Critical Path to Site Development Pt. 4: Ease of Acquisition and Incentives
Much is made in the econ dev world of the importance of incentives. In higher, more competitive circles, the discussion usually centers around what incentive, rebate, program the end user got to finalize the deal. The fallout from the Amazon HQ2 process proved as much when immediately following the announcement, the articles about what the States of New York and Virginia “gave away” in exchange for the coveted jobs.
There’s a philosophical disagreement among many over whether or not incentives are the driver of economic development projects. I can assure you that in my former life in North Carolina, few projects didn’t have the coveted JDIG (Job development investment grant) figure or Economic Development Partnership assistance markers on them. The talk was usually always about what the state or county did to secure the project……….
That is but the cherry on top of the sundae that is already built. The ice cream, hot fudge, whipped cream, and sprinkles is usually almost always the ability to control the land.
For many projects the land in said project is government or private equity partner owned. Seldom does a project of significant job growth (100+ jobs) flow through an individual land owner. The market is conditioned to avoid such negotiations. Time speed and money and lastly the incentive drive, and in many cases land the client aka business seeking to place.
Here in SE Ohio we aren’t really playing the space that the Les Wexner’s of the world play in. As you drive through much of the eastern Columbus suburbs you see land owned, managed, and controlled by those development groups. Their ability to provide ease in financing for purchase, compete at or below market rates for the right types of projects, and secure anchor tenants for planned developments makes their processes far more agreeable and reduces risk for all involved. Risk reduction is coveted across the board and in lieu of being able to do any of what the Wexner’s of the world do, we seek to mitigate risk in other ways.
The Port Authority works with land owners to do the first three steps of the process that I defined in earlier articles. In one case the Port actually jumped into the development game and worked with an interested land owner to maximize their investment by constructing a building, aligning utility, and marketing the final product as a revenue mechanism for the party and the Port Authority.
I know there is much debate over whether or not the Port should continue doing what it did with the Ingenuity Center a few years ago. What cannot be debated is that there is opportunity for the private and public sector to assist in fulfilling the needs of citizens. Where the private market is not stepping in the public sector can/should. What we at the Port are trying to determine is where there is a private market exit and how we can step in.