The game of economic development promises job- and tax revenue-creating benefits to communities. To players, deploying certain policy and tax-incentive tools are integral parts of a smart government’s capacity to win new employers and secure business expansions.
But using those tools is frequently fraught with complications and risks.
A 2012 investigation by The New York Times found the game stacked against governments. “A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them,” the Times reported.
Indeed, sometimes it’s better to err on the side of caution and avoid entering the arena.
However, often the larger question isn’t whether you play the game but how you go about playing it. How do you choose an economic development tool that’s grounded in reality, one that isn’t a solution looking for a problem, one that comes with public accountability?
In Clark County, we need look no further than the region’s eastern environs to see that larger question being grappled with by the Port of Camas-Washougal, the cities of Washougal and Camas, and the Camas-Washougal Economic Development Association.
All four are considering tapping an economic development tool — the federal New Markets Tax Credit program — to spur private investment in Washougal and Camas to generate jobs in low-income neighborhoods. To access that tool, a Community Development Entity would be launched. By selling tax credits to private investors, the CDE would lower the cost of injecting capital into projects that may otherwise struggle to attract conventional financing. It’s not a new tool. Congress created the tax credit program in 2000. Several projects in Washington and Oregon have used it.
Last week, the Port of Camas-Washougal’s three commissioners discussed the CDE. They listened as a Portland consultant, Stephen Brooks, tackled their probing questions and mapped out the complexities on a white board. Typically, big banks and large insurance companies get involved as tax-credit investors. Local governing and advisory boards also would be involved. Brooks was blunt about the program’s community-building purpose. “Groups that paper over the community benefits piece,” he said, “don’t get money.”
Commissioner Bill Ward said he wanted the CDE process to be vetted in reviewable steps, with the ability to pull the plug if the idea ends up not panning out.
The stakes are potentially high. Three as-yet-unidentified projects could benefit from the program: two likely involve the downtowns of Washougal and Camas; one involves the port’s Steigerwald Commerce Center. “We do have a bird in hand” that could move into the port’s Steigerwald site, said Paul Dennis, president and CEO of CWEDA, and the tax credit program would be a “nice mechanism to make sure we land that tenant.”
Ultimately, port commissioners indicated they’d like to see a proposed contract on April 15 to provide up to half of the $87,500 in one-time seed money needed to hire Brooks to guide officials through the CDE process. The contract would be structured to release funds incrementally, allowing step-by-step oversight and the ability to opt out of the deal.
All in all, the port engaged in a thoughtful discussion. It was grounded in reality. It was focused on how to play the economic development game in the best way: carefully.