Economic incentives represent a significant expenditure of local resources, in many cases eclipsing traditional investment in economic development. Today, cities need to ensure that their investments are not only producing reasonable returns, but also driving public benefit and inclusive outcomes.
As cities shift towards more inclusive economic development policies, many are reconsidering the role of their incentives.
In undertaking this transformation, many cities and counties across the country share the same questions:
How effective are our incentive programs in driving desired outcomes?
How do we expand our goals and evaluation metrics beyond simple traditional measures to increasingly nuanced public policy objectives around promoting greater inclusivity?
How do we adapt our programs to improve the public Return on investment for these critical investments?
We help cities answer these core questions by rigorously measuring the performance of their programs, re-aligning program goals and criteria to reflect current-day public policy objectives, shaping innovative approaches that drive greater public ROI, and designing custom implementation tools for deal evaluation and performance tracking. Our work has supported cities such as Columbus, Cincinnati, Indianapolis, and New Orleans in transforming their approach to incentives.
Better Incentive Policy
How effective are our incentive policies in advancing progress against the critical economic and community development challenges we confront as cities today?
We're transforming approaches to incentives in cities across the country.
Columbus is experiencing a period of sustained urban growth and revitalization, supported by strong investment in its downtown and surrounding core neighborhoods. The City engaged HR&A to assess how it can best utilize its economic incentive portfolio to realize community and development objectives in response to the evolving local economic and real estate context. In light of its success, Columbus wanted to assess how to adapt its incentives approach in rapidly developing neighborhoods, while also encouraging greater benefits for underserved communities. In early 2018, the Mayor of Columbus announced progressive changes to the City’s incentive programs to drive the creation of new affordable housing in high opportunity neighborhoods, building from the recommendations of HR&A’s study.
NEW ORLEANS, LOUSIANA
Amidst a resurgence in growth and investment in areas of the city, New Orleans sought to understand the effectiveness of its economic incentive programs, align future deployment with broader public policy goals, and formalize a process for incentive application review and awarding. HR&A assessed the effectiveness of four major programs within the City’s toolkit through a detailed analysis quantifying relative costs and benefits to the City and crafted a series of strategic recommendations to improve the efficiency and effectiveness of its programs in driving equitable economic outcomes citywide. HR&A then collaborated with the City to begin implementing core recommendations, including convening an intensive multi-day workshop to develop a standard protocol to evaluate project applications and encourage project delivery of core policy objectives, such as affordable housing production in high-opportunity neighborhoods. New Orleans released the new incentives framework in summer 2018, launching the first of a series of major changes to its economic incentive toolkit, currently underway.
Indianapolis is a growing city with an emerging tech hub. Despite overall low unemployment, certain segments of the population have been unable to share in the city’s prosperity. Building on citywide efforts to ensure more equitable growth, HR&A supported the Indianapolis Chamber of Commerce in its work to reposition existing economic development incentive programs and institute a series of meaningful new reforms to spur inclusive economic growth.
After evaluating past incentive usage and performance, HR&A benchmarked national best practices and hosted stakeholder roundtables designed to understand community priorities. Our recommendations included changes to the tax abatement and training grant programs to align evaluation criteria with inclusive values, as well as the establishment of a community impact network. The Community Impact Network is a pioneering new shared-values approach whereby businesses receiving economic incentives commit to supporting workers through civic engagement, social support services, and skills development. HR&A crafted a narrative around the policy rationale and benefits associated with each recommendation and developed an implementation roadmap to guide the process. The Mayor’s office announced HR&A’s recommendations to advance inclusive economic opportunity – which prioritized a higher minimum wage, health and childcare benefits, workforce training, and positive community impacts – in summer 2019.
Cincinnati’s Department of Trade and Development administers 11 incentive programs intended to facilitate real estate development and business growth, including property tax abatements, earnings tax abatements, and direct loans. HR&A assessed the performance of these programs and the city’s overall competitiveness. Based on our analysis, HR&A recommended changes to Cincinnati’s existing incentive programs and operating procedures, suggesting additional tools that would enable Cincinnati to better meets its economic development goals in a cost-effective manner.