Comment by rickydroll | Hacker News Reader

Comment by rickydroll | Hacker News Reader

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https://scholars.org/contribution/how-competition-attract-bu...

> A firm announces a plan to build a new facility, but where? Local and state development officials compete to attract the firm with ever-more-generous tax breaks and subsidies. This scene plays out again and again – even though research shows that incentives do not substantially influence firm behavior, even in the face of media exposes about wasteful giveaways. Why? Governments hope to encourage jobs and business profits, and hubris leads officials to believe “this time will be different,” even if incentives have not worked before.

> But something more pervasive is also at work. My research with Stephen Ellis demonstrates the role of “business climate” in driving economic development professionals and government officials to engage in an incentives arms race. Officials feel they must offer incentives, because failing to compete to attract businesses will be interpreted as evidence that their locality is not business-friendly. States and localities will therefore continue to compete, to the point of giving away more than the value of the new firm or facility. Can American citizens find ways to prevent the negative effects of this no-win arms race?

It's interesting because the cities some people decry as not business friendly often get lots of job growth while charging companies a lot to expand there.

Cities like NYC, SF, Boston, Seattle usually offer zero incentives and even charge developers fees for new development.

>Cities like NYC, SF, Boston, Seattle usually offer zero incentives and even charge developers fees for new development.

That's not a good thing. Those cites also have the lowest rates of new residential construction (in %) and housing shortages.

If you live in Eastern Mass, like I do, there isn't much buildable land left unless you start using state forests and golf courses. The easiest to acquire land are old brownfield sites. But even there, it's more likely they will plaster over the original building to seal in the asbestos and lead paint, rather than build a new, denser structure.

Out at Interstate 495, there is a bunch of open space, but a lot of it is zoned conservation land. To take something out of conservation zoning, you need to pay all the taxes they would have incurred from the time it was zoned as conservation land to the current day.

Sometimes I think the only reasonable solution is to start razing in-city industrial property and building it over with dense, high-occupancy, 10+ story buildings. The old mill city I live in has done that with some success. Their solution to the parking problem was to build multiple city-owned parking garages and make parking costs explicit, rather than bundling them into the rent.

The main downside is that if you don't drive, you have to spend half an hour plus on a bus to get to a supermarket or other necessities. I guess the cost of a supermarket lease makes setting up a business there significantly riskier.

> Officials feel they must offer incentives, because failing to compete to attract businesses will be interpreted as evidence that their locality is not business-friendly.

I guess this is the crux but who really wants a data center? It’s a big flashy number but what does it really do for the community at the end of the day?

Tax revenue.

https://www.google.com/search?q=nova+tax+revenue+data+center...

> A data center costs the county $0.04 per $1 of tax revenue received, whereas normal businesses cost about $0.25 per $1 of revenue

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