2007-095-RES-Accepting and approving the Paris Economic Development Corporation Budget for the Fiscal year October 1, 2007; to September 30, 2008

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Lamar County — Paris Economic Development Plan Guiding Principle 8: Economic Development is Best Pursued on a Local Labor Market Scale. The labor market benefits of job growth or wage increases in one local community occur across the entire local labor market. Because a community's policies will not fully reflect these spillover benefits, individual communities may sometimes be insufficiently oriented towards economic development policies that create jobs and enhance wages. The fiscal effects of development in one community also spillover to the entire local labor market. In many cases these fiscal effects on nearby communities will be negative. The community advising the new business development will receive additional business property taxes, whereas the roads and schools needed by workers in the new jobs may be paid for by other communities. Uncoordinated policies pursued by many small units of government will be excessively competitive for business real estate development. Thus, the fragmented structure of most metropolitan areas, with many competing jurisdictions and little coordination, may distort how economic development is approached. This fragmented structure explains why economic development is often seen as a series of real estate deals rather than as a way of improving labor market opportunities. Local governments may end up subsidizing real estate development more than they subsidize human capital development. The local labor market is also the level at which the key resources for achieving economic development must be pulled together. Labor is the most important business input. Labor costs and quality available to a business are largely determined by the metropolitan area, not the business's neighborhood or community. To alter labor costs or quality, economic development programs must target the overall local labor market. Local suppliers to an export-base firm will also be located throughout the metropolitan area, not just in the community in which the export firm is located. Policies to improve supplier competitiveness must target the entire local labor market area. METHODS Guiding Principle 9: Marketing, Streamlining Regulations and Business Problem - Solving Can Often Be Cheap Ways of Making Development Happen. The "sales" and "business development" activities that dominate the time of local economic developers are plausibly cost - effective. Because such interactions with firms are idiosyncratic, there is little research on their effectiveness. But sales and business development activities focused on information and problem - solving, not financial subsidies, are relatively cheap, and government intervention in this area has some rationale. These activities involve providing information on the local community to business prospects, and helping resolve problems that businesses have with local government regulations, taxes, and services. Providing basic information to businesses requires relatively modest expenditures on economic development staff. Providing information, particularly information on government regulations, services, and taxes, is a legitimate public activity. Private information markets are imperfect, and public or quasi - public agencies have some comparative advantages in obtaining and providing such information. Trying to resolve problems that "customers," including business customers, have with government activities, without compromising public goals, is one way of making government more effective and responsive. "Business development" becomes more questionable when it turns into public real estate development: government using zoning and condemnation to redevelop land. Absent a public subsidy, such government -based proceedings can be seen as one way of overcoming the problem of the "holdout landowner ": the one landowner in an area who refuses to go along, at a reasonable price, with an overall area plan. Unfortunately, many government- sponsored redevelopment projects use large public Paris Economic Development Corporation Page 48