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BUILD A SMARTINCENTIVES PACKAGECommunity Impact ModelsIEDC Web SeminarMay 22, 2013Ellen Harpel, PresidentBusiness Developm...
© 2013 BUSINESS DEVELOPMENT ADVISORSBDA’s Incentives FrameworkRecipientDealComplianceEffectivenessData andanalytical tools...
© 2013 BUSINESS DEVELOPMENT ADVISORSThe focus for today’s webinar:RecipientDealComplianceEffectivenessData andanalytical t...
© 2013 BUSINESS DEVELOPMENT ADVISORSThree community impact categories• Project Benefits• Fiscal Impact• Economic Impact4Ca...
© 2013 BUSINESS DEVELOPMENT ADVISORSProject Benefits (1)•  Project characteristics•  Number of jobs•  Type of jobs and wag...
© 2013 BUSINESS DEVELOPMENT ADVISORSProject Benefits (2)•  Timeframe•  When will the project begin?•  When will investment...
© 2013 BUSINESS DEVELOPMENT ADVISORSFiscal Impact•  Definition: Tax and budgetary implications for state andlocal governme...
© 2013 BUSINESS DEVELOPMENT ADVISORSFiscal Impact (2)•  Data Needs•  What will generate revenue?•  Local tax structure•  C...
© 2013 BUSINESS DEVELOPMENT ADVISORSFiscal Impact (3)•  Issues to keep in mind•  Jurisdictions to consider•  Fiscal impact...
© 2013 BUSINESS DEVELOPMENT ADVISORSEconomic Impact (1)•  Definition: Traces the flow of money throughout theeconomy after...
© 2013 BUSINESS DEVELOPMENT ADVISORSEconomic Impact (2)•  Data Needs•  Employment•  Payroll•  Annual spending•  Constructi...
© 2013 BUSINESS DEVELOPMENT ADVISORSEconomic impact models•  Methods and tools•  REMI•  IMPLAN•  EMSI•  Location-specific12
© 2013 BUSINESS DEVELOPMENT ADVISORSPerformance Requirements•  Are they clearly defined?•  Are they part of the agreement?...
© 2013 BUSINESS DEVELOPMENT ADVISORSCommunication•  Can your organization:•  Describe the project benefits?•  Quantify the...
© 2013 BUSINESS DEVELOPMENT ADVISORSTakeaways•  Devote some resources to your analysis•  IEDC can help make the case•  The...
© 2013 BUSINESS DEVELOPMENT ADVISORSTakeaways (2)•  Beware of oversimplification/overly precise outputs –judgment still ne...
© 2013 BUSINESS DEVELOPMENT ADVISORSContact Information•  Ellen HarpelPresident•  571/212.3397•  eharpel@businessdevelopme...
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Bda smart incentives community impact webinar 052213 -final

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Bda smart incentives community impact webinar 052213 -final

  1. 1. BUILD A SMARTINCENTIVES PACKAGECommunity Impact ModelsIEDC Web SeminarMay 22, 2013Ellen Harpel, PresidentBusiness Development Advisors1
  2. 2. © 2013 BUSINESS DEVELOPMENT ADVISORSBDA’s Incentives FrameworkRecipientDealComplianceEffectivenessData andanalytical tools toenable betterdecision-makingPrepare for afuture of greatertransparency andaccountability2
  3. 3. © 2013 BUSINESS DEVELOPMENT ADVISORSThe focus for today’s webinar:RecipientDealComplianceEffectivenessData andanalytical tools toenable betterdecision-makingPrepare for afuture of greatertransparency andaccountability3
  4. 4. © 2013 BUSINESS DEVELOPMENT ADVISORSThree community impact categories• Project Benefits• Fiscal Impact• Economic Impact4Can this incentive deal generate net benefitsfor your community?
  5. 5. © 2013 BUSINESS DEVELOPMENT ADVISORSProject Benefits (1)•  Project characteristics•  Number of jobs•  Type of jobs and wages•  Investment•  Location – where is the project and where will the benefits occur?•  Fit with economic development strategy•  Target industries•  Business types•  Cooperation with state and regional allies•  Meets established program criteria5
  6. 6. © 2013 BUSINESS DEVELOPMENT ADVISORSProject Benefits (2)•  Timeframe•  When will the project begin?•  When will investment and hiring occur?•  What is the expected lifespan?•  Likelihood of success•  Make sense test?•  Other backers (banks, investors)•  What is the level of risk?6
  7. 7. © 2013 BUSINESS DEVELOPMENT ADVISORSFiscal Impact•  Definition: Tax and budgetary implications for state andlocal government of incentive decisions•  Reasons: Are taxes generated likely to exceed the cost ofthe incentive and additional costs of service•  Elements:•  Cost of incentive•  New state and local taxes generated by project•  Cost of services7
  8. 8. © 2013 BUSINESS DEVELOPMENT ADVISORSFiscal Impact (2)•  Data Needs•  What will generate revenue?•  Local tax structure•  Company assets and operations•  Individuals•  What additional expenditures will be required?•  Services to new residents•  Assumptions on household characteristics•  Services to the company•  New infrastructure•  Value of incentives8
  9. 9. © 2013 BUSINESS DEVELOPMENT ADVISORSFiscal Impact (3)•  Issues to keep in mind•  Jurisdictions to consider•  Fiscal impact of indirect and induced jobs•  New jobs and new residents•  Timing – annual or over time•  Ease of use/simple interface•  Sophistication of back end analytics•  Correlations between land use factors and revenue streams•  Average costs versus marginal costs•  Rules of thumb•  GIS integration9
  10. 10. © 2013 BUSINESS DEVELOPMENT ADVISORSEconomic Impact (1)•  Definition: Traces the flow of money throughout theeconomy after the initial investment•  Reasons: To estimate the contribution of economicactivities to a regional or state economy•  Economic impact depends on industrial structure and sizeof your region•  Components:•  Direct•  Indirect•  Induced10
  11. 11. © 2013 BUSINESS DEVELOPMENT ADVISORSEconomic Impact (2)•  Data Needs•  Employment•  Payroll•  Annual spending•  Construction spending•  Industry classification (NAICS code)•  Issues to keep in mind•  Industry choice matters•  By geography•  Cost•  Technical skills•  Interpretation – does it make sense?11
  12. 12. © 2013 BUSINESS DEVELOPMENT ADVISORSEconomic impact models•  Methods and tools•  REMI•  IMPLAN•  EMSI•  Location-specific12
  13. 13. © 2013 BUSINESS DEVELOPMENT ADVISORSPerformance Requirements•  Are they clearly defined?•  Are they part of the agreement?•  Is the company required to report to the EDO on itsprogress in meeting those requirements?•  Over what time period?•  Is there a way to verify reported information?•  COLLECT THE DATA to figure out what is working andwhat is not13Will this incentive deal generate net benefitsfor your community?
  14. 14. © 2013 BUSINESS DEVELOPMENT ADVISORSCommunication•  Can your organization:•  Describe the project benefits?•  Quantify the fiscal impact?•  Explain the economic impact?•  Have you prepared brief summaries that can be sharedwith different stakeholders?•  Have you avoided jargon?•  Is the analysis transparent?•  Assumptions and inputs clearly stated14
  15. 15. © 2013 BUSINESS DEVELOPMENT ADVISORSTakeaways•  Devote some resources to your analysis•  IEDC can help make the case•  The analysis has to be customized for your location•  Band together with others in your community and region•  Pool your resources•  Look to other governmental departments•  You’ll never be “right” – need order of magnitude estimate•  Strike a balance between detail and reasonableness•  Be prepared to communicate your decision and rationale15
  16. 16. © 2013 BUSINESS DEVELOPMENT ADVISORSTakeaways (2)•  Beware of oversimplification/overly precise outputs –judgment still needed•  Share your assumptions/the model’s assumptions•  Doesn’t have to be set in stone; tweak it over time16
  17. 17. © 2013 BUSINESS DEVELOPMENT ADVISORSContact Information•  Ellen HarpelPresident•  571/212.3397•  eharpel@businessdevelopmentadvisors.com•  www.businessdevelopmentadvisors.com•  www.linkedin.com/pub/ellen-harpel/a/448/266‎ellen@smartincentives.org•  http://www.smartincentives.org/•  Twitter: @smartincentives17

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