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Is Fort Wayne ‘bad for business’?

Sure, we’re competitive, but two mayoral candidates say bread-and-butter incentive packages aren’t enough these days

By Michael Summers

michael_summers@fortwaynereader.com

Fort Wayne Reader

2011-03-07

As the field for the Republican nomination for Mayor of Fort Wayne filled up, two of the most prominent candidates made pledges to make the area a friendlier place to do business.

Liz Brown, member of Fort Wayne City Council (R-at large), kicked off her campaign by stating that the city doesn’t do enough to help business expand or operate in Fort Wayne.

And businessman Eric Doden, launching his campaign in early January, stated “on our first day in office, we’ll declare Fort Wayne ‘open for business’” and said one of his goals was to “make Fort Wayne a city of opportunity again by removing barriers of excess government regulation.”

Which is all well and good. But as campaign platforms go, pledging to make your community more business-friendly ranks right up there with being against crime and for education. After all, who doesn’t want to see successful businesses in their community employing people, increasing the tax base, and serving as a shining example to other businesses?

And as far as what the local government can do to make the community it serves a “good place for business”… there are a lot of people who might think that Fort Wayne and Allen County do plenty to attract businesses, retain businesses, and help them expand.

John Stafford, Director of the Community Research Institute at IPFW, has been involved in area economic development issues for, as he puts it, “longer than I’d like to admit.” Stafford lists a couple major incentives that communities can offer to attract and retain businesses. One is ready-to-develop business sites, or “shovel-ready” sites, as they’re often called. Just like the name says, these are properties that are ready for a business to come in and set up operations as quickly as possible. “It used to be in the olden days, companies would find a property, negotiate with an owner, and wait for utilities to run to the site,” Stafford says. “The process is much more expedited these days. They’re looking for sites that are ready to go, have utilities, some of the environmental background work done ahead of time as much as they can be.”

Another is what Stafford calls the general tax climate of an area. A lot of that, he says, is state-driven, but there are some things that are under local control. And this is where those “tax abatements” you read so much about come into play. “(Tax abatement) is a way to ease in the new tax burden that comes with a new investment,” Stafford says. “It’s intended to be an incentive; it’s also intended to soften somewhat the manner in which property taxes can act as a deterrent to new development.”

In Indiana, for example, we tax business equipment as personal property — it’s part of the property tax base. Some states don’t tax manufacturing equipment at all, so tax abatement partially offsets that tax disadvantage. “We have other areas where our tax climate is more favorable than our competitors,” Stafford says. “Site selectors line those things up, and it all depends on the structure of a given company, where their tax burden falls most heavily.”

“Tax abatement is the staple, the bread-and-butter, of any incentive package,” Stafford continues, adding that Indiana has been using it since 1977. Of course, tax abatements aren’t popular with everybody — the massive tax abatement Fort Wayne’s City Council approved for Harrison Square back in 2008 raised a lot of ire and eyebrows — but it’s been done continuously and successfully for so long by both political parties that it has simply become “the norm.” In fact, a quick scan of the minutes from City and County council meetings shows just how often these incentives are voted on and approved.

As far as these sorts of incentives go, Stafford thinks Fort Wayne and Allen County is competitive. “I don’t think we’re the most generous, but we’re not the least either generous. And not being out of line is pretty important.”

Andi Urdis, President of the Fort Wayne-Allen County Economic Development Alliance (The Alliance), also believes our area is pretty competitive, as far as incentives go. A non-profit agency that contracts with the City of Fort Wayne, Allen County, and the Chamber of Commerce, The Alliance’s mission is to provide economic development services to help those agencies attract and retain businesses. While approval for incentive packages rests with City or County council, the Alliance helps to facilitate whatever a business might need for a project.

In short, if you were moving your business to Fort Wayne or Allen County, or expanding your existing business, the Alliance would be your first stop. “Our whole goal is to create jobs and keep investment here and increase the tax base,” Urdis explains. “Basically, our hope is that people would contact us when they’re thinking of doing any kind of expansion or hiring and then we could sit down with them and help them identify what kinds of programs are available, how to make the process easier.”

“We know the groups, the contacts, what programs are more responsive to what their needs might be, because otherwise it’s like alphabet soup,” Urdis continues. The Alliance, in fact, was formed about 10 years ago to clean up some of the “alphabet soup” of area economic development; at the time, the County, the City, and the Chamber of Commerce all offered similar services, a confusing and messy state of affairs, and it was thought that consolidating these efforts would simply make things easier and more efficient.

But according Liz Brown, some of the processes businesses have to go through are still messy, inefficient, and ultimately discouraging. To hear Brown tell it, the problem these days isn’t “alphabet soup”; a more accurate metaphor might be a circus act, where participants have to navigate hoops, hurdles, and rings of fire to reach their goal. This isn’t the fault of The Alliance; it’s the City that needs to look more closely what it asks businesses to do. And the issue also has little to do with incentive packages. “No one has ever said ‘I didn’t get anything. I didn’t get money’ or whatever,” she says. “That’s not what I’ve encountered.”

What Brown has encountered are businesses of all types and sizes that complain that local government is not easy to work with. “I haven’t met anybody yet who has not felt that it’s extremely difficult to do business with the City and the County, and I mean whether it’s putting in an outdoor patio for your restaurant or getting a permit dealing with storm water run-off or something like that,” Brown says. “We call it the ‘permitting processes,’ but that’s really just one piece of it. We really need to improve our processes that the government runs that the businesses have to go through.”

“That being said, I understand that the people I’ve worked with in the City are professionals, they do a good job,” Brown adds. “I just think that sometimes you don’t see the forest for the trees. There are lots of regulations, and some of those departments are starting to look into them, but I think we have to be much more aggressive.”

Brown emphasizes that this is what she has heard from people during her term on City Council and the Fort Wayne Plan Commission, but a quick sampling of businesses that have gone through getting permits signed and plans approved (and no one wanted to speak on the record. Why? I don’t know) agree that it took a long time, and it wasn’t easy.

Perhaps most alarming is that some people feel that Fort Wayne has a reputation for that. “I can’t say that today we’re known as the friendliest place to get a permit,” says Andi Urdis. “Our goal would be to get to that point.”

Liz Brown adds: “I had a construction company owner tell me — and he builds restaurant chains across the Midwest — that he tells people not to come here. ‘It’s such a pain to do business. Give me a place where it works.’ And he’s from Fort Wayne.”

Many other cities have found a way to streamline how businesses obtain permits or get whatever they need to demonstrate they’ve complied with regulations, even places that have more regulations than Fort Wayne. “You get bigger, you get more complicated, but you shouldn’t make it more difficult,” Brown says.

“My sense is that we ‘train’ our customers — developers, business owners — and it should be the other way around,” says Brown. “We tell our customers ‘this is how our system works, you need to learn our system,’ and we should be saying ‘how can we simplify the systems so that it’s more accommodating to you?’”

These days, when people refer to the relationship between business and government in terms of “client” and “service provider,” they mean it almost literally — it’s a global market, as we’re often told, and communities compete for businesses in much the same way a store competes with other stores for customers.

Eric Doden certainly sees things in those terms. “What very talented people do, they listen to the people they’re trying to serve — especially when you’re a public servant — and you identify things that are frustrating to them, and you try to do the best you can to make it efficient and effective as possible, and make sure that they’re pleased,” he says. “That’s a cultural mindset that has to occur. Service our customers — our business owners, our citizens, our tax payers — and make sure we have that mindset in every department of government.”

While Doden is also concerned about what he calls the excessive processes business find themselves encountering in order to set up shop in the area, what he seems to see as bigger challenges to our business climate is lack of a qualified workforce and a lack of entrepreneurial spirit.

Once again, he’s hardly alone. John Stafford says the area needs to work on attracting and retaining the talented workforce that businesses look for these days. “When I got into this work, a lot of it was about low-cost business environments,” he explains. “Companies would set up in a community, and people would find the community because jobs were available. Now companies look for communities that already have the talent they need, and set up there. Talent is the #1 product a community needs to offer in the 21st century.”

Doden says that, while mulling over running for mayor, he went on a listening tour, and heard a similar story from many parents — their children were going away to school and not returning to Fort Wayne and Allen County because they did not think there were any opportunities for them here.

It’s a familiar issue — the “brain drain” — and Doden believes that one of the reasons our area struggles with it is because we don’t have an “environment of entrepreneurship.” Younger people, he explains, are less risk averse, more likely to start new businesses, and we need to help foster a climate of creativity and innovation. “We have a history of being entrepreneurial, of developing and marketing new products across the US and in some cases around the world, and I think we need to recapture that tradition.”

“One of the things that some cities have done is to have a privately administered ‘angel fund,’ to offer access to capitol for people who want to start businesses,” Doden says. “They’ve also had business competitions, where they try to bring investors together with people with a business plan, and offer rewards for the winning plan. We need to do some of those things here.”

Of course, the government would more or less stay out of it. “Government shouldn’t be in the business of picking and choosing winners and losers,” he says. “The cities that have done this, and done it well, have been cities that have gone to people with means and have encouraged them to contribute to an ‘angel fund,’ and then it’s privately administered.”

He continues: “What a mayor can do is have a lot of influence, and try to sell your private sector people who can invest in this kind of thing on the importance of having this asset available to the community. If it’s run with excellence, it should make a return.”

John Stafford at the Community Research Institute doesn’t comment on the platforms of either candidate (I don’t ask him to), but says that when it comes to economic development, a community and its leaders should be prepared to consider a range of ideas. After all, it’s a very tough market out there, and growing more so with every year. “In the past 15 years, it has become very competitive,” he says. “And the community that thinks it has it all figured out, just got passed by someone else.”