Edmond Life and Leisure - May 22, 2025

Edmond should try to avoid

‘Race to the Bottom’ with incentives

If you are waiting for the proposed brewery at Festival Market Place in downtown Edmond to wet your whistle you can stop. The project, in default twice in two years, has expired and at the last city council meeting it was a definite no from the new council to extend it, again. Council member Barry Moore was moved to say, “I am blue hot about this.” Edmond has not done well with economic incentive programs from what I have observed. My view is to take care of the people that have already made an investment here and encourage others to come based on their ability to do the project. If it takes city incentives to bring in business, then it probably will not be successful. Regular readers will note my family experience with the incentives given to the developers around Show Biz movie theater. I will be asking the city for a status and report back to you. We should have seen massive development around the theater by now but instead it is just piles of dirt.

Instead of writing about everything that was wrong with the brewery project from the start at Festival Market Place and the amount of money that has been spent by the city on demolition and preparation for the site, I have decided to move forward and share my thoughts on what should be up for consideration by our new council.

Economic incentives are powerful tools that city governments can use to stimulate economic growth, attract businesses, and improve the overall quality of life for their residents. When used properly, these incentives can lead to job creation, increased tax revenues, and a more vibrant local economy. However, the misuse or overuse of economic incentives can lead to unintended consequences, such as budget deficits, inequality, and a lack of longterm sustainability. Businesses that come and go when the incentives run out are a bad look for a community. We cannot compete with the big kids by giving out money.

Transparency and Accountability

One of the key principles in the proper use of economic incentives is transparency. City governments must ensure that the process of granting incentives is open and transparent to the public. This includes clearly outlining the criteria for eligibility, the types of incentives available, and the expected outcomes. Transparency helps to build trust between the government and the community, ensuring that residents understand how their tax dollars are being used to promote economic development.

Accountability is another crucial principle. City governments must establish mechanisms to monitor and evaluate the effectiveness of the incentives they provide. The lack of regular reporting was criticism by council of the brewery development. This can include regular reporting on the outcomes of incentive programs, such as the number of jobs created, the amount of private investment attracted, and the overall economic impact on the community. By holding businesses and developers accountable for meeting their commitments, city governments can ensure that the incentives are achieving their intended goals.

Strategic Planning

Strategic planning is essential for the effective use of economic incentives. I just do not think Edmond has done enough of this for incentive programs, especially the vetting of prospective projects. City governments must carefully consider their economic development goals and design incentive programs that align with these objectives. This involves conducting thorough economic analyses to identify the strengths and weaknesses of the local economy, as well as the opportunities and threats that may impact future growth.

One important aspect of strategic planning is targeting incentives to specific industries or sectors that have the potential to drive economic growth. For example, a city with a strong technology sector may offer incentives to attract tech startups and established companies, while a city with a rich cultural heritage may focus on incentives for tourism and the arts. By targeting incentives to key industries, city governments can maximize the impact of their economic development efforts. The leadership of the folks at Visit Edmond, our tourism department, should be included in these talks.

Tax Incentives

Tax incentives are one of the most widely used tools for economic development. These can include property tax abatements, sales tax exemptions, and income tax credits. By reducing the tax burden on businesses, city governments can make their communities more attractive to new and expanding companies. However, it is important to ensure that tax incentives are not overly generous, as this can lead to a loss of revenue for essential public services.

Grants Grants are another effective tool for promoting economic development. Our Edmond Economic Development Authority (EEDA) is set up to do some of this. City governments can offer grants to businesses for specific purposes, such as job training, infrastructure improvements, or research and development. Grants can be particularly useful for supporting small businesses and startups, which may have limited access to capital. EEDA was highly effective in doing this especially during COVID along with the Edmond Chamber of Commerce. To ensure that grants are used effectively, city governments should establish clear criteria for eligibility and require recipients to demonstrate how the funds will be used to achieve specific economic development goals.

Low-Interest Loans

While I am not sure if this is allowed in our state, low-interest loans are another type of economic incentive that city governments can use to support businesses. By providing loans at below-market interest rates, city governments can help businesses access the capital they need to grow and expand. Like grants, low-interest loans can be particularly beneficial for small businesses and startups. To minimize the risk of default, city governments should carefully evaluate the creditworthiness of loan applicants and establish clear terms and conditions for repayment. I am not a fan of this one because it requires us to function as a bank and if a bank is not willing to chin the “deal” then why should the city do it?

Balancing Incentives with Public Benefits

While economic incentives can be powerful tools for promoting economic development, it is important for city governments to balance these incentives with the need to provide public benefits. This means ensuring that the incentives provided to businesses result in tangible benefits for the community, such as job creation, increased tax revenues, and improved quality of life. Would a fourth brewery in downtown Edmond really improve the quality of life here?

One way to achieve this balance is by including community benefit agreements (CBAs) in incentive packages. CBAs are legally binding agreements between the city government and the business receiving the incentive, outlining specific commitments that the business must fulfill in exchange for the incentive. These commitments can include hiring Edmond residents, paying living wages, and investing in community infrastructure. By including CBAs in incentive packages, city governments can ensure that the benefits of economic development are shared more broadly across the community.

Avoiding Pitfalls

While economic incentives can be effective tools for promoting economic development, there are several pitfalls that city governments must avoid. One common pitfall is the "race to the bottom," where cities compete to offer increasingly generous incentives to attract businesses. This can lead to a situation where the benefits of the incentives are outweighed by the costs, resulting in budget deficits and reduced funding for essential public services.

Another pitfall is the risk of creating economic inequality. If incentives are disproportionately awarded to large corporations or wealthy developers, this can exacerbate existing inequalities and lead to a lack of opportunities for small businesses and low-income residents. To avoid this, city governments should ensure that their incentive programs are inclusive and accessible to a diverse range of businesses and residents, especially ones that are already established in Edmond city limits.

The proper use of economic incentives by a city government requires a careful balance of transparency, accountability, and strategic planning. By targeting incentives to key industries, ensuring that incentives result in tangible public benefits, and avoiding common pitfalls, city governments can use economic incentives to promote sustainable and inclusive economic growth. Ultimately, the goal of economic incentives should be to create a vibrant and prosperous community where all residents have the opportunity to thrive. I am optimistic that our new council will go about the business of getting this done.

(Ray Hibbard, publisher of Edmond Life & Leisure, may be reached at ray@edmondpaper.com)