Development 101Written by Maggie Thurber | Toledo Free Press Writer | firstname.lastname@example.org
You hear it from the media, from politicians, from business leaders, from unions, from citizens: we want and need economic development. But what, exactly, does economic development mean?
To developers and construction unions, it probably means more buildings. To most businesses, it means opportunity for profit and growth. To government, it often means more tax revenue and government jobs. But to citizens, it just means more jobs — period.
Today, whenever there is a perceived problem, many tend to look to government to “do something” and that expectation doesn’t change when the problem is economic development. The real problem, though, is that all the economic development solutions government has come up with so far really haven’t produced the intended results.
In Toledo, economic development efforts aren’t really about development — as much as they are about redevelopment. Toledo’s plans for Southwyck Mall (which it still doesn’t own) and the Marina District are about taking existing developments and doing something different with them. That’s not economic development.
True economic development comes as a result of profitable businesses. If you create an environment where businesses want to be and where they can make a profit, you will draw companies and jobs into an area. Unfortunately, most political thinking on economic development is short-term — offering relief for the symptoms rather than solving the problem.
Essentially, the thought is that if you provide incentives (corporate welfare in the guise of subsidies and tax breaks), businesses will appear profitable. But in Toledo, such “incentives” are usually tied to hiring quotas or “job creation.” Our politicians think this will create the symptoms of good economic conditions and they often tout how many “new jobs have been created” as a result of the incentives they’ve offered. Most of the time, though, we’re “retaining” more jobs than we’re “creating.” Further, the vast majority of such growth and hiring would take place without the government incentives. But if a business knows it can get money from the government to offset its own expenditures, it will do so.
Another method is what we’re seeing in the Marina District — providing incentives (loans, grants and exclusive development agreements) to construct new buildings. It is assumed that if you build it, they will come — that businesses will somehow magically appear to occupy those buildings simply because they exist. This approach certainly appeals to developers, construction firms and unions. But with the vacancy rates we have in Toledo, what makes us think a new building (with higher costs and assessments) will address the problem any better than the existing buildings we already have?
If we had a place conducive to business growth, the demand for buildings would follow. Additionally, businesses making profits hire people; people with jobs spend money and buy homes; property taxes, income taxes and sales taxes increase; government has more money. That’s economic development. But politicians really have no way to take credit for such activities and no way to brag about the results. But they miss the fact that they wouldn’t need to brag about the successes, as it would be clearly evident in the increased employment and improved economy.
So how do we create an environment conducive to business growth? We could start with minimal taxation — making sure our tax rates are lower than other areas, thus providing an advantage over competitor cities within and outside the county and state. We could focus on good infrastructure — we already have good utility service and availability (water, sewer, electricity and gas), but our roads could certainly use more attention. We have a good work force, but such government regulations like living wage and prevailing wage present a perception that we are not a labor-friendly community. We could also focus on providing basic government services — and excelling at providing such services, rather than trying to make local government the solution to every perceived problem, including how to keep kids busy during the summer.
These things aren’t flashy and don’t lend themselves to good headlines for politicians or campaign speeches about how much you’ve done for the citizens. But they do lead to success — true economic development — and jobs. And that’s what we all want.
Former Lucas County Commissioner Maggie Thurber is the host of WSPD’s “Eye on Toledo.”