Category Archives: Economic.Development

Opinion: Do Taxpayers Know They Are Handing Out Billions to Corporations?

Source: Nathan M. Jensen, The New York Times, April 24, 2018
 
Every year, states and local governments give economic-development incentives to companies to the tune of between $45 billion and $80 billion. Why such a wide range? It’s not sloppy research; it’s because many of these subsidies are not public. For the known subsidies, such as Maryland’s recent $8.5 billion incentive bid for Amazon’s second headquarters, the support includes cash grants for company relocations, subsidized land, forgiving company taxes on everything from property taxes to sales taxes and investments in infrastructure for the company. …

… Economic development all across the country is getting less open — and both Democrats and Republicans are doing it. In fact, in many cases, the politicians themselves aren’t even the ones negotiating for the public. How do communities balance the tremendous opportunity of attracting a world-class company against the taxpayer costs, the pressures on our infrastructure and our struggles of providing affordable housing? … Another strategy to avoid transparency in a competition like this is through complexity. The idea is to make economic development so twisted that it’s nearly impossible to figure out who is responsible for it. If governments aren’t submitting these bids, with taxpayers’ money, who is responsible for economic development? In many states, companies are wooed by getting a break on paying local taxes. In some of these cases, local interests get overlooked — in particular, schools. There are school districts where economic developers were empowered to give away the tax revenues without the input of educators. …

Despite 34 making six figures, true amounts of JobsOhio salaries still lowballed

Source: Randy Ludlow, Columbus Dispatch, March 12, 2018
 
JobsOhio continues to under report the amounts it pays employees — including 34 workers who make at least six-figure annual salaries — in a move that could run contrary to state law. In its 2017 filings with the state, Gov. John Kasich’s privatized economic development agency again reported employees’ taxable income — which does not include salary diverted to non-taxable retirement contributions and health insurance costs — instead of their gross income. State law requires the nonprofit to report “total compensation.” But its practice of reporting only taxable income serves to understate employee earnings by thousands of dollars each. …

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Justices again rule JobsOhio can’t be challenged
Source: Randy Ludlow, Columbus Dispatch, August 31, 2016

The Ohio Supreme Court stood on identical ground Wednesday to reject another attempt to declare JobsOhio unconstitutional. In a 6-1 vote, the court ruled that Victoria Ullmann, a Columbus lawyer, lacked the legal right — or standing — to pursue her action seeking to declare Gov. John Kasich’s privatized economic development agency as illegal. … The court threw out another challenge to JobsOhio in 2014 on grounds the parties lacked proper standing, leaving some to question then if the legality of the nonprofit could ever be questioned in the courts. Ullmann argued she had standing to sue since she, and other Ohioans, support JobsOhio through their purchase of liquor, the profits from which support the entity under its long-term lease of state’s liquor sales enterprise. … Ullmann sued Kasich, Secretary of State Jon Husted and Auditor Dave Yost, asking that the court order the Republicans to take steps to dissolve JobsOhio. A spokesman for Attorney General Mike DeWine, who defended the officeholders, said his office was pleased with the ruling. … JobsOhio reported earlier this year it attracted a record 23,602 new jobs and $6.7 billion in corporate investment in 2015. The agency reported revenue of slightly more than $1 billion last year, largely from the state’s liquor-sales operation, which racked up record sales last year to produce net income of $235.2 million. …

Liberal group’s challenge to JobsOhio rejected by Ohio Supreme Court
Source: Jackie Borchardt, Northeast Ohio Media Group, June 10, 2014

Ohio’s highest court on Tuesday rejected a challenge from a progressive group and two Democrats challenging the constitutionality of JobsOhio, the state’s private, nonprofit economic development agency. In a 5-2 decision, the Supreme Court held that ProgressOhio.org, state Sen. Michael Skindell of Lakewood and former state Rep. Dennis Murray do not have standing — the legal right to pursue its claim in court — to bring an action against the legislation that created JobsOhio. The court also held that the plaintiffs lack a personal stake in the outcome of the case.

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Cracks in Sidewalk Labs’ Toronto waterfront plan after fanfare

Source: Jeff Gray, The Globe and Mail, February 23, 2018

… Sidewalk Labs, the unit of Google parent Alphabet Inc. selected to help transform a parcel of land known as Quayside, at the foot of Parliament Street, listed off a dizzying array of technologies it could develop in Canada’s largest city, then sell elsewhere: cameras and sensors that detect pedestrians at traffic lights or alert cleanup crews when garbage bins overflow; robotic vehicles that whisk away garbage in underground tunnels; heated bike lanes to melt snow; even a new street layout to accommodate a fleet of self-driving cars. Four months have passed since Waterfront Toronto, the municipal-provincial-federal development agency, named Sidewalk its “innovation and funding partner” for the project – time enough for some of the gee-whiz talk of hyper-energy-efficient modular buildings and “taxibots” to be replaced by a rising chorus of critics both inside and outside City Hall. Many are concerned about the data Sidewalk could collect. Some say the deal has been shrouded in secrecy. Others fear the company’s vague but sweeping plans could threaten the city’s authority over a massive swath of waterfront or even its public transit system and other key services. … Meanwhile, despite briefings from Waterfront Toronto and Sidewalk executives, some city councillors say they still have little idea what Sidewalk actually intends to do – or where. …

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Beware Of Google’s Intentions
Source: Susan Crawford, Wired, February 1, 2018

In partnering with local governments to create infrastructure, Alphabet says it is only trying to help. Local governments shouldn’t believe it. ….. Beginning last fall, Toronto has been getting a flood of publicity about a deal with Sidewalk Labs, part of Google spinoff Alphabet. Reports describe the deal as giving Sidewalk the authority to build in an undeveloped 12-acre portion of the city called Quayside. The idea is that Sidewalk will collect data about everything from water use to air quality to the perambulations of Quayside’s future populace and use that data to run energy, transport, and all other systems. Swarms of sensors inside and outside buildings and on streets will be constantly on duty, monitoring and modulating.

But Toronto recently revealed that deal has put it in a tough place. A nonprofit development corporation, not the city, made the arrangement with Google that sparked all the publicity—the city itself doesn’t appear to have known a deal with Google was in the works. Now the situation appears messy: The details of the arrangement are not public, the planning process is being paid for by Google, and Google won’t continue funding that process unless government authorities promise they’ll reach a final agreement that aligns with Google’s interests. Those interests include Google’s desire to expand its Toronto experiments beyond that 12-acre Quayside plot.….

Taking the P3 Route to Reinvent Downtown

Source: Charles Renner, Public Management, July 27, 2017

… The past decade has seen a steady increase in the use of P3 structures, and 2016 was something of a watershed year with multiple high-profile projects coming online that address a variety of public needs, including a $1 billion water infrastructure project servicing San Antonio, Texas, the site of ICMA’s 2017 Annual Conference. In each case, the public sector identified a future need aimed at supporting the attraction of mobile talent, evaluated the limits of going it alone, engaged a P3 partner, and found leadership to achieve results. …

A Sioux Falls Renaissance … A key part of the updated Downtown 2025 Plan is increasing the CBD’s available commercial and residential real estate. To help accomplish this, Sioux Falls opted for a P3 solution to design, build, operate, and maintain a mixed-use facility with retail, office, and residential uses that will ultimately increase the density of downtown. …

Nebraska Innovation Campus and P3 … Located adjacent to the University of Nebraska-Lincoln, NIC is a research campus designed to facilitate new partnerships between the university community and private businesses. …

San Antonio’s Vista Ridge … As a result, the San Antonio Water System (SAWS) crafted the vision of a 142-mile water pipeline project called Vista Ridge that will deliver enough water for some 162,000 new families by 2020, providing a 20 percent increase in water supply. … SAWS opted for a P3 undertaking in order to engage private equity and much needed development expertise in securing and constructing a resource delivery project that requires roughly $1 billion in investment, thousands of private water commitments, along with the 142 miles of built-to-last water pipeline. …

With New P3, Delaware Partially Privatizes Economic Development

Source: Governing, August 16, 2017
 
Delaware’s economic development efforts are about to undergo a major transformation.  Gov. John Carney signed a bill Monday that replaces the Delaware Economic Development Office with a public-private partnership partially run by some of the state’s largest companies.  “This is a starting point,” Carney said. “The hard work starts now and that’s working together in partnership … to market our state more aggressively and think out of the box about how to develop our entrepreneurial economy.”  Tentatively called the Delaware Prosperity Partnership, the new nonprofit will be responsible for recruiting new employers to the state, supporting the state’s nascent startup community and investing in workforce development programs. …

A unanimous House votes for oversight bill vetoed last year

Source: Mark Pazniokas, CT Mirror, May 17, 2017
 
Connecticut’s legislators acted Wednesday for the second time in two years to require independent oversight of the millions of dollars in grants, loans, tax credits and other economic incentives extended to business, often a political flashpoint as states compete to attract and keep jobs.  With support ranging from organized labor to a conservative think tank, the House of Representatives voted unanimously to approve and send to the Senate an updated version of a measure Gov. Dannel P. Malloy vetoed last year as “unnecessary and unwarranted.” … Rep. Jason Rojas, D-East Hartford, the co-chair of the Finance, Revenue and Bonding Committee, said the bill requires the legislature’s Auditors of Public Accounts to examine the Department of Economic and Community Development’s entire portfolio of aid programs and report to the legislature. Their findings will be the subject of a public hearing every year. … The legislation addresses policy and political concerns of legislators. Questions over economic aid, especially when some of the recipients made headlines by subsequently laying off employees, had posed a political liability for some and, perhaps, an opportunity for others. …

Some States Spend Billions on Economic Tax Incentives for Little or No Return

Source: Eric Pianin, Fiscal Times, May 7, 2017
 
By one estimate, state and local governments spend at least $45 billion a year on tax breaks and other incentives to lure or keep job-producing businesses and plants in their jurisdictions. … But while these tax credits, exemptions, and property tax abatements are popular tools to create jobs, attract new businesses and strengthen the local economy, they also constitute high-risk investments that can squander billions in tax dollars without always paying off.  A new study by the Pew Charitable Trusts offers provides a wide-ranging look at the way many state officials handle these costly programs in recent years.  While the ultimate success of these incentives often hinges on good planning by state officials and follow-up measurements of the impact and efficacy of the programs, Pew researchers found that many states have fallen well short of what was needed.  Indeed, the study found that 23 states either lack a smart evaluation policy or have had a policy in place for five or more years that has not proven effective in measuring impact or adequately informing state lawmakers and other policy makers of what needed to be done. …

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State to get $1.5 million in EB-5 settlements

Source: Jonathan Ellis, Argus Leader, March 15, 2017

The state of South Dakota on Tuesday announced the settlements of two civil lawsuits against a company that managed the federal EB-5 Immigrant Investor Program on behalf of the state. The settlements with the South Dakota Regional Center will result in the company repaying approximately $1.5 million to the state. … The lawsuits stem from the scandal over management of the EB-5 program in South Dakota. The federal EB-5 program allows wealthy foreign investors to acquire green cards to the United States for investing $500,000 in qualifying projects that increase economic development in rural or impoverished areas of the United States. … Under former Gov. Mike Rounds, the EB-5 program was run through the Department of Tourism and State Development by a state employee named Joop Bollen. In 2009, Bollen quit his job with the state and signed a contract with the state to manage EB-5 projects through his company, SDRC. In 2011, the former head of Tourism and State Development, Richard Benda, went to work for Bollen and SDRC. In the spring of 2013, state officials learned that the U.S. Department of Justice was investigating the administration of the EB-5 program in South Dakota. Benda committed suicide that October as state authorities moved to indict him for directing $550,000 in state funds to SDRC. … Last month, Bollen pleaded guilty to one felony count for diverting money from an account to protect the state from potential liability claims. … Tuesday’s settlements don’t end litigation surrounding the EB-5 program. …

Labor agreements impede shared services, cities say

Source: Rob Ryser, News Times, March 23, 2017
 
… The inability of willing neighbors to share services when it makes sense for both sides is part of what keeps local governments from finding more efficiencies, Boughton said, and one reason he was in the state capital this week. Boughton spoke in favor of legislation that would waive certain restrictions in municipal labor contracts when towns and cities make agreements to share services. … The bill, which was extracted from a larger report containing recommendations by the statewide Connecticut Conference of Municipalities, was the subject of public hearings this week in the state legislature’s Planning and Development Committee. … In Danbury, Boughton and the City Council have been exploring partnerships with neighboring Putnam County – a six-town region of 100,000 people across the border in New York, and with Waterbury, the state’s fifth-largest city. Neither partnership needs the legislation pending in Hartford to proceed. The agreement with Putnam County involves a potential deal to provide city sewer service to a Brewster-area commercial zone, and the potential to capitalize on mutual economic interests such as infrastructure projects, recreation initiatives and cultural events. The proposed partnership with Waterbury aims to build an economic development zone along the Interstate 84 corridor, anchored by the two cities. …

House votes to abolish one of Gov. Rick Scott’s prized agencies, Enterprise Florida

Source: Jeremy Wallace, Miami Herald, March 10, 2017

The Florida House shrugged off political threats from Gov. Rick Scott and stuck a dagger into the heart of his political legacy on Friday. By an 87-28 vote, the House voted to kill Enterprise Florida, the agency Scott has relied on to hand out tax breaks to businesses in exchange for them creating jobs — a central promise in his two campaigns for governor. … With 87 votes backing the Enterprise bill, the House would be in a position to override a Scott veto because the bill passed by more than a two-thirds majority. … But the Senate still needs to pass its own bill. So far, it hasn’t. … It’s a remarkably bad week for Enterprise Florida. On Monday, the agency’s CEO, Chris Hart IV, quit abruptly without much explanation. He was only on the job since January. It’s the second time in nine months that its CEO has left. … Eliminating Enterprise Florida — a quasi-private government agency created in the 1990s to serve as a commerce department — has a long way to go. Both chambers have to pass identical bills for it to pass the Legislature and end up on the governor’s desk. Even then Scott would seemingly have the last say in vetoing the idea. … Jenne said even if the Senate doesn’t take up the bill, Enterprise Florida is vulnerable. He said in a few weeks the House and Senate will start working on a 2017 budget and the House is almost certain to put no money in the budget for Enterprise Florida, regardless of whether Renner’s bill moves forward. That will set up a budget showdown that could still put a spending plan on Scott’s desk that would de-fund what Jenne called Scott’s “policy baby.” …

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Another Scandal at Florida’s Privatized Development Agency
Source: Kasia Tarczynska, Clawback blog, February 28, 2014

For the followers of Enterprise Florida (EFI), another scandal at the organization should not come as a surprise. Television station CBS12 in Palm Beach discovered this week that EFI, the privatized “public-private partnership” responsible for recruiting companies to the state, has spent thousands of dollars on entertaining site selection consultants.

State-run agency accused of abusing tax payer dollars
Source: Michael Buczyner, CBS 12 NEWS, February 25 2014

CBS 12 News spent hours reviewing 20 months worth of spending at Enterprise Florida and uncovered thousands of dollars spent on sky boxes, steakhouses and at fancy hotels. Tens of thousands of dollars were spent on credit cards. We weren’t provided the detail on what was purchased. Our investigation found leaders at Enterprise Florida, the state’s public-private economic development machine, spent more than $21,000 at Yankee Stadium in New York. They also paid a visit to Cowboys Stadium in Arlington, TX where they dropped more than $7,100. The stadium tour also stopped off in Atlanta, GA for a cost of $4,400.

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