Connersille EDC head responds to study which downplays local economic development efforts

The Indiana Economic Development Association released a study of tax increment financing citing the incentive as being a “beneficial tool.”

A separate report by Michael Hicks, Ball State University Center for Business and Economic Research director, says local economic development efforts have been “disappointing.”

The University of Southern Indiana Center for Applied Research released the TIF study showing:

TIF activity has a positive impact on employment and wages.The USI study affirmed findings of the 2015 Indiana Legislative Services Agency study that also demonstrated positive employment trends in TIF areas. Based on gross assessed value, the LSA study demonstrated that parcels in TIF areas outperform parcels in non-TIF areas with similar characteristics.

Indiana TIF applications serve as a positive tool for place-based economic development (quality of place enhancements). They also generate positive “spillover benefits” to neighboring counties.

As opposed to some existing perceptions, data reviewed for the study show that TIF districts comprise a minimal portion of taxable property within Indiana. TIF districts in Indiana only make up about 3 percent of all parcels.

TIF districts are created as a method for investing in community assets that are intended to attract new investment or new residents and to do so without raising property tax rates.

TIF districts have their advantage and can be positive if done properly, Dan Parker, director of the Economic Development Group of Connersville and Fayette County, said. Scott County used TIF funding for it’s Mid-America Science Park with a business incubator and colleges and the Westfiield sports complex.

One of the theories for TIF is that if development comes then jobs will come which blesses the entire county even if the property tax does not come back to the county immediately, he said. 

An issue that involves the state enabling legislation is that properties owned by government that are placed into a TIF district have a $0 assessed valuation base. The local property taxing units get no base property tax from the property and all the assessed value with improvements goes into the TIF, he said. 

The TIF district for the Wayzata facility has no property tax benefit for the county even though the former Visteon building had a value. When the property was taken over by the city of Connersville, for taxing purposes, its base went to $0.

The incentive was part of the package that did bring Wayzata to Connersville.

Ball State University study

Hicks’ study, “Why have local economic development efforts been so disappointing???” found the incentives local government use are outdated. The reason the incentives have been unsuccessful is because there is a lack of “footloose” jobs, jobs that are available for relocating to an area.

“Boards of local economic development organizations should consider explicit shifts of effort from traditional business attraction to quality of place efforts. This should include efforts to support local schools directly and through their efforts to incentive businesses,” according to the report.

Hicks suggested the state government should also consider limiting development incentives offered by local governments.

In 2010, Indiana reported incentives of more than $2.2 billion resulting in 50,600 jobs, or $43,700 per job. 

He does note in the report that Indiana is not especially lavish with its incentives compared to some of the other states, especially Nevada which offered Tesla more than $200,000 a job to locate a plant in the state.

Parker said Hicks believes that quality of place is the answer to attracting businesses with jobs. He believes local economic development organizations have little impact.

“Would we like to attract a large company? Absolutely. Would we like to have someone for whatever reason change their headquarters and move to Connersville? Yes. Do we feel that’s a high probability? No, we’re realists and understand that’s a long shot,” he said. “Our focus is retention of existing companies, fortifying them, making sure they have the tools to be successful.”

He said all the industries in Connersville are being visited on a regular basis, moreso than in the past. If they have a need, there is an attempt to solve that need and if expansion is in the future, the EDG works with the company to get all possible incentives, he said. 

Retaining Stant a few years ago is an example of that effort, he said. Stant was retained and has grown significantly in Connersville. All other companies are aided if their time for growth comes and almost all are in a growth mode.

“It’s not that we’ve done miracles from an economic development standpoint, the market, mood and economy are such in the state of Indiana, and specifically in Fayette County, that it’s causing some positive effects,” Parker pointed out. “I think it’s kind of a comfort to those businesses that economic development is behind them and is helping them as they need it.”

On the smaller- and middle-sized businesses, they also are being aided, he said. More applications for use of the revolving loan fund have been distributed in the past six months than in the previous two and half years.

He said all those small business owners getting ready to open, or have plans to open in the near future, are being contacted and he is working with them. There are a number of those instances which cannot be discussed presently.

“Not to go head to head with Michael Hicks, I respect him, but he says what he says and at the same time he is training economic development leaders across Indiana, Ohio and from all over,” Parker said. “I understand what he’s saying about improving the community, and we economic leaders see the benefits of community enrichment and improvement. That’s why EDG adds our voice to the Women’s Voices in wanting a vibrant downtown, shops open, vacant buildings filled with thriving businesses.”

The EDG also wants the quality of life attributes that would encourage people to want to live in Fayette County. The improvements being made by the Whitewater Valley Arts Association downtown, the Whitewater Valley Railroad and some other proposed improvements coming that will make a difference are supported by EDG. The new sports complex and the adjacent river development is supported by EDG, he said. 

“It’s a little overwhelming when you think about some of the opportunities in Fayette County and economic development plays a part in every one of them,” he said. “Without arguing with Hicks, we have had some successes we’re quite proud of...the business from China at the 40 et 8 is one. It’s a small operation but it’s reversing the trend of jobs going to China; we have jobs from China coming here.”

While Hicks reported “local” efforts have been disappointing, Parker said those job announcements coming almost weekly to the state of Indiana are going locally.

“I look at Valerie Shaffer (president, Economic Development Corp.) in Wayne County with Blue Buffalo (pet food); that’s a local economic development corporation,” he explained. “I look at Corey Murphy in Henry County with the addition of Boar's Head. Those were local economic development people who worked their tails off to get those projects.”

John McCane in Rush County has a great relationship with INTAT Precision that continues to build. Terry Murphy in Muncie has been instrumental in settling many industries in Delaware County. There are a number of economic development local successes that Hicks has overlooked, he said.

“I see the value this position adds to the community, to industry and the jobs it adds to the community,” he said. “It is the intermediate link between government and industry that does not exist anywhere else. It works hand in hand with the state.”

In today’s world, the goal for Fayette County is not large business like the Visteon, although that would be nice to attract, but the reality is smaller companies, the 100-150 employee business, are the target. It would be nice to put some of those into the Connersville Industrial Complex, which is now owned by the EDG, Parker said. That increases the chances of success with many business, rather than one large business.