10 Critical Items Companies Should Expect from Economic Development Organizations During the Site Selection Process
by King White, on Mar 27, 2017 4:29:01 PM
Over the last 20 years of touring companies across the world looking for their next location, I have seen companies make some ridiculous requests including helicopter tours, country club memberships and lavish dinners. There is no doubt that companies expect a lot from economic developmentorganizations during the site selection process; however, companies need to focus on what is important. Even though economic developers try to cater to every need, it is critical that companies utilize economic development organizations to provide critical data, support in due diligence efforts and delivery of services that provide tangible value to your company.
The following list identifies 10 critical items that a company should expect from economic development organizations during the site selection process and beyond.1. A highly orchestrated community tour
First impressions count the most in the site selection game. When you get down to your shortlist of locations and it is time to go visit them for the first time, you’ll want your economic development organization to put together a highly orchestrated community tour. These tours typically include meetings with city leaders, local/state economic development officials, utility providers, major employers and staffing agencies. In addition to these meetings, you will also want to tour the real estate options. It is critical that these tours be carefully managed with everyone well prepared and on time.2. Controlled public relations
There is a good and bad time for public relations. It can be devastating when your project details are leaked during the site selection process because confidentiality is so critical at that time. However, once your project is ready to be announced, it is a win for all parties. Therefore, it is critical that economic developers control public communications to carefully to attract, successfully secure and retain your company in their community.3. Political advocacy
Politics always plays a critical role in the site selection process. You always want local politicians on your side, which makes appropriate management of political relationships so important. Playing hardball in negotiations can be a slippery slope with politicians. It is always recommended that you play your political cards at the right time, so hold your cards closely until you need them the most and let the economic developers guide you along the way.4. Adequate infrastructure
Economic development organizations need to invest in their communities through building adequate infrastructure for companies to operate. Whether it is wastewater infrastructure for manufacturing operations, public transportation for call centers, or power for data centers, infrastructure must meet a company’s needs or the company should be prepared to negotiate for future upgrades. If they are going to be added in the future, then make sure the community has the proper funding in place to avoid problems down the road.5. Leverage in real estate negotiations
Real estate negotiations are often tricky. For specialized projects such as a large scale manufacturing plant that needs critical site infrastructure or a call center that needs a ton of parking, there is often only one or two options in a community that will work for the project. Once the owner of the building or land figures this out, then you will start to lose leverage in negotiations. Therefore, economic development organizations can be utilized to help put pressure on the owner to get better real estate deal terms.6. Economic incentives
Economic incentives are probably the No. 1 item that companies expect from economic development organizations. Whether it is tax-related incentives such as tax credits and tax abatements or discretionary incentives such as cash grants and training incentives, companies are expecting more economic incentives than ever for capital investment and job creation. However, it is critical to understand what economic developers can actually provide. There are many restrictions such as statutory legislation, wage thresholds, capital investment and economic impact hurdles that will limit your ability to receive economic incentives despite what you think you deserve, what you were offered somewhere else, or what another company received in the past.7. Workforce development support
Labor is probably the most critical item needed to make any project a success. As a result, it is important that communities adequately fund and professionally staff their workforce development organizations. They need to be able to provide reliable data, great market intelligence, and the ability to provide quality recruiting and training assistance if they are going to successfully attract your company and help you build an operation that succeeds in the long-term.8. Expedited permitting
Companies often overlook one of the easiest incentives that economic development organizations can provide — expedited permitting. By negotiating very specific expedited permit rights for items such as regulatory, environmental and construction permits, you diminish your risk of project delays and control your project budget.9. Proactive assistance with economic incentive compliance
During economic incentive negotiations, it is critical to understand the compliance requirements of the economic incentives that you think you will receive in the future. It is often estimated that less than 50% of the economic incentive packages negotiated actually result in a company getting paid due to improper negotiation and failure to meet the compliance requirements. The most common problems are missed deadlines, incomplete documentation, lack of internal resources to manage the process and improperly negotiated incentive packages. To help minimize your risk of failure, it is important to carefully understand the compliance process, establish internal accountability, build a detailed compliance plan and leverage outside consultants who understand the process.10. Protecting the labor market
One of the main functions of economic development organizations is to attract and retain companies. It is a delicate balance that communities often fail to understand completely. The most common problem is the erosion of the labor market through industry saturation, which triggers wage inflation and excessive employee attrition. Basically, a community can fail to maintain the right balance of labor supply and demand. Therefore, when you are in the site selection process, ask community leaders questions about industry saturation and long-term strategies to handle the future demand for employees as they successfully attract other companies to their community.
There are many other factors that need to be evaluated in the site selection process. Economic developers often need to be specifically told what is expected from them. The 10 factors identified above will help you manage everyone’s expectations and make the site selection process more successful.