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Welcome How a Dose of Data Reality Can Enhance Your Region’s Competitive Positioning Fiscal Impact Analysis Creates a Win-Win for Projects and Communities Economic Gardening: Using Information to Help Your Entrepreneurs Grow Using Location Intelligence to Attract Retail to Underserved Areas Targeting a Portfolio of Clusters Quantifying the Creative Economy Economic Developer “Dinosaurs” Vs. Fast Internet Information Your Regional Knowledge Economy Strategy: Is it Succeeding? “We Have the Site, But We Need the Workforce!”  Subscribe
About Economic Development America
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Fiscal Impact Analysis Creates a Win-Win for Projects and Communities (cont.)The project that didn’t materialize Just as the use of fiscal impact analysis helped provide public support for the Decoma project, it has also provided justification when a large project located elsewhere. Not long before Decoma was announced, the community was shortlisted for a manufacturing and distribution facility promising 280 jobs and $7.5 million in capital investment. Compared to the $14.10 per hour average wage of Decoma, though, these jobs averaged $6.50 per hour. Fiscal impact analysis showed the project resulting in a negative NPV of $669,000 for the city, prior to any public investments or incentives. Combined with the company’s highly leveraged financial status, these results prompted the economic development team not to offer an incentive package. The company was welcome to locate, but no investment of public funds or abatements were offered.When the company located in another community that offered a package, the economic development team and local officials were questioned by local media and the public about the decision not to propose an incentive package and let 280 jobs locate elsewhere.With the results of the fiscal impact analysis in hand, all parties were ready to answer those questions. Rather than harsh criticism in the local media, the team was lauded for making a good decision for the community. After Carroll Tomorrow’s initial funding cycle was over and it was time to go back to local governments and ask for another multi-year funding commitment, the information provided by fiscal impact analysis revealed localities’ return on investment in the organization.With over $5 million NPV of revenues generated by Carroll Tomorrow projects, local governments agreed that their return on investment justified continued funding and recommitted.
With recruitment and expansion projects totaling over 1,500 direct jobs created and over $225 million in direct capital investment, as well as tourism projects, there are numerous examples of Carroll Tomorrow’s use of fiscal impact analysis. Each one would tell the same tale, though: Incorporating fiscal impact analysis in the process creates better deals, credibility and public trust. The Carroll Tomorrow experience provides lessons for all economic development organizations. Although Carroll Tomorrow now has a much larger staff and budget, it incorporated the practice of using fiscal impact analysis when it was a three-person organization working with a start-up budget. Creating awareness among local government staff, elected officials and the public through the data collection process lays the foundation of credibility and trust. Most importantly, using fiscal impact analysis on an iterative basis, running ‘what if ’ scenarios to determine deal structure, and being transparent with companies and elected officials about the process produces better deals for the community. Fortunately, technological developments have made it both efficient and affordable for economic developers to have in-house fiscal impact analysis capabilities. Practitioners should seek fiscal impact models that include both costs and benefits, calculate the costs and benefits of new households, are local-data driven, and feature a user-friendly interface. Once the model has been chosen, be sure to make the community and projects aware of your new practice, and start reaping the benefits of win-win deals, greater credibility and demonstrable return on investment.
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