1. BUILD A SMART
INCENTIVES PACKAGE
Community Impact Models
IEDC Web Seminar
May 22, 2013
Ellen Harpel, President
Business Development Advisors
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2. © 2013 BUSINESS DEVELOPMENT ADVISORS
BDA’s Incentives Framework
Recipient
Deal
Compliance
Effectiveness
Data and
analytical tools to
enable better
decision-making
Prepare for a
future of greater
transparency and
accountability
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3. © 2013 BUSINESS DEVELOPMENT ADVISORS
The focus for today’s webinar:
Recipient
Deal
Compliance
Effectiveness
Data and
analytical tools to
enable better
decision-making
Prepare for a
future of greater
transparency and
accountability
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4. © 2013 BUSINESS DEVELOPMENT ADVISORS
Three community impact categories
• Project Benefits
• Fiscal Impact
• Economic Impact
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Can this incentive deal generate net benefits
for your community?

5. © 2013 BUSINESS DEVELOPMENT ADVISORS
Project Benefits (1)
• Project characteristics
• Number of jobs
• Type of jobs and wages
• Investment
• Location – where is the project and where will the benefits occur?
• Fit with economic development strategy
• Target industries
• Business types
• Cooperation with state and regional allies
• Meets established program criteria
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Project Benefits (2)
• Timeframe
• When will the project begin?
• When will investment and hiring occur?
• What is the expected lifespan?
• Likelihood of success
• Make sense test?
• Other backers (banks, investors)
• What is the level of risk?
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Fiscal Impact
• Definition: Tax and budgetary implications for state and
local government of incentive decisions
• Reasons: Are taxes generated likely to exceed the cost of
the incentive and additional costs of service
• Elements:
• Cost of incentive
• New state and local taxes generated by project
• Cost of services
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Fiscal Impact (2)
• Data Needs
• What will generate revenue?
• Local tax structure
• Company assets and operations
• Individuals
• What additional expenditures will be required?
• Services to new residents
• Assumptions on household characteristics
• Services to the company
• New infrastructure
• Value of incentives
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9. © 2013 BUSINESS DEVELOPMENT ADVISORS
Fiscal Impact (3)
• Issues to keep in mind
• Jurisdictions to consider
• Fiscal impact of indirect and induced jobs
• New jobs and new residents
• Timing – annual or over time
• Ease of use/simple interface
• Sophistication of back end analytics
• Correlations between land use factors and revenue streams
• Average costs versus marginal costs
• Rules of thumb
• GIS integration
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Economic Impact (1)
• Definition: Traces the flow of money throughout the
economy after the initial investment
• Reasons: To estimate the contribution of economic
activities to a regional or state economy
• Economic impact depends on industrial structure and size
of your region
• Components:
• Direct
• Indirect
• Induced
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Economic Impact (2)
• Data Needs
• Employment
• Payroll
• Annual spending
• Construction spending
• Industry classification (NAICS code)
• Issues to keep in mind
• Industry choice matters
• By geography
• Cost
• Technical skills
• Interpretation – does it make sense?
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Economic impact models
• Methods and tools
• REMI
• IMPLAN
• EMSI
• Location-specific
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Performance Requirements
• Are they clearly defined?
• Are they part of the agreement?
• Is the company required to report to the EDO on its
progress in meeting those requirements?
• Over what time period?
• Is there a way to verify reported information?
• COLLECT THE DATA to figure out what is working and
what is not
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Will this incentive deal generate net benefits
for your community?

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Communication
• Can your organization:
• Describe the project benefits?
• Quantify the fiscal impact?
• Explain the economic impact?
• Have you prepared brief summaries that can be shared
with different stakeholders?
• Have you avoided jargon?
• Is the analysis transparent?
• Assumptions and inputs clearly stated
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Takeaways
• Devote some resources to your analysis
• IEDC can help make the case
• The analysis has to be customized for your location
• Band together with others in your community and region
• Pool your resources
• Look to other governmental departments
• You’ll never be “right” – need order of magnitude estimate
• Strike a balance between detail and reasonableness
• Be prepared to communicate your decision and rationale
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Takeaways (2)
• Beware of oversimplification/overly precise outputs –
judgment still needed
• Share your assumptions/the model’s assumptions
• Doesn’t have to be set in stone; tweak it over time
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17. © 2013 BUSINESS DEVELOPMENT ADVISORS
Contact Information
• Ellen Harpel
President
• 571/212.3397
• eharpel@businessdevelopmentadvisors.com
• www.businessdevelopmentadvisors.com
• www.linkedin.com/pub/ellen-harpel/a/448/266‎
ellen@smartincentives.org
• http://www.smartincentives.org/
• Twitter: @smartincentives
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