In the last year and a half, the economic development landscaped has changed due to the pandemic. Local governments and economic development organizations (EDOs) who are serious about improving their competitiveness must update their incentives policies and work with site selectors and companies to revise incentive agreements.
Local Governments – A time to Adapt
The current landscape calls for local governments and EDOs who want to remain or enhance their business attraction and retention efforts to rework their incentive strategy to become more flexible or adaptive. In today’s site selection market, companies seek incentives that provide more flexibility in terms of incentive agreements, waiver of building permits, and an adaptive workforce. Pre pandemic incentive agreements did not have to be managed with highly inflated construction costs, which is why now more than ever, local governments must be flexible in understanding that a 1.5-year construction cycle may see its timeframe increased by almost 50% or 2.25 years. The waiver of building permits has been an option that EDOs sometimes have in their arsenal, but this has become almost a constant in the pandemic times we live in. Looking at the workforce has presented a more significant challenge as businesses deal with a shrinking workforce and health concerns over a burst of COVID cases in any community. Remote work from home has become a viable tool for all industries in managing the pandemic times; however, in some industries, this is more challenging, such as manufacturing or logistics jobs. EDOs must work with site selectors to ensure that remote workers (work from home) may be considered in the category of targeted jobs. There is already evidence through surveys that shows EDOs are incentivizing remote jobs to support this claim. In summary, flexibility built-in to agreements, waiver of permits and remote jobs are required with incentive agreements.
So, the verdict is for adaptive incentive strategies that require EDOs to be flexible with their incentives if they want to be competitive with business attraction and retention projects.