the region’s communities should coordinate to support regionally beneficial industries and to target incentives for development of regional and local economic benefit. Communities can reduce costs by planning together and pursuing initiatives like establishing boundary agreements, sharing services or infrastructure to mutually support new development, or sharing revenues from specific developments.

 

This recommendation appears in the Prosperity and Community chapters.

 

The following describes strategies and associated actions to implement this recommendation.

Proactively coordinate local economic development efforts

Economic development achieves the most when municipalities, counties, and other partners work together across jurisdictional borders. The region’s communities collectively share in and build up our competitive advantages of a skilled workforce, extensive transportation infrastructure, and strong quality of life. Local governments, economic development entities, and others could improve outcomes, expand staff expertise and resources, and reduce costs by partnering on services like business expansion, retention, and attraction. Many jurisdictions with lower fiscal or staff capacity may need assistance for initial collaborations. CMAP, the region’s counties, universities, and civic organizations can play a substantive role in helping local governments collaborate. Nationally, many examples of successful partnerships to meet local and regional goals exist. In Cuyahoga County, Ohio, the hyper-competitive environment created by municipalities’ pursuit of income tax revenue led to a non-compete agreement to encourage intraregional cooperation for business development.[5]  The Denver region implemented a similar agreement in 1987.[6] For additional information, see the ON TO 2050 Tax Policies and Land Use Trends strategy paper.[7]

 

Local governments should implement best practices for subregional economic development to reduce costs and achieve broader economic goals.

 

CMAP and partners like ULI and the Chicago Regional Growth Corporation (CRGC) should research case studies and best practices for subregional coordination of economic development. Examples include non-compete agreements, joint economic development initiatives, infrastructure and service sharing, tax base sharing, boundary agreements, and other initiatives.

 

CMAP and partners should help municipal coalitions to plan for local economic development, focusing on sub-regions that have common planning needs and goals for business expansion, human capital, freight movement, and similar issues with strong relevance to the region’s economy.

 

CMAP should help local governments to plan for and invest in multijurisdictional transportation investments that best support economic productivity.

 

CMAP, MPC, counties, and COGs should facilitate new partnerships between municipalities and develop materials illustrating the benefits of coordinating on shared economic development priorities.

Align incentives with local and regional goals, anticipated outcomes, and tradeoffs

Most businesses choose their locations based primarily on workforce, access to transportation, quality of life, business environment, and other assets, giving much less weight to tax incentives.[8] In light of limited public funds, state and local jurisdictions should provide incentives only when a business relocation or retention would substantively advance local and regional goals related to quality of life and economic development. As CMAP research has shown, best practices exist for how, where, and when to apply incentives for maximum public benefit.[9] ON TO 2050 recommends the targeted use of incentives for developments that support regional economic goals, such as increasing employment in traded clusters, reinvesting in infill sites, or encouraging mixed-use development near transit.

 

Local governments should establish criteria to ensure that economic development incentives fit with local and regional economic goals. The policies should maximize broad benefits and minimize the use of incentives that are only for fiscal gain to the community.

 

CMAP and partners such as ULI and MPC should provide best practices and model economic development policies for communities.

 

Local governments should proactively establish economic development agreements with neighboring communities to reduce intraregional competition via incentives, and reduce public costs.

 

The State of Illinois and local governments should enhance data on tax credits and incentives provided at all levels of government and consistently evaluate the expenditures and outcomes of incentive programs such as sales tax rebates, EDGE, TIF, property tax abatements, Enterprise Zones, and others.

 

The State of Illinois should incorporate regional priorities into its strategic economic development planning and provide only assistance or incentives that align with those priorities.

Enhance economic development expertise of municipal staff and officials

Municipal economic development initiatives seek to build vibrant places, enhance job centers and commercial corridors, or retain and build existing industries. Such local efforts vary greatly in scope, from small-scale main street improvements to redevelopment of major office and industrial subcenters. Regardless of its scale, each activity needs municipal staff and elected officials with the knowledge and resources to carry out strategies appropriately, including infrastructure investment, economic development planning, business development, and incentives.

 

Municipal staff and officials interviewed through the ON TO 2050 planning process emphasized the need for more skill building resources and guidance on economic development best practices.[10] New trainings and resources can also build on the incentive, market, and fiscal feasibility recommendations of ON TO 2050, helping to improve local planning, development, and investment processes. In partnership with COGs, counties, civic organizations, and universities, CMAP should provide technical assistance for communities to build local capacity for economic development planning.

 

CMAP and partners such as ULI should provide tools to help local governments effectively use incentives, taking into account the full costs of related public services, initial infrastructure improvements, and future infrastructure maintenance.

 

Partners and CMAP should provide guidance to local partners on best practices for zoning, permitting, development regulation, market analysis, tax incentives, and transportation funding that support economic productivity and reduce market barriers.

 

Partners, educational institutions, and CMAP should establish regular trainings, networking events, and other resources to promote best practices on joint economic development initiatives, economic development planning, incentive policies, market analysis, business attraction and retention, and related topics.

 

CMAP and MMC should explore partnerships like the Southern Illinois University Edwardsville team that leads the Illinois Basic Economic Development Course to create similar offerings tailored for staff and elected officials.[11]

Footnotes

1] Chicago Metropolitan Agency for Planning, ”Manufacturing in the Golden Corridor: Golden Corridor Advanced Manufacturing Partnership,” 2014, http://www.cmap.illinois.gov/documents/10180/113409/Final+Manufacturing+in+the+Golden+Corridor+Existing+Conditions+Report.pdf/efc4ec4d-a6c9-4fe7-8d02-7fd5c3afe1ad.

[2] Chicago Metropolitan Agency for Planning, “Fiscal and economic impact analysis of local development decisions,” January 2014, http://cmap.is/2mfrlPw.

[3] Nathan M. Jensen, “Job creation and firm-specific location incentives,” Journal for Public Policy 37,1 (2017).

[4] Chicago Metropolitan Agency for Planning, Fiscal and Economic Impact Analysis of Local Development Decisions, January 2014, http://cmap.is/2mfrlPw.

[5] Cuyahoga County, “Business Attraction & Anti-Poaching Protocol,” http://regionalcollaboration.cuyahogacounty.us/pdf_regionalcollab/en-US/AntiPoachingProtocol.pdf.

[6] Chicago Metropolitan Agency for Planning, “Reorienting State and Regional Economic Development: Lessons Learned from National Examples,” 2014, http://cmap.is/%202lTAonC.

[7] CMAP ON TO 2050 strategy paper, “Tax Policies and Land Use Trends,” 2017, http://www.cmap.illinois.gov/onto2050/strategy-papers/tax-policy-land-use.

[8] Joseph M. Phillips and Ernest P. Goss, “The effect of state and local taxes on economic development: A meta-analysis,” Southern Economic Journal (1995): 320-333. Grant Thornton, The 10th Annual-Manufacturing Climates Study (1989): Chicago: Grant Thornton.

[9] Chicago Metropolitan Agency for Planning,” Reorienting State and Regional Economic Development: Lessons Learned from National Examples,” 2014, http://cmap.is/%202lTAonC.

[10] Chicago Metropolitan Agency for Planning, “ON TO 2050 Alternative Futures Engagement Summary,” 2017, http://www.cmap.illinois.gov/documents/10180/776689/ON+TO+2050+Alt+Futures+Engagement+Summary.pdf/7e55dc3f-192c-b5a6-ef00-d4b49e9cfdbc.

[11] Southern Illinois University Edwardsville, “Illinois Basic Economic Development Course,” http://www.bedcillinois.com/about-us.html.

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