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6 Essentials That Help Local Governments Drive Economic Growth

6 Essentials That Help Local Governments Drive Economic Growth

Private companies – not governments – lead economic growth. But local governments can do a lot to position themselves for economic prosperity.

Here are six essential elements that can provide local communities an edge in landing major business investments that generate jobs, tax revenue and local spending.

Land

Availability of inexpensive, undeveloped but improved land with easily accessible public utilities is essential to any economic development project. Options to purchase real estate are acquired through the use of a straw man who serves as an agent for an undisclosed developer so that the price is not adversely inflated.

Experienced and knowledgeable planning and zoning personnel can effectively advise developers about some of the potential land use obstacles that may need to be overcome.

Water and sewer service

Availability of storm/sanitary sewer services and potable water (for consumption and/or manufacturing) is necessary for any economic development project.

Many communities subsidize construction of the infrastructure needed to access such utility services as an incentive to generate income tax revenue from the project. Communities that are knowledgeable and experienced in negotiating utility service agreements have an advantage over those that do not.

Transportation

If your community sits within an area which is traversed by an interstate highway and/or rail service, this is a plus for any business that might need such transportation facilities.

Many communities subsidize construction of access roads, rail sidings or highway interchanges as an incentive to attract a major economic development project.  Other communities incorporate those amenities into an industrial park which could serve multiple projects.

Tax incentives

Most developers will request some form of tax incentives such as real estate and personal property tax abatements when considering an economic development project.

Tax abatements exist within Enterprise Zones or Community Reinvestment Areas.  Not all political subdivisions have the socio-economic demographics to create an Enterprise Zone or Community Reinvestment Area, but those communities that are knowledgeable in this area can create significant tax incentives to attract developers.

Knowledgeable and cooperative local government and school officials

Local governments, however, must balance the benefits of the increased municipal income taxes generated from the project against the loss of real estate taxes for the school district. Ohio law provides that real estate tax abatements which exceed 75% require the consent of the local school district.

However, as an incentive for school districts to consent to significant tax abatements, many local governments negotiate donation agreements whereby developers agree to make annual payments to school districts over the period of the tax abatement in exchange for the loss of real estate taxes.

Experienced legal counsel

Experienced public sector legal counsel can be a tremendous asset to a political subdivision seeking to enhance its economic development efforts.

In many ways, local communities that seek to attract private investment dollars are in “business,” as they are competing against other locales for those investments.

The local governments that have these six elements at their disposal and leverage them effectively will be in a far better position to succeed.

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Paul Dutton is a lawyer with Harrington, Hoppe & Mitchell and has served since 1997 as solicitor for the Village of Lordstown, which has secured nearly $1.4 billion in economic development in the past five years. He can be reached at (330) 744-1111 or at pdutton@hhmlaw.com.