In business incentives, some cities get act together better than others

Economic incentives. Do they work? Are deals to attract companies and their jobs even necessary? For economic developers and many city officials, it boils down to the old adage: ?Sometimes you have to spend money to make money.? The controversy with many economic incentives, however, is it?s taxpayer?s money ? or future money ? being tossed about. And increasingly, citizens have something to say about that.

For a series of stories in this issue by writers Caron Ellis and David Clucas, The Business Report was given a list of possible programs that Boulder is reviewing for its new economic vitality program.

On the list, which begins to compare Boulder to other cities including Denver, Fort Collins, Austin, Madison, Wis., Portland, Ore. and Santa Fe, N.M., there are 65 different tax, business assistance and technical or regulatory programs.

In many cases, Boulder Valley cities can check yes next to certain programs. Energy use reduction incentive programs. Micro-loan programs. Site selection assistance.

What The Business Report found, however, is that there are huge differences in how cities in Boulder and Broomfield counties operate economic incentive programs and how aggressive each will be with promises to business prospects.

Without exception, incentives are handled on a case-by-case rule by nearly every city.

Incentives, especially property or sales/use tax breaks ? which directly impact a city?s general fund ? generally are not publicized or, in some cases, not clear at all if a city even will use them.
When economic developers go after companies, both small and large, it?s not typically a very open process. With good reason. Businesses ? sometimes playing one city off of another ? demand private negotiations.

Cities are never anxious to discuss deals because they may or may not want to offer the same incentive again.

Reporters now ask a lot more about what kind of deal was done. But it can be like pulling teeth to get information. Trust me.

Details of high-profile deals, especially a Wal-Mart Supercenter or a large publicly held company, may or may not come out. And sometimes it?s after the fact ? the deal already is signed, sealed and delivered.

Longmont is a city that at least openly states exactly what kind of incentives it will offer. The city and its Longmont Area Economic Council have a list of three primary incentive plans to attract primary employers. Exemption of sales and use taxes on manufacturing equipment, exemption of sales and use taxes on R&D equipment and permit fee waivers of up to 30 percent are all spelled out specifically on the LAEC?s Web site.

Boulder, I believe, will try to be equally as open as it tries to decide on what kind of economic incentives make sense for the city. In a good first step, the city placed a first draft of possible economic programs on the Web at www.businessinboulder.com.

It?s easy, of course, to criticize Boulder as very much the Johnny Come Lately to the economic incentive competition. It?s true the city long has ignored specific economic programs, relying on its ?quality of life? reputation. One can?t overlook, however, the entrepreneurial efforts that business, government and university leaders have spawned ?the Boulder Technology Incubator, technology transfer programs at the University of Colorado and the federal labs, small business assistance programs and Esprit Entrepreneur ? a long-standing recognition of business success.

Colorado?s population boom and sizzling ?90s economy made the job of economic development easier here that in larger U.S. cities losing ?smokestack? manufacturers. And as Boulder adopted slow-growth policies, county cities gladly accepted the lucrative handoff of retail and commercial expansion.

Recessions and job losses, however, have a way of changing people?s minds. Lose high-paying salaries, leave office buildings standing empty and suddenly economic development looks more appealing.

Each Boulder Valley city faces its own business challenges.

Louisville, riding a wave of retail development in the Centennial Valley, lacked an overall economic plan and hired CU for advice. As Interlocken and the U.S. 36 Corridor filled up, Broomfield is focusing on options to the east, facing aggressive developments by other cities along I-25. Lafayette, despite citizen opposition, battled to hold onto its Wal-Mart, knowing full well Erie would love to steal the tax revenues.

Longmont, which built a tremendous supply of commercial space and recruited large high-tech tenants, now has higher vacancies as its largest landlord, Pratt Properties, explores a possible sale. Boulder has a rap of being business ?unfriendly? and admits much of its commercial space is ?tired? and in need of redevelopment. Superior is getting ready to develop an entire new town center.

Incentives clearly make cities ? and states ? competitive in business attraction and retention. Without them, most cities know they?re not even in the game.

on Facebook on LinkedIn