“So what places do good economic development?”
That’s a question we often get asked when we train journalists, community groups, and policymakers on economic development subsidies. We devote a lot of time to “blocking the low road” — because it’s so darn crowded with the dogma “tax breaks create jobs,” when, no, actually, subsidies are seldom effective at creating new jobs or helping communities thrive — but less time “paving the high road.”
This year, we at Good Jobs First embarked on an ambitious project, analyzing the economic development practices of roughly 250 small- and mid-sized cities across the United States.
To be sure, it’s a mixed bag so far. But as we go, we’re gathering examples of the best practices we’re seeing. We’ll be sharing some in our new series, “Snapshots from America’s Small- and Mid-Sized Cities: Best Practices in Economic Development.”
Let’s start in Kansas and Michigan.
Wichita, Kansas
One of the things we like best about Wichita’s Industrial Revenue Bond program (IRBX) is its transparency. The city requires companies to submit yearly progress reports that provide information on not just job and wage promises, but job and wage outcomes. Too few places track what happens once a company receives a taxpayer subsidy. In the case of Wichita, tracking a project’s progress lets officials decide whether to modify or terminate the agreement if a company falls short.
We also like their preference for local hiring and wage and benefit minimums.
Read Good Jobs First researcher Nya Anthony’s detailed take on the program.
Grand Rapids, Michigan
To stimulate investment at contaminated former industrial sites – called “brownfields” – Grand Rapids uses one of the widely used means of subsidizing private projects locally. That would be Tax Increment Financing (See our TIF Frequently Asked Questions).
Michigan’s state enabling TIF legislation provides localities the option of giving projects up to 30 years in subsidies, so it’s important to get these projects right.
Grand Rapids in many ways has. Compared to four other Michigan cities that use the same brownfield TIF, Grand Rapids has paid the least per-job subsidy – $14,311, compared to $109,547 for Lansing – and has leveraged the most private investment, receiving $31.26 for each $1 in taxpayer money, compared to $6.62 for each $1 in Lansing.
Grand Rapids also conditions public support on a broader set of community benefits – it rewards adding electric vehicle charging stations or a public transit stop, or for siting a project in a historically disinvested and racially segregated neighborhood – and has its disclosure and reporting practices: you’ll find projected and actual investment, wage and job outcomes.
Read Good Jobs First researcher Jacob Whiton’s detailed take on the program.
See something working well in your community or elsewhere? We’d love to hear about it.