BUILD A SMART INCENTIVES PACKAGE

Transcription

1 1 BUILD A SMART INCENTIVES PACKAGE Community Impact Models IEDC Web Seminar May 22, 2013 Ellen Harpel, President Business Development Advisors

2 2 BDA s Incentives Framework Data and analytical tools to enable better decision-making Prepare for a future of greater transparency and accountability Recipient Deal Compliance Effectiveness

3 3 The focus for today s webinar: Data and analytical tools to enable better decision-making Prepare for a future of greater transparency and accountability Recipient Deal Compliance Effectiveness

4 4 Three community impact categories Project Benefits Fiscal Impact Economic Impact Can this incentive deal generate net benefits for your community?

5 5 Project Benefits (1) Project characteristics Number of jobs Type of jobs and wages Investment Location where is the project and where will the benefits occur? Fit with economic development strategy Target industries Business types Cooperation with state and regional allies Meets established program criteria

6 6 Project Benefits (2) Timeframe When will the project begin? When will investment and hiring occur? What is the expected lifespan? Likelihood of success Make sense test? Other backers (banks, investors) What is the level of risk?

7 7 Fiscal Impact Definition: Tax and budgetary implications for state and local government of incentive decisions Reasons: Are taxes generated likely to exceed the cost of the incentive and additional costs of service Elements: Cost of incentive New state and local taxes generated by project Cost of services

8 8 Fiscal Impact (2) Data Needs What will generate revenue? Local tax structure Company assets and operations Individuals What additional expenditures will be required? Services to new residents Assumptions on household characteristics Services to the company New infrastructure Value of incentives

9 9 Fiscal Impact (3) Issues to keep in mind Jurisdictions to consider Fiscal impact of indirect and induced jobs New jobs and new residents Timing annual or over time Ease of use/simple interface Sophistication of back end analytics Correlations between land use factors and revenue streams Average costs versus marginal costs Rules of thumb GIS integration

10 10 Economic Impact (1) Definition: Traces the flow of money throughout the economy after the initial investment Reasons: To estimate the contribution of economic activities to a regional or state economy Economic impact depends on industrial structure and size of your region Components: Direct Indirect Induced

11 11 Economic Impact (2) Data Needs Employment Payroll Annual spending Construction spending Industry classification (NAICS code) Issues to keep in mind Industry choice matters By geography Cost Technical skills Interpretation does it make sense?

12 12 Economic impact models Methods and tools REMI IMPLAN EMSI Location-specific

13 13 Performance Requirements Are they clearly defined? Are they part of the agreement? Is the company required to report to the EDO on its progress in meeting those requirements? Over what time period? Is there a way to verify reported information? COLLECT THE DATA to figure out what is working and what is not Will this incentive deal generate net benefits for your community?

14 14 Communication Can your organization: Describe the project benefits? Quantify the fiscal impact? Explain the economic impact? Have you prepared brief summaries that can be shared with different stakeholders? Have you avoided jargon? Is the analysis transparent? Assumptions and inputs clearly stated

15 15 Takeaways Devote some resources to your analysis IEDC can help make the case The analysis has to be customized for your location Band together with others in your community and region Pool your resources Look to other governmental departments You ll never be right need order of magnitude estimate Strike a balance between detail and reasonableness Be prepared to communicate your decision and rationale

16 16 Takeaways (2) Beware of oversimplification/overly precise outputs judgment still needed Share your assumptions/the model s assumptions Doesn t have to be set in stone; tweak it over time

17 17 Contact Information Ellen Harpel President 571/