September 26, 2016
Walking Away from an Economic Development Deal
In This News Story: Rounds Consulting

Hugs are plentiful when a deal closes. However, walking away from a bad economic development deal should also receive praise.

I have a number of friends that work in economic development, either for an individual community or a broader based organization. They work very hard to help attract jobs and improve the quality of life of area residents. Attributes related to infrastructure, real estate, workforce, community amenities, etc, are usually promoted first. These things matter. Some do a better job than others at this promotion, but everybody is trying. It’s also standard practice to do cost/benefit analyses to make sure any incentives that are needed to close a deal are less than the community’s fiscal benefit. In other words, don’t spend $1 to only make 75 cents.

I am encouraged at how communities are leading with a positive pitch about their economic attributes and are even trying to “monetize” (as one friend put it) these benefits when possible. The incentive follows rather than leads the discussion. This is the best way to match up economic development with responsible public policy.

Hugs are plentiful when a deal closes. It makes for a good press release and it’s easier to discuss in a positive way. However, walking away from a bad economic development deal should also receive praise. Sometimes it’s ok to limit incentives, focus on higher wage jobs, and look at opportunity costs related to a deal. A community doesn’t need to publicly promote that a deal went awry because too much was being asked by the expanding or relocating company. But, a mayor or city manager should be proud to say that “no thank you, goodbye” is indeed an option for their team.

Author’s note: If there is a particular economic or policy issue you would like covered in a later publication feel free to send your ideas and/or comments to


Post by: Jim Rounds






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