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Thread: In the name of "economic development", everything becomes okay

  1. #1
    Cyburbian TerraSapient's avatar
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    In the name of "economic development", everything becomes okay

    As planners, we probably see the "economic development" carrot being dangled in the face of our communities to justify community-opposed land development more than most other members of society. This issue has always irked me.

    I am sure we all have examples of this in our hometowns. One current development that is underway locally here in Hawaii that has received monumental community resistance is the development and opening of a 130,000 square foot Target in Kailua. For information, refer to this brief article that adequately explains the situation http://honoluluweekly.com/cover/2011/01/off-target/. What I find particularly interesting about this case is that the community isn't interested in the carrot. They consistently and adamantly reject the carrot and want Target to stay away, but Target just keeps dangling it and using the creation of 250 jobs in the area as justification for going against the community's wishes and has even gone so far as to threaten litigation against the chair of the local neighborhood board for stating that he does not support the development because it goes against the area's sustainable communities plan (which, unfortunately, has no teeth).

    I'd love to hear some thoughts on this situation from other communities. Has a similar situation ever occurred in your town? How did you handle it? Did the development go through? Was the community able to claim any victories in the process? When there is no legally defensible precedent for denying development rights, how does a community defend itself from continually being developed?

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    Cyburbian TexanOkie's avatar
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    This isn't really an answer to your posed questions, but your comments show a markedly stark contrast in attitudes toward development in Hawaii and Texas. In Texas, it's most always welcomed with open arms unless it is something that draws out a few localized NIMBYs. I'd argue that even in most places, it's viewed as an inevitability (or at least should be), and the goal of the community should be more to shape it into a desired form rather than try to prevent it completely. It has been my experience and observation that communities who take the "prevent it completely" attitude and action most always get much less out of it than those with the other attitude.

  3. #3
    Cyburbian Rygor's avatar
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    What kind of land use or design controls are there limiting development in the community? Unless there are policies in place (such as strict banning of certain types of uses, or regulation of building over "x" size, or design controls), then there is not much that can be done. If I were Kailua, I'd be working feverishly to get some of these policies in place because otherwise these situations are going too come up again. I assume it's probably too late to prevent the Target, though.
    "When life gives you lemons, just say 'No thanks'." - Henry Rollins

  4. #4
    Cyburbian stroskey's avatar
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    People, even Economic Development people, greatly misuse the term "economic development". Is our community going to really better itself because a new Target is here, or an Applebees, or a Sonic? Those don't develop your economic base, but rather just continue with what you have. True economic development means taking what you have and improving it. Usually that means increased production, factory expansion, new financial tools, etc.

    The problem we have is that not every community is a place where businesses really want to be. Those places can put whatever regulations on they want and they'll still grow. Most places are looking for any increased tax base, and that's where the term gets thrown around. "If we get more taxes, surely we've developed." I've been places where people get excited about a new fast food place because that means an extra 25K in property taxes per year, which can really help out a strained budget. Businesses know this and they will say, "Your rules make it so hard to come here, we'd rather go to your neighboring city who will work with us more than you will." Leaders don't want that and they make rules that benefit businesses now, but not the city in the long-term. What can we do? I don't know.
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  5. #5
    Cyburbian Mud Princess's avatar
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    Quote Originally posted by stroskey View post
    <snip> Most places are looking for any increased tax base, and that's where the term gets thrown around. "If we get more taxes, surely we've developed." I've been places where people get excited about a new fast food place because that means an extra 25K in property taxes per year, which can really help out a strained budget.
    There may be an extra 25K in property taxes, but what's often not taken into consideration is the cost of providing additional services because of that new fast food place. OK, maybe a single business doesn't have that much of an impact, but what about that huge new shopping center? On the plus side, yes, it provides jobs and tax revenue, but it may also result in the need for additional police and fire services... and in my state, some of the largest commercial projects seek PILOT agreements or other tax incentives that immediately reduce that potential community benefit.

  6. #6
    Cyburbian The One's avatar
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    Ok.....

    With about 4,500+ professional economic developers and likely 3X that in private/non-profit/city/county practice, I'm thinking the ED scene is VERY diluted these days. Just 15+ years ago economic development was much more unique and regional in scope. Intense competition among communities and the lack of an agreed to structure at the regional level (including tax sharing and shared infrastructure costs) creates additional tension. The competition is great as long as development doesn't go elsewhere due to a lack of pooled resources/incentives. With little or no financial backing, many of these smaller organizations are merely marketing tools for non-basic sector development (downtown development groups)

    With so much dilution and competition in the economic development community, it is no wonder non-basic sector employment is now pushed as economic development.

    If I were an economic development employee for a small jurisdiction (see comments above about not having a regional economic development entity that shares benefits and costs across the board), you can bet I'd be proposing a ribbon cutting for a fast food joint or even a target in order to keep my job. But for regional or state economic development efforts, a target or fast food joint just doesn't cut it.

    In my view non-basic sector employment should not be the focus of state or regional economic development efforts. Non-basic development can be passed off as significant at a local level because something is better than nothing at all.

    Basic sector employment should be the primary focus at all levels of economic development, but because everyone and their uncle are in the economic development business these days, the trend is to convince elected officials and the public that all development is equally important.

    Also it would help if we didn't create incentives for corporations to send our basic sector jobs overseas
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  7. #7
    Cyburbian ColoGI's avatar
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    Quote Originally posted by Mud Princess View post
    There may be an extra 25K in property taxes, but what's often not taken into consideration is the cost of providing additional services because of that new fast food place. OK, maybe a single business doesn't have that much of an impact, but what about that huge new shopping center? On the plus side, yes, it provides jobs and tax revenue, but it may also result in the need for additional police and fire services...
    The COCS literature is clear that commercial usu uses much less service revenue than residential, which does not pay for itself. That is: commercial pays for itself. Residential does not.

    Nonetheless, I can completely understand Hawaii not wanting rampant development like Texas. Good for them. There, the ED carrot isn't much of a dangle.

  8. #8
    Cyburbian TerraSapient's avatar
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    In my experiences, Hawaii has always been a bird of a different feather in terms of development. Routinely, one hears strong opposition to development of any sort. I imagine it has a lot to do with the fact that just 50 years ago, Hawaii was a place dominated by taro fields, rice patties, and jungle, and now it is a concrete jungle dominated by sky scrapers, endless seas of traffic, and sprawling suburban-style developments. Oahu has experienced this the most intensely, but the trend is present in the outer islands as well.

    What I find interesting about the Kailua-Target case, is that the community has gone to Target and requested that they build one of their compact stores, about 80,000 square feet, and Target has declined to compromise despite the negative press. One of Target's representatives informed a local paper that they designed the store for a community of about 100,000 people. Kailua is 40,000 at most. To me, and apparently to a lot of other people, this means that Target expects people to drive from other nearby communities to support the store (note: this will be the second Target in Hawaii). This will add even more congestion to the already strained transportation network. Targets response has been to add another traffic light and reduce the number of entry-exit points to their parking lot.

    Regardless, using the 250-job carrot isn't soothing over the community that will host this store. I suspect, as I am sure others do, that Target will simply put other locally-owned Kailua-based stores out of business, so the job creation gimmick is exactly that, a gimmick.

    I think the way that planning is controlled here is part of the problem. You have the State, which makes decisions about all land that is not urban, and the counties, which make decisions about the urban-areas. So, Kailua is at the mercy of the planning department of the City and County of Honolulu. Though this system does help prevent neighboring communities from fighting over tax revenue from placement of businesses within their jurisdictions, it also minimizes the ability of municipalities to control their own development.

  9. #9
    Cyburbian Brocktoon's avatar
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    Oten big box retailers that create part time jobs fight to get their project approved under the guise of economic development. In Arizona most cities would bend over backwards for a Target...they are huge sales tax generators. I would imagine that revenue per square foot is critical for Target in a place like Hawaii where the nearest distrubtion center is 5 hours by plane and 3 days by ship away. Target is good at doing its demographic research and I am not aware of them going into an area and failing.

    One thing that is often lost in economic development debates is community character. If a city or area wants to be big box free and the residents understand that it will have a financial impact then they should hold firm.

    A term you are going to start hearing a lot more commercially viable. Many small communities do not have the densities, workforce or infrastructure to support the new locates. Economic development professionals in rural and smaller areas are going to really have to start playing defense to retain what they have and help support entrprenuers. With the economic dynamic favoring higher educated locales, manufacturing becoming more sophisticated and efficent, and knowledge workers it will be more difficult for small areas to create jobs through the standard attraction model.
    "If you don't like change, you're going to like irrelevance even less" General Eric Shinseki

  10. #10
    Cyburbian Cardinal's avatar
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    There is a very real debate in the economic development community right now concerning the meaning of economic development. There are some professionals who follow the old "jobs and wealth" line of saying that the practice revolves around primary industry attraction (marketing, incentives, etc.), while a more enlightened group* realizes that it is also our role to build the capacity and conditions that allow economic development to occur. In that context, economic development can mean expanded shopping and dining opportunities, better parks and cultural facilities, more housing targeting different segments of the population, etc. So under the right set of circumstances, getting a new Target can be a win for economic development.

    And there are circumstances in which a new Target may not be contributing to the community's economic well-being. It is even more likely that the picture is not so clear - there are both good and bad outcomes. Answering the question really requires information. It should start long before Target arrives, with analysis to determine what kinds of uses will really provide economic development (or build capacity). Then a strategy is needed to determine how to maximize the desired benefit and minimize negative impacts. Lastly, when someone like Target arrives, an independent study should be conducted to evaluate the potential outcomes of that particular use. This analysis/strategy/evaluation mechanism is missing from most communities.

    * Is my bias apparent?
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  11. #11
    Cyburbian
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    Right out of college I did a "Major employers report" for an MPO in SE Washington. It involved calling hundreds of businesses and talking to them about their employment numbers (touchy to say the least). We divided the jobs into full time and part time. What was so interesting to me is that the Albersons and Safeways and Targets and Wal-marts ect... may employ lots of people, but most of them are part time. For example one of the Albertsons said they employed 100 people. It turned out that they had 3 full time employees at that store and 97 part timers. Most of the part timers were high school kids... Is that economic development? All jobs are not created equal. I would much rather have a company move to town that employs 5 engineers than one that employs 97 high school kids part time.

    The real conundrum is that these chain businesses that dangle their jobs rhetoric (especially now) don't contribute to the local economy like a locally owned competitor would. Net profits off a chain store go to corporate stock holders, who may not even be from the nation! A locally owned businesses net profits stay in that community and add wealth all over again.

  12. #12
    Cyburbian Mud Princess's avatar
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    Quote Originally posted by zach2187 View post
    The real conundrum is that these chain businesses that dangle their jobs rhetoric (especially now) don't contribute to the local economy like a locally owned competitor would. Net profits off a chain store go to corporate stock holders, who may not even be from the nation! A locally owned businesses net profits stay in that community and add wealth all over again.
    I agree, which is why I generally don't support the idea of providing incentives to retailers like Cabela's, Wal-Mart, Target, etc.

  13. #13
    Cyburbian
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    Quote Originally posted by zach2187 View post
    What was so interesting to me is that the Albersons and Safeways and Targets and Wal-marts ect... may employ lots of people, but most of them are part time. For example one of the Albertsons said they employed 100 people. It turned out that they had 3 full time employees at that store and 97 part timers.
    The kicker is that many of those "part timers" are probably working 39 hours a week. The stores would be required to give better benefits if they were full time so they keep them just under to avoid doing so.

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    OH....IO Hink's avatar
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    Quote Originally posted by Blide View post
    The kicker is that many of those "part timers" are probably working 39 hours a week. The stores would be required to give better benefits if they were full time so they keep them just under to avoid doing so.
    Not disagreeing with you in concept. I think the practice is wrong, but in my experience employers define part time as number of house a year. You go over than number than you are full time. They just assure that people don't go over that number. Most I have seen are 32 hours a week. Not sure why that is, but it seems pretty consistent.
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    Cyburbian jsk1983's avatar
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    Quote Originally posted by Blide View post
    The kicker is that many of those "part timers" are probably working 39 hours a week. The stores would be required to give better benefits if they were full time so they keep them just under to avoid doing so.
    Yep. That was me at one point. Worked 40 hours for a few weeks then a little less then 40 again. If I was scheduled for 40 hours a week for a certain number of weeks they would have had to make me full time and of course that would have cost them more.

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    Cyburbian
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    That may be true, but the point is still the same. A (39 hr/week) job at Albertsons isn't the same as a full time engineering job. I don't know many folks that consider a part time job at Albersons a career, yet Albersons will tell you they are bringing 100 jobs to town in hopes of stirring up thoughts of 100 new career like positions being added to the local economy. When in reality, not only are most of the jobs low wage jobs that will likely go to teenagers looking for extra cash, but even those jobs aren't "new" jobs that have been "added" to the economy. They are mearly pirating business from other local businesses.

  17. #17
    Cyburbian
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    And in the meantime our communities are giving away tax breaks to these folks to come to town. We should be giving them money to stay away.

  18. #18
    Cyburbian
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    Quote Originally posted by TexanOkie View post
    This isn't really an answer to your posed questions, but your comments show a markedly stark contrast in attitudes toward development in Hawaii and Texas. In Texas, it's most always welcomed with open arms unless it is something that draws out a few localized NIMBYs. I'd argue that even in most places, it's viewed as an inevitability (or at least should be), and the goal of the community should be more to shape it into a desired form rather than try to prevent it completely. It has been my experience and observation that communities who take the "prevent it completely" attitude and action most always get much less out of it than those with the other attitude.
    Is this why everyone wants to live in Texas and nobody wants to live in Hawaii? Oh wait...

  19. #19
    Cyburbian
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    People, even Economic Development people, greatly misuse the term "economic development". Is our community going to really better itself because a new Target is here, or an Applebees, or a Sonic? Those don't develop your economic base, but rather just continue with what you have.
    Agreed - none of these are primary jobs. Retail, and especially restaurants, can be provided by local enterprises. Agreed that a Target might increase the variety of retail available locally, offer better prices, draw shoppers to your community and/or prevent shoppers from leaving your community, all with potential sales tax benefits for the local government (unless you are in Oregon or Montana where there is no sales tax), but that's not the same as economic development. I've seen quite a few economic development organizations that are prohibited from getting involved with retail at all.

    Some would say the profits generated by a large corporate store get taken out of your community (as opposed to a local owner-operator) but I just don't see many locally-owned stores that are even mid-box size. I do like the model of the Ace or True Value that combines local ownership with a purchasing network. On the other hand, I find it difficult to get excited about "buy local" when the local retailers are selling the same stuff at higher prices. For smaller communities, if its job creation you're looking for, I myself am interested in moving beyond "buy local" meaning buying from local retailers selling the same goods big boxes do, to actually looking at establishing local systems - like the local food systems movement that looks at the entire process from production to processing and value added to retail; or to encouraging institutions like resort hotels to source locally. I know the organization BALLE has some good literature on this, although the rhetoric may be a bit strong.

  20. #20
    Cyburbian wahday's avatar
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    I think what many are alluding to here is the difference between Economic Growth and Economic Development

    Economic Growth considers the increase in productivity or GDP - essentially more activity in the marketplace - but does not address any changes in standard of living (which may or may not occur, depending on the particulars)

    Economic Development is specifically concerned with the measurable improvement in standard of living (which is not just more money, but access - usually through that money - to goods and services that were not there or difficult to access before). Depending on what economic model one is considering, this arena might also encompass things like (in the international context) democraticization, more choice in goods and services, increases in education, sometimes a decrease in birth rates, increased savings, increased government spending on public services and infrastructure, etc. International Development deals heavily in this arena (World Bank, IMF, UN, etc.) but domestically, it often considers a set of issues that are specific to our developed, industrialized society.

    So, Target in Hawaii (or, in my local case, call centers by the dozen) may create jobs, yes, but what kind of jobs? What is the pay and benefits? Will these jobs lead to an actual increase in standard of living for those employed and others served? The answer is mixed, of course. Call centers, one could argue, provide a level of technical assistance people may not have had before and that is "development". Or Target brings goods to a population they may not have had or at a price that is lower than before.

    However, what are the wages? Our call center jobs are $8/hr and many work more than one job because the cost of living is higher than that job can address. Is this sustainable (ie. can people really live on these wages)? Will it lead to higher educational achievement for their children? Can people advance at their job or are they doomed to $8/hr. forever? Does it lead to healthier families because the health benefits afford access to medical care? Or are the benefits sh!tty (or in the case of Walmart, do they emply people at less than full-time to avoid paying benefits and then direct employees to get on state Medicaid?) Did the company build a much needed road that provides access to other jobs and resources? Or has it developed a greenfield that will never again be used for agriculture?

    These are the kinds of questions that would differentiate "growth for growth's sake" from real "development" of quality of life. Obviously, the measure of QOL is rather subjective and that's where the wrangling occurs. What one person sees as a total win for everyone, someone else sees as the scourge of society.
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  21. #21
    moderator in moderation Suburb Repairman's avatar
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    Quote Originally posted by wahday View post
    I think what many are alluding to here is the difference between Economic Growth and Economic Development

    Economic Growth considers the increase in productivity or GDP - essentially more activity in the marketplace - but does not address any changes in standard of living (which may or may not occur, depending on the particulars)

    Economic Development is specifically concerned with the measurable improvement in standard of living (which is not just more money, but access - usually through that money - to goods and services that were not there or difficult to access before). Depending on what economic model one is considering, this arena might also encompass things like (in the international context) democraticization, more choice in goods and services, increases in education, sometimes a decrease in birth rates, increased savings, increased government spending on public services and infrastructure, etc. International Development deals heavily in this arena (World Bank, IMF, UN, etc.) but domestically, it often considers a set of issues that are specific to our developed, industrialized society.

    So, Target in Hawaii (or, in my local case, call centers by the dozen) may create jobs, yes, but what kind of jobs? What is the pay and benefits? Will these jobs lead to an actual increase in standard of living for those employed and others served? The answer is mixed, of course. Call centers, one could argue, provide a level of technical assistance people may not have had before and that is "development". Or Target brings goods to a population they may not have had or at a price that is lower than before.

    However, what are the wages? Our call center jobs are $8/hr and many work more than one job because the cost of living is higher than that job can address. Is this sustainable (ie. can people really live on these wages)? Will it lead to higher educational achievement for their children? Can people advance at their job or are they doomed to $8/hr. forever? Does it lead to healthier families because the health benefits afford access to medical care? Or are the benefits sh!tty (or in the case of Walmart, do they emply people at less than full-time to avoid paying benefits and then direct employees to get on state Medicaid?) Did the company build a much needed road that provides access to other jobs and resources? Or has it developed a greenfield that will never again be used for agriculture?

    These are the kinds of questions that would differentiate "growth for growth's sake" from real "development" of quality of life. Obviously, the measure of QOL is rather subjective and that's where the wrangling occurs. What one person sees as a total win for everyone, someone else sees as the scourge of society.
    You said that far better than I could have. I get so frustrated when what are really service industry jobs are touted as economic development when they don't really do anything for raising quality of life for employees.

    "Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

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  22. #22
    Cyburbian Brocktoon's avatar
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    Smart ED professionals often say no to a deal. The community I work in is nearing build out. I can't tell you how many times we have told warehouse and distribution companies that we are not the best fit but here are some people in nearby cities that would love to have your company. If we are going to see 25 acres go vertical then it needs to have more than 80 jobs with an average wage of $35,000 per year.

    When I worked in Michigan the EDC I worked for told a company that we would love to have their company in our community but given their supply chain they would be much better off in Texas. ( Needless to say the mayor almost had a stroke.) Since their products market was almost exclusively oversees the long supply lines would have made it almost impossible to be sustainable.
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  23. #23
    Cyburbian wahday's avatar
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    Quote Originally posted by Brocktoon View post
    Smart ED professionals often say no to a deal. The community I work in is nearing build out. I can't tell you how many times we have told warehouse and distribution companies that we are not the best fit but here are some people in nearby cities that would love to have your company. If we are going to see 25 acres go vertical then it needs to have more than 80 jobs with an average wage of $35,000 per year.
    Wow, that's impressive that you all have the details worked out up front like that. I wonder how many other communities have metrics like this to help measure potential impact. My impression is that most places just react when a proposal comes and have not developed the kind of analysis or key elements that make a big commercial enterprise viable (from an economic development standpoint). This makes them more prone to both influence peddling and being swayed by the pitch (because, really, the proposed business is going to have much more capacity and resources to present compelling stats than the local neighborhood or graqssroots organizations critical of it). To be able to push all that glossy material back across the table and say "show me your project will do X, Y and Z and we will consider it" I think puts the municipality in a very strong negotiating position.
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  24. #24
    Cyburbian Cardinal's avatar
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    Quote Originally posted by wahday View post
    Wow, that's impressive that you all have the details worked out up front like that. I wonder how many other communities have metrics like this to help measure potential impact. My impression is that most places just react when a proposal comes and have not developed the kind of analysis or key elements that make a big commercial enterprise viable (from an economic development standpoint). This makes them more prone to both influence peddling and being swayed by the pitch (because, really, the proposed business is going to have much more capacity and resources to present compelling stats than the local neighborhood or graqssroots organizations critical of it). To be able to push all that glossy material back across the table and say "show me your project will do X, Y and Z and we will consider it" I think puts the municipality in a very strong negotiating position.
    The majority of communities do not have any substantive policy regarding the cost-benefit of companies locating in their community. Many years ago the need for this became apparent after I was approached by a guy wanting to buy land for a tire recycling business. After five minutes of conversation it became apparent that he wanted to move an old trailer onto the property where he would live and operate the business, which he described as needing only a conveyor belt and a shredder. What I developed was a sliding scale that began pricing land at four times our acquisition and development cost, and then reduced it depending on the number of jobs, wages and benefits, and whether it was a targeted industry. It brought many pointless conversations to a quick end when I could simply say "Based on what you told me I could sell you a site for $200,000 per acre."
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  25. #25
    I guess I'm conflicted. I don't shop at target/walmart/whatever.

    But if a big box store or any type of store wants to come into a community an comply with the previously agreed upon design standards and no get any public funds, then I think they should be allowed in. To what extent is the opposition just MINBYism or BANANAism? Who are we to say that if the level of jobs is too low, then we don't want them in our community and the those who might benefit from those jobs should not have them?

    Again, there is a need for strong environmental standards, strong design standards, etc. so a tire recycler would be out. But government should not be deciding between store brands. Make everyone provide health insurance, have a high minimum wage, but let anyone in who complies with that.

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