Economic development incentives are beneficial tools for communities when they are used wisely. Here is a synopsis of the latest Smart Incentives presentation on using incentives effectively and responsibly. The full presentation can be accessed here.
Incentives should help us achieve our community’s economic development goals.
Incentives are not just about winning a deal. Smart incentive use is always connected to a larger economic development strategy.
Data and analytics can reduce risk and improve outcomes.
Due diligence – both background research on the applicant and business case analysis - helps us understand the risks associated with providing financial incentives to companies.
Evaluating project attributes and quantifying fiscal and economic impacts of proposed investments lets us determine whether a project can generate net benefits for our community.
Evaluations can demonstrate which incentives are most effective.
Monitoring compliance with performance agreements and evaluating outcomes shows us whether incentivized projects actually did generate benefits for our community.
Evaluating a portfolio of incentives yields insights into the projects and programs that are most helpful in achieving our economic development goals.
Communities want better information on incentive usage and outcomes.
Elected leaders, the media, and the public want to know who is receiving incentives, how much is being spent, and the results of that spending.
It is difficult to answer these questions well given the challenges of confidentiality, measurement, and timing associated with incentive use and outcomes, but technical assistance is forthcoming.
We call for regular release of basic transaction details, annual reports of activity, and multi-year evaluations of major incentive programs.