With the Win, Comes Arrogance

I can almost hear the gnashing of teeth in state capitals and picture the conversations directed my way. Why, Dean, are you so insistent that the terms of incentive deals with companies investing in our wonderful state be made public?

Why would you, Dean, someone who knows economic development, be busting our chops over this, something so trivial? Heck, you're one of us. Lay off, pal. Just between us, our commerce secretary is now having second thoughts about inviting you to dinner.

Well, friend, I appreciate you telling me that, but it's not so trivial to me. Because we are talking about the public's right to know how its money is being spent. This is not private monopoly money. This is public tax dollars at work, which means, in my book, it's damn near holy.

Furthermore, and I have to tell you this, I think it shows blatant arrogance to put out a press release touting a big corporate investment in your state while saying nothing, not a word, about whether state and/or local incentives -- public monies -- are involved.

But if you want to continue playing that game, I'm going to call you out on it. From now on, every friggin' time I see it. Not just you, but other states, too. Are we still friends? Oh yeah, tell the secretary that I said hi.

I see it all too frequently in emails that I receive almost daily from economic development organizations from around the country. They are announcements of companies either establishing operations in a new locale or expanding operations in an existing locale.

Inherent in almost every one of these announcements are agreements between state and local governments and those investing companies. These are in effect, public deals, that are all too often treated as private deals. It's as if John Q. Public does not have a right to know if his tax dollars were at work. And we want to build trust in economic development?

As a former economic developer for two organizations, one statewide, one regional, and a former business editor for a daily newspaper, I have to believe that taxpayers should be told of their stake in any such deals involving their money.

But that is increasingly not how it works. More and more, I see a private deal mentality being exhibited.

The arrogance was on full display last week in Arizona, Texas and Georgia and probably other states as well. Prepared statements (news releases) were prepared and published by various commerce departments lauding large capital investment projects. Governors and CEOs were quoted. We were told how many jobs were expected to be created, how much the companies would spend, when construction would start, and when operations might begin.

Some went so far as to speculate on what the economic impact of a particular project would be in the surrounding region. I have no problem with that. That's all well and good. But missing in so many of these official statements from governments were any details of when and if any publicly-funded incentives came into play

It may not be so much a conscious effort to keep incentive agreements confidential -- although some companies might prefer that -- but speaks more to a bureaucratic mindset that the public need not know any details of a deal hammered on out on their behalf. I mean, truly the public wouldn't care or understand. Let's just keep this among us professionals who know.

Three examples from Arizona last week. Taiwan Semiconductor Manufacturing Company announced on Tuesday it would spend an additional $28 billion on its chip-making complex in North Phoenix, growing from $12 billion to $40 billion and by doing so creating additional 4,500 new jobs. The $12 billion investment was already the largest in state history. But not a word on if incentives were awarded. I am presuming they were.

To the south in Tucson, also on Tuesday, lithium battery cell manufacturer American Battery Factory announced it would build a $1.2 billion "gigafactory," creating about 300 jobs initially, 1,000 eventually. Crickets on state incentives.

The very next day, another win for Tucson. Sion Power Corporation, the maker of electric vehicle batteries, said it would spend $341 million to expand existing manufacturing operations in Tucson, Arizona, creating 150 jobs over a five-year span.

But wait, there's more. Take a look at the following press releases from the past week, which I directly quote from:

Dec. 8. Atlanta, Ga.: "Governor Brian P. Kemp today announced that Hyundai Motor Group and SK On have selected a site in Bartow County for a new electric vehicle (EV) battery manufacturing facility that will supply Hyundai Motor Group’s plants in the U.S. One of the largest economic development projects in state history, stakeholders estimate it will create more than 3,500 new jobs through approximately $4-5 billion of investment in Bartow County.”

State Incentives: None mentioned.

Dec. 8, Austin, Texas: "Governor Greg Abbott today celebrated the announcement of Air Products and The AES Corporation's new mega-scale green hydrogen facility in Wilbarger County. The project is anticipated to create more than 1,300 construction jobs, 115 permanent operations jobs, and 200 transportation and distribution jobs. It is also expected to generate approximately $500 million in revenue to the State of Texas over the course of the project’s lifetime and be the largest green hydrogen facility in the United States.”?

State Incentives: None mentioned.

The following example is coming out of South Carolina is hardly better but at least there was a passing reference to incentives.

Dec. 8, Columbia, S.C.: "Kontrolmatik Technologies, via its subsidiary?Pomega Energy Storage Technologies, today announced plans to build a 3 gigawatt-hour (GWh) capacity lithium-ion battery factory in Colleton County. The company’s $279 million investment will create approximately 575 new jobs."

State Incentives (no dollar amount): "The Coordinating Council for Economic Development approved job development credits related to this project."

North Carolina, however, saw fit to do the right thing. Kudos to the Tarheel State.

Dec. 7, Raleigh, N.C.: "Future Meat Technologies Inc. d/b/a Believer Meats, a cultivated meat company, will create up to 100 new jobs in Wilson County, Governor Roy Cooper announced today. The company will make an initial investment of more than $123 million to establish its first commercial-scale food manufacturing facility in Wilson."

State incentives: "A performance-based grant of $500,000 from the One North Carolina Fund will help with Believer Meats’ location to North Carolina. The One NC Fund provides financial assistance to local governments to help attract economic investment and to create jobs. Companies receive no money upfront and must meet job creation and capital investment targets to qualify for payment. All One NC grants require matching participation from local governments and any award is contingent upon that condition being met."

But I am most impressed by the transparency displayed by Pennsylvania last week.

Dec. 8, Harrisburg, Pa.: "Governor Tom Wolf announced that?Crop One, an industry-leader in technology-driven indoor vertical farming, is opening a vertical farm in Hazle Township, Luzerne County, bringing 40 new full-time managerial and farm production jobs to the region."

State Incentives: "The company received a funding proposal from the Department of Community and Economic Development (DCED) for a loan of up to $3 million through the Pennsylvania Industrial Development Authority (PIDA); a $120,000 Pennsylvania First grant, and an $80,000 workforce development grant to train its new workers. The company has committed to investing a total of $105 million into the project and creating at least 40 new full-time jobs within three years."

Now that's what I am talking about. The Keystone State is laying it out there for all to see. And that's the way it should be.

Final Thoughts: Whom Do We Work For?

When state and local governments provide incentives to a company, be it tax credits and abatements, grants, low-interest and/or forgivable loans, and the like, they have effectively become sponsors of that company by using public funds.

And because of that, the various government agencies have a fiduciary responsibility to their bosses -- the taxpayers -- to be transparent and put their interest first, whether the companies like that or not.

Too often, I think we in economic development forget whom we are really working for. It's not the big companies asking for favorable treatment. (By and large, I am receptive to performance-based incentives.) No, it's the people busting their asses in our communities, trying to grab a piece of the American Dream and make it work for them. I work for them.

Huey P. Long said it best, "Every man a king."

This is the lead story in our latest edition of The Rising Tide, our weekly newsletter for economic developers and business people. To read the full, unabridged edition, seven stories in all, become a Tide Insider and subscribe at?BBA?or on?Substack.

BBA offers objective insight to communities and companies. We help communities build business investment and companies find the right communities to invest in. For more information, contact me, Dean Barber at [email protected]. Need a speaker??I can be there for you.