Local Hero V. Regional Champ

Very often, a big development project achieves regional goals but does so by flattening a local community. Or vice versa.
December 2000
William Fulton
By William Fulton  |  Columnist
Director of the Kinder Institute for Urban Research at Rice University and former mayor of Ventura, Calif.

A few years ago, I heard a transportation expert in Los Angeles offer up an almost perfect illustration of the difference between local and regional goals. "When I step off the curb to cross the street and almost get flattened by a car going 50 miles per hour," he said, "that's a triumph of regional goals over local priorities."

The same can be said for economic development. Whether some economic development effort is achieving its goal depends on how you define the outcome. Very often, some project does a fine job of achieving local aims but amounts to little more than rearranging things at the regional level. Or, conversely, a project (often a big one, such as an airport) achieves regional goals but does so only by flattening a local community.

For the past several months, a rhetorical battle between the city of Anoka, Minnesota, and the Washington, D.C.-based policy organization Good Jobs First has brought this local-versus-regional conflict into view once again.

Anoka is an older community some 20 miles north of Minneapolis. It has been struggling economically since the loss of a major industrial employer, the Federal Cartridge Corp. Under the leadership of the late economic development consultant Gary Stout, Anoka used a tax- increment-financing mechanism to attract dozens of companies to its 300-acre industrial park. A major lure to the companies was free land.

There is little question that the industrial park has been a roaring success for Anoka; today the industrial park is home to at least 1,600 jobs, mostly in manufacturing. But Good Jobs First, a group that has a history of questioning the impact of deep economic incentives, looked at the Anoka situation from a regional perspective.

Using Minnesota's unusually broad public disclosure requirements for economic development projects, Good Jobs First found that all 29 companies that had been lured to the park had come from elsewhere in the Twin Cities metro area, mostly from other northern suburbs closer in to the central city. Based on interviews with the companies, Good Jobs First concluded that, while most of the companies were looking to expand, virtually all of them were planning to stay in the Twin Cities area no matter what. Their report also noted that the free land played a major role in luring them to Anoka--largely because, as one neighboring city official put it, "I don't see how companies can say no to it."

Good Jobs First concluded that Anoka had simply spent tax dollars to subsidize the relocation of companies and jobs that would have stayed in the vicinity anyway. A little less compellingly, but with impressive use of geographical data, the report argues that the Anoka relocations contribute to regional sprawl because most of these relocations came from close-in suburbs, and workers must relocate to the metropolitan fringe or commute out from central locations in order to retain their jobs.

Needless to say, the Good Jobs First report has infuriated city officials in Anoka, who have spent a lot of time defending their project as good for both their struggling city and the regional economy. No one doubts Anoka's assertion that the industrial park has revived the town economically. But on the regional front, the city's main argument is that most of the space vacated by the companies that moved to Anoka was quickly leased to other companies. In other words, Anoka's free land did not subsidize pointless business relocations to Anoka. Rather, it subsidized a needed increase in the metropolitan region's supply of industrial real estate.

This is where the regional-local conflict in economic development gets a little dicey.

If the purpose of these subsidies is to stimulate regional economic growth--well, the Twin Cities region already has the most prosperous economy of any metropolitan area in the Upper Midwest, so it's hard to believe subsidies are really needed. If, on the other hand, the purpose is to rearrange economic growth to where it is most needed within the region, then Anoka might be one candidate for a target location, but it's certainly not the only target. Anoka was struggling, but underlying the Good Jobs First critique was that there are many other communities in the region that are struggling just as much or more. They had no say in how Anoka used its subsidy, and they may be losers when Anoka wins.

Despite the city's arguments, the Anoka Enterprise Park wasn't a regional economic development effort at all. It was a pretty typical job-subsidy effort--and a successful one--by one struggling community that had access to certain financial levers with which to manipulate the regional economy, and the brains or the luck to hire a guy who knew what to do with those levers.

Whether you're an economic Darwinist or a metropolitanist at heart, it shouldn't be very surprising how this one turned out. The Anokas of this world are the towns that usually succeed at the economic development game. And why should they care whether their region has won or lost as a result of all their moves?