Magazine article Government Finance Review

THE ROLE of the Finance Officer in ECONOMIC DEVELOPMENT

Magazine article Government Finance Review

THE ROLE of the Finance Officer in ECONOMIC DEVELOPMENT

Article excerpt

Your jurisdiction has just announced a major new economic development project requiring a significant investment in public infrastructure to be funded by a large debt issuance program. Were you participating in the announcement ceremony, or just now hearing it for the first time? Too often finance officers find themselves answering the latter.

Economic development plays a major role in both the community's local economy and the public sector's financial vitality. State and local governments often list economic development as one of their top goals, with elected officials, senior management, and community groups placing considerable emphasis on achieving these goals.

FINANCE OFFICERS SHOULD HAVE A SEAT ATTHE TABLE

Economic development often requires significant public financial participation and the extension of the government's credit support. The domain of the finance officer includes the stewardship of public funds, the lending of credit support, and the entity's overall financial condition. Therefore, the finance officer's involvement early in the economic development planning process is central to a development program that succeeds both in the short and long term.

While direct involvement appears necessary, cultural and organizational issues regularly preclude the finance officer's involvement. Often finance officers experience frustration by entering an economic development deal long after developers and the planning department initiated key parts of the financial negotiations. Moreover, these other key actors perceive the finance officer as the gatekeeper and often the naysayer.To be included in a process with substantial financial implications, finance officers need to re-characterize their role as one of constructively working within the process.

This article highlights and explains the value and necessity of the finance officer's active participation in economic development.The finance officer's contributions can be many and varied beginning at the outset with the jurisdiction defining its vision and strategy, to being at the negotiating table to shape the deal, to overseeing the post-development financial impacts.This article presents a comprehensive picture of the major reasons underlying the newly adopted recommended practice "The Role of the Finance Officer in Economic Development." This article provides the finance officer with both an information resource,and where needed, the case for active participation throughout the economic development process.

ILLUMINATING THE FINANCIAL ASPECTS OF ECONOMIC DEVELOPMENT

Economic development strategies frequently include the use of public financial incentives. The tools, including tax increment financing, abatement, various economic activity and hospitality revenue bonds, and tax credits, are often complex financial exercises. For many finance officers, these techniques likely fall outside their professional experience and background.Yet the professional and financial experience of the finance officer affords the best vantage point to understand not only the individual characteristics of these strategies, but their impact on other aspects of the jurisdiction's financial architecture. The finance officer's experience provides a particular opportunity to demonstrate his or her value to the process by taking the lead as an educator. In this capacity, the finance officer helps guide the jurisdiction in setting standards for the use of these tools.

Development projects and financings often have an extended term. Elected officials, staff, and the actual financial incentives likely change over time.The finance officer needs to participate in ongoing informational and educational forums not only to keep current with these events, but to communicate these changes to the organization. In certain cases a project, or the use of a financial incentive, heightens public debate. Public information efforts by finance officers help the community and the decision makers properly understand the issue. …

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