April 9, 2007

Free Guide Helps Cities Make 'Ideal Deal' with Companies

Local governments can demand that companies receiving tax abatements, low-interest loans and other "corporate welfare" either create good jobs and public benefits or return the money, according to a new handbook co-authored by a University of Illinois at Chicago professor.

"The Ideal Deal: How Local Governments Can Get More for Their Economic Development Dollar" contains advice from Rachel Weber, UIC associate professor of urban planning and policy, and David Santacroce, professor, University of Michigan Clinical Law Program.

The free guide, which is downloadable at http://www.goodjobsfirst.org/pdf/idealdeal.pdf, guides economic development practitioners step-by-step through the elements of public incentive contracts: valuation of public costs and benefits, performance standards, disclosure and oversight, and enforcement.

The authors state that well-designed, enforceable incentive deals are among the few tactics by which a city can influence private development with relatively little risk or upfront investment.

If drafted too loosely, incentive plans may allow companies to break their word on benefits promised to cities that subsidized them (sometimes even relocating to other cities). Incentives, which often cost more than the benefits they create, divert funds from education and infrastructure, allow cronyism, and poison intercity relations, according to the authors.

"Everyone -- taxpayers, communities and employers -- benefits when the terms of the deals are clearly defined," Weber said. "These are best practices we've culled from local development officials around the country.

"I think Chicago, for example, has been doing a good job in terms of structuring these deals, demanding a fair amount from the developers and firms that are subsidized," she said.

"The Ideal Deal" is published by UIC's Center for Urban Economic Development, a research center focused on urban economic unevenness and its implications for low-income communities, and Good Jobs First, a nonprofit based in Washington, D.C.

UIC ranks among the nation's top 50 universities in federal research funding and is Chicago's largest university with 25,000 students, 12,000 faculty and staff, 15 colleges and the state's major public medical center. A hallmark of the campus is the Great Cities Commitment, through which UIC faculty, students and staff engage with community, corporate, foundation and government partners in hundreds of programs to improve the quality of life in metropolitan areas around the world. For more information about UIC, please visit http://www.uic.edu

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