FINDINGS FROM ONLINE SURVEY OF ECONOMIC DEVELOPERS

1
FINDINGS FROM ONLINE SURVEY OF ECONOMIC DEVELOPERS

• October 21 2004

2
DATA SOURCES IN THIS PROJECT

• Focus Groups of Economic Developers
• Online Survey of Economic Developers
• Online Survey of Missouri Companies
• Interviews with Missouri Companies
• Interviews with Site Selection Consultants

3
AUDIENCE

• 90 respondents out of a 400 person membership
  (about 23)
• Eighty-seven percent were MEDC members and the
  balance were MEDFA members
• Average length of economic development experience
  was 13.1 years
• Developers were scattered throughout Missouri,
  with just a third from either Kansas City or St.
  Louis.

4
STRENGTHS OF MO PROGRAM

• The majority of developers think that DED,
  despite its weaknesses, is a critical resource
  for local economic developers.
• A slight majority of developers think that MEDC
  and MDFA are effective at furthering economic
  development in Missouri and the majority feel
  that DED is cooperative with local development
  groups.
• About a fourth of developers think that DEDs
  research functions effectively monitor trends in
  global and international markets.

5
WEAKNESSES OF MO PROGRAM

• Nearly 90 percent think that DED programs are
  under-funded. Three-fifths feel that DED has an
  inadequate level of professional staffing for its
  mission.
• Three-fourths think that DED programs pay
  inadequate attention to startups or expansions
• Two-thirds think that DED has not developed a
  consensus strategy for economic development in
  Missouri and nearly as many think that DED does
  not have a realistic strategic plan for statewide
  development and lacks a system for measuring and
  communicating its performance to stakeholders.
• Half of developers think that state government
  leadership in Missouri lacks a commitment to
  economic development and that state leaders do
  not engage the private sector nor local and
  regional economic development leaders in economic
  development policy.

6
MORE WEAKNESSES

• Nearly half of economic development leaders feel
  that Missouri has not identified a realistic list
  of target industries nor that the states
  development flagship, DED, is responsive to
  expansion projects. Half feel that DEDs
  unresponsiveness extends to RD and technology
  companies. The implication in the survey,
  reinforced in interviews and focus groups, is
  that Missouri focuses only on manufacturing
  projects.
• Two-fifths of developers feel that DED does not
  respond effectively to relocation prospects.
  Focus groups suggest that critical issues are
  slowness to respond with overly complex incentive
  packages and programs.
• Not surprisingly, most developers feel that DED
  has not developed a broad base of support among
  Missouri practitioners.

7
GENERAL FINDINGS

• Most developers indicate that prospects value
  CDBG and IRB programs.
• Less than a fifth of developers give venture
  capital programs any value.
• The majority of developers mentioned that
  enterprise zone tax credits have value to
  prospects, followed by development tax credits.
  Developers thought that business facility tax
  credits, historic tax credits and BUILD MO
  credits have value, although the scope of
  projects is more limited than the EZ credits.
• The property tax abatement and Chapter 100
  programs were valued highly by developers.
• Tax increment financing was deemed useful by
  nearly half of developers and overall was the
  most useful tool for public infrastructure needs.
  The tax credit for contributions was deemed of
  value but apparently not of as broad a use as tax
  increment financing.
• All of Missouris training programs were deemed
  of high value and broad use by a large proportion
  of the respondents. Training is underfunded
  according to those who answered open-ended
  questions later in the survey.

8
PRIORITIES FOR INCENTIVES

• When asked which five programs they would keep,
  if forced to choose, developers responded with
• Customized training
• CDBG Infrastructure grants
• Enterprise Zones
• New Jobs Training and
• BUILD MO Program.

9
ISSUES AND CHALLENGES

• A number of issues recurred throughout the stable
  of Missouri incentive programs (see matrix on
  next slide).
• The following are the most frequently cited
  issues
• Approval process is too long
• Program is too cumbersome in terms of
  applications and paperwork
• Program is too complex to market
• Limits and program exclusions are too low
• Specific issues raised frequently with a series
  of Missouri incentive programs are shown on the
  following slides.

10
SPECIFIC ISSUES WITH INCENTIVES
11
BUILD MO PROGRAM

• Program is inadequately funded
• Approval process is too long
• Scope of eligible businesses is too narrow
• Paperwork and applications are too cumbersome
• Rules and regulations are too inflexible

12
TAX CREDITS

• Incentive has limited impact on company bottom
  lines
• Program is too complex to market to prospects
• Limits and program exclusions are too low for
  book of active projects

13
DEVELOPMENT TAX CREDITS

• Limits and exclusions are too low for book of
  active projects
• Program is too complex to market to prospects
• Scope of eligible projects is too narrow
• Program is inadequately funded
• Approval process is too lengthy

14
TRAINING

• Program is inadequately funded
• Program is too inflexible in rules and
  regulations
• Scope of businesses is too narrow
• Limits and program exclusions are too low

15
ENTERPRISE ZONES

• Program is too restrictive in terms of geographic
  boundaries
• Limits and program exclusions are too low
• Program in inadequately funded
• Program is too inflexible in rules and regulations

16
TAX INCREMENT FINANCING

• Approval process is too long
• Program is too cumbersome in paperwork and
  applications
• Program is too complex to market

17
EXAMPLES OF LOST OPPORTUNITIES

• The following points were noted as tangible
  examples of how Missouri has lost projects to
  other states because of these issues
• A stainless steel fabrication company (18
  million investment and 240 jobs) picked PA over
  MO because of incentives
• Toyota Bodine and the Kansas City Raceway
• Unnamed project with 30 semi-skilled jobs
• Kansas SBIR awards to Kansas City area technology
  companies
• High end customer support centers because of
  inbound call center exclusions
• NUCOR to Blytheville, AR
• US Cellular in Farmington

18
PROGRAMS TO EMULATE

• Michigan Renaissance Zones
• Oklahoma Quality Jobs Program
• Michigan MEGA Program
• TX local sales tax programs
• AL statewide enterprise zones
• Iowa Area Development Group
• Jackson, TN area
• Jonesboro, AR area
• K-Tech in Kansas
• Ohio TIF program
• NC Job Creation Grants
• EDGE programs in KY, IL and IN
• KREIDA Program in KY
• KS Star bonds

19
IDEAS FOR IMPROVEMENT

• Saleable and immediately refundable tax credits.
• Simplify new jobs training because many companies
  cant purchase bonds
• Program like OK Quality Jobs
• Cash grants and elimination of sales tax on
  construction financed with IRBs
• Eliminate cap on New Jobs Training certificates
• DED needs to change its top-down economic
  development approach to one of local support,
  teamwork and open cooperation
• One-stop shop for communities to dialogue with
  DED
• Do away with tax credit programs
• Eliminate region specific tax credits like Wine
  and Grape

20
MORE IMPROVEMENTS

• Stability of mission, strategy and staffing at
  DED
• Incentives for small and startup companies
• Increased cap for Enhanced Enterprise Zone
  program
• Increased cap for the BUILD MO Program
• Increased funding for training programs
• Shorter time lines for notices and application
  processing
• Focus on expansion and retention programs
• Walk thru of incentive programs on DED web site
• A real strategic plan for growing the economy of
  MO
• Raise expectations, measure results, hold
  departments accountable for improvements