Editorial: City incentives
Requiring developers to invest in local companies may not work well.
Lawrence city commissioners need to be careful not to overthink economic incentive policies.
As the city works to rewrite those policies, some commissioners think the city should require developers to invest in local workers and companies in order to be eligible for incentives. While the thought process behind such a requirement is understandable, the ramifications and practicality of enforcing such a policy would likely do more harm than good.
Millions of dollars in property tax rebates, sales tax exemptions and other tax abatements are being provided annually to developers whose projects ostensibly provide economic benefit and long-term tax growth to the city. Last year, 28 such agreements were in effect, including apartment, hotel and industrial projects.
The city has had much debate of late on when and how such incentives should be awarded and went so far as to hire a consultant to review individual projects and provide guidelines and recommendations on granting incentives.
Vice Mayor Leslie Soden and fellow commissioners Matthew Herbert and Stuart Boley were elected in part on a platform that the city’s incentives policy needed to be overhauled. Soden is an advocate for having a community benefits policy as part of the city’s invectives policy. Kansas City recently approved such a resolution, asking that jobs or other local benefits be included in economic incentive agreements.
Soden said a similar policy makes sense for Lawrence.
“I think it’s reasonable to expect that a majority of their employees or contractors live within the county, so we can keep those payroll dollars circulating locally,” Soden said.
Having local workers work on local projects, when practical, makes sense. But how exactly would such a policy be enforced? And comparing Lawrence with Kansas City is comparing apples and oranges. Kansas City and Jackson County have significantly larger workforces and much greater variety of construction services than Lawrence and Douglas County. The city needs to be careful not to implement policies that make development projects in Lawrence noncompetitive with development projects elsewhere.
So far, a community benefit requirement hasn’t made its way onto the list of recommended changes to the city’s economic development policies. That’s as it should be.
Tax incentives should be used to incentivize projects that deliver a lasting economic benefit and are good for the community over the long-term. Commissioners were elected to make decisions on behalf of the public. In the case of incentives, that means considering each project individually, taking into account information provided by staff and consultants and deciding what rebates, if any, the project warrants.
Commissioners can’t legislate subjectivity out of the process and they should stop trying to do so.