A significant shift is taking place in economic development circles.
Research shows that – for the most part – employers are flocking to vibrant communities rather than workers moving to find jobs, according to a Ball State University study released last week.
Michael Hicks, one of the paper’s authors, took the results a step further during a phone interview. He said the best way to build a robust local economy is to stop awarding tax breaks to lure employers and instead use that money to invest in things that make the community an exciting place to live.
Those include outstanding public schools and quality-of-place projects such as art centers, public plazas, downtown restaurants, fitness trails, public art and riverfront development.
Northeast Indiana officials have embraced quality-?of-place projects, as demonstrated by their entry in the Regional Cities Initiative competition. Seven groups are competing for two grants of $42 million each and made formal presentations in Indianapolis last week.
An official with Greater Fort Wayne Inc. said that sometimes, it’s necessary to offer tax breaks.
Judicious use of employer incentives is necessary because other communities nationwide are using them, said John Urbahns, executive vice president of economic development.
"I don’t think it’s an either/or proposition," he said.
Hicks said officials shouldn’t offer overstuffed incentives packages to employers that want to treat the community as a commodity by insisting on the best possible deal as a condition for coming to – or staying in – the area.
"(Hicks) and I completely agree on that," Urbahns said. "We’re not leading with incentives. We lead with the community" by talking about its assets.
Research shows that economic development didn’t always work this way, Hicks said.
In the 1970s, manufacturers would build sprawling factories and workers would rush in to grab the jobs. Over time, the relationship has changed, with the employers choosing to locate close to talented workers in attractive communities, Hicks said.
Ball State researchers will publish a paper on the topic this fall.
"This is a call to action for local governments," Hicks said of the study’s recommendations. "We can’t be doing mid-20th-century economic development policy in a 21st-century environment."
Greater Fort Wayne’s Urbahns doesn’t like the idea of taking some of his options off the table, however.
Every project is unique, and incentives are based on actual investments made and jobs created, he said. Local economic development officials don’t pass out tax breaks like candy on Halloween.
"There’s a delicate balance, and incentives are not always offered," Urbahns said.
Regardless of what Urbahns and his staff offer potential employers, incentives must be approved by the City Council or County Council before they’re official.
The public plays a role in the process by voting for council members. Urbahns said his organization’s business incentive offers reflect what the public is willing to support.