Magazine article Nation's Cities Weekly

Software Helps Communities Weigh Costs of Development, Incentives

Magazine article Nation's Cities Weekly

Software Helps Communities Weigh Costs of Development, Incentives

Article excerpt

Companies increasingly seek incentives -- waste treatment, tax abatements, infrastructure enhancements -- to locate in communities where their presence will mean more jobs and a better tax base.

Government officials must weigh the costs against the benefits of granting such incentives. To help with this crucial evaluation, economists at the Georgia Institute of Technology's

Center for Economic Development Services (CEDS) have developed software to provide a detailed fiscal and economic analysis.

LOCI (for Local Impact Model), formulated by Bill Riall and Robert Lama, fills a gap left by traditional input-output models that are both unreliable for small economies and exclude the all-important cost side of the equation. For example, landing a new firm will stimulate the local economy, but with that growth comes more demand for services.

According to Lann, CEDS research services manager, LOCI supports the need for objective, cost-effective economic development by providing the information to know how far a community can go in granting incentive demands, supporting the community's side in negotiations by supplying data about how government costs may change, and helping to understand and communicate how a local economy works.

"We think LOCI levels the playing field by giving communities a tool to estimate the fiscal and economic impacts from a new business location for themselves. They no longer have to rely only on the claims of the prospect," Lann said.

LOCI estimates how government costs and revenues will change from adding new investment to a local economy, such as a new manufacturing plant, distribution center, tourist attraction or office headquarters.

LOCI also estimates other impacts, such as the increase in new employment, income, households, commercial and industrial establishments and retail purchases. …

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